10 Essential Business Plan Components

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Business Plan: Your Organizational and Operational Plan

By Amy Fontinelle


  1. Business Plan: Introduction
  2. Business Plan: Do You Need One?
  3. Business Plan: Composing Your Executive Summary
  4. Business Plan: Describing Your Business
  5. Business Plan: Analyzing Your Industry
  6. Business Plan: Marketing And Sales
  7. Business Plan: Your Organizational and Operational Plan
  8. Business Plan: Your Financial Plan
  9. Business Plan: Presenting Your Plan
  10. Business Plan: Conclusion

The Organizational and  Operational Plan  describes how you will structure your company and how you will carry out everything you present elsewhere in your business plan. Without an execution strategy, the rest of your plan is meaningless.

Like the Marketing Plan, your Operational Plan is essential to the success of your business. It will be important not just to would-be lenders and investors, but also to you, to management and to your employees. You can’t take for granted that anyone, including you, understands exactly how to run your business on a day-to-day basis unless you’ve thought it through and made your expectations clear. A key difference between an Operational Plan you would prepare for internal use and one you will give to potential lenders and investors is that you do not need as much detail in the latter.

Here are the key components to address in an operations plan that will be used externally.


In the business description, you provided the address where your business will be (or already is) located. If you have a retail location, describe the surrounding area and explain what makes this location effective. For example, you might be located on a major road that people drive on the way home from work, making it convenient for them to pick up groceries or a hot prepared meal on the way home. If your business only has an online presence – perhaps you run a service that dispatches independent contractors to clean homes – explain who operates the website and handles customer service, from where and why that arrangement makes sense. Also describe where your contractors live and how quickly they can reach your customers.

Note any disadvantages or possible problems presented by your location and what, if anything, you have done or will do to counteract these negatives. Does traffic back up so badly on the road where your store is located that cars struggle to exit the parking lot during rush hour? Do you have enough parking spaces to handle peak volume? For an online business that uses independent contractors, what are the drawbacks associated with not having all your employees operating from a single location? What are the advantages?

State whether you own or lease the property your business operates out of and provide the terms of your mortgage or lease. Present information such as the monthly payment, the length of the term, whether you are legally able to sublet and the terms of the early termination clause. If you rent, state whether your lease is net, double net, or triple net – in other words, is it you or the landlord who will be responsible for property taxes, insurance and maintenance? If your company is responsible for any of these items, how much do they cost?

Provide details such as the square footage of the property, how your store or facility is laid out, what type of loading area it has to receive merchandise (if applicable) and the number and location of parking spaces. Also provide data about vehicle and pedestrian traffic, accessibility from major roads and highways, related nearby businesses that provide synergy or competition, and anything else that affects your location. If your business has more than one location, be sure to describe each one. Also discuss the major fixtures and equipment your business requires and how they integrate with your space. Note whether you are likely to outgrow the space, and if so, how you plan to handle a move or expansion. (For more, check out  Starting A Business: Location And Licenses .)

Supply and Inventory Management

If you sell a product, the inputs that go into making it will be your supplies and the final product will be your inventory. Who will your suppliers be? Do you have multiple options available, or are you beholden to a single supplier, which may subject you to shortages and give you little bargaining power with regard to price and delivery schedule? What terms have you established with your suppliers? For example, do you pay cash on delivery, or do you have 10 days or even 30 days to pay? Do you get a discount for early payment? What kind of reputation do your suppliers have? Will they extend credit to your business, and if so, how much and on what conditions? Can you return unused supplies and if so, within what timeframe? What percentage of the purchase price will be refunded?

It’s also important to explain how you will manage your inventory. If you have too much inventory, you’re wasting money that could be put to active use elsewhere in the business – and in the case of a grocery store, you’re actively losing money on inventory that spoils before you can sell it. If you have too little inventory, you’re losing out on potential sales, not to mention repeat customers – if you don’t have what they want, when they want it, they will go somewhere else, and they will likely turn to that company first the next time they need the item you used to sell them. Having good relationships with your suppliers can help you manage your inventory effectively.


If you operate a service business, your workers are your supply. Have you hired enough contractors to meet the demand for your cleaning service? How do you check out their credentials and backgrounds to ensure that your customers receive a high quality work product and that your cleaners do not assault them or steal from them? Do you pay higher rates at times of higher demand to entice more contractors to work for you?

