A business plan is a document used to start a new business or get funding for a business that is changing in some significant way. Business plans are important documents for potential investors such as banks or private individuals who may fund the business. Other audiences for business plans may be government officials or regulating agencies who need to approve the plan.
A business plan is very much like a proposal, since they are both intended to persuade a reader to do something. However, they differ in scope. You write a business plan when you’re trying to start a new business or significantly expand an existing business. Business plans usually try to persuade readers for a significant investment or offer of time, goods, or services. A proposal, on the other hand, seeks approval to do a specific project for an existing business. For example, a business plan might seek funding to start a software company to create computer games, yet a proposal might bid to do the development work for some specific computer game. Business plans therefore have some different content and sections.
Business Plan Content and Structure
Your goals in a business plan are to convince your reader/s that you have a good idea which is feasible to act upon, and to encourage them to invest in it, or approve it in some way. So, you need to provide whatever information that audience needs to consider your idea. If you’re in doubt about including certain information, put that information in its own section or in an appendix, so readers can access it as appropriate.
Business plans are usually formal documents, so all conventions related to formal reports apply, e.g., letter of transmittal, headings, subheadings, graphics, etc.
The following sections are common in business plans; know that you can add, subtract, combine, and/or sequence them in any way that best addresses your audience.
Executive Summary
Provide a condensed version of the business plan’s content in an executive summary, which acts as an introduction to a business plan. Make your case immediately for your product, service, or company and why it’s unique in the market. Offer brief information about your qualifications/your team’s qualifications, and include information on funding and investment.
Product or Service to be Offered
A key section of a business plan is the description of the actual product or service to be offered. If you’re seeking funding for a product—a physical object—apply techniques for technical description in order to fully explain the product. If you’re offering a service, explain step by step how the service will be handled, using a chronological process structure. Make sure to include as much detail as your audience needs. If they don’t understand what your business is going to offer, they will not continue reading, so develop this section fully and carefully.
Technical Background for the Product or Service
Explain any technologies or technical processes, if the technology involved in your product or service is potentially unfamiliar to your reader. Remember that business plans often go to non-specialists who, despite their lack of technical expertise, have the investment funds or the legal understanding to get your business going.
Market for the Product or Service
Information about potential markets is another key section of any business plan. What has your exploration of the existing marketplace revealed? Are there other companies that offer the same or similar thing? If so, what differentiates your goods or services? How much business do other companies in the same field do? Or, is your item or service new? If so, on what are you basing the projection that people will need it?
This section focuses on the likelihood of the success of your business. Make the content as specific as possible for the marketing section, and carefully research and cite your sources. Support your own belief in the business with facts and research in order to convince your readers. The sections on Product or Service to be Offered and Market for the Product or Service form the heart of a business plan.
Business Overview and Operation
Explain your goals and mission. Explain the organizational and legal structure (e.g., corporation, “doing business as,” limited liability). Discuss the facilities (storefronts, warehouses, production facilities, vehicles) your business will require as well as the personnel it will need. Explain how the proposed business will operate on a day-to-day basis. Mention relevant patents or copyrights as appropriate.
Qualifications and Background of Personnel
Introduce this section by describing your group’s qualifications as a whole. Then present your individual qualifications to start and operate the business you are proposing, along with qualifications of others who will be a key part of the business.
Funding Needs, Projected Revenues, and Investment Potential
Detail the funding you’ll need to get the business started as well as the funding needed for operating costs to run the business on a daily basis. Discuss the revenues you project for your business. If you know the estimate of total revenues for the market area in which you plan to operate, what percentage do you expect to win? If you operate at a loss in the first few years, which often happens, at what point in time do you expect to break even? Your discussion of funding and projected revenues should illustrate the feasibility of contributing to the business. It’s like a mini logical argument within the overall logical argument of the business plan. Finally, as appropriate, end by explaining what kinds of investments you are seeking and offering.
Additional Resources
There are many resources for writing business plans. They vary a bit in naming and ordering the sections, but all include the same basic information. Here are just a few additional resources you may find useful:
