Written by: Dr. Ian Marshall

What should be in a business plan?

Firstly we need to establish the purpose for which the business plan is being written:

STARTING A BUSINESS
The creation of a business plan as a road map to achieving your objectives is a crucial element of achieving success. This document formalizes the research information that you have gathered from the market place. By writing the plan you have a full understanding of what it is your company is offering; who your customers will be and how to communicate with them. The Business Plan gives a clear action plan which details what you will be doing in each one of the components of the plan and when the action is to be completed. What needs to be described in the business plan is how the industry makes money and how you will make your money participating in the industry.

SEEKING FINANCE FOR AN EXISTING BUSINESS
If you have an existing business and are doing a business plan for the purpose of raising capital you will take a different approach to writing the business plan. Now you have history and experience and can show the market opportunities based on your passed experience. You may have sales demand records showing how the market has increased and how if you could expand you could tap into the additional and available sales. You will also need to show the expansion itself in a plan (a drawing) etc – as well as detailed costs. It is recommended that you show the progression of the sales increase separately from the normal sales forecast, that way it will be easy to see the expected growth is sales, when completing your financials.

SELLING THE BUSINESS
If you have an existing business and you are looking to exit the business – by selling the business off or by taking on a partner who would eventually take over control and ownership – again the business plan would have a different slant to it. Here you will need to show sustainability in your absence. If “you” are the business you need to show that it can continue to operate without you. If the company is involved in production you will need to show that the assets of the company can continue to produce product at the levels predicted in the financials. You will need to show that these assets are worth what you say they are – not in value only but in contribution to the company’s bottom line. Can they function at their capacity – can the factory (and equipment) meet sales forecasts.

As you can see from this information the business plan plays a very important role in the sale, purchase or start-up of a business.

Here is an example of what should appear in the business plan for a start-up business.

Part 1 - Layout and Structure & opening information

Firstly you need to ensure that the business plan once completed can be used as a reference guide, a planning and implementation document, as a fund raising document, or as a document used to promote the sale of your business. This means that someone else besides yourself must be able to read it and make sense of what you are trying to achieve.
Lay out the business plan in a manner in which it roles out addressing each part of the business, from the concept/idea, to marketing and into the finances – here’s a guideline:
Executive Summary
Objective: To highlight the key points of the business and to show that it can be a success.

You should start the business plan with an executive summary. This is a summary of the highlights within your business plan. This is the section where you promote your business idea and its successful implementation. The executive summary must be left to last; you should only write it once you have completed the plan and have a clear understanding of the highlights that need to be emphasised.

Introduce the key points from each section of your business plan. The executive summary should provide a quick outline to the reader of what they will find in greater detail in your business plan. Typically, this is a 1 to 2 page brief no longer; so it must have impact and must cause the reader to want to read on.
Description of Industry
Objective: To show that you have a good understanding of how the industry operates and makes money and how you will fit into this industry.

This section is the backdrop to your business; it should not be about your business in particular. The reader should get a clear understanding of how businesses typically function in this industry and how they make money. If the industry has several sectors or categories, briefly describe each category and identify the one you will be competing in. Describe common characteristics found within your sector and the common methods used to obtain business – how do businesses in this industry make money? Describe changes or trends taking place and make sure you use statistics to support your position and list the reference source.
Description of the Business
Objective: To show that you understand how your business will operate and how it will make money.

This section should give the reader an understanding why you believe your business is going to succeed in the marketplace. Identify any advantages or gaps your business will address in the marketplace. Tell the reader how you came up with the business idea and the opportunities you see for your business. Describe how much money you forecast your business will make and how big you see it growing in the future.
Vision Statement
This is a brief statement describing how you the see business growing and developing over the next 3 to 5 years including responses to changing market demands, expansion, and/or diversification. It is your vision for the company’s future.
Mission Statement
The mission statement is made with your customer as the focus. It should contain what you are doing for your customers. This should be a focused statement including the purpose and philosophy of the business.
Business Goals
Write goals with your focus on the activities that lead to the end result, rather than the focus on the end result itself. Make your goals as visual as possible. You must be able to attain these goals, while challenging they must not be beyond your grasp. It is important that your business goals have the following components:
Specific, measurable, attainable, visual, time Sensitive (this means a deadline must be given), activity / action focused.
Part 2 – The Operations Plan
Business Structure
Objective: To describe to the reader how your business will be set up and what systems you will use to manage it.

This section should describe to the reader the basic set up of your business. Admin systems Describe admin systems that your business would be using to keep financial records, customer records & databases, inventory control, billing, filing, etc.
Human Resources Structure
Objective: To describe to the reader what manpower you will need and to show how the manpower will be employed as well as how the manpower will grow with the company.

Even if you are the only person who will be doing all the work, create a job description for each essential position in your business as if you were going to hire people. You can also describe the $ value of each position such as per hour rate or annual salary.

Production Methods/Service Delivery
Objective: In this section, describe to the reader how your business produces the product or delivers it’s service to the market.

These are a series of steps that identify all the tasks required to produce the product or service and in what sequence the tasks must be scheduled. If your business has a long selling cycle, state how long you expect each task to take. Quality controls are a set of quality standards that your business is going to adhere to. For example, some businesses go through an ISO audit to receive an ISO rating. Others may adopt an association's standard. If not you can describe your own set of standards.

Part 3 – The Marketing Plan
Marketing Plan & Selling Strategies
Objective: This section should describe to the reader how your business is going to succeed in the marketplace.

Describe the main features of your product or service relative to the wants of your target market. How you will package or "bundle" your products or services. What distribution channels your business is going to use such as direct sales, online, catalogue, wholesale, retail, institutional, etc. etc. Each marketing action that you carry out has an expectation of some results - state what they are as this forms the basis for your financial projections. Describe the methods your business will use to find customers for the business (prospecting), the approach you will use to sell them and how you will retain them as customers and get referrals. It should describe to the reader in the greatest detail who your customers are. There is no such thing as a "general population". It should also convey to the reader that you have looked at real and highly possible scenarios which could adversely affect your business and that you have made some plans should they occur.

Part 4 – The Financial Plan
FINANCIAL PLAN - Cash Flow & Financials
Objective: To show the reader that you have a financially viable business.

This section of the business plan should contain the cash flow, the income statement and the opening balance sheet. The cash flow should demonstrate the flow of cash into and out of the business and therefore should relate to all planned expenditures mentioned in the other sections of the business plan e.g. marketing expenses, operational expenses, employment expenses etc.
The financial plan must show the reader that you have costed the product to cover raw material costs, overheads and that you make a contribution to profits. The reader must get a clear understanding of when the company with breakeven so that it can be determined if sufficient operational capital has been acquired.

ACTION PLAN
Time Lined Action Plan, showing the activities planned for each section of the business plan, and the timing of these activities should be given, demonstrating to the reader that you have a role out plan for the business and that you understand what needs to be done when.

APPENDICES
Attachment of all the information relative to the business plan and any other relevant information that will support your business plan and it’s implementation. This can include, your resume’, facility layout and production flows, human resource policies, strategic alliances, price lists, samples of adverts, and promotional material etc. Include any financial support data such as costing, breakeven analysis, financiers etc.