The 10 Key Business Plan Components

The 10 components of a business plan that you must include are as follows:
1. Executive Summary
The executive summary provides a succinct synopsis of the business plan, and highlights the key points
raised within. It often includes the company’s mission statement and description of the products and
services. It’s recommended by me and many experts including the Small Business Administration to write
the executive summary last.
The executive summary must communicate to the prospective investor the size and scope of the market
opportunity, the venture’s business and profitability model, and how the resources/skills/strategic
positioning of the company’s management team make it uniquely qualified to execute the business plan.
The executive summary must be compelling, easy-to-read, and no longer than 2-4 pages.
RELATED ARTICLE: How to Create a Great Business Plan Executive Summary
 
2. Company Analysis
This section provides a strategic overview of the business and describes how the company is organized,
what products and services it offers/will offer, and goes into further detail on the business’ unique
qualifications in serving its target markets. As any good business plan template will point out, your
company analysis should also give a snapshot of the company’s achievements to date, since the best
indicator of future success are past accomplishments.
 
3. Industry or Market Analysis
This section evaluates the playing field in which the company will be competing, and includes well-
structured answers to key market research questions such as the following:
 What are the sizes of the target market segments?
 What are the trends for the industry as a whole?
 With what other industries do your services compete?
To conduct this market research, do research online and leverage trade associations that often have the
information you need.
 
4. Analysis of Customers
The customer analysis business plan section assesses the customer segment(s) that the company serves.
In this section, the company must convey the needs of its target customers. It must then show how its
products and services satisfy these needs to an extent that the customer will pay for them.
The following are examples of customer segments: moms, engaged couples, schools, online retailers,
teens, baby boomers, business owners, etc.
As you can imagine, the customer segment(s) you choose will have a great impact on the type of business
you operate as different segments often have different needs. Try to break out your target customers in
terms of their demographic and psychographic profiles. With regards to demographics, include a
discussion of the ages, genders, locations and income levels of the customers you seek to serve. With
regards to psychographic variables, discuss whether your customers have any unique lifestyles, interests,
opinions, attitudes and/or values that will help you market to them more effectively.
 
5. Analysis of Competition
All capable business plan writers discuss the competitive landscape of your business. This element of your
plan must identify your direct and indirect competitors, assesses their strengths and weaknesses and
delineate your company’s competitive advantages. It’s a crucial business plan section.
Direct competitors are those that provide the same product or service to the same customer. Indirect
competitors are those who provide similar products or services. For example, the direct competitors to a
pizza shop are other local pizza shops. Indirect competitors are other food options like supermarkets,
delis, other restaurants, etc.
 
The first five components of your business plan provide an overview of the business opportunity
and market research to support it. The remaining five components of the plan focus mainly on
strategy, primarily the marketing, operational, financial and management strategies that your firm
will employ.
 
6. Marketing, Sales & Product Plan
The marketing and sales plan component of your business plan details your strategy for penetrating the
target markets. Key elements include the following:
 A description of the company’s desired strategic positioning
 Detailed descriptions of the company’s product and service offerings and potential product
extensions
 Descriptions of the company’s desired image and branding strategy
 Descriptions of the company’s promotional strategies
 An overview of the company’s pricing strategies
 A description of current and potential strategic marketing partnerships/ alliances
 
7. Operations Strategy, Design and Development Plans
These sections detail the internal strategies for building the venture from concept to reality, and include
answers to the following questions:

o What functions will be required to run the business?
o What milestones must be reached before the venture can be launched?
o How will quality be controlled?
 
8. Management Team
The management team section demonstrates that the company has the required human resources to be
successful. The business plan must answer questions including:
 Who are the key management personnel and what are their backgrounds?
 What management additions will be required to make the business a success?
 Who are the other investors and/or shareholders, if any?
 Who comprises the Board of Directors and/or Board of Advisors?
 Who are the professional advisors (e.g., lawyer, accounting firm)?
 