Production and Distribution

If you’re creating a product, how will your production process work? Describe each major stage, including any processes that are outsourced and the technologies you use, remembering that you are writing for someone who may not understand the acronyms and terms of art common in your industry. Detail what you will produce, how much of it you will produce and how long it takes to produce each unit. Also elaborate on what methods of  quality control  you will implement, both during and after production. In the case of a grocery store, you may not be producing anything (unless you cook things in store), but you will certainly be distributing them. The same is true for a cleaning service – how will you match up homeowners who want their houses cleaned and landlords and tenants who want their apartments cleaned with your pool of workers? How will you match workers by level of skill and experience and distance from the client with the jobs you send them on?


If it’s a product you’re selling – dresses, for example – in what stores will you sell them? Consider any arrangements that are already in place, and how you will get your product to the stores. You should also consider how and why these arrangements will work. In which types of stores will your fair-trade, organic cotton dresses will do well? Where have you already sold them and how have those plans worked out?

As you discuss each component of your operating plan, make sure to analyze what  competitive advantage  or disadvantage your firm has in that area if you haven’t already discussed it elsewhere in your business plan. (For more, see  Competitive Advantage Counts .)

Business Organization: Management Team and Employees

Your team of managers and lower-level employees or contractors are the ones who will carry out most of the company’s operating plan, so it’s important to describe who they are, what their qualifications are and what their responsibilities will be. Include an organization chart showing the hierarchical structure of your business. What is the company’s management philosophy and business culture, and how will these contribute to your business’s success? How will you measure employee and management performance and reward them accordingly or let them go if needed?

Your organizational plan should provide names and professional descriptions of each owner and manager your business will have; include the bios and professional backgrounds of all principals. The description of each top-level member of your organization should explain what their roles and responsibilities will be in your company and what they have done previously. You will want to emphasize how their backgrounds have prepared them to take on the challenge of running your new startup, and how they will help your current business succeed.

For example, perhaps your chief operating officer previously worked for a company that used a network of independent contractors to provide handyman services. The company operated in a way similar to how your cleaning business will operate and he successfully sold the business for a profit after five years. Meanwhile, you used to work for the nation’s largest maid services company as its CEO and have many ideas about what makes a cleaning business successful and what hurts its bottom line. You know how to improve on the model of your former employer to create a superior offering. While you signed a noncompete clause there, your new company will operate outside of the clause’s geographic scope and its time limit has run out as well.

Conversely, if an employee’s business background is in a significantly different industry, you might want to emphasize how this can be an advantage instead of a detriment.

In addition to your managers, what other essential jobs are there in your company, and which key employees will perform them? What qualifications do they have to excel at these jobs? Provide cross references in your descriptions to the appendix, where you will include detailed business resumes for yourself and for each of these individuals.

Lower-level staff members, if you plan to hire any, are important enough to mention in your business plan because they will be essential to the smooth functioning of your business. Explain how you will locate potential employees and what qualifications they must meet, what jobs they will perform, how you will compensate them and so on. Think about the information you would include if you were advertising one of these job openings, and include that in your business plan.

Also note whether your business will hire any outside consultants or other independent contractors. If so, why? What functions they will perform? Finally, describe any positions you might want to add in the future if your business is successful enough to expand – managers for additional stores, for example.

Depending on how much information you need to present, you may want to separate the organizational plan from the operating plan. But if your business is extremely small, the organization plan will be quite short. If your business is a sole proprietorship, there really isn’t anything to describe, since there are no managers, no employees and no chain of command. (To learn more, see  The Basics Of Corporate Structure .)

