The Anatomy of a Business Plan

Written business plans are as varied as the companies that compile them.
Some plans run almost 100 pages, whereas others barely fill a few sheets.
Some plans start with executive summaries, and others plunge right into
detailed descriptions of products and services. Some companies print their
business plans on paper, and some publish their plans exclusively on the
Web. Some plans include page after page of financial projections, and others
list only anticipated costs, expected revenues, and projected profits.

Every business plan is written for a different reason and to obtain a different
outcome. Still, some plans are better than others. The following information
helps you write a plan that will win high marks.

Business-plan contents from beginning to end
Business plans come in all shapes, sizes, formats — even colors — but they
all share a similar framework. The following components, presented in the
order they generally appear, are common elements in most business plans:

✓ Table of contents: This element is a guide to the key sections in your
business plan and is especially useful if your plan exceeds ten pages.
✓ Executive summary: This section is a summary of the key points in your
business plan. You should incorporate it if your plan runs more than ten
pages and you want to convey important information upfront. You want
to keep it clear, captivating, and brief — in fact, try to keep it to two
pages or less.
✓ Company overview: This section describes your company and the
nature of your business. It may include your company’s mission and
vision statements as well as descriptions of your values, your products
or services, ways your company is unique, and what business opportunities
you plan to seize. (Turn to Chapter 3 for help defining your business
purpose and developing your company overview.)
✓ Business environment: This section includes an analysis of your industry
and the forces at work in your market; an in-depth description of
your direct and potential competitors; and a close look at your customers,
including who they are, what they want, and how they buy products
or services. It describes everything that affects your business that’s
beyond your control. (Count on Chapter 4 to help you zoom in on your
environment and develop your analysis.)

✓ Company description: In this section, include information about your
management team, your organization, your new or proprietary technology,
your products and services, your company operations, and your
marketing potential. (Check out Chapter 6 for help in writing your company
description.)
✓ Company strategy: This section brings together the information about
your business environment and your company’s resources and then lays
out a strategy for going forward. (As you prepare this section, you’ll find
Chapter 5 an indispensable resource.)
✓ Marketing plan: This section is where you describe how you plan to
reach prospects, make sales, and develop a loyal clientele. (Chapter 7 is
devoted exclusively to helping you develop your marketing plan.)
✓ Financial review: This section includes a detailed review of dollars and
cents, including the state of your current finances and what you expect
your financial picture to look like in the future. It typically contains
financial statements, including an income statement, your balance sheet,
and a cash-flow statement. (If any of these terms seem foreign to you, or
if you want step-by-step financial planning advice, see Chapter 8 for all
the details.)
✓ Action plan: Here you detail the steps involved in implementing your
business plan, including the sequence of actions and how they align with
your goals and objectives. (Flip to Chapter 3 for advice on establishing
goals and objectives and then turn to Chapters 14 and 15 for information
on how action plans ensure that you’ll put your business plan to work.)
✓ Appendixes: This section includes detailed information that supports
your business plan. It may include analyses, reports, surveys, legal documents,
product specifications, and spreadsheets that deliver a rounded
understanding of your business plan but which are of interest to only a
small number of your readers.

Not all business plans include all the components listed here. In fact, you
won’t find a textbook example of a written business plan. For that reason, we
don’t provide any rigid business-plan model in this book. Instead, you find
information on how to develop each of the major components, advice for
how business plans tend to work for different kinds of businesses, and ways
you can organize and present materials in your written plan.