This document provides guidance on writing an effective business plan. It discusses that a business plan should guide a business according to its goals and have enough initial capital to operate at a loss until becoming profitable. The document then outlines various sections that are typically included in a business plan such as executive summary, marketing plan, financial plan, and discussion of decision criteria. It also notes that the specific content and format of a business plan depends on its goals and intended audience.

1. Writing a Business Plan
This book will guide you through the process of writing a business plan. Having a business plan and running your business according
to that plan can be fundamental to a business's success. It is also important to have enough capital so you can run your business at a
loss until it can turn profitable without going under.
Introduction
Writing the plan
Executive Summary
Organizational Background
Mission Statement
Current Status
History
Management Team
Marketing Plan
Product Portfolio
Market Size and Structure
Competitive analysis: Existing Markets
Competitive analysis: New Markets
Pricing
Demand Management
Distribution
Promotion and Brand Development
Operational Plan
Current Product/project status
Research and development plan
Manufacturing/Deployment plan
Information and Communications Technology Plan
Staffing Plan
Staffing Needs
Union issues
Training Requirements
Hiring Time Table
Staffing Budget
Business Process Outsourcing Plan
Asset Development Plan
Intellectual Property Plan
Acquisition Plan
Organizational Learning Plan
Cost Allocation Model
Financial Plan
Current Financing
Funding Needs
Funding Plan
Financial History
Financial Forecasts
Valuation
Contents

2. Risk analysis
Risk Evaluation
Risk Management Plan
Conclusion
Sources and contributors
A business plan is a formal statement of a set of business goals, the reasons why they are believed attainable, and the plan for
reaching those goals. It may also contain background information about the organization or team attempting to reach those goals.
The business goals being attempted may be for-profit or non-profit. For-profit business plans typically focus on financial goals. Non-
profit and government agency business plans tend to focus on service goals.
Business plans may also target changes in perception and branding by the customer, client, tax-payer, or larger community. A
business plan that has changes in perception and branding as its primary goals is called a marketing plan.
Business plans may also be internally or externally focused. Externally focused plans target goals that are important to external
stakeholders, particularly financial stakeholders. They typically have detailed information about the organization or team attempting
to reach the goals. In the case of for-profit entities, external stakeholders would include investors and customers.
External stake-holders of non-profits include donors and the clients of the non-profit's services.
In the case of government agencies, external stakeholders would include tax-payers, higher-level government agencies, and
international lending bodies such as the IMF, the world bank, various economic agencies of the UN, and development banks.
Internally focused business plans target intermediate goals required to reach the external goals. They may cover the developmentof a
new product, a new service, a new IT system, a restructuring of finance, the refurbishing of a factory or a restructuring of the
organization.
An internal business plan will often be developed in conjunction with a balanced scorecard or a list of critical success factors. This
allows success of the plan to be measured using non-financial measures. Business plans that identify and target internal goals, but
provide only general guidance on how they will be met are called strategic plans.
Operational plans describe the goals of an internal organization, working group or department. Project plans, sometimes known as
project frameworks, describe the goals of a particular project. They may also address the project's place within the organization's
larger strategic goals.
Business plans are decision making tools. There is no fixed content for a business plan. Rather the content and format of the business
plan is determined by the goals and audience. A business plan should contain whatever information is needed to decide whether or
not to pursue a goal.
For example, a business plan for a non-profit might discuss the fit between the business plan and the organization’s mission. Banks
are quite concerned about defaults, so a business plan for a bank loan will build a convincing case for the organization’s ability to
repay the loan. Venture capitalists are primarily concerned about initial investment,feasibility, and exit valuation. A business plan for
a project requiring equity financing will need to explain why current resources, upcoming growth opportunities, and sustainable
competitive advantage will lead to a high exit valuation.
Preparing a business plan draws on a wide range of knowledge from many different business disciplines: finance, human resource
management,intellectual property management,supply chain management,operations management,and marketing, among others. It
can be helpful to view the business plan as a collection of sub-plans, one for each of the main business disciplines.
Introduction

