What Makes Up a Business Plan?

Whether it is to secure funds or to keep you on track, a business plan is the backbone of most businesses. While some business plans are hundreds of pages long, many do not have to be that extensive. There are various ways to write a business plan, but all business plans must address certain key issues in order to be effective.

Executive Summary

A business plan's executive summary should come first, although it is often written last. If the business plan is meant to secure capital, the executive summary is the most important part of the plan and, in fact, may be the only part a potential investor reads.
This summary should include the key points from the entire business plan and highlight each section. The executive summary should help the reader understand what your business is about and, ideally, make him want to know more. It should be interesting and not just a listing of the plan's contents. An executive summary should also be concise (no more than two pages long).

Description

The description part of your business plan should come after the executive summary and describe who is involved in your company, what products or services you're selling, who you're selling to, and why your business exists. For example, if you're opening a luxury handbag store, do not simply state "We're going to be selling handbags." A better option would be: "XYZ Handbags is a luxury boutique catering to female consumers making $100,000 or more per year that are into trendsetting fashion and name brands. This city has many high-earning females but no luxury stores that cater to them. XYZ Handbags will provide products and services that are desirable to this market."
Also describe the legal structure of your business in this section.

Marketing and Sales

In this part of your business plan, the focus is on sales and marketing strategies, specifically why people will buy what you're selling and how you will sell to them. Questions to consider here are: How will you make potential customers aware of what you're offering or that your business even exists? Will you offer promotions? How and where will you advertise to your target market? This is also the section in which to include public and community relations strategies.

Management and Staff

Include in this section information about the business's owners and key personnel such as executives and managers. Also include their credentials. Although educational background can be mentioned as well, it is more important to highlight their career achievements. For example, if one of your business's executives oversaw the development of a successful or well-known business venture, mention that in this section. Information about your business advisers, such as attorneys, publicists (if their services are outsourced instead of in-house, and accountants can be listed in this section as well.

Operations

This section should detail where your business operates. If it's an online business, include information about the yearly costs for web space, design and maintenance. If you have a physical store, warehouse or factory (even if they are outsourced), detail the location, rent expense and other pertinent information.

Financial Information

This is a very important part of your business plan, especially if you're seeking funding, and should include the financial forecast for your business over the next three to five years. Back up your assumptions in this section with figures. Include cashflow statements for at least 12 to 18 months; profit, loss and sales forecasts; and risk analysis (particularly contingencies and insurance related to the risks).