OutReSources, Inc. will begin by providing multiple training services for health care providers and public agencies in the areas of Developmental Therapy, and Service Coordination, but will later progress and diversify into Psychosocial Rehabilitation, Case Management, Clinical Therapies, and a multitude of supportive and more specific concepts. These concepts may range from Health Care Business Practices, Health and Wellness Promotion, Specific Disabilities and Treatments.
The initial service training categories for Developmental Therapy and Service Coordination are:
OutReSources, Inc. is a business that has become necessary because of today’s ever increasing demand on the need for community health care. There are an increasing number of providers who have become dependent on Medicaid reimbursement, which has created the need for training resources. There are 100s of agencies providing fee-for-services reimbursed by Medicaid. Combine this with regional Medicaid units being severely understaffed and underbudgeted and you have a declining system unable to meet the huge need for support. OutReSources is therefore, ideally positioned to deliver these support and training services to provider companies and agencies.
The are many Medicaid providers. There are 79 listed in the Centerville Yellow Pages under the Mental Health and Developmental Disability categories, most of which provide a variety of service treatments or therapies. Several are either incorporated or franchised across the state. All of them provide at least one Medicaid reimbursed service (most offer several) and are required to maintain certain standards, self regulate, and educate. This creates the prime market for our services:
The segmentation of the market is a new concept within the Mental Health and Developmental Disabilities fields of service but is not new to the general health care industry, and other service fields leaving a strong need for specific services:
It makes logical sense for OutReSources, Inc. to primarily direct its marketing approach at these three segments. In 2000, the market potential for the disabled service population is estimated to be around 200,498 people reporting some disability in Greenstate (Census 2000). Nationally the number was nearly 50 million. At the same time, the market potential for the need of bilingual services was estimated to be around 127,609 people speaking another language other than English at home of which 85% speak Spanish. Each of these populations are expected to grow at a steady rate of 5.6% per year.
In the table and chart below:
Market Analysis | |||||||
Year 1 | Year 2 | Year 3 | Year 4 | Year 5 | |||
Potential Customers | Growth | CAGR | |||||
Agency Group 1 | 25% | 60 | 75 | 94 | 118 | 148 | 25.32% |
Agency Group 2 | 25% | 40 | 50 | 63 | 79 | 99 | 25.43% |
Agency Group 3 | 5% | 100 | 105 | 110 | 116 | 122 | 5.10% |
Total | 16.55% | 200 | 230 | 267 | 313 | 369 | 16.55% |
OutReSources, Inc. chooses to make the above segments its targeted market is because we have the applied first hand experience and the credentials having provided these services for significant periods of time, earning credibility with substantial marks in quality. Through our experiences as providers we have developed a strong knowledge of what services would be greatly needed, appreciated and valued.
We have and are continually increasing our credentials as providers to improve our current services allowing us to utilize those gained credentials in support of our new offerings. Through the years we have developed a reputation of providing high-quality services among state regulators, providers, and the community.
Consulting participants range from major international name-brand consultants to tens of thousands of individuals. One of OutReSources’ challenges will be establishing itself as a real consulting company, positioned as a relatively risk-free organizational purchase.
There really is not much local competition specific to the field of Mental Health and Developmental Disabilities, only small private entities that are usually sole proprietors consulting from the basis of that one individual’s own knowledge and/or theories, and their own interpretations but with varying levels of practical application experience.
Our program will minimize its starting cost and have almost no overall risk by developing our new offerings based on the services services Flowstone, Inc. currently provides. This allows us to minimize up front cost and overhead while improving services within OutReSources. Flowstone will provide the inial start-up expenses in return for partial ownership, profit, and free access to services rendered.
The key element in purchase decisions made at the OutReSources’ client level is trust in the professional reputation and reliability of the consulting firm.
OutReSources, Inc. will primarily focus on three service markets, Developmental Disability, Service Coordination, and Mental Health Providers, and in limited product segments: Pre-audit Review, Training, and Certifications.
Clearly, our competitive edge is the customer service experience and approach that our management team will bring to the table. Our “Best Practice” and “Client First” approach to all of our services is evident, and highly appreciated.
An overview of the marketing plan includes:
The Team Supervisor needs and expects close contact and cooperation with the client agency’s staff. The General Operational Manger is under pressure to get a quotation together. The GOM and Trainers must be armed with quick reference guide to pricing. The important caller should be told that the GOM will “call right back.” The more successful the marketing strategy is in making in-roads into the foundation of a market, the more important this communication response will become.
In respect to the prospect list of clients, it is essential that a “salesman’s” approach be adopted to insure an organized, orderly approach to each prospect. Notes need to be kept on each client. Follow-up and persistence will pay off.
OutReSources, Inc. is a start-up and a relatively new concept in the field within a fairly common concept of consultation and training services. It is difficult to forecast without any benchmarks. However, since our overhead and start-up cost will be minimal we are able to use basic forecast principles by estimating our primary cost of salary (what it cost us to provide the service) which includes staffs estimated operating costs of lodging, meals and travel expenses to forecast our cost.
We want a 50% profit margin (to allow room for adjustments as needed) and so will double operating expenses to project revenue. This results in a Net profit of 50% on the dollar or 2-1 on our money. Of course, as services are implemented adjustments will be made based on total sales, realized cost, accessibility, feasibility, etc.
Sales Forecast | |||
Year 1 | Year 2 | Year 3 | |
Sales | |||
Pre-audit Review | $195,000 | $253,500 | $329,550 |
Pre-audit Review with Training | $265,500 | $345,150 | $448,695 |
Specialized Trainings | $7,800 | $11,700 | $17,550 |
Certification Courses | $11,700 | $17,550 | $26,325 |
Total Sales | $480,000 | $627,900 | $822,120 |
Direct Cost of Sales | Year 1 | Year 2 | Year 3 |
Pre-audit Review | $97,500 | $126,750 | $164,775 |
Pre-audit Review with Training | $132,750 | $172,575 | $224,348 |
Specialized Trainings | $1,950 | $2,925 | $4,388 |
Certification Courses | $1,942 | $2,913 | $4,370 |
Subtotal Direct Cost of Sales | $234,142 | $305,163 | $397,880 |
Set forth below are the main milestones in the schedule of proposed development. We have carefully reviewed the timelines for start-up and firmly believe that once we are completely funded we can construct and open our initial services within less than one month of external implementation.
Milestones | |||||
Milestone | Start Date | End Date | Budget | Manager | Department |
Develop Formalized Methodology | 1/15/2005 | 5/31/2005 | $0 | GOM | Department |
Purchase Presentation Equipment | 1/15/2005 | 5/31/2005 | $0 | Flowstone | Department |
Dry Run of Pre-audit Review | 1/15/2005 | 6/30/2005 | $0 | GOM | Department |
Approval of Products | 1/15/2005 | 7/31/2005 | $0 | Flowstone, GOM, T-S | Department |
Marketing for Potential Clients | 1/15/2005 | 7/31/2005 | $0 | Flowstone, GOM | Department |
Training Packets and Materials | 1/15/2005 | 5/31/2005 | $0 | GOM, T-S | Department |
Internal Protocols/Employee Manual | 1/15/2005 | 6/30/2005 | $0 | Flowstone, GOM | Department |
Prepare/Finalize Mktg Campaign | 1/15/2005 | 6/30/2005 | $0 | Flowstone, GOM | Department |
Hire and Train Staff | 1/15/2005 | 6/30/2005 | $0 | GOM, T-S | Department |
Soft Opening | 1/15/2005 | 7/31/2005 | $0 | GOM, T-S | Department |
Totals | $0 |
The three managers, Flowstone, Inc. owners Khallie Locharnold and Soren Aboukir and General Operations Manager Yuriatin Guadalquivir, have impeccable credentials in this industry. This will benefit OutReSources, Inc. in three ways:
The Training Supervisors and Trainers have yet to be formalized but would primarily consist of the Program Managers and Professionals from within Flowstone. Their extensive experience and education in service, and management within the industry will provide a foundation for success for OutReSources, Inc.
All work is, at the moment, produced by Yuriatin Guadalquivir and Flowstone, Inc. Since OutReSources, Inc. still remains in its formative stage and all stock holders’ compensation is purely based on net profit, and currently there is no revenue being generated, there are no salary expenses. There will be added where and when necessary and in line with success in penetrating the plan’s targeted markets. These salary expenses will absorbed by Flowstone, Inc.
By the end of June 2005, it is assumed that increased business volume will require the first Training Supervisor to be brought on board. By the end of August 2005, increased volume will require hiring the first trainer.
In FY2007, OutReSources will have 4 Training Supervisors and 4 trainers working, with the increasing amount of less sensitive work being farmed out to paraprofessionals and administrative support staff of Flowstone. It is assumed that OutReSources will become completely independent of Flowstone’s financial and staff support in year FY2008 or FY2009, depending on demand volume.
As stated earlier the salaries of the owner/consultants, training supervisors and trainers is included in the Cost of Sales. Only those costs for the hourly paraprofessional and administrative staff are shown in the Personnel table below.
Personnel Plan | |||
Year 1 | Year 2 | Year 3 | |
Owners/Consultants | $0 | $0 | $0 |
Operations Manager | $0 | $41,000 | $41,000 |
Training Supervisors | $0 | $0 | $0 |
Trainers | $0 | $0 | $0 |
Paraprofessionals | $16,000 | $32,000 | $32,000 |
Administrative Support | $10,000 | $24,000 | $24,000 |
Total People | 0 | 0 | 0 |
Total Payroll | $26,000 | $97,000 | $97,000 |
Our main concerns will be aggressive time management, so that our labor costs stay under control, and proper purchasing, keeping costs down. Secondarily, hiring the best team, training them properly and retaining them will be a critical component to good costs. A good trainer does not sacrifice quality for quantity, but rather they optimize their time spent. Growth will be sustained through a contribution to a “roll-over” plan, and from potential future clients.
Total start-up expenses include legal costs, logo design, stationery and related expenses.
Expensed presentation and office equipment include computers and projectors. Start-up assets include initial cash to handle the first few months of consulting operations as accounts receivable play through the cash flow. Flowstone, Inc. is providing some of their used office furniture, chairs, as Other Current Assets.
Flowstone, Inc. will provide seed capital. Soren Aboukir and Khallie Locharnold will each invest at start-up, and anticipate loaning the company additional funds during the year.
