Components of a Business Plan:
Introductory page / Title / Cover page –
This is the title or cover page that provides a brief summary of the business plans contents. The introductory page should contain the following;
- The name & address of the company.
- The name of the entrepreneur(s), telephone number, fax number, e-mail address & web site address of available.
- A paragraph describing the company & the nature of the business.
- The amount of finance needed.
- A statement of the confidentiality of the report.
This title page sets outs the basic concept that the entrepreneur is attempting to develop. Investors consider it important because they can determine the amount of investment needed without having to read the entire plan.
Executive summary –
This section of the business plan is written after the total plan is written. About 2 to 3 pages in length, the executive summary should stimulate the interest of the potential investor. The investor uses the summary to determine if the entire business plan is worth reading. Thus, it would highlight in a concise & convincing manner the key points in the business plan.
Generally, the executive summary should address a number of issues or questions that anyone picking up the written plan for the first time would want to know. For example;
- What is the concept or model?
- How is this business concept or model unique?
- Who are the individuals starting this business?
- How will they make money & how much?
If the new venture has a strong growth plan & in five years expects to be positioned for an Initial Public Offer (IPO) then the executive summary should also include an exit strategy. If the venture is not initially expecting this kind of growth, the entrepreneurs should avoid any discussion of an exit strategy in the executive summary.
The executive summary is only meant to highlight key factors & provide a strong motivation to the person holding the plan to read in its entirety. Key factors for some of the plans might be the people involved.
Industry analysis –
It reviews trends & competitive strategies.
- Future outlook & trends.
- Analysis of competitors.
- Market segmentation.
- Industry & market forecasts.
Description of the venture –
It provides complete overview of product(s), services & operations new venture.
- Size of business.
- Office equipment & personnel.
- Background of entrepreneurs.
Production plan –
It details how product(s) will be manufactured.
- Manufacturing process (amount subcontracted).
- Physical plant.
- Machinery & equipment.
- Names of suppliers of raw materials.
Operations plan –
It describes the flow of goods & services from production to the customers.
- Description of company’s operation.
- Flow of orders for goods or services.
- Technology utilization.
Marketing plan –
It describes the market conditions & strategy related to how products & services will be disturbed, priced & promoted.
Organizational plan –
It describes form of ownership & lines of authority & responsibility of members of new venture.
- Form of ownership.
- Identification of partners or principal of shareholders.
- Authority of principals.
- Management – team background.
- Roles & responsibilities of members of organization.
Assessment of risk –
It identifies potential hazards & alternative strategies to meet business plan goals & objectives.
- Evaluate weakness of business.
- New technologies.
- Contingency plans.
Financial plan –
Projections of key financial data that determine economic feasibility & necessary financial investment commitment.
- Proforma income statement.
- Cash flow projections.
- Proforma balance sheet.
- Break even analysis.
- Sources & applications of funds.
It generally contains any backup material that is not necessary in the text of document.
- Letters of approvals, clearness etc.
- Market research reports.
- Leases or contracts.
- Price lists from suppliers.