Business Plan: Your Financial Plan

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    1. BENEFITStopic-icon
      • How to Figure Out Your Own Compensation
        • Quick Summary
        • Pay Yourself What You Can
        • Pay Yourself Based on Industry Standards
        • Postpone Payment (Use It as a Loan to Your Company)
        • Pay Yourself More Later (When the Business Can Afford It)
      • How to Compensate Employees: Base Pay & Beyond
        • Quick Summary
        • Employee Base Pay: Key Considerations
        • Other Ways to Compensate Employees Beyond Base Pay
        • Pay Your Employees with Key Benefits
        • Creative Ways to Reward and Compensate Employees
      • Health Insurance Is Important to You and Your Business
        • Quick Summary
        • How to Obtain Individual Health Insurance
        • Available Through Professional and Trade Organizations
        • Advantages of High Deductible Policies
      • Primary Types of Health Insurance
        • Quick Summary
        • Fee for Service
        • Managed Care
        • High-Deductible Health Plans: A Way to Save on Taxes
        • Outsourcing Administration of Health Insurance
      • A Quick-Start Guide to Workmans’ Compensation
        • Quick Summary
        • What Is Workers’ Comp?
        • How Workers’ Comp Ins Protects Your Business
        • Obtain Workers’ Compensation Insurance
      • Advantages of ‘Pay-as-You-Go’ Workers’ Comp
        • Quick Summary
        • Lower Upfront Cost and Competitive Workers’ Comp Insurance Costs
        • How to Get Workers’ Comp Insurance – Pay-as-You-Go
        • Pay Your Workers’ Comp Premiums Based on Your Schedule
      • Accidental Death & Dismemberment
        • Quick Summary
        • Why Offer Accidental Death or Dismemberment?
        • Offer AD&D as a Basic Voluntary Coverage
        • AD&D Covers Loss of Limbs or Vital Functions
    2. EXPANSIONtopic-icon
      • 5 People You Must Have on Your Startup Team
        • Quick Summary
        • Essential Advisors
        • Attorneys – 5 People You Need on Your Startup Team
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        • Office-Related Tax Matters
      • Should You Start a Business in Retirement?
        • Quick Summary
        • Rethinking the Concept of Retirement
        • Why Become an Encore Entrepreneur?
        • Retiree Business Startup Considerations
        • Popular Business Ventures for Retirees
        • Financing Your Encore Startup
      • Are You Thinking of Buying a Franchise?
        • Quick Summary
        • How to Spot Franchising Opportunities
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    3. MARKETINGtopic-icon
      • What Is Marketing
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        • Marketing Defined
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        • Quick Summary
        • PR Basics for the Beginners
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        • Word of Mouth Marketing Can Work
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      • How to Create Your First Marketing Plan
        • Quick Summary
        • Marketing Plan: The Basics
        • Market Situation Analysis
        • Use Customer Insights to Create Your Marketing Plan
        • Determine Your Value Proposition
        • How to Craft a Vision Statement
        • Identify Your Marketing Objectives
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      • Branding for Beginners
        • Quick Summary
        • Define Your Brand
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        • Build Brand Equity
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        • Be Consistent
      • How to Create a Business Website
        • Quick Summary
        • Do You Really Need a Website?
        • What Website Model Is Right for Your Business?
        • Why and How to Collect Email Addresses
        • Measuring Success Through Web Metrics
        • Launch and Learn: Get It Up and Go
      • Social Media Marketing
        • Quick Summary
        • Why You Must Be on Social Media
        • Top Social Media Platforms
        • Developing Relevant, Shareable Content
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      • How to Create a Social Media Marketing Plan
        • Quick Summary
        • Setting Your Objectives
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        • Selecting Social Media Sites
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      • How to Measure Digital Success Using Analytics and Metrics
        • Quick Summary
        • Key Metrics for Analyzing Websites
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        • Selecting Analytics Technologies
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      • Market Research: The Basics
        • Quick Summary
        • Why Do Market Research?
        • Types of Research: Primary vs Secondary
        • Quantitative vs. Qualitative Business Research
        • Collecting Data
      • Analyzing Your Place in the Market
        • Quick Summary
        • Strengths: Your Competitive Advantage
        • Weaknesses: Another Word for Opportunity
        • Opportunities: Your Path to Growth
        • Threats: Obstacles That Can Trip Up Your Business
        • The SWOT Analysis: Putting It All Together
      • Six Principles of Small Business Advertising
        • Quick Summary
        • 1. Define Your Customer
        • 2. Craft a Single Message
        • 3. Create Intriguing Advertising
        • 4. Make Your Claims Credible
        • 5. Don’t Forget Contact Information
        • 6. Test (and Test Again)
      • Getting to Sold – The A.I.D.A. Marketing Model
        • Quick Summary
        • The Marketing Funnel
        • AIDA in Traditional Media
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    4. MONEYtopic-icon
      • Picking Your Business Structure
        • Quick Summary
        • Sole Proprietorships
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      • Building Your Business Plan
        • Quick Summary
        • Why Do I Need a Written Business Plan?
        • Main Components of a Business Plan
        • How to Write a Readable Plan
        • Revising and Refining Your Plan
      • Startup Financing: What You Need to Know
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        • Find the Right Mix of Debt vs Equity Financing
        • Use Financing from Family & Friends to Launch Your Business?
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      • Your Business Loan: What Banks Need
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        • Know Your Credit History
        • Get Organized
        • Bankers Love Data
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      • Beyond Banks: Alternative Funding for Startups
        • Quick Summary
        • Crowdfunding – Beyond Banks: Alternative Funding for Startups
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      • How to Manage Your Cash Flow
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        • Metrics to Monitor
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      • Accounting for Your Startup
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        • Keeping Special Purpose Journals: An Introduction to Bookkeeping
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      • Business Tax Basics for Beginners
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      • Hiring: What You Need to Know
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        • Know the Basics of Federal Job Discrimination Law
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        • Creating a Results-Driven Culture
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        • Severance Packages – Yes? No? Maybe?
        • Don’t Worry, COBRA Doesn’t Bite Employers