Start-up Funding | |
Start-up Expenses to Fund | $14,500 |
Start-up Assets to Fund | $25,500 |
Total Funding Required | $40,000 |
Assets | |
Non-cash Assets from Start-up | $1,000 |
Cash Requirements from Start-up | $24,500 |
Additional Cash Raised | $0 |
Cash Balance on Starting Date | $24,500 |
Total Assets | $25,500 |
Liabilities and Capital | |
Liabilities | |
Current Borrowing | $0 |
Long-term Liabilities | $0 |
Accounts Payable (Outstanding Bills) | $0 |
Other Current Liabilities (interest-free) | $0 |
Total Liabilities | $0 |
Capital | |
Planned Investment | |
Flowstone, Inc. | $20,000 |
Khallie Locharnold | $10,000 |
Soren Aboukir | $10,000 |
Additional Investment Requirement | $0 |
Total Planned Investment | $40,000 |
Loss at Start-up (Start-up Expenses) | ($14,500) |
Total Capital | $25,500 |
Total Capital and Liabilities | $25,500 |
Total Funding | $40,000 |
Initially, OutReSources will be housed in the Flowstone office spaces and and benefit from the established administrative support system. In January 2006, we anticipate that OutReSources will move to it’s own office when an adjacent suite is due to become available.
As noted earlier, salaries for owner/consultants, training supervisors and trainers are included in Cost of Sales. To correctly calculate the necessary payroll tax withholding, a formula was entered into the P&L table for a percentage of the combined salaried and hourly wages.
Pro Forma Profit and Loss | |||
Year 1 | Year 2 | Year 3 | |
Sales | $480,000 | $627,900 | $822,120 |
Direct Cost of Sales | $234,142 | $305,163 | $397,880 |
Other Costs of Sales | $7,800 | $10,000 | $13,000 |
Total Cost of Sales | $241,942 | $315,163 | $410,880 |
Gross Margin | $238,058 | $312,737 | $411,240 |
Gross Margin % | 49.60% | 49.81% | 50.02% |
Expenses | |||
Payroll | $26,000 | $97,000 | $97,000 |
Marketing/Promotion | $1,560 | $3,000 | $4,000 |
Depreciation | $0 | $0 | $0 |
Rent | $5,000 | $12,000 | $15,000 |
Utilities | $750 | $600 | $750 |
Insurance | $1,000 | $2,000 | $3,000 |
Payroll Taxes | $28,485 | $46,592 | $56,327 |
Training Packet Production | $3,900 | $5,820 | $8,000 |
Office Supplies | $2,340 | $4,000 | $5,500 |
Total Operating Expenses | $69,035 | $171,012 | $189,577 |
Profit Before Interest and Taxes | $169,023 | $141,725 | $221,663 |
EBITDA | $169,023 | $141,725 | $221,663 |
Interest Expense | $0 | $0 | $0 |
Taxes Incurred | $50,707 | $42,517 | $66,499 |
Net Profit | $118,316 | $99,207 | $155,164 |
Net Profit/Sales | 24.65% | 15.80% | 18.87% |
Our monthly break even figure is based on our anticipated cost of sales, and in-kind administrative support from Flowstone. Break even currently requires an average monthly sales as shown below. This will vary if cost of sales increases or decreases, and if overhead expenses such as administrative support is transferred from Flowstone to us sooner than expected.
Break-even Analysis | |
Monthly Revenue Break-even | $11,232 |
Assumptions: | |
Average Percent Variable Cost | 49% |
Estimated Monthly Fixed Cost | $5,753 |
The Cash Flow table is based on ideal numbers. The numbers where set as explained previously by basic business principles to permit room for adjustment as the company grows. As seen in the chart as the months go by the Cash Balance remains positive. This is dependent upon reaching sales forecasts each month and keeping our expenses in line. Over time we are assured to make adjustments as stated in the explanation of the forecasting. The key components we will need to monitor that will adjust the overall true numbers are:
The founding partners anticipate loaning the company additional monies as a short-term loan in mid-year. If sales exceed forecast this may not be necessary. Additional computers and presentation equipment will need to be purchased as new trainers and supervisors are hired.
Pro Forma Cash Flow | |||
Year 1 | Year 2 | Year 3 | |
Cash Received | |||
Cash from Operations | |||
Cash Sales | $0 | $0 | $0 |
Cash from Receivables | $341,008 | $585,073 | $765,880 |
Subtotal Cash from Operations | $341,008 | $585,073 | $765,880 |
Additional Cash Received | |||
Sales Tax, VAT, HST/GST Received | $28,800 | $37,674 | $49,327 |
New Current Borrowing | $0 | $0 | $0 |
New Other Liabilities (interest-free) | $0 | $0 | $0 |
New Long-term Liabilities | $0 | $0 | $0 |
Sales of Other Current Assets | $0 | $0 | $0 |
Sales of Long-term Assets | $0 | $0 | $0 |
New Investment Received | $0 | $0 | $0 |
Subtotal Cash Received | $369,808 | $622,747 | $815,208 |
Expenditures | Year 1 | Year 2 | Year 3 |
Expenditures from Operations | |||
Cash Spending | $26,000 | $97,000 | $97,000 |
Bill Payments | $285,781 | $446,114 | $558,592 |
Subtotal Spent on Operations | $311,781 | $543,114 | $655,592 |
Additional Cash Spent | |||
Sales Tax, VAT, HST/GST Paid Out | $28,800 | $37,674 | $49,327 |
Principal Repayment of Current Borrowing | $0 | $0 | $0 |
Other Liabilities Principal Repayment | $0 | $0 | $0 |
Long-term Liabilities Principal Repayment | $0 | $0 | $0 |
Purchase Other Current Assets | $4,000 | $4,000 | $6,000 |
Purchase Long-term Assets | $0 | $0 | $0 |
Dividends | $0 | $0 | $0 |
Subtotal Cash Spent | $344,581 | $584,788 | $710,919 |
Net Cash Flow | $25,228 | $37,959 | $104,288 |
Cash Balance | $49,728 | $87,686 | $191,975 |
The balance sheet is not a key factor at this point since OutReSources, Inc. will be operating as a company within a company and utilizing Flowstone, Inc.’s assets. Given that any start-up cost or realized loss can be deemed as an assets expense for Flowstone there is truly little to no liability or risk thereof.
Pro Forma Balance Sheet | |||
Year 1 | Year 2 | Year 3 | |
Assets | |||
Current Assets | |||
Cash | $49,728 | $87,686 | $191,975 |
Accounts Receivable | $138,992 | $181,818 | $238,058 |
Other Current Assets | $5,000 | $9,000 | $15,000 |
Total Current Assets | $193,719 | $278,505 | $445,033 |
Long-term Assets | |||
Long-term Assets | $0 | $0 | $0 |
Accumulated Depreciation | $0 | $0 | $0 |
Total Long-term Assets | $0 | $0 | $0 |
Total Assets | $193,719 | $278,505 | $445,033 |
Liabilities and Capital | Year 1 | Year 2 | Year 3 |
Current Liabilities | |||
Accounts Payable | $49,903 | $35,482 | $46,846 |
Current Borrowing | $0 | $0 | $0 |
Other Current Liabilities | $0 | $0 | $0 |
Subtotal Current Liabilities | $49,903 | $35,482 | $46,846 |
Long-term Liabilities | $0 | $0 | $0 |
Total Liabilities | $49,903 | $35,482 | $46,846 |
Paid-in Capital | $40,000 | $40,000 | $40,000 |
Retained Earnings | ($14,500) | $103,816 | $203,023 |
Earnings | $118,316 | $99,207 | $155,164 |
Total Capital | $143,816 | $243,023 | $398,187 |
Total Liabilities and Capital | $193,719 | $278,505 | $445,033 |
Net Worth | $143,816 | $243,023 | $398,187 |
The following table shows the projected business ratios. We expect to maintain healthy ratios for profitability, risk, and return. The industry comparisons are for SIC 8742.0200, Human Resources Consulting, part of the larger Management Consulting Services category. The most noteworthy catagory is the percent of sales. You will notice that OutReSources, Inc. and Industry Standards are comparable until gross profit margin wherein OutReSources falls back by 50% from industry standards. This is primarily due to the majority of our expenses coming from staff compensation. However, OutReSources more than compensates in general administrative expenses. Though the numbers are based on ideal assumptions and are subject to change, OutReSources’ owner and management structure will continue to minimize general admin costs.
