January 28, 2023

10 Essential Elements of the Business Plan and Why They Matter

By DENNIS BLACK on Jan 8, 2023

Here are 10 elements of a business plan you might want to include:

1. Executive Summary 

This is an essential part of a successful business plan that often takes longer to complete.

It's also one you might consider completing last, even though it's usually the first thing the reader sees.

 An executive summary is the definitive recap of all the information you include in your business plan.

Most commonly, these elements do not exceed two full pages. This is because the executive summary aims to present the essence of the business and its objectives.

It serves as an elevator pitch that can help you convince someone to invest in the business.

A successful executive summary makes it possible to get the reader excited about your business idea and make them want to explore it further.

Traditionally, the executive summary presents the organization's mission statement and the products or services the company plans to offer.

You might also consider explaining to the reader how creating the company can help your specific audience, for example by solving a problem that the target audience experiences.

2. Description of the Business

The next element of a business plan is a description of the business. This component serves to describe the organization's objectives, target audience, and products or services.

Of course, some parts of the business description may overlap with the executive summary.

For example, you might consider providing more detail on how the company's products or services can solve the everyday problems of the target audience by providing a detailed analysis of the problem.

To make the business plan more reliable, consider briefly mentioning who is involved in the project.

That's because, if the team includes experienced professionals, readers are often more likely to trust the idea and invest in it.

3. Market Analysis and Strategy

These elements allow you to better investigate the company's target audience and their needs.

When analyzing the market, you can also focus on companies and organizations that offer similar products and services or alternative solutions.

To better illustrate how competitive the market can be for the company you are working for, it may be beneficial to develop a SWOT (Strengths, Weaknesses, Opportunities, Threats) analysis for it.

A SWOT analysis allows you to create a plan that builds on the idea's strengths while eliminating its weaknesses to increase your chances of success.

4. Marketing and Sales Plan

These plan elements define what you plan to do to promote and sell the company's products or services.

Consider including your pricing plans here and mention your organization's unique selling proposition. You can also list important communication channels for the business.

For example, if you are about to launch a retail business, you can explain what social media channels you would use to promote the products through paid and organic ads.

5. Competitive Analysis

The competitive analysis provides an in-depth look at companies that aim to reach the same audience as the organization you are helping to build.

In these elements, consider comparing the organization's selling proposition with what the competition offers.

It's important to highlight your competitors' weaknesses and strengths so you can better predict how your target audience might react to the business you're working on.

The last element of competitive analysis can explain to the reader how the company you are creating will be unique by listing the aspects that make it stand out.

6. Description of Management and Organization

These elements of the business plan generally cover the management and organization strategy, including the company's leaders.

You might consider including a brief biography of the people involved in creating the business.

Make sure you focus on your organizational successes and important accomplishments in the field. When writing these biographies, it's also important that you use active verbs that can help you demonstrate your expertise.

By providing these details, you demonstrate to readers that the people engaged in building the company are trustworthy and know how to make the idea successful.

7. Description of Products and Services

By creating these elements, you can use your sales skills to provide an engaging and detailed description of the company's products or services.

If the business plan takes product manufacturing into account, it is important that you explain all stages of product development here, from design and manufacturing to product promotion and sale.

Consider mentioning which materials the company wants to use in the manufacturing process, for example, to assure the reader that all processes are sustainable.

A key element of these elements is providing detailed information about costs.

Consider mentioning how much it costs to buy high-quality materials, and create products, and how much the company will pay its critical employees.

If the business plan you are creating focuses on providing services, you can also mention how long they last.

8. Operational Plane

This component of a business plan describes how management and leaders plan to run the organization.

Consider mentioning the desired organizational structure, how many employees the company wants to employ, and how everyone will communicate to ensure that everything goes according to plan. These elements are all about the logistics of who does what and when.

You may also want to explain the hiring process here.

9. Projection and Financial Needs

Financial and needs projection is a critical part of a business plan that allows you to quote all costs and forecast the company's revenue.

To keep the reader engaged, it is important to clearly state how the company intends to generate revenue and explain its main sources of revenue.

In these elements, you can also mention any funding opportunities available to the organization.

Creating financial projections can be a complex process, and to ensure you include the necessary information, consider asking an accountant or financial advisor to guide you through this process.

10. Annexes and Appendices

The final elements of a business plan usually include any additional information or appendices that support the claims and ideas presented in the preceding elements.

You might consider adding attachments that demonstrate the feasibility of your business plan, for example, financial statements or external market reports that you used to analyze your competition or target audience.

Common information to add here includes:

  • CVs of company management personnel and stakeholders
  • market research
  • allow
  • proposed marketing and branding materials
  • relevant legal documentation
  • product photos or preview
  • financial documents