    1. BENEFITStopic-icon
      • Compensating Key Employees
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        • How to Structure a Bonus Plan
        • Should You Offer a Deferred Compensation Plan?
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        • If Your Business Has at Least 50 Full-Time/FTE Employees
        • What You Should Do Now
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        • Quick Summary
        • Should You Offer Group Disability Insurance to Your Employees?
        • Short-Term versus Long-Term Disability Insurance Coverage
        • Taxation of Disability Income Insurance Benefits
      • Nonqualified Deferred Compensation Plans for Key Personnel
        • Quick Summary
        • What Is a Nonqualified Deferred Compensation Plan?
        • Differences Between Qualified & Nonqualified Plans
        • Important Deferral and Election Rules: IRS Section 409A
        • Key Considerations for Participating in a Nonqualified Plan
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        • What Is a SEP IRA and How Does It Work?
        • What Are the Main Benefits of These Pension Plans?
        • Are There Downsides to SIMPLE IRAs and SEPs?
      • Value of Adding a 401(k) Plan to Your Employee Benefits
        • Quick Summary
        • How a 401(k) Plan Can Benefit Your Growing Business
        • Pre-Tax 401(k) Offers Up-Front Tax Deductions for You and Employees
        • An After-Tax Roth 401(k) Provides Tax-Free Withdrawal Options
        • A Safe Harbor 401(k) Simplifies Administrative Requirements
    2. EXPANSIONtopic-icon
      • How to Take Your Business to the Next Level
        • Quick Summary
        • How to Establish a Culture of Creativity
        • Taking Calculated Risks
        • How to Prioritize Tasks and Delegate Them to Your Team
        • How to Expand (or Develop) Your Business Plan
      • Managing for Growth
        • Quick Summary
        • Align Growth with Strategic Goals
        • Maintain Capital Liquidity and Availability
        • Create Realistic, Accurate Forecasts
      • Accelerate Your Business Growth
        • Quick Summary
        • Defining Your Company’s Vision
        • Setting Company Standards
        • Finding and Hiring the Right People
        • Empowering Proactive Employees
      • Managing Vendors and Suppliers
        • Quick Summary
        • Establishing Vendor Relationships
        • Maintaining Effective Vendor Relationships
        • When Things Go Wrong: Ending Vendor Relationships
      • How to Optimize a Seasonal Business
        • Quick Summary
        • Cash Management Best Practices for a Seasonal Business
        • Managing Your Time and Resources Most Effectively
        • Is Year-Round Expansion Right for Your Business?
      • Expanding Your Business Through Exporting
        • Quick Summary
        • The Benefits of Exporting
        • Finding Exporting Opportunities
        • Financing Your Exports
        • Setting Up Your Exporting Contract
        • Managing Currency Risk
      • Taking Your Business Global – How to Begin
        • Quick Summary
        • Trade Agreements
        • International Trade Contracts
        • UN Convention on Contracts for the International Sale of Goods
        • Resolving International Disputes
      • Grow Your Business Through Franchising
        • Quick Summary
        • Is Your Business Franchisable?
        • Alternatives to Franchising
        • Requirements and Paperwork
        • An Overview of the Franchising Process
      • Green Your Business
        • Quick Summary
        • It’s Good to Be a Green Business
        • Make Green Routine
        • Get Certified
        • Prioritize Energy Efficiency Projects
    3. MARKETINGtopic-icon
      • Brand Archetypes
        • Quick Summary
        • What Are Brand Archetypes?
        • The 12 Brand Archetypes
        • Using Archetypes to Define Your Brand
        • Translate Your Brand Archetypes Into a Communications Platform
      • What is Direct Response Marketing?
        • Quick Summary
        • What’s Your Brand Message vs Sales Message
        • Why You Should Consider Using Incentives to Boost Response
        • How You Can Use Testing for Optimal Results
        • Direct Response Marketing Channels
      • Marketing Your Brand in the Digital Age
        • Quick Summary
        • Digital Brand Accountability
        • Promoting & Protecting Your Social Media Brand
        • Creating a Socially Responsible Brand
        • Branding vs Marketing vs Advertising
      • Email Marketing Overview
        • Quick Summary
        • Committing to Email Marketing
        • Building and Managing Quality Email Lists
        • Writing Emails That Get Results
        • Measuring Email Campaign Effectiveness
      • Tracking Your Brand
        • Quick Summary