Ratio Analysis | ||||
Year 1 | Year 2 | Year 3 | Industry Profile | |
Sales Growth | 0.00% | 30.81% | 30.93% | 6.61% |
Percent of Total Assets | ||||
Accounts Receivable | 71.75% | 65.28% | 53.49% | 18.68% |
Other Current Assets | 2.58% | 3.23% | 3.37% | 49.64% |
Total Current Assets | 100.00% | 100.00% | 100.00% | 71.06% |
Long-term Assets | 0.00% | 0.00% | 0.00% | 28.94% |
Total Assets | 100.00% | 100.00% | 100.00% | 100.00% |
Current Liabilities | 25.76% | 12.74% | 10.53% | 35.28% |
Long-term Liabilities | 0.00% | 0.00% | 0.00% | 15.95% |
Total Liabilities | 25.76% | 12.74% | 10.53% | 51.23% |
Net Worth | 74.24% | 87.26% | 89.47% | 48.77% |
Percent of Sales | ||||
Sales | 100.00% | 100.00% | 100.00% | 100.00% |
Gross Margin | 49.60% | 49.81% | 50.02% | 100.00% |
Selling, General & Administrative Expenses | 24.95% | 34.01% | 31.15% | 83.35% |
Advertising Expenses | 0.00% | 0.00% | 0.00% | 1.13% |
Profit Before Interest and Taxes | 35.21% | 22.57% | 26.96% | 2.92% |
Main Ratios | ||||
Current | 3.88 | 7.85 | 9.50 | 1.49 |
Quick | 3.88 | 7.85 | 9.50 | 1.25 |
Total Debt to Total Assets | 25.76% | 12.74% | 10.53% | 60.96% |
Pre-tax Return on Net Worth | 117.53% | 58.32% | 55.67% | 7.36% |
Pre-tax Return on Assets | 87.25% | 50.89% | 49.81% | 18.86% |
Additional Ratios | Year 1 | Year 2 | Year 3 | |
Net Profit Margin | 24.65% | 15.80% | 18.87% | n.a |
Return on Equity | 82.27% | 40.82% | 38.97% | n.a |
Activity Ratios | ||||
Accounts Receivable Turnover | 3.45 | 3.45 | 3.45 | n.a |
Collection Days | 55 | 93 | 93 | n.a |
Accounts Payable Turnover | 6.73 | 12.17 | 12.17 | n.a |
Payment Days | 27 | 36 | 26 | n.a |
Total Asset Turnover | 2.48 | 2.25 | 1.85 | n.a |
Debt Ratios | ||||
Debt to Net Worth | 0.35 | 0.15 | 0.12 | n.a |
Current Liab. to Liab. | 1.00 | 1.00 | 1.00 | n.a |
Liquidity Ratios | ||||
Net Working Capital | $143,816 | $243,023 | $398,187 | n.a |
Interest Coverage | 0.00 | 0.00 | 0.00 | n.a |
Additional Ratios | ||||
Assets to Sales | 0.40 | 0.44 | 0.54 | n.a |
Current Debt/Total Assets | 26% | 13% | 11% | n.a |
Acid Test | 1.10 | 2.72 | 4.42 | n.a |
Sales/Net Worth | 3.34 | 2.58 | 2.06 | n.a |
Dividend Payout | 0.00 | 0.00 | 0.00 | n.a |
Sales Forecast | |||||||||||||
Month 1 | Month 2 | Month 3 | Month 4 | Month 5 | Month 6 | Month 7 | Month 8 | Month 9 | Month 10 | Month 11 | Month 12 | ||
Sales | |||||||||||||
Pre-audit Review | 0% | $2,500 | $5,000 | $7,500 | $10,000 | $12,500 | $15,000 | $17,500 | $20,000 | $22,500 | $25,000 | $27,500 | $30,000 |
Pre-audit Review with Training | 0% | $3,500 | $7,000 | $10,500 | $14,000 | $17,500 | $20,000 | $23,500 | $27,000 | $30,500 | $34,000 | $37,500 | $40,500 |
Specialized Trainings | 0% | $100 | $200 | $300 | $400 | $500 | $600 | $700 | $800 | $900 | $1,000 | $1,100 | $1,200 |
Certification Courses | 0% | $150 | $300 | $450 | $600 | $750 | $900 | $1,050 | $1,200 | $1,350 | $1,500 | $1,650 | $1,800 |
Total Sales | $6,250 | $12,500 | $18,750 | $25,000 | $31,250 | $36,500 | $42,750 | $49,000 | $55,250 | $61,500 | $67,750 | $73,500 | |
Direct Cost of Sales | Month 1 | Month 2 | Month 3 | Month 4 | Month 5 | Month 6 | Month 7 | Month 8 | Month 9 | Month 10 | Month 11 | Month 12 | |
Pre-audit Review | $1,250 | $2,500 | $3,750 | $5,000 | $6,250 | $7,500 | $8,750 | $10,000 | $11,250 | $12,500 | $13,750 | $15,000 | |
Pre-audit Review with Training | $1,750 | $3,500 | $5,250 | $7,000 | $8,750 | $10,000 | $11,750 | $13,500 | $15,250 | $17,000 | $18,750 | $20,250 | |
Specialized Trainings | $25 | $50 | $75 | $100 | $125 | $150 | $175 | $200 | $225 | $250 | $275 | $300 | |
Certification Courses | $25 | $50 | $75 | $100 | $125 | $149 | $174 | $199 | $224 | $249 | $274 | $299 | |
Subtotal Direct Cost of Sales | $3,050 | $6,100 | $9,150 | $12,200 | $15,250 | $17,799 | $20,849 | $23,899 | $26,949 | $29,999 | $33,049 | $35,849 |
Personnel Plan | |||||||||||||
Month 1 | Month 2 | Month 3 | Month 4 | Month 5 | Month 6 | Month 7 | Month 8 | Month 9 | Month 10 | Month 11 | Month 12 | ||
Owners/Consultants | 0% | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 |
Operations Manager | 0% | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 |
Training Supervisors | 0% | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 |
Trainers | 0% | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 |
Paraprofessionals | 0% | $0 | $0 | $0 | $0 | $2,000 | $2,000 | $2,000 | $2,000 | $2,000 | $2,000 | $2,000 | $2,000 |
Administrative Support | 0% | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $2,000 | $2,000 | $2,000 | $2,000 | $2,000 |
Total People | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | |
Total Payroll | $0 | $0 | $0 | $0 | $2,000 | $2,000 | $2,000 | $4,000 | $4,000 | $4,000 | $4,000 | $4,000 |
Pro Forma Profit and Loss | |||||||||||||
Month 1 | Month 2 | Month 3 | Month 4 | Month 5 | Month 6 | Month 7 | Month 8 | Month 9 | Month 10 | Month 11 | Month 12 | ||
Sales | $6,250 | $12,500 | $18,750 | $25,000 | $31,250 | $36,500 | $42,750 | $49,000 | $55,250 | $61,500 | $67,750 | $73,500 | |
Direct Cost of Sales | $3,050 | $6,100 | $9,150 | $12,200 | $15,250 | $17,799 | $20,849 | $23,899 | $26,949 | $29,999 | $33,049 | $35,849 | |
Other Costs of Sales | $100 | $200 | $300 | $400 | $500 | $600 | $700 | $800 | $900 | $1,000 | $1,100 | $1,200 | |
Total Cost of Sales | $3,150 | $6,300 | $9,450 | $12,600 | $15,750 | $18,399 | $21,549 | $24,699 | $27,849 | $30,999 | $34,149 | $37,049 | |
Gross Margin | $3,100 | $6,200 | $9,300 | $12,400 | $15,501 | $18,101 | $21,201 | $24,301 | $27,401 | $30,501 | $33,601 | $36,451 | |
Gross Margin % | 49.60% | 49.60% | 49.60% | 49.60% | 49.60% | 49.59% | 49.59% | 49.59% | 49.59% | 49.60% | 49.60% | 49.59% | |
Expenses | |||||||||||||
Payroll | $0 | $0 | $0 | $0 | $2,000 | $2,000 | $2,000 | $4,000 | $4,000 | $4,000 | $4,000 | $4,000 | |
Marketing/Promotion | $20 | $40 | $60 | $80 | $100 | $120 | $140 | $160 | $180 | $200 | $220 | $240 | |
Depreciation | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | |
Rent | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $1,000 | $1,000 | $1,000 | $1,000 | $1,000 | |
Utilities | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $150 | $150 | $150 | $150 | $150 | |
Insurance | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $200 | $200 | $200 | $200 | $200 | |
Payroll Taxes | 15% | $320 | $640 | $961 | $1,281 | $1,901 | $2,169 | $2,489 | $3,109 | $3,430 | $3,750 | $4,070 | $4,364 |
Training Packet Production | 15% | $50 | $100 | $150 | $200 | $250 | $300 | $350 | $400 | $450 | $500 | $550 | $600 |
Office Supplies | $30 | $60 | $90 | $120 | $150 | $180 | $210 | $240 | $270 | $300 | $330 | $360 | |
Total Operating Expenses | $420 | $840 | $1,261 | $1,681 | $4,401 | $4,769 | $5,189 | $9,259 | $9,680 | $10,100 | $10,520 | $10,914 | |
Profit Before Interest and Taxes | $2,680 | $5,360 | $8,040 | $10,719 | $11,099 | $13,332 | $16,012 | $15,041 | $17,721 | $20,401 | $23,081 | $25,537 | |
EBITDA | $2,680 | $5,360 | $8,040 | $10,719 | $11,099 | $13,332 | $16,012 | $15,041 | $17,721 | $20,401 | $23,081 | $25,537 | |
Interest Expense | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | |
Taxes Incurred | $804 | $1,608 | $2,412 | $3,216 | $3,330 | $3,999 | $4,803 | $4,512 | $5,316 | $6,120 | $6,924 | $7,661 | |
Net Profit | $1,876 | $3,752 | $5,628 | $7,504 | $7,770 | $9,332 | $11,208 | $10,529 | $12,405 | $14,281 | $16,157 | $17,876 | |
Net Profit/Sales | 30.01% | 30.01% | 30.01% | 30.01% | 24.86% | 25.57% | 26.22% | 21.49% | 22.45% | 23.22% | 23.85% | 24.32% |
Pro Forma Cash Flow | |||||||||||||
Month 1 | Month 2 | Month 3 | Month 4 | Month 5 | Month 6 | Month 7 | Month 8 | Month 9 | Month 10 | Month 11 | Month 12 | ||
Cash Received | |||||||||||||
Cash from Operations | |||||||||||||
Cash Sales | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | |
Cash from Receivables | $0 | $208 | $6,458 | $12,708 | $18,958 | $25,208 | $31,425 | $36,708 | $42,958 | $49,208 | $55,458 | $61,708 | |
Subtotal Cash from Operations | $0 | $208 | $6,458 | $12,708 | $18,958 | $25,208 | $31,425 | $36,708 | $42,958 | $49,208 | $55,458 | $61,708 | |
Additional Cash Received | |||||||||||||
Sales Tax, VAT, HST/GST Received | 6.00% | $375 | $750 | $1,125 | $1,500 | $1,875 | $2,190 | $2,565 | $2,940 | $3,315 | $3,690 | $4,065 | $4,410 |
New Current Borrowing | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | |
New Other Liabilities (interest-free) | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | |
New Long-term Liabilities | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | |
Sales of Other Current Assets | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | |
Sales of Long-term Assets | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | |
New Investment Received | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | |
Subtotal Cash Received | $375 | $958 | $7,583 | $14,208 | $20,833 | $27,398 | $33,990 | $39,648 | $46,273 | $52,898 | $59,523 | $66,118 | |
Expenditures | Month 1 | Month 2 | Month 3 | Month 4 | Month 5 | Month 6 | Month 7 | Month 8 | Month 9 | Month 10 | Month 11 | Month 12 | |
Expenditures from Operations | |||||||||||||
Cash Spending | $0 | $0 | $0 | $0 | $2,000 | $2,000 | $2,000 | $4,000 | $4,000 | $4,000 | $4,000 | $4,000 | |
Bill Payments | $146 | $4,520 | $8,894 | $13,268 | $17,629 | $21,603 | $25,314 | $29,706 | $34,617 | $38,991 | $43,365 | $47,728 | |
Subtotal Spent on Operations | $146 | $4,520 | $8,894 | $13,268 | $19,629 | $23,603 | $27,314 | $33,706 | $38,617 | $42,991 | $47,365 | $51,728 | |
Additional Cash Spent | |||||||||||||
Sales Tax, VAT, HST/GST Paid Out | $375 | $750 | $1,125 | $1,500 | $1,875 | $2,190 | $2,565 | $2,940 | $3,315 | $3,690 | $4,065 | $4,410 | |
Principal Repayment of Current Borrowing | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | |
Other Liabilities Principal Repayment | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | |
Long-term Liabilities Principal Repayment | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | |
Purchase Other Current Assets | $0 | $0 | $0 | $0 | $2,000 | $0 | $0 | $2,000 | $0 | $0 | $0 | $0 | |
Purchase Long-term Assets | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | |
Dividends | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | |
Subtotal Cash Spent | $521 | $5,270 | $10,019 | $14,768 | $23,504 | $25,793 | $29,879 | $38,646 | $41,932 | $46,681 | $51,430 | $56,138 | |
Net Cash Flow | ($146) | ($4,312) | ($2,436) | ($560) | ($2,671) | $1,605 | $4,111 | $1,002 | $4,341 | $6,217 | $8,093 | $9,981 | |
Cash Balance | $24,354 | $20,043 | $17,607 | $17,047 | $14,376 | $15,981 | $20,093 | $21,095 | $25,436 | $31,654 | $39,747 | $49,728 |
Pro Forma Balance Sheet | |||||||||||||
Month 1 | Month 2 | Month 3 | Month 4 | Month 5 | Month 6 | Month 7 | Month 8 | Month 9 | Month 10 | Month 11 | Month 12 | ||
Assets | Starting Balances | ||||||||||||
Current Assets | |||||||||||||
Cash | $24,500 | $24,354 | $20,043 | $17,607 | $17,047 | $14,376 | $15,981 | $20,093 | $21,095 | $25,436 | $31,654 | $39,747 | $49,728 |
Accounts Receivable | $0 | $6,250 | $18,542 | $30,833 | $43,125 | $55,417 | $66,708 | $78,033 | $90,325 | $102,617 | $114,908 | $127,200 | $138,992 |
Other Current Assets | $1,000 | $1,000 | $1,000 | $1,000 | $1,000 | $3,000 | $3,000 | $3,000 | $5,000 | $5,000 | $5,000 | $5,000 | $5,000 |
Total Current Assets | $25,500 | $31,604 | $39,584 | $49,440 | $61,172 | $72,793 | $85,690 | $101,126 | $116,420 | $133,053 | $151,562 | $171,947 | $193,719 |
Long-term Assets | |||||||||||||
Long-term Assets | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 |
Accumulated Depreciation | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 |
Total Long-term Assets | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 |
