The 9-part business plan

One of the most common email queries we receive on the Hustle email is on writing a business plan. So we thought we would tackle that this week.

The document, at its very basic level, is a roadmap or plan that explains and outlines the goals a business has. It also details how these goals will be achieved, and the cost implications.

A business plan can be used for seeking funding and providing the basis of your business operations. You can tweak a business plan to suit your specific needs, but these are the nine crucial parts of one.

1. Executive summary

This is normally prepared once you have an overview of the entire business, and introduces the company to the reader.

An executive summary captures the history of a business and the goals it has. It needs to capture the attention of a reader and draw interest.

2. Market analysis

This section captures the industry your business will be in, and provides information on the size of the problem you’ll be solving, your target customers and your competitors. You’ll need to carry out in-depth research to present a clear picture of the opportunities and hurdles in your business’ way.

3. Company description

This is the section where you offer a brief description of your company, including the nature of your business and the factors that will make it a success. Include a description of how your product or service meets a need.

4. Management and organisation

Briefly describe the ownership structure of the company, and mention the board members, directors or partners. Include the qualifications and other occupations, if any, for these individuals.

The point is to illustrate why they’re a perfect fit for the organisation and what value they bring to the table in their designated roles.

You’ll also need to provide an organisational chart that shows how roles and responsibilities trickle down from the CEO or managing director to other employees.

5. Marketing and sales management

It’s in the interest of investors to understand how you intend to make sales and get your product or service to the end consumer. This section will, therefore, require your market penetration, growth, communications and distribution strategies. Also include details on your sales staff and the activities they’ll be involved in.

6. Product or service line

In this section, as you illustrate how the product or service you’re offering offers a solution to existing pain points, you’ll need to add information on service/product costs, suppliers and any new service you may need to tack on as you grow.

Additionally, highlight the benefits of your solution to current and potential customers.

7. Funding

Here, you’ll provide information on the amount of money you need to realise the business you want to run. Include the capital you’ve raised, and any current or future funding needs.

List down how you intend to use the money you have (or are looking for), and the strategies you’ll employ to be more attractive to investors.

Outline any factors that would directly impact your ability to repay a loan if you’re after one, such as an impending sale of the business in the future, a buyout or acquisition.

8. Financials

Potential lenders will require both past and prospective financial data. Include cash flow statements, balance sheets and income statements for the past three to five years.

You should also present a forecasted statement of these statements for the next three to five years, but ensure your projections are based on realistic parameters.

9. Appendix

Prepare a separate section that’s not necessarily attached to the main body of the business plan. This section will have proprietary and confidential information that should only be accessed by individuals or institutions who show serious commitment to funding your business.

The documents to include in an appendix include market study details, reference letters, credit history, permits, contracts, and personal and business credit information.