Components of a Business Plan

Writing the Draft Business Plan

• Use the following sections of this chapter to prepare an outline for your business plan. You should do the headings feature in Word so that you can later automatically generate a table of contents.
  
  • This will provide you with a template into which to insert the information needed for your plan.
    
• Insert the relevant parts of the written work produced during Essential Initial Research into your new business plan template. You can do this in one of two ways.
  
• First, you can copy and paste the results of your essential initial research into the sections of your business plan template where you believe that they can be used to support or justify the strategies and other decisions you will later describe in those sections. Of course, you can later move those parts of your environmental scan as needed as you develop your plan. In general, this strategy results in a stronger business plan.
  
• Second, you can insert the results from your societal-level and industry-level analyses in an Operating Environment section as listed in the outline below. As described below, the market- level analysis will probably always fit best within the Marketing Plan and the firm-level analysis might fit across all of the plans within the business plan.
  
  • Completing this step will give you the satisfaction of seeing some of your work so far taking shape in the form of a business plan.
    
  • Also, inserting the results from your environmental scan into the relevant sections of your plan should later provide you with the stimulus and support you will need to develop solid, realistic, evidence-based strategies and decisions for those sections.
    
• Incorporate your business model into your new business plan template. As there is no section in a business plan in which you specifically describe your business model, you will need to incorporate your business model elements into appropriate sections of your plan.
  
• Fill in as much relevant information as you can under as many of the headings on your business plan template as possible.
  
  • You will normally include both (1) information that you got from particular sources and (2) information that has not come from any source, but that is based on an assumption you made (and that you might intend to replace later with more accurate information from valid sources). Follow the following practices:
    
• Every time that you insert something into your business plan template that you got from a source, clearly indicate from where you got that information. For example, if you list the office equipment and furniture that you need along with their exact costs as taken from suppliers' catalogue, clearly indicate from which catalogues you got the information. Similarly, if you spoke to an industry expert who recommended that you manufacture your product in a particular way, if you can (if you got the person's permission to do so) clearly indicate who you spoke to and what their credentials are.
  
  • When you do this, you help establish your credibility as a business plan writer, and your business plan's credibility. It also might save you time later when you discover that you need to add a similar item along with its cost to your list.
    
  • Note: Do not reinvent the wheel by “inventing” your own method to reference your sources, and do not use multiple methods. Use one (and only one) proper and well established referencing method, like APA. This will improve the degree of professionalism of your plan.
    
• Every time that you insert something into your plan that did not come from a source, a best practice is to highlight that part of your plan, possibly by using a distinct font color. The objective will be to ultimately replace all of those assumptions with source-backed information. When you do so, change the font to its regular color so you can quickly and easily see what still needs to be sourced.
  
  • Note that if you are an expert source on something – maybe you are a construction expert that business plan readers will trust to do estimates on building costs – you should establish your credentials and clearly indicate when some of the information in your plan is based on your own expert knowledge.
    
  • When you flag your assumptions in this way, you can quickly and easily see what information needs to be replaced with sourced information before you finalize your business plan.
    
• Use the appropriate schedule in the spreadsheet templates to record estimated sales revenue for each month. You must base these sales projections on well-reasoned criteria and set them up in your spreadsheets using formulas so that if you need to change a criterion later, you can change a number in one cell or a limited number of cells rather than have to change all of them.
  
  • Projecting realistic sales can be difficult, but setting up a method for doing so early gives business plan writers a significant start toward completing their business plan. A well- developed sales model that takes advantages of the powers of electronic spreadsheets gives business plan writers the opportunity to relatively quickly easily make necessary changes to their assumptions and overall estimates when needed.
    
• Use the spreadsheet templates by filling in all of the numbers you have in the various schedules. As you are doing in the written part of your plan, use a distinct font to flag numbers that are based on assumptions.
  
  • When you have actual numbers, be certain that it is clear to a reader what source you used to get those numbers. When you use the schedules provided on the spreadsheet templates, and any others that you add, you will be well on your way to developing the financial component of your business plan.
    

Providing references strengthens the credibility of claims and makes the business plan stronger.

If you don't have a source to a claim, plant a flag and move forward, returning later to insert the source.