Total Assets | $25,500 | $31,604 | $39,584 | $49,440 | $61,172 | $72,793 | $85,690 | $101,126 | $116,420 | $133,053 | $151,562 | $171,947 | $193,719 |
Liabilities and Capital | Month 1 | Month 2 | Month 3 | Month 4 | Month 5 | Month 6 | Month 7 | Month 8 | Month 9 | Month 10 | Month 11 | Month 12 | |
Current Liabilities | |||||||||||||
Accounts Payable | $0 | $4,228 | $8,457 | $12,685 | $16,913 | $20,764 | $24,329 | $28,557 | $33,322 | $37,550 | $41,779 | $46,007 | $49,903 |
Current Borrowing | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 |
Other Current Liabilities | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 |
Subtotal Current Liabilities | $0 | $4,228 | $8,457 | $12,685 | $16,913 | $20,764 | $24,329 | $28,557 | $33,322 | $37,550 | $41,779 | $46,007 | $49,903 |
Long-term Liabilities | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 |
Total Liabilities | $0 | $4,228 | $8,457 | $12,685 | $16,913 | $20,764 | $24,329 | $28,557 | $33,322 | $37,550 | $41,779 | $46,007 | $49,903 |
Paid-in Capital | $40,000 | $40,000 | $40,000 | $40,000 | $40,000 | $40,000 | $40,000 | $40,000 | $40,000 | $40,000 | $40,000 | $40,000 | $40,000 |
Retained Earnings | ($14,500) | ($14,500) | ($14,500) | ($14,500) | ($14,500) | ($14,500) | ($14,500) | ($14,500) | ($14,500) | ($14,500) | ($14,500) | ($14,500) | ($14,500) |
Earnings | $0 | $1,876 | $5,628 | $11,255 | $18,759 | $26,529 | $35,861 | $47,069 | $57,598 | $70,003 | $84,283 | $100,440 | $118,316 |
Total Capital | $25,500 | $27,376 | $31,128 | $36,755 | $44,259 | $52,029 | $61,361 | $72,569 | $83,098 | $95,503 | $109,783 | $125,940 | $143,816 |
Total Liabilities and Capital | $25,500 | $31,604 | $39,584 | $49,440 | $61,172 | $72,793 | $85,690 | $101,126 | $116,420 | $133,053 | $151,562 | $171,947 | $193,719 |
Net Worth | $25,500 | $27,376 | $31,128 | $36,755 | $44,259 | $52,029 | $61,361 | $72,569 | $83,098 | $95,503 | $109,783 | $125,940 | $143,816 |
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Over the last 20+ years, we’ve written business plans for over 4,000 companies and hundreds of thousands of others have used the best business plan template and our other business planning materials.
From this vast experience, we’ve gained valuable insights on how to write a business plan effectively , specifically in the management section.
A management team business plan is a section in a comprehensive business plan that introduces and highlights the key members of the company’s management team. This part provides essential details about the individuals responsible for leading and running the business, including their backgrounds, skills, and experience.
It’s crucial for potential investors and stakeholders to evaluate the management team’s competence and qualifications, as a strong team can instill confidence in the company’s ability to succeed.
Your management team plan has 3 goals:
There are two key elements to include in your management team business plan as follows:
For each key member of your team, document their name, title, and background.
Their backgrounds are most important in telling you and investors they are qualified to execute. Describe what positions each member has held in the past and what they accomplished in those positions. For example, if your VP of Sales was formerly the VP of Sales for another company in which they grew sales from zero to $10 million, that would be an important and compelling accomplishment to document.
Importantly, try to relate your team members’ past job experience with what you need them to accomplish at your company. For example, if a former high school principal was on your team, you could state that their vast experience working with both teenagers and their parents will help them succeed in their current position (particularly if the current position required them to work with both customer segments).
This is true for a management team for a small business, a medium-sized or large business.
In this section, detail if your management team currently has any gaps or missing individuals. Not having a complete team at the time you develop your business plan. But, you must show your plan to complete your team.
As such, describe what positions are missing and who will fill the positions. For example, if you know you need to hire a VP of Marketing, state this. Further, state the job description of this person. For example, you might say that this hire will have 10 years of experience managing a marketing team, establishing new accounts, working with social media marketing, have startup experience, etc.
To give you a “checklist” of the employees you might want to include in your Management Team Members and/or Gaps sections, below are the most common management titles at a growing startup (note that many are specific to tech startups):
If you have a Board of Directors or Board of Advisors, you would include the bios of the members of your board in this section.
A Board of Directors is a paid group of individuals who help guide your company. Typically startups do not have such a board until they raise VC funding.
If your company is not at this stage, consider forming a Board of Advisors. Such a board is ideal particularly if your team is missing expertise and/or experience in certain areas. An advisory board includes 2 to 8 individuals who act as mentors to your business. Usually, you meet with them monthly or quarterly and they help answer questions and provide strategic guidance. You typically do not pay advisory board members with cash, but offering them options in your company is a best practice as it allows you to attract better board members and better motivate them.
Below are examples of how to include your management section in your business plan.
Jim Smith, Founder & CEO
Jim has 15 years of experience in online software development, having co-founded two previous successful online businesses. His first company specialized in developing workflow automation software for government agencies and was sold to a public company in 2003. Jim’s second company developed a mobile app for parents to manage their children’s activities, which was sold to a large public company in 2014. Jim has a B.S. in computer science from MIT and an M.B.A from the University of Chicago
Bill Jones, COO
Bill has 20 years of sales and business development experience from working with several startups that he helped grow into large businesses. He has a B.S. in mechanical engineering from M.I.T., where he also played Division I lacrosse for four years.
We currently have no gaps in our management team, but we plan to expand our team by hiring a Vice President of Marketing to be responsible for all digital marketing efforts.
Vance Williamson, Founder & CEO
Prior to founding GoDoIt, Vance was the CIO of a major corporation with more than 100 retail locations. He oversaw all IT initiatives including software development, sales technology, mobile apps for customers and employees, security systems, customer databases/CRM platforms, etc. He has a B.S in computer science and an MBA in operations management from UCLA.
We currently have two gaps in our Management Team:
A VP of Sales with 10 years of experience managing sales teams, overseeing sales processes, working with manufacturers, establishing new accounts, working with digital marketing/advertising agencies to build brand awareness, etc.
In addition, we need to hire a VP of Marketing with experience creating online marketing campaigns that attract new customers to our site.
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Free Ultimate Guide On Writing A Business Plan
A business is as efficient as its team and its management. Therefore, it becomes important for business owners to build a structured management team that achieves the objectives and goals set by the organization.
Andrew Carnegie, an American steel magnate, beautifully summarized it –
“Teamwork is the ability to work together toward a common vision. The ability to direct individual accomplishments toward organizational objectives.”
A business management plan helps build an efficient team and formalizes business operations. This helps businesses streamline strategies to achieve their goals.
So, if you are a business owner who is looking to formalize their business structure and write the management team section in their business plans, this guide is for you.
Here’s a sneak peek into what you’ll learn:
Sounds good? Let’s dive in.
The management section of a business plan is an in-depth description of a business’s team, its structure, and the owners of a business.
The section discusses who is on the management team—internal and external, their skill sets, experiences, and how meaningfully they would contribute to an organization’s mission statement and goals.
Now that we have defined what the management section of a business plan is, let’s understand why it is so important.
The management section helps you to
Now that you know why exactly a management section in the business plan is necessary, let’s move ahead with what to include in it:
An organization’s entire management team can be divided into parts — the internal team and the external team. Let us see those in detail:
A business team consists of several departments. The most common departments are—marketing, sales, IT, customer service, operations, finance, and HR.
These departments depend on the nature and functioning of your business. For example, a dental clinic may not require a sales department per se.
The entire management team is distinguished according to their responsibility. This helps the business owners and investors be aware of the roles, benefits, ESOPs (if applicable), profit sharing (for sales), work contracts, NDAs (Non-Disclosure Agreements), and Non-Competition Agreements of the entire team.
It is recommended that business owners collect and document the following information about their team:
For example, your present VP of Marketing helped their previous company grow its bottom line from $3 million to $10 million over 18 months.
The external management team is usually composed of—advisory board members and professional services.
Advisory board members help by:
Credible advisory board members show great commitment to a company’s growth. Therefore, it becomes important to mention their experience and specialization in the business management plan.
The advisory board members can help give valuable advice that internal team members need or lack.
Usually, board members meet quarterly or monthly to provide strategic guidance in place of stock options in your company. This helps attract the best advisors and motivates them to invest in your business.
On the other hand, professional service helps by
Such services help businesses leverage skills that would be difficult to build and acquire over a short period.
Examples of such professional services are:
After a brief overview of the management team, let’s move forward.
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The management team gap is an important part of the management section. Primarily because it helps document if your management team currently has gaps or missing skills.
Your team may lack a few required skills while starting. The management team gaps help you to be aware and make efforts to close this gap.
As a business owner, you must document what positions are missing and who ought to fill those positions or take responsibility.
For example, if you need a VP of Sales, clearly document this in the section.
Also, write down the job description and key responsibilities to be undertaken. For example—you might mention that the role requires 10 years of experience in the sales domain. The applicant must have experience handling a sales team, closing new accounts, and working in tandem with the marketing team.
