A good business plan follows generally accepted guidelines for form and content. There are three primary parts to a business plan:
- The first is the business concept, where entrepreneurs discuss the industry, their business structure, their particular product or service, and how they plan to make their business a success.
- The second is the marketplace section, in which entrepreneurs describe and analyse potential customers: who and where they are, what makes them buy and so on. They also describe the competition and how they will position themselves to beat it.
- Finally, the financial section contains their income and cash flow statement, balance sheet and other financial ratios, such as break-even analyses. This part may require help from the accountant and a good spreadsheet software program.
In addition to these sections, a business plan should also have a cover, title page and table of contents.
Entrepreneurs should be updating their business plans every month, every week and every day – whenever things change. And things always change. While this might seem like chaos, it is actually the opposite; the constantly-updated business plan is what makes order out of chaos. It becomes a long-term planning process that sets up a business strategy, objectives and the steps an entrepreneur needs to take by constantly being aware of the results of these steps. Plans are about the future, and nobody gets the future right very often. It is important to keep the plan fresh and watch closely as reality moves forward. A good business plan is never finished.
A typical business plan runs 15 to 20 pages. Much will depend on the nature of the business. If an entrepreneur has a simple concept, they may be able to express it in very few words. On the other hand, if they are proposing a new kind of business or even a new industry, it may require much more explaining. The purpose of the plan also determines its length. If the plan will be used to seek financing to start a risky venture, it may involve a lot of explaining and convincing. If it will be used for internal purposes to manage an ongoing business, a much more abbreviated version should suffice.
Elements of a good business plan should include: an executive summary, a company overview with a short mission statement, description of the products/services, market and industry analysis, as well as a marketing plan, an operations section, an organisational structure and management team, and a section with the financial projections.