The Most Essential Parts of a Business Plan

When you’ve got a great idea for starting a business, it’s tempting to just dive straight into building it. But if you want to succeed, take a pause: You need to spend time planning. What you need is a business plan.  

Why spend time writing a business plan? For starters, it helps you think strategically about how you’re going to meet your business goals. Working through the different parts of a business plan helps you make sure you don’t miss anything. No matter the stage of the business or experience of the team, a well-developed business plan provides structure and outlines your vision for success.  

Every business plan should have some essential components. Here, we’ve gathered them for you, along with why they matter and what you should consider. 

Executive Summary: Your Business at a Glance 

Start with the executive summary. It’s an overview of your business that brings all the pieces together and ensures everything’s in place. The executive summary should reflect the structure and content of the rest of your plan, but it should also be able to stand alone if needed. Think of it as a trailer for a movie: It should entice your audience to keep reading, and it shares the very best pieces of the whole.  

You may want to write the executive summary after you finish the rest of the plan so that you have a complete picture of what the rest of the document will be. Here are some parts to consider including: 

• Your mission statement are words that capture what’s exciting about your business.
• A brief overview of each section of your plan. Focus on your highest priorities so the reader can easily get the big picture.
• An explanation of your company’s viability and growth potential.
• A summary of your plans, including your next steps and what you need to be successful.

Company Overview: Who You Are and What You Do 

The company overview allows you to share what inspired you to create your business, who you have on board and what resources you have in place. This element of your business plan can help you connect with your audience on a more personal level and tell the story of your venture. Paint a picture of where you came from and where you’re hoping to go — and who you’re hoping to go with. 

In this section, consider including: 

• The history of your business and the inspiration behind your drive to create it.
• An overview of the company’s leadership and employees, including notable community members who are already on board with your business.
• Information about your location and operations that might be of interest to the public.

Products or Services: What You Offer 

The products or services section of your business plan tells the reader what your business actually does. Clearly outline the problem that you’re solving and then tell your reader how you’re going to solve it. Include enough details to show that you’ve clearly thought things through, but avoid too many specifics or technical jargon that might break the reader’s concentration or interest.  

Consider including these elements: 

• A description of the products or services you offer and the value they bring to the customer, including how they are different from competitors’ products or services.
• A brief overview of the production and/or procurement process, as well as a timeline of bringing your product or service to life.
• An outline of your vendor relationships.
• Pricing and lifespan/longevity of your product/service.
• Any patents or proprietary technology.
• Continued plans for research and development or growth (if applicable).

Market Analysis: Understanding the Opportunity 

Here’s where you zoom out a little. The market analysis gives the reader an overview of your industry and explains how your business will stand out in the market. This element of your business plan will help the reader drill down on the importance of what your business offers. 

Some elements of the market analysis may include: 

• A market and industry overview, including size, volatility and growth potential.
• A description (or reiteration) of how your products or services are unique amongst your competitors. 
• A SWOT (strengths, weaknesses, opportunities and threats) analysis to show readers that you’ve thought through challenges and opportunities alike.
• An overview of your top competitors, including their strengths and weaknesses.
• Industry trends that will work in your favor — or that you will have to contend with.

Marketing Strategy: How You’ll Reach Your Audience 

Your marketing strategy describes your brand — in other words, how you are perceived in the market — and how you use that to sell your products or services. If your business is more established, you could include focused sections such as entering new markets, introducing a new product or service, boosting sales of a particular product or service and cross-selling. 

Consider including: 

• A detailed description of your target market. Who are your intended customers? How big is this market? What is your customer base’s spending power? What do they consider when making decisions about purchases that are similar to your products or services?
• An overview of strategies your competitors have used (successfully and otherwise) and what you can take from these successes or failures.
• Strategies to promote your business and reach your target audience using various channels, including but not only social media. You should also include definitions of what success looks like for each strategy and channel.
• A plan for building customer loyalty, a key to the success of your business.

Goals and Objectives: Your Roadmap to Success  

A goals and objectives section gives you space to use all your research to create goals, objectives and tactics for succeeding. Think of it as the “next steps” section of your plan. This is also where you would include a funding request for the next 3–5 years, if appropriate for your business and your audience. 

In this section, consider including elements such as these: 

• SMART goals (specific, measurable, attainable, relevant and time-bound).
• Objectives (or sub-goals) that will help you track progress toward your main goals.
• Tactics to help you achieve each goal.
• The support (financial and otherwise) that you need to reach these goals.

Financial Analysis: Showcasing Business Health  

Your financial analysis is the overview of the financial health of your organization. This section of your business plan should include both the current situation and the future financial projections.  

You can be aggressive with these projections, if they are realistic and justified. Have you looked at the potential risks and determined a strategy to minimize those risks? Have you taken into account the hidden costs of starting a business? How do these projections compare to competitors? 

Here are some elements to include in this section: 

• Your current budget.
• A few ratios that demonstrate the financial health of your business (such as a common size ratio, a current ratio, a quick ratio and an inventory turnover ratio).
• Any relevant tax information.
• Your sales targets and financial projections. 

Best Practices for Your Business Plan 

Your plan should be concise, running no longer than 15–20 pages. In some cases, it might just be a page. You are focusing on the key information; you can get into the details in your internal documents. Even in a full-length business plan, longer elements that you might want to include can be added in the appendix, such as a patent application. A short version, such as a one-page plan, still requires you to think through each component of your business plan and make a compelling case. 

Have other people read your plan. They can often see things that you aren’t able to. A fresh set of eyes may catch a typo and someone outside the planning process can point out areas where you need to add detail or clarify. 

And remember to be flexible. Keep revising your plan. This isn’t a static document — it’s meant to grow with you and your business. At the very least, review your plan annually to record accomplishments, changes and the ways that your trajectory has shifted in the past year. 

Protect Your Business

A business plan is no substitute for a great idea, experience, business insights and the proper protection. Talk to Farm Bureau today to make sure you have the bases covered before launching your business.