This article explains what goes into a business plan and why. It is not specific to any particular kind of business plan, nor does it presume any specific layout. Please do not read the section headings as titles of business plan sections. For information on the various presentation formats of a business plan see the main article Business plan.
Though business plans have many different presentation formats, business plans typically cover five major content areas:
Some of these content areas may be more or less important depending on the kind of business plan. There is no fixed content for a business plan. Rather the content and format of the business plan is determined by the goals and audience. A business plan should contain whatever information is needed to decide whether or not to pursue a goal.
Once a business plan has been developed, the key decision making points are usually summarized in an executive summary.
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The executive summary summarizes the key points of the business plan. It should define the decision to be made and the reasons for approval. The specific content will be highly dependent on the core purpose and target audience. To get a sense of the difference the purpose and target audience can make, here are three different sets of key points for an executive summary - one for a loan request, one for a start-up seeking venture finance, and one for an internal plan. Items unique to a particular kind of plan are highlighted in bold:
A loan request executive summary might contain the following information:
For a new venture, the executive summary might contain:
For an internal project plan, the executive summary might look like this:
In some cases information will overlap. For example, some of the reasons why a loan is likely to be repaid might equally as well be used as justification for the kind of extraordinary return expected by venture capitalists.
In some cases the business plan as a whole contains similar information, but for one type of plan it is mere detail and for another it is a key decision making factor. For instance, both start-ups and internal projects need staff and facilities. However the staffing and facilities needs are considered details in a plan for start-up financing. In a plan for internal projects they are key elements and, in fact, may be the only resources needed.
In a written plan, information may appear in a separate section, an appendix, or may be omitted all together depending on the nature of the plan. If the plan is directed at people outside of the company, a brief synopsis may appear in the executive summary. This will be supplemented with a more detailed discussion elsewhere in the plan.
The marketing plan has five objectives: If the product is a new product with no existing market, one must identify all substitute products. For each significant substitute product one must explain:
In economics, demand management is the art or science of controlling economic demand to avoid a recession. The term is also used to refer to management of the distribution of, and access to goods and services on the basic of needs. An example is social security and welfare services. Rather than increasing budgets for these things, governments may develop policies that allocate existing resources according to a hierarchy of need.
The plan outlines how one would service their clients cost effectively.
Training requirements should look to address two issues - a benefit to motivate staff and developing the capability of the organisation to deliver the business objectives. Ideally all training requirements should be based on as an assessment of the business plan objectives, the required competence and capability to deliver these objectives and understanding of the current capacity and capability of the organisation. Simple question to ask to assess the appropriateness of the training - as a result of the training how much better will the organization be at delivering its objectives. Remember that training covers a wide range of activities from project work and on the job training to professional qualifications. Most learning takes place outside of formal training activities.
Some business plans gain competitive advantage by buying companies up and down the value chain. Some gain competitive advantage by buying up companies and consolidating them. Sometimes a business plan will seek to earn a superior return by adding superior management talent to an existing weak company.
For more information see Mergers and Acquisitions.
When acquisitions form a major part of the business strategy, the acquisition plan needs to be included in the business plan.
The organizational learning plan discusses what lessons will be learned from the marketing, operational, and finance plans and how those lessons will be consolidated to gain strategic advantage.
If variable costs play an important role in the business plan, it may be helpful to include a cost allocation model. This is particularly true if one has a unique business model that creates competitive advantage by transforming traditionally fixed costs into variable costs.
The plan outlines how one would service their clients cost effectively.
For more information, see Financial plan.
For more information, see risk analysis.
Parts of this section are from an analysis of a business plan
Detailed plans are more often found as part of internal plans. Plans written for funders may need to include a high level of description if there are significant controllable risks.