        • Do You Need to Track Your Brand?
        • Conducting Surveys
        • Listening to Social Media
        • Tracking Brand Reviews
      • Marketing ROI
        • Quick Summary
        • Marketing Success Metrics
        • Measuring Impressions
        • Measuring Conversion Rates
        • Measuring Lead Generation
        • Measuring ROI
        • What Is Return on Engagement?
      • Creating a Marketing Department
        • Quick Summary
        • The Role of a Marketing Department
        • The Marketing Department Within Your Organization
        • Hiring a Marketing Leader
      • Marketing & Sales: Frienemies Forever!
        • Quick Summary
        • Marketing & Sales: Their Differences & Why They May Conflict
        • How Marketing Supports Sales
        • How Sales Informs Marketing
        • Making Marketing & Sales Work Better Together
      • Building a Sales Team
        • Quick Summary
        • Recruiting Your First Sales Representative
        • Compensating Your Sales Team
        • Creating Sales Quotas
        • Sales Incentive Programs
        • Maintaining Ethical Standards
      • Hiring Ad Agencies
        • Quick Summary
        • Types of Agencies
        • Choosing an Agency
        • Agency Fees and Costs
        • Working with an Agency
      • How to Get Started with Ecommerce
        • Quick Summary
        • Are You Ready to Sell Online?
        • Processing Payments: On-Site vs Off-Site
        • Keeping a Lid on Shipping Costs
        • Managing Customer Ratings and Reviews
        • Securing Your E-Store
    4. MONEYtopic-icon
      • How to Finance Your Business Growth
        • Quick Summary
        • Advantages vs. Disadvantages of Debt Financing
        • Advantages vs. Disadvantages of Equity Financing
        • Advantages vs. Disadvantages of Venture Capital
        • Advantages vs. Disadvantages of Leveraged Finance
      • Find New Sources of Money to Finance Your Growing Business
        • Quick Summary
        • Take Past Financing Techniques to the Next Level
        • Factoring: Sell Your Accounts Receivables for Fast Cash
        • Lease, Don’t Buy, Capital Equipment
        • Sale-leasebacks: Leveraging Equipment for Cash
        • Joint Ventures, VC and IPOs: When You Need Big Money
      • 2 Tax Credits That May Benefit Your Business
        • Quick Summary
        • When to Use Research and Development Tax Credits
        • When to Use Investment Tax Credits
      • Surviving a Recession or Challenging Times
        • Quick Summary
        • The Business Cycle Has Not Been Repealed
        • Keeping Your Business Steady in Turbulent Times
      • Understanding Depreciation
        • Quick Summary
        • Depreciation Defined
        • What Can and Cannot Be Depreciated
        • Straight-Line Depreciation
        • Reducing-Balance Method
        • Creating a Depreciation Schedule
    5. SAFEGUARDStopic-icon
      • Complying with Federal Laws
        • Quick Summary
        • Occupational Safety & Health Act (OSHA)
        • The Equal Employment Opportunity Commission (EEOC)
        • The Family and Medical Leave Act (FMLA)
      • Workplace Privacy — Testing, Checking, and Monitoring Employees
        • Quick Summary
        • Testing for Drugs and Alcohol
        • Pulling a Candidate’s Credit Report
        • Running Background Checks on Job Applicants
        • Monitoring Employee Social Media Activity at Work
      • When’s the Right Time to Hire In-House Counsel
        • Quick Summary
        • Defining the Duties of In-House Counsel
        • Pros and Cons of In-House Counsel
        • Compensation and Alternative Approaches
      • What You Need to Know About Government Contracting
        • Quick Summary
        • How Do Government Contracts Work?
        • How to Find Government Contracts
        • How to Qualify for Government Contracts
        • Complying with EEOC & DOL Requirements
        • Opportunities for Women-owned & Disadvantaged Small Businesses
      • Business Insurance Coverage Check-Up
        • Quick Summary
        • Address New Exposures
        • Determine Changes in Property Exposures
        • Adjusting Your Business Income Insurance Coverage
        • Special Needs of Growing Businesses
        • Business Insurance Coverage Check-up Tool
      • Weathering Severe Weather
        • Quick Summary
        • Which Weather Events Might Affect Your Business?
        • How Can You Plan and Prepare for Extreme Weather?
        • What Kind of Insurance Protection Do You Need?
      • Employment Practices Liability Insurance
        • Quick Summary
        • Protects Businesses from Employee Litigation
        • Covers a Broad Range of Employment-Related Claims
        • Risks and Exposures Scenarios
      • Directors and Officers (D&O) Liability Insurance