Be as detailed as possible. This will help you build a checklist while interviewing the right candidate and also win investor confidence in your managerial skills.
Here are a few key positions you would want to include in your management team business plan:
The management structure defines how a business organizes its management hierarchy. A hierarchy helps determine all team members’ roles, positions, power, and responsibilities.
The management structure also depends upon the type of business ownership. Business ownership can be—a sole proprietorship, partnership, or LLC.
Following is a sample management structure of an organization.
Now that we understand what details we need to document in business management plans, let’s have a look at the example.
[management section of a hotel], [management team], internal team members.
Name: Charles Fargo Role: Owner Responsibility: Formulating key strategies, defining budgets, and building a business plan Experience: 35 years of owning multiple hotels in Las Vegas Educational Background: B.Sc in Hospitality Management from South Dakota State University.
Name: Michael Clark Role: General Manager Responsibility: Overall hotel operations – guest interactions, revenue management, brand ambassador of the hotel, customer satisfaction, and experience, leadership to all departments Experience: 25 years working with several technology hotels as the general manager. Educational Background: MBA from Wharton School
Name: George Trump Role: Department Manager Responsibility: Manage employees, smooth coordination amongst employees, plan daily affairs of the department, strategize, prepare reports, and deal with complaints and suggestions. Lead team members to function as a team Experience: 15 years working as a department manager Educational Background: BSc in Hotel Management from Texas University
Note: There can be multiple Department Managers depending on the nature of your business. In the case of hotels, departments can include – housekeeping, logistics, security, food, and banquets.
Name: Donald Clooney Role: Marketing and Sales Manager Responsibility: Increase occupancy and generate revenue. Position the hotel as an option for leisure activities, relaxation, and holidays. Experience: 11 years working as the marketing and sales manager for hotels Educational Background: MBA in Tourism and Hospitality from Midway University
Name: Oprah Williams Role: Human Resources Manager Responsibility: Recruit and train hotel staff, maintain smooth onboarding process for new recruits, train, counsel, and coach staff, resolve conflicts, and conduct performance reviews Experience: 9 years working as human resources manager for hotels Educational Background: MBA in Human Resources Management from California University
Advisory Board Member
#1 Richard Branson Responsibility: Strategic advisory for sustainable growth and expansion Experience: Founder of Virgin Group
#1 Digital Marketing Agency – Neil Patel – Help market and sell our product using digital mediums – blog, website, YouTube, and social media.
There is a gap in one key position in our startup.
#1 Chief Finance Officer (CFO) Responsibilities: Finance, Accounting, Tracking Profit and Loss, and overseeing FP&A (Financial Planning and Analysis)
So, that’s it for today! Now that you know how to write a management team section, make sure you write the best one by mentioning all the necessary details.
If you are still confused about writing the management team sections, then you can visit various sample business plans to know more. You can even use smart business planning software to smooth your business planning process.
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What tone should i use when writing the management team section.
When writing about your management team in your business plan, use a tone that’s confident, professional, and positive. This shows investors that your team is experienced, qualified, and able to lead your company to success.
In the management team of a business plan, you should include all the key members of the company:
In a business plan, it’s not necessary to include personal information about team members unless it directly relates to their role in the business. The focus should be on professional qualifications, experience, and skills that are relevant to their position.
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Upmetrics Team
Upmetrics is the #1 business planning software that helps entrepreneurs and business owners create investment-ready business plans using AI. We regularly share business planning insights on our blog. Check out the Upmetrics blog for such interesting reads. Read more
Sep 17, 2023 | Business Consulting , Business Plan , Organization and Management , Organizational Development , Strategy
It provides critical information for those looking for evidence that your staff has the necessary experience, skills, and pedigree to realize the objectives detailed in the rest of your business plan.
The organization and management section of your business plan should provide details about your business structure and team. This section typically comes after the executive summary. However, some people have it further in the document after the market analysis section.
This section generally is separated into two parts. The first concerns the organization as a whole. It gives readers an overview of the company structure, which is an excellent opportunity for the reader to lift the roof off your office and peer into its inner workings. For your legal design, you may set up as a limited liability company (LLC) or nonprofit/ charity or form a partnership. It’s crucial to include this section. However, suppose you’re starting a home business or have an already operating business where you’re the only person involved. In that case, you can skip this section or show the company registration details from either the company’s house or the awarding .gov.
The second part focuses specifically on your management team and introduces readers to each member — your chance to impress them with the many accomplishments pinned to your organization’s management team.
This section may seem less important than some of the other parts of your business plan, but the truth is that your people are your business. If they’re highly competent and accomplished, the implication is that so is your business.
Of course, if you’re a sole proprietor with no management structure or any employees, this section is unnecessary other than to talk about yourself and your achievements.
The section on organization and management should outline the hierarchy, individual roles, and corresponding responsibilities. It should also highlight each person’s strengths and qualifications for their positions.
The organizational section of your business plan outlines the hierarchy of individuals involved in your business, typically in a chart format. This section identifies the President or CEO, CFO, Director of Marketing, and other roles for partnerships or multi-member LLCs. If you’re a single-person home business, this section is straightforward as you are the only person on the chart.
Although this section primarily focuses on owner members, you can include outsourced workers or virtual assistants if you plan to hire them. For example, you may have a freelance web admin, marketing assistant, or copywriter. You may even have a virtual assistant who coordinates with your other freelancers. While these individuals are not owners, they hold significant responsibilities in your business.
There are various business structures, such as sole proprietorships, partnerships, LLCs, and corporations.
Here is an indicative list of business structures. It would help if you talked to your accountant and legal advisors to determine which legal form is the best for your business proposition.
When embarking on a business venture, it’s essential to consider the various structures available. A sole proprietorship is a structure whereby the business is not regarded as separate from its owner’s finances. The owner retains complete control and responsibility for the company. However, they are unable to sell stocks or bring in new owners. The business becomes a sole proprietorship if not registered under any other structure.
When forming a partnership, it can either be a limited partnership (LP) or a limited liability partnership (LLP). One partner assumes most liability in a limited partnership (LP). In contrast, the other partners have limited liability and control over the business. Alternatively, in a limited liability partnership (LLP), all partners have limited liability from debts and actions of other partners, and there is no general partner.
A limited company (LTD) or limited liability company (LLC) is a mixture of business structures that mixes aspects of partnerships and corporations. It offers limited personal liability to the owner and passes profits through to their tax returns.
There are various types of corporate structures. A C-corporation enables the issuance of stock shares, pays corporate taxes instead of personal returns, and provides the highest level of personal protection from business activities. On the other hand, nonprofit corporations are similar to C corporations. However, they do not aim to make profits and are exempt from state or federal income taxes.
More information on company legal structures is available on UK.Gov and USA.SBA websites.
This first step illustrates the positions in your organization’s employee hierarchy and how they all relate to each other.
This is usually done graphically as a guide, using an organizational chart, or “org chart” for short. People use a Microsoft tool, i.e., PowerPoint or Excel, to help.
Organization Charts typically follow a top-down hierarchy, starting with your CEO/ Managing Director in the top box at the top of the page. Lines extend down from that person’s name to boxes containing the terms of the CEO’s direct reports.
We have included an example organizational chart below for guidelines only.
Identify your business organization structure and list your team members’ strengths and skills.
Those managers then have lines extending to those who report to them, and so on, down to your lowest staff positions.
This section will give your readers a quick understanding of your management and governance structure, the size of your organization, and your lines of control and communication.
In your business plan’s Organization and Management section, please provide a detailed description of your team. Y ou will discuss the company’s management team, starting with the owners.
This section highlights who is involved in the running of your business and who are the support professionals. It also includes the roles and responsibilities of managers.
Suppose the company structure is a multi-owner arrangement or some other multi-owner arrangement. In that case, you’ll want to include information for every member and their percentage of ownership and ongoing involvement in the company.
It’s important to discuss how ownership interests are split, their responsibilities, what they did before securing their current position, and how they came to be involved with the company.
Here, it would help if you talked about some of your critical team members. These people are directly responsible for large portions of your business operations.
Within your business o rganization and management section, y ou should introduce the team and talk about their experience, qualifications, previous companies and achievements, role in the company, and any special skills they bring with them. Please provide the following details for each owner, manager, or member of the business within your business plan:
Perhaps they’re an entrepreneur, business coach, exclusive advisor, or industry specialist to help you grow.
This is an ideal opportunity for companies with an Executive Board of Directors, Governance Structure, or Advisory Board to introduce them to your readers.
Having a board of directors is essential for your management team. Without one, you may be missing out on crucial information. This section includes details similar to those found in the ownership and management team sub-section, such as the names, areas of expertise, positions (if applicable), and involvement with the company of each board member.
Suppose you’re looking for funding for your business or to fill a gap in your knowledge, or you may not have the funds to hire an executive board. In that case, you must inform potential partners and investors that you have a team of professionals assisting you. This includes lawyers, accountants, and any freelancers or contractors you may be working with. When listing these individuals, include their name, title, educational background, certifications, services they provide to your business, and their relationship with you (i.e., hourly rates, projects, retainer, as-needed, regular). Additionally, highlight their skills and experience that make them an asset to your team you need
Does anything else make them stand out as quality professionals (awards, past working with credible brands)?
Now, you’ve showcased the management team in its entirety. You can provide brief bios for hiring team needs or secondary members and talk at length about how the team’s combined skills complement each other and how they amplify the team’s effectiveness.
It’s also important to point out any gaps in the knowledge your team is currently suffering. Your readers will likely be savvy enough to pick up on existing holes.
Therefore, you’ll want to get ahead of these criticisms and demonstrate that you’re already aware of the positions and complementary skill sets your management team still requires and how you plan to address the knowledge gaps with future hires.
Every successful business plan should include the organization and management section, helping you communicate your legal structure and team.
Writing a business plan can seem overwhelming, especially when starting a small, one-person business. However, it can be a reasonably simple task. This section of the plan should be updated if there are any changes to the organization structure or team members, such as additional training, awards, or other resume changes that benefit the business.
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Program management is a vital component of organizational success, as it enables the coordinated execution of interdependent projects that yield benefits beyond the scope of individual project management. It involves the judicious application of knowledge, skills, tools, and techniques to meet specific program requirements. Our experience has demonstrated that organizations with well-developed program management and program management offices (PMOs) consistently outperform those that lack such structures. Therefore, it is imperative that organizations prioritize the establishment of robust program management frameworks to achieve their strategic objectives.
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Business transformation strategy is a complex and dynamic process that fundamentally restructures an organization’s strategy, processes, and systems. Though each business transformation is unique, several critical steps remain foundational to a successful change management plan. A comprehensive business transformation framework ensures a smooth and practical transformation. This framework should encompass various elements, such as defining the vision and aims of the transformation, assessing the current state of the business, identifying gaps and areas of improvement, developing a roadmap and action plan, implementing the changes, monitoring and measuring progress, and continuously refining the transformation approach as needed.
