Executive Summary

The executive summary lists as the first document in a business plan. Its a one- to two-page brief overview of the most important components of the business plan. This might sound like one of the simplest components of the plan – and in some ways, it is. However, for the most part it’s only simple if all the other sections of the plan have been, because these are where the executive summary pulls its information from.

Financial objectives

The main objective of financial analysis is to know the company and industries financial status, its debt, revenue, expenditure, equity, share price, and segmental revenue/expenditures. With Financial analysis we can know the present company, industry, and sector status' and can expect its future.

Repayment of debt

This is an amount owed to a person or organization for funds borrowed. Debt can be represented by a loan note, bond, mortgage or other form stating repayment terms and, if applicable, interest requirements. These different forms all imply intent to pay back an amount owed by a specific date, which is set forth in the repayment terms.

Start-up or expansion summary

This is the early stage in the life cycle of an company where the entrepreneur moves from the idea stage to securing financing, laying down the basis structure of the business, and initiating operations or trading.

Products or Services

These are your good, idea, method, information, object or service created as a result of a process and serves a need or satisfies a want. It has a combination of tangible and intangible attributes (benefits, features, functions, uses) that a seller offers a buyer for purchase. For example, a seller of a toothbrush not only offers the physical product but also the idea that the consumer will be improving the health of their teeth.

Market Size

This is where you want to get real, both with the potential readers of your business plan and with yourself. Do your research and find out who and where your competitors are, and how much your customers spend annually on your product or service. How big is the potential market for your business?

Market segmentation

The process of defining and subdividing a large homogenous market into clearly identifiable segments having similar needs, wants, or demand characteristics. Its objective is to design a marketing mix that precisely matches the expectations of customers in the targeted segment. Few companies are big enough to supply the needs of an entire market; most must breakdown the total demand into segments and choose those that the company is best equipped to handle.

Location

Clients and customers who will buy a product in the region or area in which it is produced. For marketing purposes it is important to know who will buy the product, where they are located and how far they will travel to obtain the product. The local market includes customers located within the region the product or service is produced or made available.

Targeted demographics

You’ll want to include demographics such as age, income, and location here. You’ll also need to dial into your customers’ psychographics as well. You should know what their interests and buying habits are, as well as be able to explain why you’re in the best position to meet their needs.

Market needs

This is where you’ll discuss the current state of your industry overall and where it’s headed. Relevant industry metrics like size, trends, life cycle, and projected growth should all be included here. This will let banks or investors see that you know what you’re doing, and have done your homework and come come prepared with the data to back up your business idea.

Marketing objectives

The group of goals set by a business when promoting its products or services to potential consumers that should be achieved within a given time frame. A company's marketing objectives for a particular product might include increasing product awareness among targeted consumers, providing information about product features, and reducing consumer resistance to buying the product.

Marketing strategy

An organization's strategy that combines all of its marketing goals into one comprehensive plan. A good marketing strategy should be drawn from market research and focus on the right product mix in order to achieve the maximum profit potential and sustain the business. The marketing strategy is the foundation of a marketing plan.

Competitive analysis

This is the section in which you get to dissect your competitors, which is important for a couple of reasons. Obviously, it’s a good idea to know what you’re up against, but it also lets you spot the competition’s weaknesses. Are there customers out there being underserved? What can you offer that similar businesses aren’t offering?

Competitive advantages

A superiority gained by an organization when it can provide the same value as its competitors but at a lower price, or can charge higher prices by providing greater value through differentiation. Competitive advantage results from matching core competencies to the opportunities.

Management

The organization and coordination of the activities of a business in order to achieve defined objectives.

Keys to success

The combination of important facts that is required in order to accomplish one or more desirable business goals. For example, one of the key success factors in promoting animal food products might be to advertise them in a way that appeals to those consumers who love animals.

SWOT analysis

Situation analysis in which internal strengths and weaknesses of an organization, and external opportunities and threats faced by it are closely examined to chart a strategy. SWOT stands for strengths, weaknesses, opportunities, and threats. See also PEST analysis.

Barriers to entry

Economic, procedural, regulatory, or technological factors that obstruct or restrict entry of new firms into an industry or market. Such barriers may take the form of (1) clear product differentiation, necessitating heavy advertising expenditure to introduce new products, (2) economies of scale, necessitating heavy investment in large plants to achieve competitive pricing, (3) restricted access to distribution channels, (4) collusion on pricing and other restrictive trade practices (such as full-line forcing) by the producers or suppliers, (5) well established brands, or (6) fierce competition.

