Sreeraj Sasidharan Nair
A business plan is a strategic map of your startup, and how you plan on conducting business. It lays out where your business stands—your resources, abilities, and goals—and anticipates future decision making and goals. A business plan provides direction, keeping you on track and is usually a requirement when you seek finance. Business plans are typically between 30 and 50 pages long.
The average business plan includes the following eleven (11) sections:
- Cover Page
- Table of Contents
- Executive Summary
- Company Background and Opportunity Summary
- Market Opportunity
- Products and Services
- Sources of Funding
Similar to a book cover, your cover page easily identifies your company and contact information. The cover page includes the company’s name, contact information, and company logo.
Table of Contents
The table of contents allows the reader to locate specific information. In a document that can be 50 pages long, make it easy for the individual by indicating where to find specific information in your table of contents.
The executive summary introduces your company, explains what you do, and lays out what you’re looking for from your readers. The executive summary is typically one page long.
Company Background and Opportunity Summary
In this section, you provide a brief history of your company, describe the basic market need, and your company’s solution. Clearly, illustrate your company’s value proposition.
The Market Opportunity
In this section you address: the overall market, competition, your customers and end users, and how they can be leveraged to make your company money. You can break your market opportunity section into four (4) sections:
- Market and industry: Include relevant research on your market and industry, such as market size, market segments, your product’s niche, the market’s growth prospects, new trends and technologies, and any barriers to entry.
- Competition: Demonstrate that you fully understand the challenges from outside competitors, both large and small. Include a description of competitors’ products, distribution channels, pricing and partnership. Consider developing a competitive matrix that lists the key attributes of your product and your competitive advantage and positioning.
- Customers and end users: Provide an outline for the target customers for your product or service. Refer to any customer testimonials in this section and include the document in the appendix or the due diligence package.
- Sales and marketing strategy: Explain how you will get the product into the customers’ hands. Provide a revenue model and describe the sales cycle and process. Include a description of the channels to market and your marketing communications strategy.
Products and services
In this section you describe your product or service if you are in the software business include photos or screenshots. Detail how your product is scalable and when you plan to launch if you have not already done so. Outline the next steps in your research and development (R&D) to further build on or improve your offering. Include a discussion of intellectual property and any technology partnerships, this includes patents, copyrights, trademarks). You may also highlight your company’s competitive advantages.
Investors are putting their money behind you and your team, not just an idea, so be sure to highlight how you’ve recruited the best team available to build the company. Include the list of advisors or board members as well as service providers. Get the approval of any directors and advisors before including their information in the document. If you are planning any key hires in the near future, and you will be using the funding to build out the team, include the roles in this part of the discussion.
Depending on the stage of your business your Financials section will differ. Be sure to include your key assumptions in order to provide an understanding of your predictions and forecasting. Include the following:
Sources of Funding
Sources of funding: Describe investment by principals, prior equity investments, debt (if any), cash from operations and total funds raised to date.
Use of proceeds: Describes how you will use the funding if received. Examples may include sales and marketing, R&D, recruiting costs and salaries of new hires, equipment, capital expenses, legal and accounting. The uses of funding should match the amount you are targeting to raise in outside financing.
Based on appropriate timelines for individual milestones, detail the actions your team will focus on to further build the organization’s value. Actions include key hires, new financing, sales milestones, new product launches and strategic partnerships.
Include anything relevant, such as biographies of founders and key management, patent information and customer testimonials.
Writing a business plan is a long and time-consuming process. By the time the business plan is written it is usually out of date as some of the key aspects of the business have changed. Only write a business plan if it required in order to secure financing. For internal communications and decision making look to using the Lean Canvas.
MaRS workbook: The Business Plan and Executive Summary, Vertex42 Sales Forecast Template, Vertex42 Cash Flow Template, Vertex42 Balance Sheet Template, TemplateLab Break Even Templates, Canavizer: Lean Canvas, Government of Canada Business Planning