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Change is the only constant in today’s fast-paced world, and organizations must adapt to stay ahead. Fortunately, change management provides a structured and coordinated approach that enables businesses to move from their current state to a future desirable state. To deliver business value, organizations introduce change through projects, programs, and portfolios. However, introducing change is just the beginning! The real challenge is to embed the change and make it a new normal state for the organization. This calls for implementing the main principles of change management, which we will discuss in this article. Get ready to transform your organization and achieve your desired outcomes by mastering the art of change management!
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Posted march 22, 2021 by noah parsons.
A personnel plan is a critical part of your business plan and financial forecast . In addition to helping you budget for current and future employees, your personnel plan enables you to think through who you should hire and when you should hire them.
If you’re pitching to angel investors or venture capitalists for funding, they will want to see why your team is uniquely suited to grow and scale your business, as well as your hiring plan.
Investors will want to know:
For many startups and small businesses, the people who do the work—your team—are both the most costly and most valuable asset. It makes sense that hiring the right person at the right time can have a significant impact on your ability to meet your company’s milestones and goals , not to mention your cash flow .
Thinking strategically about human resources — when to add positions, compensation levels, and whether to hire full-time or on a contract basis are all pieces of a healthy personnel plan.
So, whether you’re seeking investment or not, building a personnel plan and forecast is an essential part of business planning and strategic planning for the long-term viability of your company. Let’s dive right in and look at the five key steps to build an investor-ready personnel plan.
In the “team” section of your business plan, you will typically include an overview of the key positions in your company and the background of the people who will be in those critical roles. Usually, you’ll highlight each of the management positions in your company and then speak more generally about other departments and teams.
You don’t need to include full resumes for each team member—a quick summary of why each person is qualified to do the job is enough. Describe each person’s skills and experience and what they will be doing for the company.
Emphasize your team’s strengths. How do they make your team stronger? What specific expertise and experience do they have in your (or a related) industry? Assuming your market research identified a great opportunity, why are you the right team to capitalize on it?
For potential investors, this section helps qualify why each team member is necessary for the success of the business. It acts as a justification for their salary and equity share if they are part owners of the company.
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The organizational structure of your company is frequently represented as an “org chart” that shows who reports to whom and who is responsible for what.
You don’t have to create a visual org chart, though—describing your organization in the text is just fine. Just make sure to show that you have a clear structure for your company.
Is authority adequately distributed among the team? Do you have the resources to get everything done that you need to grow your company?
You’ll also want to mention the various teams your company is going to have in the future. These might include sales, customer service, product development, marketing, manufacturing, and so on.
You don’t need to plan on hiring all of these people right away. Think of this section as an outline of what you plan to do in the future with your company.
It’s alright to have gaps on your team, especially if you’re a startup. You may not have identified all the “right” team members yet, or you may not have the funds available yet to hire for essential roles . That’s okay.
The key is to know that you do have gaps on your team—this is how you figure out who you need to hire and when you need to hire them. Also, it’s much better to define and identify weaknesses in your team than to pretend that you have all the key roles that you need. In your business plan , explain where your organization is weak and what your plans are to correct the problem as you grow.
It might be tempting to hide your potential weaknesses from investors, but they’ll see through that right away. It’s much better to be open and honest about where you have management gaps and your plans to solve those problems. You want them to know you have identified and made plans to mitigate risks .
You also need to keep in mind that employees might wear a lot of hats in the early days of a company, but that specialization will happen as the company grows.
For example, initially, the CEO might also be the VP of Sales. But, eventually, the VP of Sales role should be filled by a specialist to take on that responsibility. Include these types of changes in your personnel plan to explain to investors that you understand how your company is going to grow and scale.
For some companies, external advisors, board members , and even consultants can play a crucial role in setting business strategy. These people might even fill key positions temporarily as your company grows. If this is the case, you’ll want to list these people in your business plan. Like your management team, provide a brief background on each principal advisor that explains the value they provide.
If your advisors don’t hold key roles or are not critical to your success, you don’t necessarily have to list them. But, do list anyone that is adding substantial value to the company by providing advice, connections, or operational expertise.
Most business plans should include a personnel table to forecast the expense of your employees. Here are the expenses you’ll need to be aware of when forecasting.
You’ll want to include both direct expenses , which usually comprise salaries, as well as indirect expenses which include:
As well as any other costs you incur for each employee beyond their salary. Here’s an example of what a personnel forecast can look like using LivePlan .
There are different names for the indirect expenses of personnel. Still, I like to call it “burden rate” or “employee-related expenses,” which is an expense over and above the direct wages and salaries. These expenses typically include payroll taxes, worker’s compensation insurance, health insurance, and other benefits and taxes.
For business planning purposes, don’t stress about coming up with the exact figure for the burden rate. Instead, estimate it using a percentage of total monthly salaries. Somewhere between 15 percent and 25 percent usually makes sense, but it depends on what kind of benefits you plan on offering.
In your personnel plan, you can list both individual people as well as groups of people. You’ll probably want to list out key people and other highly paid employees, but group together other departments or groups of people. For example, you might list out your management team, but then group together departments like Marketing, Customer Service, and Manufacturing.
Then, add in your personnel burden to cover benefits and insurance. In the example personnel table above, this is called “Employee-Related Expenses.”
You’ll then take the total number of your salaries plus personnel burden and include this in your profit and loss forecast as an expense. Suppose you’re using LivePlan to build your personnel forecast. In that case, this how-to article on entering personnel shows where you’ll see personnel costs appear on your cash flow statement, profit and loss (income statement), and your balance sheet.
If you are a sole proprietor and don’t have employees, you should still include your own salary as part of the business plan. Make sure to include your salary as an expense in your Profit & Loss Statement . Even if you, the business owner, don’t take the salary, so you can keep the cash in your business, you’ll want to record what you should have been paid.
In the case of a sole proprietor, you probably don’t need a full table for the personnel plan, like in the example above. But, when you do start planning to hire a team, you should use the format I’ve described here.
Personnel planning is a valuable part of the business planning process because it forces you to think about what needs to get done in your business and who’s going to do it. Take the time to work through this part of your financial forecast, and you’ll have a much better sense of what it’s going to take to make your business successful.
*Editors Note: This article was initially written in 2019 and updated for 2021.
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This section explains how your business runs and who’s on your team. Learn how to present the information in this section of your business plan.
This section of your business plan, Organization and Management, is where you’ll explain exactly how you’re set up to make your ideas happen, plus you’ll introduce the players on your team.
As always, remember your audience. If this is a plan for your internal use, you can be a little more general than if you’ll be presenting it to a potential lender or investor. No matter what its purpose, you’ll want to break the organization and management section into two segments: one describing the way you’ve set up the company to run (its organizational structure), and the other introducing the people involved (its management).
Having a solid plan for how your business will run is a key component of its smooth and successful operation. Of course, you need to surround yourself with good people, but you have to set things up to enable them to work well with each other and on their own.
It’s important to define the positions in the company, which job is responsible for what, and to whom everyone will report. Over time, the structure may grow and change and you can certainly keep tweaking it as you go along, but you need to have an initial plan.
If you’re applying for funding to start a business or expand one, you may not even have employees to fit all the roles in the organization. However, you can still list them in your plan for how the company will ideally operate once you have the ability to do so.
Obviously, for small businesses, the organization will be far more streamlined and less complicated than it is for larger ones, but your business plan still needs to demonstrate an understanding of how you’ll handle the workflow. At the very least, you’ll need to touch on sales and marketing, administration, and the production and distribution of your product or the execution of your service.
For larger companies, an organizational plan with well-thought-out procedures is even more important. This is the best way to make sure you’re not wasting time duplicating efforts or dealing with internal confusion about responsibilities. A smooth-running operation runs far more efficiently and cost-effectively than one flying by the seat of its pants, and this section of your business plan will be another indication that you know what you’re doing. A large company is also likely to need additional operational categories such as human resources and possibly research and development.
One way to explain your organizational structure in the business plan is graphically. A simple diagram or flowchart can easily demonstrate levels of management and the positions within them, clearly illustrating who reports to whom, and how different divisions of the company (such as sales and marketing) relate to each other.
Here is where you can also talk about the other levels of employees in your company. Your lower-level staff will carry out the day-to-day work, so it’s important to recognize the types of people you’ll need, how many, what their qualifications should be, where you’ll find them, and what they’ll cost.
If the business will use outside consultants, freelancers, or independent contractors, mention it here as well. And talk about positions you’d want to add in the future if you’re successful enough to expand.
Now that we understand the structure of your business, we need to meet the people who’ll be running it. Who does what, and why are they onboard? This section is important even for a single practitioner or sole proprietorship, as it will introduce you and your qualifications to the readers of your plan.
Start at the top with the legal structure and ownership of the business. If you are incorporated, say so, and detail whether you are a C or S corporation. If you haven’t yet incorporated, make sure to discuss this with your attorney and tax advisor to figure out which way to go. Whether you’re in a partnership or are a sole owner, this is where to mention it.
List the names of the owners of the business, what percent of the company each of them owns, the form of ownership (common or preferred stock, general or limited partner), and what kind of involvement they’ll have with day-to-day operations; for example, if they’re an active or silent partner.
Here’s where you’ll list the names and profiles of your management team, along with what their responsibilities are. Especially if you’re looking for funding, make sure to highlight the proven track record of these key employees. Lenders and investors will be keenly interested in their previous successes, particularly in how they relate to this current venture.
Include each person’s name and position, along with a short description of what the individual’s main duties will be. Detail his or her education, and any unique skills or experience, especially if they’re relevant to the job at hand. Mention previous employment and any industry awards or recognition related to it, along with involvement with charities or other non-profit organizations.
Think of this section as a resume-in-a-nutshell, recapping the highlights and achievements of the people you’ve chosen to surround yourself with. Actual detailed resumes for you and your management team should go in the plan’s appendix, and you can cross-reference them here. You want your readers to feel like your top staff complements you and supplements your own particular skill set. You also want readers to understand why these people are so qualified to help make your business a success.
This section will spell out the compensation for management team members, such as salary, benefits, and any profit-sharing you might be offering. If any of the team will be under contract or bound by non-compete agreements, you would mention that here, as well.
If your company will have a Board of Directors, its members also need to be listed in the business plan. Introduce each person by name and the position they’ll hold on the board. Talk about how each might be involved with the business (in addition to board meetings.
Similar to what you did for your management team, give each member’s background information, including education, experience, special skills, etc., along with any contributions they may already have had to the success of the business. Include the full resumes for your board members in the appendix.
