Essential Pieces of Your Business Plan

Of the many components of a business plan, a few of the most important to get right are the marketing plan, the management team description, and the financial plan. These sections are where the entrepreneur has a chance to show readers how the business will reach its customers, who the business will be run by and how they are qualified, and the financial results expected from the venture.

Marketing Plan

The marketing plan must relate directly to the preceding three sections of the business plan: the industry, customer, and competitive analyses. Readers should see that the branding, promotion, distribution, and pricing described in the marketing plan is a natural outgrowth of this research. It is also important for readers to see signs of a decisive manager who is able to make strong and clear choices even with limited information to act upon. The company cannot seek every single customer in every single way, and choosing a clear strategy to market and limited tactics to use is important here.

Management Team

This section is an opportunity to prove that the management is well chosen for the task at hand and the functions they must execute. If co-founders intend to be the managers, it should be clear that they bring skill and experience to the table, whether it is industry or function specific. If the existing managers cannot cover all of the needs of the business, a plan to hire additional management help should be presented here.

Financial Plan

The financial plan should sum up the financial results of the business, showing funders how much cash is required to launch, what the capital will be used for, and how what returns should result. Lenders will be looking for the company’s ability to make timely payments and hold assets as collateral. Investors will be interested in dividends, growth potential, or exit strategies involving sale of the company, franchising, or additional rounds of funding.

Answer These Business Plan Questions Before Presenting

Rather than presenting your business plan to funders only to hear difficult questions for the first time, why not think ahead of the questions funders will ask and incorporate those answers into the plan ahead of time? Here are some key questions and how you should go about answering them in your business plan.

Why Are Your Chosen Managers Qualified?

Funders are looking to see not just that the founders want to start the business in question, but that they have the qualifications to launch and run the business. They must at least have the qualifications to be hired to run a similar existing business. Furthermore, some entrepreneurial skill from launching other businesses, products, services, or programs will be helpful. It should also be clear that each manager has functional experience in the areas which they will have responsibility for (such as operations, sales, marketing, finance, etc).

Can This Business Scale Up?

Investors will be especially interested in your business using its initial operations to create a foundation for much greater growth. Wherever possible, explain how the business can add additional locations, products, services, or customer markets in the coming years, spreading the startup costs over more and more revenue. Investors will not be as attentive if your plan describes a small business which is created more or less to stay small.

When Will The Business Break Even?

Know when the business will reach break even from a cash flow standpoint (when monthly cash inflows begin to exceed cash outflows and the company no longer has to dig into cash reserves) and from the perspective of covering all of the initial startup costs and earning profit on top of that. Cash flow break even should occur within the first year if possible, while break even over startup costs may be in the first or second years generally. Funders want to see that your break even point is realistic, but that you are acting aggressively enough that it will not take too long.