3. The format of a business plan depends on its presentation context. It is not uncommon for businesses, especially start-ups to have
three or four formats for the same business plan:
an "elevator pitch" - a three minute summary of the business plan's executive summary. This is often used as a
teaser to awaken the interest of potential funders, customers, or strategic partners.
an oral presentation - a hopefully entertaining slide show and oral narrative that is meant to trigger discussion and
interest potential investors in reading the written presentation. The content of the presentation is usually limited to
the executive summary and a few key graphs showing financial trends and key decision making benchmarks. If a
new product is being proposed and time permits a demonstration of the product may also be included.
a written presentation for external stakeholders - a detailed, well written, and pleasingly formatted plan targeted at
external stakeholders.
an internal operational plan - a detailed plan describing planning details that are needed by management but may
not be of interest to external stakeholders. Such plans have a somewhat higher degree of candor and informality
than the version targeted at external stakeholders.
Cost and revenue estimates are central to any business plan for deciding the viability of the planned venture. But costs are often
underestimatedand revenues overestimatedresulting in later cost overruns, revenue shortfalls, and possibly non-viability. During the
dot-com bubble 1997-2001 this was a problem for many technology start-ups. However, the problem is not limited to technology or
the private sector; public works projects also routinely suffer from cost overruns and/or revenue shortfalls. The main causes of cost
overruns and revenue shortfalls are optimism bias and strategic misrepresentation.
Writing the plan
This article explains what goes into a business plan and why. It is not specific to any particular kind of business plan. Nor does it
presume any specific layout. Please do not read the section headings as titles of business plan sections. For information on the various
presentation formats of a business plan see the main article Business plan.
Though business plans have many different presentation formats, business plans typically cover five major content areas:
background information
a marketing plan
an operational plan
a financial plan
a discussion of the decision making criteria that should be used to approve the plan.
Some of these content areas may be more or less important depending on the kind of business plan. There is no fixed content for a
business plan. Rather the content and format of the business plan is determined by the goals and audience. A business plan should
contain whatever information is needed to decide whether or not to pursue a goal.
Once a business plan has been developed, the key decision making points are usually summarized in an executive summary.
The executive summary summarizes the key points of the business plan. It should define the decision to be made and the reasons for
approval. The specific content will be highly dependent on the core purpose and target audience. To get a sense of the difference the
purpose and target audience can make, here are three different sets of key points for an executive summary - one for a loan request,
one for a start-up seeking venture finance, and one for an internal plan. Items unique to a particular kind of plan are highlighted in
bold:
A loan request executive summary might contain the following information[citation needed]:
company information: name of company, years in business, legal structure, minority and majority owners
brief description of project
amount and length of loan
Executive Summary

4. objective reasons why the bank should be confident that the loan will be paid back. This likely will include
financial track record
the future revenue stream
any contracts in place that might guarantee the revenue stream is more than just a forecast.
For a new venture, the executive summary might contain[citation needed]:
company information: name of company, proposed legal structure, current legal structure, minority and majority
investors.
amount of investment requested
expected terminal value
description of market opportunity
objective reasons why the market opportunity can be exploited by this particular team
For an internal project plan, the executive summary might look like this[citation needed]:
company information:not applicable
description of project
project mandate: who requested the proposal, who is being assigned to carry it out
strategic, tactical and financial justifications
summary of resources needed:staff, funds, facilities
In some cases information will overlap. For example, some of the reasons why a loan is likely to be repaid might equally as well be
used as justification for the kind of extraordinary return expected by venture capitalists.
In some cases the business plan as a whole contains similar information,but for one type of plan it is mere detail and for another it is
a key decision making factor. For instance, both start-ups and internal projects need staff and facilities. However the staffing and
facilities needs are considereddetails in a plan for start-up financing. In a plan for internal projects they are key elements and, in fact,
may be the only resources needed.
In a written plan informationmay appear in a separate section, an appendix, or may be omitted altogether depending on the nature of
the plan. If the plan is directed at people outside of the company, a brief synopsis may appear in the executive summary. This will be
supplemented with a more detailed discussion elsewhere in the plan.
number of employees
annual sales figures
key product lines
location of facilities
current stage of development (start-ups)
corporate structure (options are:
Sole proprietor
Partnership
Joint Venture
Publicly traded corporation
Limited liability company
Public utility
Non-profit organization
names of the majority investor, if any
Organizational Background
Mission Statement
Current Status

5. founding date
major successes
strategically valuable learning experiences
Board members
Owners
Senior managers
Managing partners
Head scientists and researchers
The marketing plan has five objectives:
to identify revenue generating opportunities
to provide a rationale for revenue forecasts.
to define marketing goals.
to define a set of concrete steps for reaching those goals.
to describe current progress towards those goals, if any.
The rationale behind revenue projectionsis developed by describing the market associated with each product covered by the business
plan. In addition the business's current and likely future competitive position must be discussed.
Specific marketing goals and the steps involved in achieving them are covered by describing plans for pricing, promotion, demand
management, distribution, and brand development.
For more information, seeMarketing Plan.
Core product lines relevant to venture or project
For each relevant product line,
Life cycle management plan
Versioning possibilities
Revenue potential
allied markets (substitute products)
major players: customers, vendors, regulatory agencies, etc
balance of power among vendors, customers, regulatory agencies, other
If the product has an existing market, a table or set of paragraphs explaining the following may be needed:
name, features, why proposed product is better
switching costs
customer loyalty to/brand premium of competitors
why the product will overcome switching costs and customer loyalty
History
Management Team
Marketing Plan
Product Portfolio
Market Size and Structure
Competitive analysis: Existing Markets

