Entrepreneurship: Building a BusinessBusiness Plan ComponentsManagement Team Plan The Management Team Plan section of the business plan presents your management team’s qualifications for making the venture a success. One of the keys to a successful business is having a strong management team. The team members must have the character traits and skill sets necessary to accomplish the firm’s goals. The management team plan outlines the key executives’ duties. It provides details about each person’s education, qualifications, work experience, and personal financial information. The plan includes a description of the key advisors. Key advisors guide executives in business planning and decision making. The plan also describes the qualifications, roles, and products or services that outside service providers offer the business. The Company Description outlines the company's basic background information, business concept, and goals and objectives. The company description of the business plan should state the business concept and the focus that the firm will take. The description explains the reasons for starting, purchasing, or expanding a business. It also describes the entrepreneurial opportunity that exists. Developing a company description will help a business set priorities. It will help the company decide on goals that are achievable. The company description helps answer the key question, "What business am I in?" To answer this question, a company must consider the market it wants to target, the products and services it plans to offer, and what makes it different from other businesses. The Product and Service Plan describes the features and benefits of the business’s products and services. The product and service plan defines the core products and services that the company will offer, and describes how they will be produced. The plan explains to stakeholders how the company’s products and services will meet potential customer needs. Review of the products and services currently being offered in the marketplace helps a company define how its features and benefits will be unique. It is important to clearly communicate the unique selling proposition of a company’s products or services to the target market. The Mission and Vision Statements section of the business plan sets forth the guiding principles by which a company functions. The vision statement and the mission statement communicate the firm’s beliefs and goals. The vision statement is a declaration that states the scope and purpose of the company. The mission statement is a declaration that expresses the specific aspirations of a company. Both serve as a powerful guide for future decisions and actions. In addition, these statements serve as one of the primary vehicles for communicating to stakeholders. These statements should focus on customer needs and not on a particular product or service. The Industry Overview addresses the basic trends and growth within those companies providing similar, complementary, or supplementary products and services. The industry overview familiarizes stakeholders with the economic and industry sector in which the business will operate. It includes research on economic trends that will impact the company. It also lists direct and indirect competitors. The industry overview explains the life cycle of the products or services. It also examines any uncontrollable external factors that affect the business. In addition, the industry overview should explain any barriers to entering the industry. The Market Analysis section of the business plan presents your market research and features a customer demographic profile that defines the traits of the company's target market. The market analysis section of the business plan presents research findings about target markets. It includes a target market profile that explains the traits of the company’s potential customers. The target market profile helps stakeholders understand who potential customers are, where they live, what their needs are, and what will likely motivate them to purchase a product. The analysis provides potential investors with a realistic forecast of the growth potential for the market in which the firm will operate. The Competitive Analysis section of the business plan focuses on demonstrating that the proposed business has an advantage over its competitors. The competitive analysis section of the business plan describes the direct and indirect competitors in the same market as your planned business. By analyzing your competitors’ strengths and weaknesses you can determine your business’s competitive advantage. The Marketing Plan describes a company’s marketing mix strategies or how it plans to market, promote, and sell its products or services. The marketing plan explains how a company plans to market, promote, and sell its products or services. The primary elements of the marketing plan are often called the marketing mix, or the four Ps of marketing. The four Ps are product, place (distribution), price, and promotion. An integrated marketing plan uses these four elements in a complementary way. Each piece must fit together to form a clear picture. This part of the business plan explains how the four Ps communicate the desired message to the target market. The Operational Plan section of the business plan includes information about all the processes that take place in the business. The operational plan describes how a company will manage its business on a day-to-day basis. It outlines where the business will be located. It explains what equipment and facilities will be required to run it. The plan explains the production process and defines what method of production is best suited to the product design. It also explains how the products will be stored, distributed, ordered, and serviced. The plan explains the utilization of labor and how the business will organize various job functions. Finally, the operational plan must address any issues regarding safety, health, and government regulations. The Organizational Plan offers information about the business’s legal structure, methods of and responsibilities for record keeping, human resources, and legal and insurance issues. The organizational plan describes how the operations of a business will function. It defines the human resources required and the responsibilities of each position. The organizational plan also addresses issues regarding compliance with local, state, and federal government laws; regulations; and reporting requirements. The Financial Plan section of a business plan presents past and current finances and financial forecasts and explains the assumptions made when calculating forecast figures. The financial plan is a set of documents that projects the future profitability of a company. The plan explains how much money is required to start or expand a business. It describes how the money will be used and what effect the money will have on the future profitability of the company. Creditors and investors will be particularly interested in these financial projections to determine whether the company will be a good investment. The Growth Plan looks at how the business will expand in the future. Every company needs to grow in order to stay competitive—even a successful one. If not planned properly, growth can severely handicap a company and even make it fail. While establishing a new, successful company is challenging, keeping the company viable and successful can be just as hard. Because of this, investors and creditors need to see a comprehensive plan of how an entrepreneur intends to expand the company once it becomes established. The Contingency Plan examines the assumptions in the business plan and the greatest risks to the business and suggests plans to minimize the risk. Up to this point, your business plan is a story of success. However, experienced entrepreneurs know that unforeseen events occur. A business’s success will often depend on its ability to respond to changing market conditions. Therefore, it is important to identify any internal and external risk factors. Considering and planning for these risk factors in advance will foster more confidence in your business plan from investors. The Executive Summary recounts the key points in the business plan. The executive summary is a brief description of the business concept. It explains the goals of the company and how these goals will be achieved. The summary explains the financial resources needed, where the company intends to obtain them, and how it will repay the money. The summary should entice the reader to become interested in the company and want to learn more. The Cover Page, Title Page, and Table of Contents offer basic information about the company and the structure and contents of the plan. Now that the business plan is complete, it is important that it be well organized and easy to read. The front matter of a business plan should tell who wrote it and explain how the information is organized. The Supporting Documents section of the business plan includes items, exhibits, and documentation relevant to the business. Important supporting documents that further explain aspects of the business must be carefully organized for quick referral by interested investors. |  |