        • Quick Summary
        • The Who, What & Why of Directors & Officers Insurance
        • Types and Costs of D&O Coverage
        • A Look at Some Common D&O Risks & Claims
      • Fiduciary Liability & Fidelity Bond Coverage
        • Quick Summary
        • Fiduciary Liability Insurance Guards Against Mismanagement Claims
        • ERISA Fidelity Bonds Cover Losses from Theft and Fraud
      • Risk Management for Accounting Firms
        • Quick Summary
        • Accounting Firm Data and Security Breaches
        • Client Lawsuits
        • Accounting Firm Property & Personal Risk Insurance
        • Accounting Firm Property & Personal Risk Insurance
      • Risk Management for Consulting Firms
        • Quick Summary
        • Valuing Your Expertise
        • Constantly Networking for New Work
        • What is Business Interruption Insurance?
        • Getting Paid
        • Professional Liability Risks
      • Risk Management for Creative, PR, Marketing and Ad Agencies
        • Quick Summary
        • Defamation and Invasion of Privacy
        • Social Media Content and Behavior
        • Trademark and Copyright Issues
        • Property and Office Management Concerns
      • Risk Management for Law Firms
        • Quick Summary
        • Client Risks
        • Lawyer Risks
        • Law Firm Data and Security Breaches
        • Law Firm Property & Personal Risk
        • Law Firm Property & Personal Risk
      • Risk Management for Real Estate Firms
        • Quick Summary
        • Market and Economic Fluctuations
        • Document Management
        • Per Se Antitrust Actions
        • Copyright Issues in Marketing
      • Risk Management for Retail Stores
        • Quick Summary
        • Keeping the Shelves Stocked
        • Macroeconomic Factors
        • Brand and Customer Loyalty Risks
        • Retail Property Risk
        • Retail Property Risk
      • Risk Management for Salons and Barber Shops
        • Quick Summary
        • Personal Injury and Treatment Risks
        • Hiring and Retaining the Best Employees
        • Competition and Customer Retention Issues
        • Beauty Salon & Barbershop Property Risk
        • Beauty Salon & Barbershop Property Risk
        • Licensing and Regulatory Concerns
      • Risk Management for Small Medical and Allied Health Practices
        • Quick Summary
        • Medical Malpractice
        • Compliance with HIPAA, Federal & State Regulations
        • Medical Property and Professional Liability
      • Risk Management for Small Technology, Web and IT Companies
        • Quick Summary
        • Innovation and Intellectual Property
        • Cyber Security and Data Breach
        • Technology Property and Professional Liability
    6. TALENTtopic-icon
      • Keys to Competing for Talent
        • Quick Summary
        • How to Cast a Nationwide Job Net
        • Working with Recruiters and Agencies
        • Should You Raid the Competition?
        • How to Sweeten the Pot With a Signing Bonus
      • Forming a Board
        • Quick Summary
        • Does Your Business Need a Board?
        • Determining the Board’s Role
        • Selecting Board Members
      • Defining, Measuring, and Improving Employee Performance
        • Quick Summary
        • How to Define Employee Performance Metrics
        • How to Measure and Evaluate Employee Performance Data
        • How to Identify Top Performers and Future Leaders
        • How to Implement Performance Rewards Systems
        • How to Push Performance with Training Programs
      • The Virtual Workforce: What You Need to Know
        • Quick Summary
        • Advantages and Disadvantages of a Virtual Workforce
        • How to Manage an Off-Site Virtual Workforce
        • How to Outsource Key Business Functions
        • How to Use Offshore Resources
        • What You Need to Know About Virtual Workforce Technology
      • Working with Temporary and Contract Employees
        • Quick Summary
        • Why Hire Temporary and Contract Workers
        • How to Hire Temps and Contract Workers
        • What to Pay Temps and Contract Workers
        • How to Manage Temps and Contract Workers
        • Risk Management of Temporary and Contract Workers
      • The Two Core Functions of HR
        • Quick Summary
        • How to Set Up Payroll and Personnel Management
        • How to Implement Employee Benefits
      • Strategic HR: Systems for Managing Your Human Capital
        • Quick Summary
        • Learning Management Systems
        • Performance Management
        • Applicant Tracking Systems
      • Becoming More Productive Through Workforce Management
        • Quick Summary
        • Right People, Right Place, Right Time
        • Managing Work Schedules for Increased Profitability
        • Turning to Time Sheet Technology