6. the competitive strategy:
staying power (common for second mover large corporations)
expertise in mass distribution (another large second mover advantage)
niche for which competitor has no suitable strengths
monopoly rights to improved product, i.e. patents, exclusive contracts
richness of alliances
novel and hard to copy business process/culture
time line for growth in market share
If the product is a new product with no existing market, one must identify all substitute products. For each significant substitute
product one must explain:
name, features, why substitute, why proposed product better
switching costs and why new product justifies switching
expected adoption dynamics
expected role once market begins to develop (see above for existing products)
chosen price points
proposed Pricing strategy
research supporting chosen price points
Distribution strategy
List of major distributors
Current status of negotiations
Promotion strategy
Supply chainrequirements
Production inputs
Facility requirements - size, layout, capacity, location
Competitive analysis: New Markets
Pricing
Demand Management
Distribution
Promotion and Brand Development
Operational Plan
Current Product/project status
Research and development plan
Manufacturing/Deployment plan

7. Equipment requirements
Warehousing needs for raw materials, finished goods
space requirements
Systems needed
Operations: Billing, HR, SCM, CRM, Knowledge bases, etc
Websites: internal, public
Security and privacy requirements
Hardware requirements
Off-the-shelf software needed
Custom development requirements
list of roles
management structure
for each role
number of employees
proposed compensation
availability
Only those processes are to be outsourced that aren't the core processes of the business, For example, a company XYZ invents a
product called ABC and starts its production. As soon as the patent of the same expires, others will start to manufacture the product
ABC. Companies will now attempt to gain an upperhand either by associating more benefits to it, or else will outsource its
manufacture to some organization which has cost cutting benefits. The company XYZ, if it has invested on R&D, enough, will now
start to produce another product and kill off the earlier product, ABC.
An intellectual property plan should specify key intellectual property assets and deliverables. It will be both an inventory of existing
intellectual property and a roadmap for the development of the business intellectual property portfolio.
Information and Communications Technology Plan
Staffing Plan
Staffing Needs
Union issues
Training Requirements
Hiring Time Table
Staffing Budget
Business Process Outsourcing Plan
Asset Development Plan
Intellectual Property Plan

8. The most effective intellectualproperty plans usually link the intellectualproperty to the way in which the business is going to create
value. Against this background, the intellectual property plan will set out:
an intellectual property inventory
a portfolio development plan
The intellectual property inventory will list the intellectual property that will support business growth. This could include trade
marks, domain names, confidential customer lists, trade secrets and know-how, copyright items, designs, patents or plant breeders
rights. The portfolio development plan will explain how the intellectual property will be protected, developed and used to create
value for the business.
Some business plans gain competitive advantage by buying companies up and down the value chain. Some gain competitive
advantage by buying up companies and consolidatingthem. Sometimes a business plan will seek to earn a superior return by adding
superior management talent to an existing weak company.
For more information seeMergers and Acquisitions.
When acquisitions form a major part of the business strategy, the acquisition plan needs to be included in the business plan.
acquisition strategy
proposed acquisition targets
effect on market structure (if consolidation plan is being proposed)
The organizational learning plan discusses what lessons will be learned from the marketing, operational, and finance plans and how
those lessons will be consolidated to gain strategic advantage.
market sensing - organization's method for collecting information about customers (George Day)
Strategic Staircase- the accumulation of future competencies by building on existing competencies. (Michael Hays,
Costas Markides)
If variable costs play an important role in the business plan, it may be helpful to include a cost allocation model. This is particularly
true if one has a unique business model that creates competitive advantage by transforming traditionally fixed costs into variable
costs[citation needed].
Fixed cost
Variable costs
For more information, seeFinancial plan.
key investors or owners
Investment company(private equity)
corporate investors
angels, friends, and family
existing loans and liabilities
Acquisition Plan
Organizational Learning Plan
Cost Allocation Model
Financial Plan
Current Financing

9. terms, obligations
potential sources of new funding
sometimes calledpro formas
balance sheet
income statement
cash flow statement
1-3-5-7 year projections (depends on length of project)
for loans, repayment period determines length of projections, i.e. a six month loan doesn't need seven year
forecasts
for investments point at which returns stabilize (terminal value) determines length of forecast
annual, quarterly, and monthly versions should be provided
graphs of key values often helpful: gross revenue, EBITDA, NPV, etc.
financial portions of the marketing, asset development, and operations are often placed in this section rather than in
the section discussing th plan. They are viewed as elaboration on the various line items in the pro-formas.
For more information, seeRisk analysis.
market risks
new entrants to market
ease of entry
potential threat to market share
slower than expected adoption
operational risks
staffing risks
availability of skilled workforce
union issues
financing risks
liabilities
poorly worded investor contracts at risk for litigation
investor pull-out
lack of follow-on funding to complete project
Funding Needs
Funding Plan
Financial History
Financial Forecasts
Valuation
Risk analysis
Risk Evaluation

10. managerial risks
poor board or investor dynamics
agency risk particular to the venture
Detailed plans are more often found as part of in internal plans. Plans written for funders may need to include a high level description
if there are significant controllable risks.
methods and procedures to limit liabilities
reserve funds
continuity of operations plan
...
Business plan
Business plan contents
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Risk Management Plan
Conclusion
Sources and contributors