10 key business plan sections and why they're important
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Writing a business plan is essential for making sure the company or project you're about to launch can succeed. These plans provide a business with a vision for the future and a clear strategy for how to expand and grow over time. There are several essential components of an effective business plan and understanding each one of them can help you create a plan that leads a new company or venture to success. In this article, we list 10 essential business plan sections and explain why business plans are important for the success of an organisation.
Essential business plan sections
Understanding essential business plan sections can help you learn how to develop successful and engaging business plans. Here are 10 sections of a business plan that you may wish to include:
1. Executive summary
This is an essential part of a successful business plan that often takes the most time to complete. It's also one that you may consider completing last, even though it's usually the first thing that the reader sees. An executive summary is the definitive recap of all of the information that you include in the business plan. Most commonly, this section doesn't exceed two full pages. This is because the executive summary aims to present the essence of the business and its goals.
It serves as an elevator pitch that may help you convince someone to invest in the business. A successful executive summary makes it possible to get the reader excited about your business idea and makes them want to explore it further. Traditionally, the executive summary presents the organisation's mission statement and the products or services that the company plans to offer. You may also consider explaining to the reader how creating the company can help its specific target audience, for example, by solving a problem that the target audience experiences.
Related: 4 types of businesses to start
2. Business description
The next section of a business plan is a business description. This component serves to describe the organisation's goals, target audience and products or services. Naturally, some parts of the business description may overlap with the executive summary.
For example, you may consider providing more details about how the company's products or services can solve the target audience's daily problems by providing a detailed analysis of the issue. To make the business plan more credible, you may consider briefly mentioning who's involved in the project. This is because if the team includes experienced professionals, readers are usually more likely to trust the idea and invest in it.
3. Market analysis and strategy
This section allows you to further investigate the business's target audience and their needs. When analysing the market, you may also focus on companies and organisations that offer similar products and services or alternative solutions. To better illustrate how competitive the market may be for the company you're working on, it may be beneficial to develop a SWOT (Strengths, Weaknesses, Opportunities, Threats) analysis for it. A SWOT analysis allows you to create a plan that takes advantage of the idea's strengths while eliminating its weaknesses to increase your chances of succeeding.
4. Marketing and sales plan
This section of the plan defines what you plan to do to promote and sell the company's products or services. Consider including your pricing plans here and mention the organisation's unique selling proposal. You may also list important communication channels for the business. For example, if you're about to launch a retail company, you may explain which social media channels you'd use to promote the products through paid and organic advertisements. Other elements to include here are your email, influencer and content marketing strategies.
5. Competitive analysis
Competitive analysis provides an in-depth look at the companies that aim to reach the same audience as the organisation you're helping to build. In this section, consider comparing the organisation's selling proposal to what the competition offers. It's important to outline the competitors' weaknesses and strengths because this way, you can better predict how the target audience may react to the business you're working on. The last section of the competitive analysis can explain to the reader how the company you're creating is going to be unique by listing the aspects that make it stand out.
6. Management and organisation description
This section of the business plan usually covers the management and organisation strategy, including company leaders. You may consider including a short biography of the people involved in the creation of the business. Make sure to focus on their organisational successes and important accomplishments in the field. When writing these bios, it's also important that you use active verbs that can help you demonstrate their expertise. By providing these details, you demonstrate to the readers that people engaged in creating the company are reliable and know how to make the idea successful.
7. Products and services description
While creating this section, you can use your sales skills to provide an engaging and in-depth description of the company's products or services. If the business plan takes into consideration manufacturing products, it's important that you explain all stages of product development here, from designing and manufacturing to promoting and selling the products. Consider mentioning what materials the company wants to use in the manufacturing process, for example, to reassure the reader that all processes are sustainable.
A key element of this section is providing detailed information about the costs. Consider mentioning how much it costs to purchase high-quality materials, create products and how much the company is going to pay its critical employees. If the business plan you're creating focuses on providing services, you can also mention how long they last.
8. Operating plan
This component of a business plan describes how management and leaders plan to run the organisation. Consider mentioning the desired organisational structure, how many employees the company wants to employ and how everyone's going to communicate to ensure everything goes as planned. This section is all about the logistics of who does what and when. You may also want to explain the hiring process here.
9. Financial projection and needs
The financial projection and needs is a critical part of a business plan that allows you to mention all costs and predict the company's revenue. To keep the reader engaged, it's important to clearly mention how the company intends to bring in revenue and explain its main revenue streams. In this section, you can also mention any funding opportunities that are available for the organisation. Creating financial projections may be a complex process, and to ensure you include the necessary information, you may consider asking an accountant or a financial advisor to guide you through this process.
10. Exhibits and appendices
The final section of a business plan usually includes any additional information or appendices that support the claims and ideas you present in previous sections. You may consider adding attachments that exhibit the viability of your business plan, for example, financial statements or external market reports that you used to analyse competition or target audience. Common information to add here includes:
CVs of company management personnel and stakeholders
proposed marketing and branding materials
relevant legal documentation
pictures or visualisation of the product
Why are business plans important?
An organised business plan can help you provide a clear outline of all of the actions that the company leaders can take to ensure the steady growth and success of the budding organisation. Business plans help you decide parameters for crucial factors, including hiring, budget and revenue potential, all of which are important for investors and business owners to understand. They're a great organisational tool that accounts for all aspects that business owners typically focus on to make sure an organisation is successful, including:
providing insight into what resources can help management reach their organisational goals
establishing a clear timeline for certain actions, milestones and goals
determining the steps to take to enter a new market
offering a clear strategy for tracking progress
predicting and preventing potential risks
allowing investors to see the business's real value
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