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Unread 04-20-2009, 02:00 PM   #7
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Default Section 2--The main parts of a business plan

Section 2
The main parts of a business plan

There are eight main segments of complete business plan:

1. Executive Summary
2. Business Description
3. Marketing
4. Operations
5. Management
6. Critical-Risks
7. Financial
8. Milestone Schedule

An abbreviated version would include the most important sections: the executive summary, the business description, marketing, and financials. A brief description of each segment follows, then in the following sections we will go into detail and provide examples of each one.

Executive Summary: It seems pretty obvious what this section is—a summary of the entire business plan. However, one cannot underestimate the importance of this section. This is due to the fact that most people will only read this section first to see if it is worth their time and effort to read through rest the document. At a maximum of three pages, this section should not only provide a summary, but be your “elevator pitch”, expressing eloquently and concisely why your business idea will make money.

Business Description: This section should give a very clear idea what kind of business you are proposing. The business’s potential should be clearly demonstrated, as well as a description of the industry in which you will be doing business. Most importantly this section should describe the uniqueness of this venture relative to other similar businesses in the industry and in your area.

Marketing: This is equally the most important part of the business plan as well the most difficult to do appropriately and effectively. This is the section in which you exhibit that your business will make money; that there is a market for your amazing idea. This involves a considerable amount of research in your industry and the area in which you will be doing business to show that--there is demand for your product, that the demand isn’t already being satisfied by your competitors, and that your product will fill that demand and/or-- due to the uniqueness of the venture—will attract market share from your competition. Based upon the demand that you have demonstrated you will be able to garner from the marketplace you will estimate what your monthly and annual sales will be in your first three years of business (at least). This section will also include your advertising and pricing strategies.

Operations: This section describes how and where your business will operate. You will describe in detail how many employees you will need and when you will need them. Hours of operation will be discussed, tasks to perform when opening and closing the business, and task to perform to allow the business to operated smoothly. Finally, it is important to discuss who will be supplying your business, and what and when they will be supplying.

Management: This section outlines the legal and physical structure of the venture.Describe the role of each management member and their compensation. Resumes of the management team should be included in the appendix. If there will be outside professional help i.e. lawyers, accountants, they should be listed in the plan as well.

Critical Risks: Every business, no matter how meek and mild they may be, has risks associated with them. The ability of a business and its management to effectively identify, abate, and mitigate its risk, determines to a large degree the long-term viability of the venture. It is important to sit down and openly and honestly identify all the risks associated with your business however small and minute in possibility they may seem. Once the list is finished and each has been described in detail, you should identify how these risks will be managed to lessen their potential for occurrence and/or lessen their impact once a risk is realized.

Financial: In this segment you display with real numbers that your business will make money. You will categorize and estimate all your costs (cash outflows) and revenue (cash inflows) and put them together to demonstrate a positive balance at the end of the month (optimally) or at the end of the fiscal year (necessary). A majority of this section will consist of financial statements and analysis including: the income statement, the balance statement, and the statement of cash flows, and break-even point. However there is some narrative required. This includes identifying first all your start-up costs. These are all the costs that you will incur prior to opening up your doors and receiving your first dollar of revenue. Next any item you put into the financial statements you will describe the assumptions that led you to determine the estimate of that cost or revenue. The statements that you will form as a result of the assumptions you make are called pro forma, essentially fancy jargon for financial projections, much like when you put together your home budget.

The Milestone Schedule: This section outlines indicators that demonstrate you are on the right track for your business plan. Prior to starting up your timeline to get things online prior to opening day, and once you have opened when you plan to reach a certain sales point or purchase the new cooker because you have outgrown your smaller one.

Next Section: General Business Planning Guidelines…
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