9. Financial Plan
The financial plan involves the development of the company’s revenue and profitability model. These
financial statements detail how you generate income and get paid from customers,. The financial plan
includes detailed explanations of the key assumptions used in building the business plan model,
sensitivity analysis on key revenue and cost variables, and description of comparable valuations for
existing companies with similar business models.
One of the key purposes of your business plan is to determine the amount of capital the firm needs. The
financial plan does this along with assessing the proposed use of these funds (e.g., equipment, working
capital, labor expenses, insurance costs, etc.) and the expected future earnings. It includes Projected
Income Statements, Balance Sheets (showing assets, liabilities and equity) and Cash Flow Statements,
broken out quarterly for the first two years, and annually for years 1-5.
Importantly, all of the assumptions and projections in the financial plan must flow from and be supported
by the descriptions and explanations offered in the other sections of the plan. The financial plan is where
the entrepreneur communicates how he/she plans to “monetize” the overall vision for the new venture.
Note that in addition to traditional debt and equity sources of startup and growth funding that require a
business plan (bank loans, angel investors, venture capitalists, friends and family), you will probably also
use other capital sources, such as credit cards and business credit, in growing your company.
 
10. Appendix
The appendix is used to support the rest of the business plan. Every business plan should have a full set of
financial projections in the appendix, with the summary of these financials in the executive summary and
the financial plan. Other documentation that could appear in the appendix includes technical drawings,
partnership and/or customer letters, expanded competitor reviews and/or customer lists.

1. Executive Summary
Your executive summary should appear first in your business plan. It should summarize what you expect
your business to accomplish. Since it’s meant to highlight what you intend to discuss in the rest of the
plan, the Small Business Administration suggests that you write this section last.
A good executive summary is compelling. It reveals the company’s mission statement, along with a short
description of its products and services. It might also be a good idea to briefly explain why you’re starting
your company and include details about your experience in the industry that you’re entering.
2. Company Description
A company description includes key information about your business, goals and the target customers that
you want to serve. This is where you explain why your company stands out from other competitors in the
industry and break down its strengths, including how it offers solutions for customers, and the competitive
advantages that will give your business an edge to succeed.
3. Market Analysis
This is where you show that you have a key understanding of the ins and outs of the industry and the
specific market you plan to enter. Here you will substantiate the strengths that you highlighted in your
company description with data and statistics that break down industry trends and themes. Show what
other businesses are doing and how they are succeeding or failing. Your market analysis should also help
visualize your target customers — how much money they make, what their buying habits are, which
services do they want and need, etc. Above all, the numbers should help answer why your business can
do it better.
4. Competitive Analysis

A good business plan will present a clear comparison of your business vs your direct and indirect
competitors. This is where you prove your knowledge of the industry by breaking down their strengths and
weaknesses. Your end goal is show how your business will stack up. And if there are any issues that
could prevent you from jumping into the market, like high upfront costs, this is where you will need to be
forthcoming. Your competitive analysis will go in your market analysis section.
Related Article: 15 Ways Startups Can Raise Capital
5. Description of Management and Organization
Your business must also outline how your organization is set up. Introduce your company managers here
and summarize their skills and primary job responsibilities. An effective way could be to create a diagram
that maps out your chain of command.
Don’t forget to indicate whether your business will operate as a partnership, a sole proprietorship or a
business with a different ownership structure. If you have a board of directors, you’ll need to identify the
members.
6. Breakdown of Your Products and Services
While your company description is an overview, a detailed breakdown of your products and services is
intended to give a complementary but fuller description about the products that you are creating and
selling, how long they could last and how they will meet existing demand.
This is where you should mention your suppliers, as well as other key information about how much it will
cost to make your products and how much money you are hoping to bring in. You should also list here all
relevant information pertaining to patents and copyright concerns as well.
7. Marketing Plan
This is where you describe how you intend to get your products and services in front of your target
customers. Break down here the steps that you will take to promote your products and the budget that
you will need to implement your strategies.
Related Article: How Turning a Hobby Into a Business Affects Your Taxes 
8. Sales Strategy
This section should answer how you will sell the products that you are building or carry out the services
that you intend to offer. Your sales strategy must be specific. Break down how many sales reps you will
need to hire and how you will recruit them and bring them on board. Make sure to include your sales
targets as well.
9. Request for Funding
If you need funding, this section focuses on the amount of money that you need to set up your business
and how you plan to use the capital that you are raising. You might want to include a timeline here for
additional funding that you may require to complete other important projects.
10. Financial Projections

This final section breaks down the financial goals and expectations that you’ve set based on
market research. You’ll report your anticipated revenue for the first 12 months and your annual projected
earnings for the second, third, fourth and fifth years of business.
If you’re trying to apply for a personal loan or a small business loan, you can always add an appendix or
another section that provides additional financial or background information.