Business Plans should be long enough to convince potential investors of the worth-while opportnity while not boring the reader. In order to create such a balance, business plan writers should decide on the most important information for each section. It is not a good idea to bombard the potential investor with unnecessary information or to mislead him by not putting in enough information. Here is a short breakdown of each section of a business plan and recommended length:
- Executive Summary – While this is one of the first pages of a business plan, it is recommended for the writer to do this last. The Executive Summary should sum up the business plan’s main objectives into 3 or 4 paragraphs. Included in this section should be 1 to 2 paragraphs for each of the following topics: overview on the Company looking for investment, objectives and strategies of the Company, and the opportunity at hand. A couple lines regarding why the market is ready for the Company should be included in either the opportunity section or the company overview section. This should not be more than 1 page.
- Management Team – This is one of the most important sections of the business plan. While a company may have a great idea for a business, if the wrong management team is hired, the business will never get off the ground. In this section, you must convince the potential investors why the management team is absolutely dedicated to the success of the new company and what experience they have that will help the company become profitable. There should be a 1 page summary written about the CEO of the company and any other chief executives. For other positions, such as Vice President of Marketing or Head of Investor Relations, there should be approximately 1 to 2 paragraphs describing the individuals. For each individual in the management team, a summary should be written describing their position with the Company, their responsibilities, and their past experience that prove relevant to the Company. This section should be approximately 2 to 5 pages.
- About the Company – In this section, the business plan writer should describe what the Company does, how they will do it and why it is a good idea. If the Company already has products or services, there should be 1 to 2 pages describing these. If the Company has future products or services it intends to offer in addition to the current project seeking money, 1 page should be written to explain this (these). All together this section should be approximately 3 to 5 pages. This may be larger for companies looking to expand their business.
- Market Analysis – This section should describe the industry the Company is going into in addition to market demand for the Company’s products or services. 1 to 3 paragraphs should be dedicated to describing the Company’s target market. There should be a section dedicated to describing the demand for the Company’s products or services. It is always a good idea to add statistics proving the demand along with supporting charts or graphs. 1 to 2 paragraphs should be written about the positional requirements which are needed for the Company to prove successful in such a market. Positional requirements do not apply to every company. For example, if the Company offers a service of taking groups of people out to sea on a yacht, then positional requirements would be easy access to a dock and/or nice weather. 1 to 2 pages should be written about the competitive landscape surrounding the Company’s market. This total Market Analysis section should be approximately 3 to 6 pages.
- SWOT Analysis – This section lists the strengths, weaknesses, opportunities and threats of the Company. Depending on the style you choose this can be 1 to 4 pages. For further information, regarding how to write a SWOT Analysis, visit our Q & A of the Day and search for SWOT.
- Execution Plan – The execution plan describes the various phases of the Company which will lead to profitability. Each section should describe every step which is necessary to make the company a cash cow. Each phase should be given a time limit. An example of a phase 1 will include: register company name; create logo for company; write a business plan; create a website, etc. This section should be approximately 5 to 7 pages.
- Financial Analysis – Investors want to see where their money is going to and when they will receive a return. It is vital to create a modest financial pro-forma that still breaks even no later than the 3rd year (of course there are businesses which are exceptions who will reach their break even point in either a shorter or longer time period). For each projected income statement, balance sheet or statement of cash flows, the writer should include a page describing the assumptions which were made to get to those numbers. This section should be approximately 6 to 9 pages.