Alternately, if you don’t have a Board of Directors, include information about an Advisory Board you’ve put together, or a panel of experts you’ve convened to help you along the way. Having either of these, by the way, is something your company might want to consider whether or not you’re putting together the organization and management section or your business plan.
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A personnel plan is a document that outlines an organization’s staffing needs, goals, and strategies for managing its workforce.
It is a key component of human resource management and provides a roadmap for the recruitment, selection, training, development, retention, and management of employees.
A personnel plan is critical within the business plan you would have created as a start-up or entrepreneur. It will help you in your financial forecasting, anticipating the right times to hire and expand.
The personnel section of a business plan should include information about the management team and staff that will be involved in operating the business. The people who do the work are the most important asset, which of course comes with a cost. Understanding when to hire, when to think about human resources, and when to grow your business at the right time can be enormously important in meeting business objectives, setting yourself up for success with great personal benchmarks.
Building out a personnel plan within your business plan is going to be essential in planning for the long term success of your business. Forecasting this data can be the best way to ensure longevity.
This should include a brief introduction to the key members of the management team, including their backgrounds, experience, and relevant skills. It’s important to highlight their qualifications and how they will contribute to the success of the business.
This can be brief and doesn’t require a full resume for each member of the team. A simple explanation detailing qualifications and relevant experience applicable within the company is all that’s required.
This section should provide an overview of the organizational structure of the company, including who will be in charge of each department or functional area, as well as any outside consultants or advisors who will be involved.
In line with forecasting, you will want to illustrate the future of your company and who will be included. As you develop, you can anticipate your team growing from a just few employees into staff across multiple sectors, such as customer service, marketing, and support.
Outline the staffing needs of the business, including the number and types of employees needed to run the business successfully. This should also include the qualifications and skills required for each position.
Here you can identify the weaknesses and risks across your team, ensuring that you have a capable understanding of the roles and responsibilities that are important to the business in the future – though they may not be in place right now. Investors are quick to highlight “perfect” personnel plans, so you will want to embrace that you have identified risks in staffing.
As an example, your head of customer support may also be your head of sales, but in time these two roles will need to be separated.
This section should detail how the company plans to recruit and train employees, including any training programs or on-the-job training that will be provided.
Outline the compensation and benefits packages that will be offered to employees, including salaries, bonuses, health benefits, retirement plans, and any other perks or incentives.
Detail the company’s policies on issues such as employee performance reviews , disciplinary procedures, and termination policies.
Even if you don’t have any employees right now, having a personnel plan is beneficial for your business in the long term.
Without a personnel plan, you may find it challenging to scale your business or adapt to changes in your industry or market. For example, if you suddenly need to hire someone to fill a critical role, you may not know where to start or what qualifications you should look for.
Creating a personnel plan can also help you to clarify your business goals and objectives. By determining the roles and responsibilities required to meet those goals, you can better prioritize and focus on the essential tasks that need to be done.
Therefore, even if you don’t have any employees currently, it’s still a good idea to develop a personnel plan to help you prepare for future growth and ensure that you have the right team in place to support your business objectives.
Personnel planning is a long process as it requires dedicated thought as to what needs to happen in your business and where you want to take it. Typically, this require a lengthy process of spreadsheets and equations to figure out exactly who needs to be working with you, and at what cost.
Business planning software can ensure that this part of your business plan, alongside other key components, is created with ease – simply needing a few data entries to be entered throughout the software.
Every successful business has one thing in common, a good and well-executed business plan. A business plan is more than a document, it is a complete guide that outlines the goals your business wants to achieve, including its financial goals . It helps you analyze results, make strategic decisions, show your business operations and growth.
If you want to start a business or already have one and need to pitch it to investors for funding, writing a good business plan improves your chances of attracting financiers. As a startup, if you want to secure loans from financial institutions, part of the requirements involve submitting your business plan.
Writing a business plan does not have to be a complicated or time-consuming process. In this article, you will learn the step-by-step process for writing a successful business plan.
You will also learn what you need a business plan for, tips and strategies for writing a convincing business plan, business plan examples and templates that will save you tons of time, and the alternatives to the traditional business plan.
Let’s get started.
Businesses create business plans for different purposes such as to secure funds, monitor business growth, measure your marketing strategies, and measure your business success.
One of the primary reasons for writing a business plan is to secure funds, either from financial institutions/agencies or investors.
For you to effectively acquire funds, your business plan must contain the key elements of your business plan . For example, your business plan should include your growth plans, goals you want to achieve, and milestones you have recorded.
A business plan can also attract new business partners that are willing to contribute financially and intellectually. If you are writing a business plan to a bank, your project must show your traction , that is, the proof that you can pay back any loan borrowed.
Also, if you are writing to an investor, your plan must contain evidence that you can effectively utilize the funds you want them to invest in your business. Here, you are using your business plan to persuade a group or an individual that your business is a source of a good investment.
A business plan can help you track cash flows in your business. It steers your business to greater heights. A business plan capable of tracking business growth should contain:
A good business plan should guide you through every step in achieving your goals. It can also track the allocation of assets to every aspect of the business. You can tell when you are spending more than you should on a project.
You can compare a business plan to a written GPS. It helps you manage your business and hints at the right time to expand your business.
A business plan can help you measure your business success rate. Some small-scale businesses are thriving better than more prominent companies because of their track record of success.
Right from the onset of your business operation, set goals and work towards them. Write a plan to guide you through your procedures. Use your plan to measure how much you have achieved and how much is left to attain.
You can also weigh your success by monitoring the position of your brand relative to competitors. On the other hand, a business plan can also show you why you have not achieved a goal. It can tell if you have elapsed the time frame you set to attain a goal.
You can use a business plan to document your marketing plans. Every business should have an effective marketing plan.
Competition mandates every business owner to go the extraordinary mile to remain relevant in the market. Your business plan should contain your marketing strategies that work. You can measure the success rate of your marketing plans.
In your business plan, your marketing strategy must answer the questions:
1. create your executive summary.
The executive summary is a snapshot of your business or a high-level overview of your business purposes and plans . Although the executive summary is the first section in your business plan, most people write it last. The length of the executive summary is not more than two pages.
Generally, there are nine sections in a business plan, the executive summary should condense essential ideas from the other eight sections.
A good executive summary should do the following:
The executive summary is the make-or-break section of your business plan. If your summary cannot in less than two pages cannot clearly describe how your business will solve a particular problem of your target audience and make a profit, your business plan is set on a faulty foundation.
Avoid using the executive summary to hype your business, instead, focus on helping the reader understand the what and how of your plan.
View the executive summary as an opportunity to introduce your vision for your company. You know your executive summary is powerful when it can answer these key questions:
Writing the executive summary last although it is the most important section of your business plan is an excellent idea. The reason why is because it is a high-level overview of your business plan. It is the section that determines whether potential investors and lenders will read further or not.
The executive summary can be a stand-alone document that covers everything in your business plan. It is not uncommon for investors to request only the executive summary when evaluating your business. If the information in the executive summary impresses them, they will ask for the complete business plan.
If you are writing your business plan for your planning purposes, you do not need to write the executive summary.
The company overview or description is the next section in your business plan after the executive summary. It describes what your business does.
Adding your company overview can be tricky especially when your business is still in the planning stages. Existing businesses can easily summarize their current operations but may encounter difficulties trying to explain what they plan to become.
Your company overview should contain the following:
When creating a company overview, you have to focus on three basics: identifying your industry, identifying your customer, and explaining the problem you solve.
If you are stuck when creating your company overview, try to answer some of these questions that pertain to you.
After answering some or all of these questions, you will get more than enough information you need to write your company overview or description section. When writing this section, describe what your company does for your customers.
The company description or overview section contains three elements: mission statement, history, and objectives.
The mission statement refers to the reason why your business or company is existing. It goes beyond what you do or sell, it is about the ‘why’. A good mission statement should be emotional and inspirational.
Your mission statement should follow the KISS rule (Keep It Simple, Stupid). For example, Shopify’s mission statement is “Make commerce better for everyone.”
When describing your company’s history, make it simple and avoid the temptation of tying it to a defensive narrative. Write it in the manner you would a profile. Your company’s history should include the following information:
When you fill in this information, you use it to write one or two paragraphs about your company’s history.
Your business objective must be SMART (specific, measurable, achievable, realistic, and time-bound.) Failure to clearly identify your business objectives does not inspire confidence and makes it hard for your team members to work towards a common purpose.
The third step in writing a business plan is the market and competitive analysis section. Every business, no matter the size, needs to perform comprehensive market and competitive analyses before it enters into a market.
Performing market and competitive analyses are critical for the success of your business. It helps you avoid entering the right market with the wrong product, or vice versa. Anyone reading your business plans, especially financiers and financial institutions will want to see proof that there is a big enough business opportunity you are targeting.
This section is where you describe the market and industry you want to operate in and show the big opportunities in the market that your business can leverage to make a profit. If you noticed any unique trends when doing your research, show them in this section.
Market analysis alone is not enough, you have to add competitive analysis to strengthen this section. There are already businesses in the industry or market, how do you plan to take a share of the market from them?
You have to clearly illustrate the competitive landscape in your business plan. Are there areas your competitors are doing well? Are there areas where they are not doing so well? Show it.
Make it clear in this section why you are moving into the industry and what weaknesses are present there that you plan to explain. How are your competitors going to react to your market entry? How do you plan to get customers? Do you plan on taking your competitors' competitors, tap into other sources for customers, or both?
Illustrate the competitive landscape as well. What are your competitors doing well and not so well?
Answering these questions and thoughts will aid your market and competitive analysis of the opportunities in your space. Depending on how sophisticated your industry is, or the expectations of your financiers, you may need to carry out a more comprehensive market and competitive analysis to prove that big business opportunity.
Instead of looking at the market and competitive analyses as one entity, separating them will make the research even more comprehensive.
Market analysis, boarding speaking, refers to research a business carried out on its industry, market, and competitors. It helps businesses gain a good understanding of their target market and the outlook of their industry. Before starting a company, it is vital to carry out market research to find out if the market is viable.
The market analysis section is a key part of the business plan. It is the section where you identify who your best clients or customers are. You cannot omit this section, without it your business plan is incomplete.
A good market analysis will tell your readers how you fit into the existing market and what makes you stand out. This section requires in-depth research, it will probably be the most time-consuming part of the business plan to write.
To create a compelling market analysis that will win over investors and financial institutions, you have to carry out thorough market research . Your market research should be targeted at your primary target market for your products or services. Here is what you want to find out about your target market.
The purpose of carrying out a marketing analysis is to get all the information you need to show that you have a solid and thorough understanding of your target audience.
Only after you have fully understood the people you plan to sell your products or services to, can you evaluate correctly if your target market will be interested in your products or services.