    1. BENEFITStopic-icon
      • Compensating Key Employees
        • Quick Summary
        • Stock Options
        • Incentive and Deferred Compensation
        • Arranging Equity Participation
        • Supplemental Executive Retirement Plans
        • Golden Parachutes & Golden Parachute Tax
        • Securing Non-Compete Agreements
      • ESOP & the Next Generation
        • Quick Summary
        • How to Transfer Your Company to Employees with an ESOP
        • What Are The Advantages of Selling to Employees
        • ESOP’s Capital Gains Tax and Tax-deductible Contributions
        • Factors to Consider when Establishing an ESOP
    2. EXPANSIONtopic-icon
      • Buy, Sell, or Join Forces?
        • Quick Summary
        • Acquiring Another Company
        • Creating a Joint Venture
        • Selling Your Company
      • Transition Planning
        • Quick Summary
        • Managing the Transition
        • Positioning Your Company for Sale
        • Establishing the Succession Team
    3. MARKETINGtopic-icon
      • Brand Equity
        • Quick Summary
        • What Is Brand Equity?
        • Advantages of Strong Brand Equity
      • Integrated Marketing Strategy
        • Quick Summary
        • One Brand, Many Channels
        • Communicating Your Brand Via Traditional, Digital & Social Media
        • Developing Branded Content
        • Search Marketing
    4. MONEYtopic-icon
      • Evaluating Your Company’s Market Value
        • Quick Summary
        • Determining Your Company’s Value
        • Optimizing Your Company’s Value
        • Setting a Price—and a Deal Structure
      • Trusts 101
        • Quick Summary
        • A Trustworthy Tool to Protect Your Business
        • Credit Shelter Trust: Use It or Lose It
        • Grantor Retained Annuity Trust: Income & More
        • Life Insurance Trust: Taking the Tax Out of Life Insurance
        • Charitable Trusts: Altruism and Tax Breaks
      • Transition Time
        • Quick Summary
        • Reasons to Transition a Business
        • Choosing a Transition Team
        • Making a Transition Plan
      • Accounting for Transition
        • Quick Summary
        • Do Your Due Diligence
        • Getting Your Books in Order
        • What Are You Selling? Assets or Stocks?
        • Earn-Outs and Contingent Payments
      • Financing Your Business Transition
        • Quick Summary
        • Determining Your Business’s Market Value
        • Option 1: Sell to Another Company
        • Option 2: Sell to Your Employees Through an ESOP
        • Option 3: Sell to Your Family
      • Your Income and Post-Transition Plans
        • Quick Summary
        • STEP 1: Determine What You Want/Need from the Transition
        • STEP 2: Base Your Income on Your Post-Transition Plans
        • STEP 3: Prepare a Financial Plan for Your Sale Proceeds
    5. SAFEGUARDStopic-icon
      • Top Merger & Acquisition Considerations
        • Quick Summary
        • Deal Structure
        • Escrows and Earn-Outs
        • Representations and Warranties
        • Non-Compete and Non-Solicit Clauses
      • Business Continuation Insurance
        • Quick Summary
        • Provides Ownership Transition Stability If Owner Is Disabled/Dies
        • Helps Avoid Potential Conflicts Between Owners of a Business
      • Protect Your Business with Key Person Insurance
        • Quick Summary
        • What Is Key Person Life Insurance?
        • Does Your Small Business Need Key Person Insurance Protection?
        • Key Person Insurance Can Add Value to Your Maturing Business
    6. TALENTtopic-icon
      • Change Management Strategies
        • Quick Summary
        • Communicating Change to Employees
        • Merging Company Cultures
        • Quelling Employee Concerns
        • Retaining Top Performers
      • HR’s Role During Transition
        • Quick Summary
        • Merger or Acquisition
        • Initial Public Offering (IPO)
        • Selling the Business
        • Closing the Business
      • Post-Merger Activities of Human Resources Teams
        • Quick Summary
        • HR Post-Merger Activities
        • People Post-Merger
        • A Guiding Document: The Merger Agreement
      • Dismissing Employees
        • Quick Summary
        • Acceptable Reasons for Dismissal
        • Unacceptable Reasons for Dismissal
        • How to Dismiss an Employee
        • Obligations to Dismissed Employees
      • Finding Alternatives to Layoffs
        • Quick Summary
        • Work Share Programs
        • Furlough Options
        • Reducing Hours
        • Modifying Pay
        • Early Retirement


