Starting a Michigan Business Series: How to Structure a Business Plan
Planning is important in any business. A business plan is a tool that keeps on giving. Providing guidance when necessary and answering questions when you stray off the beaten path.
A business plan can help you woo investors, get bank financing, identify potential markets, point out potential competitors, and ultimately gives you a clear path and direction for your business.
Quite often business owners skip this phase when launching a business.
As we move forward in our Starting a Michigan Business Series, this weeks focus is on how to structure a business plan.
1. Executive Summary
An overview of your business. Even though this will be at the beginning of your business plan, it should be written last, after you’ve evaluated other areas of your business.
2. General Description
Explain the type of business your in. If it’s an existing business give a history of the company. If it’s a start-up focus on the qualifications for starting the business. Note why the business is needed and it’s chances for success.
3. Products and Services
What are the unique features of your products and services. Use this section to describe them and how they will attract customers to your business.
Specify your target market. You should be able to show that there are specific market segments that will pay for your products or services. Outline what your strategy (marketing) will be to attract customers. List your competitors giving an honest evaluation of their strengths and weakness and how you will compete against them.
List the people that will be active in your business. Showcase their skills and experience. Think abbreviated resume.
What will the structure of your business be? Corporation, Limited Liability Partnership, S or C Corp? Will there be patents or trademarks involved? What sort of agreements are in place between owners?
List the business’ financial needs and where you expect to get these funds. Be sure to project revenue, expenses and profits. Going through this section to create a financial statement will help you understand cash flow, the life blood of every business. It addition you’ll understand your break-even point and how sensitive your business may be to market fluctuations.
What systems or process will be used in your business? Where will your business be located? What type of facilities will you require? Do you need supplies? Where will be the be obtained? What will the hours of operations be? Use this section to explain operational process for your business.
Your executive summary is going to be the most important part of you business plan. Most investors won’t get pass this point, so be thorough when crafting it. Focus on drawing the reader in, give them a reason to move past this section and on to your overall plan.
Remember the depth and complexity of your plan will depend on what type of business your launching. No matter what, it’s an important exercise in getting insight to your business pre or post launch.
What do you think, is a business plan still a important part of launching a business?