As an entrepreneur, you put together a business plan to run your company. What are the components of a business plan?

The first five components of a professional business plan provide an overview of the business opportunity and market research to support it. The remaining five components of the plan focus mainly on strategy, primarily the marketing, operational, financial and management strategies that that firm will employ

The marketing plan details your strategy for penetrating the target markets. Key components include the following

A description of the company's desired strategic positioning

Detailed descriptions of the company's product and service offerings and potential product extensions

Descriptions of the company's desired image and branding strategy

Descriptions of the company's promotional strategies

An overview of the company's pricing strategies

A description of current and potential strategic marketing partnerships/ alliances

Operations/Design and Development Plans. These sections detail the internal strategies for building the venture from concept to reality, and include answers to the following questions

What functions will be required to run the business

What milestones must be reached before the venture can be launched

How will quality be controlled

Management Team. The Management Team section demonstrates that the company has the required human resources to be successful

Who are the key management personnel and what are their backgrounds

What management additions will be required to make the business a success

Who are the other investors and/or shareholders, if any

Who comprises the Board of Directors and/or Board of Advisors

Who are the professional advisors (e.g., lawyer, accounting firm)

Financial Plan. The Financial Plan involves the development of the company's revenue and profitability model. It includes detailed explanations of the key assumptions used in building the model, sensitivity analysis on key revenue and cost variables, and description of comparable valuations for existing companies with similar business models In addition, the financial plan assesses the amount of capital the firm needs, the proposed use of these funds, and the expected future earnings. It includes Projected Income Statements, Balance Sheets and Cash Flow Statements, broken out quarterly for the first two years, and annually for years 1-5. Importantly, all of the assumptions and projections in the financial plan must flow from and be supported by the descriptions and explanations offered in the other sections of the plan. The Financial Plan is where the entrepreneur communicates how he/she plans to "monetize" the overall vision for the new ventureAppendix. The Appendix is used to support the rest of the business plan. Every business plan should have a full set of financial projections in the Appendix, with the summary of these financials in the Executive Summary and the Financial Plan. Other documentation that could appear in the Appendix includes technical drawings, partnership and/or customer letters, expanded competitor reviews and/or customer lists Expertly and comprehensively discussing these components in their business plan helps entrepreneurs to better understand their business opportunity and assists them in convincing investors that the opportunity may be right for them too

1. Business concept. Describes the business, its product and the market it will serve. It should point out just exactly what will be sold, to whom and why the business will hold a competitive advantage.
2. Financial features. Highlights the important financial points of the business including sales, profits, cash flows and return on investment.
3. Financial requirements. Clearly states the capital needed to start the business and to expand. It should detail how the capital will be used, and the equity, if any, that will be provided for funding. If the loan for initial capital will be based on security instead of equity, you should also specify the source of collateral.
4. Current business position. Furnishes relevant information about the company, its legal form of operation, when it was formed, the principal owners and key personnel.
5. Major achievements. Details any developments within the company that are essential to the success of the business. Major achievements include items like patents, prototypes, location of a facility, any crucial contracts that need to be in place for product development, or results from any test marketing that has been conducted.

You can get as technical as you like but honestly is all boils down to five things:

1. How well have you defined the problem, and how does your product/service solve it?
2. Who are your customers, why do they like your product, and will they grow with awareness?
3. Will you make money, how?
4. How much money do you need to start?
5. Who is your team?

For anyone who has ever had to do a capstone project, we know what's all involved in a business plan. However, what is actually crucial and essential to the business plan is often forgotten. Here are my rules for a solid business plan.

RULE #1:

Always include a SWOT analysis of your company vs. the competition. A SWOT analysis is an outline of the Strengths, Weaknesses, Opportunities, and Threats involved in the business/industry you are getting involved in. Leave this out and you're asking for failure.

RULE #2:

Have a contingency plan in place. In the case that anything goes wrong, you'll have an exit strategy. Outline all of the possibilities you can think of that may lead to disadvantages for your company, then lay out the plan to get your company out of it. 

RULE #3:

Create a realistic timeline graph that shows each process you plan on implementing, how long it will take, and when the outcome will arrive/be completed. This allows you to see just how long your company will take to start turning a profit and things like that. BE REALISTIC! I emphasize this because most people become overly optimistic and when things don't go according to plan, they lose hope, shut down the business, and there goes time and effort lost and wasted. Be honest with yourself.

RULE #4:

Financial Pro Forma. Don't know what that is? Research one on Google and make sure you become familiar with how to put one together that's specific to your company, You'll be lost without it, and you will fail at ensuring that all budgets are properly allocated. This is what helps you track expenditure and revenue and all that other fancy money stuff.

RULE #5:

HAVE A MISSION AND VISION STATEMENT! I don't know how many times I've come across business plans that do not have these two very simple, yet important, components. Never leave these out!!!

RULE #6:

Marketing plan. Need i say more? Set some goals you know you can achieve.

RULE #7:

Set an organizational plan that sets specific guidelines to whom gets appointed for what position. It will make life easier when you have to restructure. It also helps you define the chain of command.

RULE #8:

Operational Plan...make it a big deal because if you don't do this right then nothing will flow properly in the business. This is what helps streamline the way you do things and the way people get things done.

RULE #9:

Critical risks assessment should be a HUGE and vital part of your business plan. Without this essential part of a business plan, you will be so focused on the good things that you will not be prepared for the bad/unexpected. Make sure you are remaining realistic when you do this (I know I say this a lot, but it is very important!). Consult with those in your company who have the knowledge to get this done right.

RULE #10:

Scope out your competition within your industry and make sure you know what they're doing to get ahead, then set a plan in place that helps you get a head of them. 

RULE #11:

Outline leadership. It is important simply because you do not want to have power struggles within your organization.  That is what you're trying to avoid.

RULE #12:

Re-evaluate and create an expansion plan once things are going really well. Expansion can make local expansion into new areas, international expansion, or simply growing the company.

These twelve rules should be basic enough and should always be included in a business plan.