What Are The 3 Common Business Plan Components?

December 17, 2015 Education No Comments

The order of the components of a plan can vary somewhat, but there are elements common to all. These include:

Cover Page and Table of Contents:  Begin the plan as you intend to continue it. The cover page should be professional, neat, and attractive. It should provide the name of the business and the principals, the date, contact information, and any confidentiality statement. The table of contents should be sufficiently detailed so an investor or manager can easily find a section, but not so detailed that it takes up multiple pages of the plan.

Executive Summary: A Snapshot of Your Business: The executive summary has to be compelling and comprehensive. It may be the only part that many people will read. It will be the hook that either catches potential investors or loses their attention. If a reader doesn’t fully understand the business concept and the purpose of the plan from the executive summary, the rest of the plan is likely to remain unread. The executive summary must encapsulate the story of the business clearly and concisely, propose the funding request, and inspire enthusiasm for the possibility of its success.

This section should be written last and limited to one or two pages. It should answer who, what, when, why, and how questions for the business. Who will manage the business? What will it do, and what is the owner asking for in the plan? When will the proposed plan be implemented? How will the business succeed? Done well, the reader will have a “light-bulb” moment and be eager to read the rest of the plan.

Mission, Vision and Culture: Each company has the opportunity to create its own unique mission, vision, and culture. The founding team can determine how to strategically use the company’s competitive advantage to satisfy customers. Culture that the owners model and support can be shaped according to the environment and the manner of treating employees, customers, and other stakeholders. The mission of your business, expressed in a mission statement, is a concise communication of strategy, including your business definition and competitive advantage. The function of a mission statement is to clarify what you are trying to do, and it can provide direction and motivation to those who are involved in the business.

A clearly stated mission statement not only tells your customers and employees what your business is about, but can also be a guide for every decision you make. It should capture your passion for the business and your commitment to satisfying your customers. The mission statement should be clear and concise, no more than 40 or 50 words.

The vision for your business will be broader and more comprehensive, painting the big picture of what you want your organization to become. It is built on the core values and belief system of the organization. It is typically shorter than the mission statement, with a loftier perspective.

The culture of an organization, whether intentionally or unintentionally created, is largely defined by its leadership. You can build a culture for your company by making beliefs, values, and behavioral norms explicit and intentional. A business’s culture has many components, including attitudes toward risk-tolerance and innovation and its orientation with respect to people, team formation and outcomes, attention to detail, and communication. Whether you want a free-thinking, aggressive company with informal communications or a structured, formal organization with more “official” interactions, you will set the standards and be the role model for your business’s culture.