  • close table of contents

New BusinessMONEY

  • Back to quick summary
  • Building Your Business Plan

    Game Plan


    Main Components of a Business Plan

    Author: Scott Ferguson

    A business plan can take many forms, depending on the venture. A four-person management consulting firm may produce a leaner plan focused on service expertise and industry experience compared to a 20-employee widget maker, which would also have to describe products, manufacturing techniques, competitive forces and marketing needs, among other details. But most plans will include the following main sections:

    • Executive summary
      This is your five-minute elevator pitch. It may include a table of contents, company background, market opportunity, management overviews, competitive advantages, and financial highlights. It’s probably easiest to write the detailed sections first and then extract the cream to create the executive summary. Try to keep it to just a couple of pages.
    • Business description and structure
      This is where you explain why you’re in business and what you’re selling. If you sell products, describe your manufacturing process, availability of materials, how you handle inventory and fulfillment, and other operational details. If you provide services, describe them and their value proposition to customers. Include other details such as strategic relationships, administrative issues, intellectual property you may own, expenses, and the legal structure of your company.
    • Market research and strategies
      Spell out your market analysis and describe your marketing strategy, including sales forecasts, deadlines and milestones, advertising, public relations and how you stack up against your competition. If you can’t produce a lot of data analysis, you can provide testimonials from existing customers.
    • Management and personnel
      Provide bios of your company executives and managers and explain how their expertise will help you meet business goals. Investors need to evaluate risk, and often, a management team with lots of experience may lower perceived risk.
    • Financial documents
      This is where you provide the numbers that back up everything you described in your organizational and marketing sections. Include conservative projections of your profit and loss statements, balance sheet, and your cash flow statements for the next three years. These are forward-looking projections, not your current accounting outputs.
    Game PlanGame Plan

    Game Plan

    • Local SBA Small Business Development Centers provide free consulting and low cost training for building a business plan. Find one near you.
    • Continue learning by reading a section-by-section breakdown of the business plan .
    • New Business
      Table of Contents