How To Write An Effective Business Plan - Part 2

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An explanation of the five sections of an effective business plan:

1. Executive Summary - While the executive summary will technically be the first part of your business plan, you should actually write it last since, as its name implies, it summarizes the entire business plan.

Since many readers will never bother to read beyond the executive summary, it's imperative that you make sure that it is comprehensive and well-written.

If that sounds like a difficult task, it really isn't. Just be sure to read through the entire business plan before you start writing the executive summary. Make a list of the essential information that you think is the most important or will really stand out to a reader, and be sure to place all of it in your summary.

2. Company Overview - This section needs to explain the guiding force behind your new business. It gives the reader a chance to see what you have in mind for the business and how you plan to achieve those goals.

Typically, the overview accomplishes this by providing the mission statement, goals, and objectives for your business.

In a nutshell, the mission statement gives the answers to the following questions in 50 words or less:

• What am I selling?
• Why am I selling it?
• Who am I selling it to?

Each answer doesn't have to be just one sentence, but you should keep it as brief as possible.

The other components of the company overview, the goals and objectives, are often confused by those who are writing a business plan for the first time. Keep in mind that goals are the things your company wants to achieve and your objectives are how you plan to get there.

3. Business Environment - This section will most likely require you to do a bit of outside research since it includes information regarding your industry, your market, and your competition.

You have to take an honest look at the market you're preparing to enter and pay close attention to its structure, trends, and any barriers to new businesses.

Become familiar with the major competitors in your industry, then explain how you plan to differentiate your business from them. Get to know your potential customers. What makes them tick?

The more you know about your customers, the more likely you will be to entice them to buy.

4. Company Description - At this point in your new business plan, you should go into detail about your business. You can't just define your company in terms of what you plan to sell, but also in terms of who you plan to serve, what resources you plan to use, what types of employees you'll need to hire, what type of distribution method you'll use, and much more. All of these factors should combine to create your new company.

You should also state your company's Unique Positioning Statement (UPS), which is a one sentence statement that explains exactly what sets your business apart from all of your competitors.

5. Action Plan - The last part of a business plan is your action plan which outlines the steps you must take now in order to reach your objectives. It should also reflect the goals that you've outlined in your company overview.

In addition to these primary parts of a business plan, you'll probably also need to include a financial section, especially if you plan on using your business plan to solicit outside funding for your business.

This may take a bit more thought and careful planning than the other sections because it will require you to make a few realistic assumptions about your business' revenue potential. The most important thing is to be sure to base any estimates on realistic expectations, not lofty dreams.

Here are a couple of web pages where you will find some samples to give you an idea of how your business plan should be formatted and worded:

• http://www.businessplans.org/businessplans.html

• http://www.bplans.com/sp/

With a few useful examples and this helpful guide, you'll be well on your way to creating an effective and professional business plan!