Milestones

Project management: Scheduled event that indicates the completion of a major deliverable event (or a set thereof) of a project. Milestones are measurable and observable and serve as progress markers (flags) but, by definition, are independent of time (have zero durations) therefore no work or consumption of resources is associated with them.

Personnel forecast

Human resources forecasting involves projecting labor needs and the effects they’ll have on a business. An HR department forecasts both short- and long-term staffing needs based on projected sales, office growth, attrition and other factors that affect a company’s need for labor.

Revenue forecast

A calculation of the amount of money that a company will receive from sales during a particular period: The internet hosting company revealed that it had missed revenue forecasts by 20%.

Break-even analysis

Study of the mathematical relationship between costs and sales revenue, under a given set of assumptions regarding the firm's fixed costs and variable costs. In this financial analysis, the objective is to determine (in manufacturing) number of products that must be sold at a given price to cover the costs, or (in project financing) number of months or years required by the forecasted total net cash flow to equal estimated total project cost. An integral part of financial planning, it is performed either by using a breakeven-formula or by drawing a breakeven graph.

Income statement

summary of a management's performance as reflected in the profitability (or lack of it) of an organization over a certain period. It itemizes the revenues and expenses of past that led to the current profit or loss, and indicates what may be done to improve the results.

Cash flow statement

A summary of the actual or anticipated incomings and outgoings of cash in a firm over an accounting period (month, quarter, year). It answers the questions: Where the money came (will come) from? Where it went (will go)? Cash flow statements assess the amount, timing, and predictability of cash-inflows and cash-outflows, and are used as the basis for budgeting and business-planning.

Balance sheet

A condensed statement that shows the financial position of an entity on a specified date (usually the last day of an accounting period). Among other items of information, a balance sheet states (1) what assets the entity owns, (2) how it paid for them, (3) what it owes (its liabilities), and (4) what is the amount left after satisfying the liabilities. Balance sheet data is based on a fundamental accounting equation (assets = liabilities + owners' equity), and is classified under subheadings such as current assets, fixed assets, current liabilities, Long-term Liabilities. With income statement and cash flow statement, it comprises the set of documents indispensable in running a business.

Sensitivity analysis

Simulation analysis in which key quantitative assumptions and computations (underlying a decision, estimate, or project) are changed systematically to assess their effect on the final outcome. Employed commonly in evaluation of the overall risk or in identification of critical factors, it attempts to predict alternative outcomes of the same course of action. In comparison, contingency analysis uses qualitative assumptions to paint different scenarios. Also called what-if analysis.

Financial indicators

There are five types of markers that businesses use to measure performance in a variety of areas, from marketing to HR to finance. Keeping close tabs on your small business’ financial performance is essential to long-term success. These are gross profit margin, net profit, net profit margin, againg accounts receivable, and current ratio (Current ratio = current assets/current liabilities).

Financial assumptions

Business plans are required for all small businesses seeking loans or investors and financial assumptions and projections are critical components of all business plans. Three universal financial presentations are expected in all business plans. You must include a projected income statement, balance sheet and cash flow statement for the coming three to five years. Along with the numbers, include a narrative that explains your assumptions and how the line items were computed.

Shareholder description

This any person, company or other institution that owns at least one share of a company’s stock. Because shareholders are a company's owners, they reap the benefits of the company's successes in the form of increased stock valuation. If the company does poorly, however, shareholders can lose money if the price of its stock declines.

Use and allocation of funds

If you receive an investment, your business records are subject to be probed by the investor(s). So carefully account for all your transactions using standard and appropriate financial recording guidelines. These investors will be evaluating where and when you will be using the investing funds and the profitability of your venture.

Return on investment (ROI)

This is usually expressed as a percentage which shows profitability and indicates whether or not a company is using its resources in an efficient manner.

Company exit strategy

This is your strategic plan to sell your investment in the company you developed. An exit strategy gives you a way to reduce, or even eliminate in some cases, your stake in the business. If the business is successful, you would likely make a substantial profit.

Business valuation

Here, we’ll determine the economic value of your business. We want to determine the fair value of the business, which could be used for a variety of reasons, including help in securing an investment, setting a sale value, or for establishing partner ownership.

Business multipliers

Our valuation method takes into account important factors such as the profitability of the business and cashflow indicators for the company. Secondly, we factor in the differences between companies within an industry, which can be very different in size, brand value, customer-base, management efficiency and other “soft” factors. If we are using this for a start-up, and since this valuation would be based on industry averages, it doesn't the differences mentioned can make it difficult to substantiate the validity of a multiplier, which can throw off the accuracy of the valuation.