Business plan

A business plan is a summary of how a business owner, manager, or entrepreneur intends to organize a commercial endeavor and implement activities necessary and sufficient for the venture to succeed. It is a written explanation of the companies business model.

Business plans are used internally for management and planning and are also used to convince outsiders such as banks or venture capitalists to invest money into a venture.

Business plans are noted for often quickly becoming out of date. One common belief within business circles is that the actual plan may have little value, but what is more important is the process of planning, through which the manager gains a greater understanding of the business and of the options available.

Content of a business plan

A business plan can be seen as a collection of sub-plans including a marketing plan, financial plan, production plan, and human resource plan. The business plan has many forms. There is however a format that is typical:

Executive summary
- explains the basic business model
- gives rationale for the strategy
Background
- gives short history of company (unless it is a new company)
- provides background details such as:
  - age of company
  - number of employees
  - annual sales figures
  - location of facilities
  - form of ownership including
    - sole proprietor
    - Partnership
    - entrepreneurial startup
    - private corporate startup
    - publicly traded corporation.
    - public utility
    - Non Profit Organization
- background of key personnel including
  - owners
  - senior managers
  - head scientists and researchers
Marketing
Production and manufacturing
- describe all processes
- production facility requirements - size, layout, capacity, location
- inventory requirements - raw materials inventory, finished goods inventory, warehouse space requirements
- equipment requirements
- supply chain requirements
- fixed cost allocation
Finance
- source of funds
- expected return
- break even analysis
- monthly pro-forma cash flow statement
- existing loans and liabilities
Human resources
- assign responsibilities
- training required
- skills required
- union issues
- compensation
- skills availability
- new hiring

Specialized sections such as product research and development, legal strategies, marketing research, or inter-company collaborations, are added to deal with unique features or characteristics of the business or its markets.

Business plan

Content of a business plan

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