The 6 Parts of a Business Plan

A business plan, like the name implies, is a written plan for a business that includes specific information such as financial plans, product descriptions, goals, and more.

A well-made business plan dives into the details and outlines specifics. This analysis and documentation is vital for ensuring that a company has room to grow within its chosen industry and a plan to support that growth or overcome barriers. Above all else, a business plan is a guiding document that gives an idea shape and direction. A business plan can also help a new business secure funding by showcasing growth potential to prospective investors or lenders.

There are six things that should be included in every business plan, no matter what template you use.

The executive summary is the highest level overview of a business. It includes the main idea, objectives, and description of the business. Ideally, anyone can read the executive summary and get an idea of what a business does and its plans for the future. One of the most important aspects of the executive summary is a business’s mission statement. This is a brief description (often one or two sentences) of the business’s goals and purpose. The mission statement describes why the business exists and what it’s setting out to do. The executive summary most often includes a short overview of everything else included in the broader business plan.

First, this section should outline the problem the business is attempting to solve and how it will do so with the products or services it will offer. These products and services should be described in detail, including any necessary information about offering them, such as manufacturing or equipment costs.

This section of the business plan outlines the key members of the business’s leadership team and how their experience will contribute to the business’s success. This often includes an organizational chart (often shortened to “org chart”) that visually shows key positions and the internal structure of the business. This section also outlines how the business will be structured from a legal perspective, such as whether a sole proprietorship, an LLC, or a corporation, and where the business will be located.

The market analysis section includes the important details of the business industry. That means listing and describing potential competitors and how they aren’t adequately addressing the problem this business looks to solve. This section describes the important people, businesses, and customers in the market and how this business fits into the industry landscape. The market analysis should bring in actual data, including quantitative data (information that is expressed as numbers, such as how many customers a business expects or products they plan to make) and qualitative data (Information that isn’t expressed in numbers, such as experiences or answers to survey questions).

This section outlines how the business will attract and retain customers. Solving a problem better than everyone else is not enough for a business to thrive if customers don’t know about it. The marketing and sales strategy goes over how the company will advertise to potential customers and make sales. For example, if customers will buy goods directly from a physical storefront, if products are purchased online and shipped, if the customer comes to the business to receive the service, etc.

The financial plans and projections section is where a business explains how much money it expects to make and spend, and what that looks like as the company grows. Documents and projections in this section include…

• Income Statement (also called a Profit and Loss Statement): A report that shows a company’s revenues and expenses over a certain period of time.
• Balance Sheet: A document that lists a company’s assets, liabilities, and equity at a specific time.
• Cash Flow Statement: A document that shows how much cash is coming in and out of a business.
• Sales and Revenue Projections: An estimate of how much a company is predicated to make over a set period of time.

When a business is first starting out, it may not have all of these documents ready. They should be added as soon as the business has enough history to create them.

Ideally, this section provides an idea of what the next five years looks like for the business, going into monthly or quarterly projections as needed.

A business plan is a vital document for a business, whether the company is just getting started or well-established and looking to ensure it stays on track. It outlines all of the most important information about the business, including specific documents and product information and overall goals and a direction for the business.