You can easily convince interested parties to invest in your business if you can show them you thoroughly understand the market and show them that there is a market for your products or services.
How to Quantify Your Target Market
One of the goals of your marketing research is to understand who your ideal customers are and their purchasing power. To quantify your target market, you have to determine the following:
What Does a Good Market Analysis Entail?
Your business does not exist on its own, it can only flourish within an industry and alongside competitors. Market analysis takes into consideration your industry, target market, and competitors. Understanding these three entities will drastically improve your company’s chances of success.
You can view your market analysis as an examination of the market you want to break into and an education on the emerging trends and themes in that market. Good market analyses include the following:
The market analysis section is not just for talking about your target market, industry, and competitors. You also have to explain how your company can fill the hole you have identified in the market.
Here are some questions you can answer that can help you position your product or service in a positive light to your readers.
Basically, your market analysis should include an analysis of what already exists in the market and an explanation of how your company fits into the market.
In the competitive analysis section, y ou have to understand who your direct and indirect competitions are, and how successful they are in the marketplace. It is the section where you assess the strengths and weaknesses of your competitors, the advantage(s) they possess in the market and show the unique features or qualities that make you different from your competitors.
Many businesses do market analysis and competitive analysis together. However, to fully understand what the competitive analysis entails, it is essential to separate it from the market analysis.
Competitive analysis for your business can also include analysis on how to overcome barriers to entry in your target market.
The primary goal of conducting a competitive analysis is to distinguish your business from your competitors. A strong competitive analysis is essential if you want to convince potential funding sources to invest in your business. You have to show potential investors and lenders that your business has what it takes to compete in the marketplace successfully.
Competitive analysis will s how you what the strengths of your competition are and what they are doing to maintain that advantage.
When doing your competitive research, you first have to identify your competitor and then get all the information you can about them. The idea of spending time to identify your competitor and learn everything about them may seem daunting but it is well worth it.
Find answers to the following questions after you have identified who your competitors are.
If your competitors have a website, it is a good idea to visit their websites for more competitors’ research. Check their “About Us” page for more information.
If you are presenting your business plan to investors, you need to clearly distinguish yourself from your competitors. Investors can easily tell when you have not properly researched your competitors.
Take time to think about what unique qualities or features set you apart from your competitors. If you do not have any direct competition offering your product to the market, it does not mean you leave out the competitor analysis section blank. Instead research on other companies that are providing a similar product, or whose product is solving the problem your product solves.
The next step is to create a table listing the top competitors you want to include in your business plan. Ensure you list your business as the last and on the right. What you just created is known as the competitor analysis table.
Direct vs Indirect Competition
You cannot know if your product or service will be a fit for your target market if you have not understood your business and the competitive landscape.
There is no market you want to target where you will not encounter competition, even if your product is innovative. Including competitive analysis in your business plan is essential.
If you are entering an established market, you need to explain how you plan to differentiate your products from the available options in the market. Also, include a list of few companies that you view as your direct competitors The competition you face in an established market is your direct competition.
In situations where you are entering a market with no direct competition, it does not mean there is no competition there. Consider your indirect competition that offers substitutes for the products or services you offer.
For example, if you sell an innovative SaaS product, let us say a project management software , a company offering time management software is your indirect competition.
There is an easy way to find out who your indirect competitors are in the absence of no direct competitors. You simply have to research how your potential customers are solving the problems that your product or service seeks to solve. That is your direct competition.
Factors that Differentiate Your Business from the Competition
There are three main factors that any business can use to differentiate itself from its competition. They are cost leadership, product differentiation, and market segmentation.
1. Cost Leadership
A strategy you can impose to maximize your profits and gain an edge over your competitors. It involves offering lower prices than what the majority of your competitors are offering.
A common practice among businesses looking to enter into a market where there are dominant players is to use free trials or pricing to attract as many customers as possible to their offer.
2. Product Differentiation
Your product or service should have a unique selling proposition (USP) that your competitors do not have or do not stress in their marketing.
Part of the marketing strategy should involve making your products unique and different from your competitors. It does not have to be different from your competitors, it can be the addition to a feature or benefit that your competitors do not currently have.
3. Market Segmentation
As a new business seeking to break into an industry, you will gain more success from focusing on a specific niche or target market, and not the whole industry.
If your competitors are focused on a general need or target market, you can differentiate yourself from them by having a small and hyper-targeted audience. For example, if your competitors are selling men’s clothes in their online stores , you can sell hoodies for men.
The next step in your business plan is your business and management structure. It is the section where you describe the legal structure of your business and the team running it.
Your business is only as good as the management team that runs it, while the management team can only strive when there is a proper business and management structure in place.
If your company is a sole proprietor or a limited liability company (LLC), a general or limited partnership, or a C or an S corporation, state it clearly in this section.
Use an organizational chart to show the management structure in your business. Clearly show who is in charge of what area in your company. It is where you show how each key manager or team leader’s unique experience can contribute immensely to the success of your company. You can also opt to add the resumes and CVs of the key players in your company.
The business and management structure section should show who the owner is, and other owners of the businesses (if the business has other owners). For businesses or companies with multiple owners, include the percent ownership of the various owners and clearly show the extent of each others’ involvement in the company.
Investors want to know who is behind the company and the team running it to determine if it has the right management to achieve its set goals.
The management team section is where you show that you have the right team in place to successfully execute the business operations and ideas. Take time to create the management structure for your business. Think about all the important roles and responsibilities that you need managers for to grow your business.
Include brief bios of each key team member and ensure you highlight only the relevant information that is needed. If your team members have background industry experience or have held top positions for other companies and achieved success while filling that role, highlight it in this section.
A common mistake that many startups make is assigning C-level titles such as (CMO and CEO) to everyone on their team. It is unrealistic for a small business to have those titles. While it may look good on paper for the ego of your team members, it can prevent investors from investing in your business.
Instead of building an unrealistic management structure that does not fit your business reality, it is best to allow business titles to grow as the business grows. Starting everyone at the top leaves no room for future change or growth, which is bad for productivity.
Your management team does not have to be complete before you start writing your business plan. You can have a complete business plan even when there are managerial positions that are empty and need filling.
If you have management gaps in your team, simply show the gaps and indicate you are searching for the right candidates for the role(s). Investors do not expect you to have a full management team when you are just starting your business.
1. Avoid Adding ‘Ghost’ Names to Your Management Team
There is always that temptation to include a ‘ghost’ name to your management team to attract and influence investors to invest in your business. Although the presence of these celebrity management team members may attract the attention of investors, it can cause your business to lose any credibility if you get found out.
Seasoned investors will investigate further the members of your management team before committing fully to your business If they find out that the celebrity name used does not play any actual role in your business, they will not invest and may write you off as dishonest.
2. Focus on Credentials But Pay Extra Attention to the Roles
Investors want to know the experience that your key team members have to determine if they can successfully reach the company’s growth and financial goals.
While it is an excellent boost for your key management team to have the right credentials, you also want to pay extra attention to the roles they will play in your company.
Adding an organizational chart in this section of your business plan is not necessary, you can do it in your business plan’s appendix.
If you are exploring funding options, it is not uncommon to get asked for your organizational chart. The function of an organizational chart goes beyond raising money, you can also use it as a useful planning tool for your business.
An organizational chart can help you identify how best to structure your management team for maximum productivity and point you towards key roles you need to fill in the future.
You can use the organizational chart to show your company’s internal management structure such as the roles and responsibilities of your management team, and relationships that exist between them.
In your business plan, you have to describe what you sell or the service you plan to offer. It is the next step after defining your business and management structure. The products and services section is where you sell the benefits of your business.
Here you have to explain how your product or service will benefit your customers and describe your product lifecycle. It is also the section where you write down your plans for intellectual property like patent filings and copyrighting.
The research and development that you are undertaking for your product or service need to be explained in detail in this section. However, do not get too technical, sell the general idea and its benefits.
If you have any diagrams or intricate designs of your product or service, do not include them in the products and services section. Instead, leave them for the addendum page. Also, if you are leaving out diagrams or designs for the addendum, ensure you add this phrase “For more detail, visit the addendum Page #.”
Your product and service section in your business plan should include the following:
In the products and services section, you have to distill the benefits, lifecycle, and production process of your products and services.
When describing the benefits of your products or services, here are some key factors to focus on.
When describing the product life cycle of your products or services, here are some key factors to focus on.
When describing the production process for your products or services, you need to think about the following:
1. Avoid Technical Descriptions and Industry Buzzwords
The products and services section of your business plan should clearly describe the products and services that your company provides. However, it is not a section to include technical jargons that anyone outside your industry will not understand.
A good practice is to remove highly detailed or technical descriptions in favor of simple terms. Industry buzzwords are not necessary, if there are simpler terms you can use, then use them. If you plan to use your business plan to source funds, making the product or service section so technical will do you no favors.
2. Describe How Your Products or Services Differ from Your Competitors
When potential investors look at your business plan, they want to know how the products and services you are offering differ from that of your competition. Differentiating your products or services from your competition in a way that makes your solution more attractive is critical.
If you are going the innovative path and there is no market currently for your product or service, you need to describe in this section why the market needs your product or service.
For example, overnight delivery was a niche business that only a few companies were participating in. Federal Express (FedEx) had to show in its business plan that there was a large opportunity for that service and they justified why the market needed that service.
3. Long or Short Products or Services Section
Should your products or services section be short? Does the long products or services section attract more investors?
There are no straightforward answers to these questions. Whether your products or services section should be long or relatively short depends on the nature of your business.
If your business is product-focused, then automatically you need to use more space to describe the details of your products. However, if the product your business sells is a commodity item that relies on competitive pricing or other pricing strategies, you do not have to use up so much space to provide significant details about the product.
Likewise, if you are selling a commodity that is available in numerous outlets, then you do not have to spend time on writing a long products or services section.
The key to the success of your business is most likely the effectiveness of your marketing strategies compared to your competitors. Use more space to address that section.
If you are creating a new product or service that the market does not know about, your products or services section can be lengthy. The reason why is because you need to explain everything about the product or service such as the nature of the product, its use case, and values.
A short products or services section for an innovative product or service will not give the readers enough information to properly evaluate your business.
4. Describe Your Relationships with Vendors or Suppliers
Your business will rely on vendors or suppliers to supply raw materials or the components needed to make your products. In your products and services section, describe your relationships with your vendors and suppliers fully.
Avoid the mistake of relying on only one supplier or vendor. If that supplier or vendor fails to supply or goes out of business, you can easily face supply problems and struggle to meet your demands. Plan to set up multiple vendor or supplier relationships for better business stability.
5. Your Primary Goal Is to Convince Your Readers
The primary goal of your business plan is to convince your readers that your business is viable and to create a guide for your business to follow. It applies to the products and services section.
When drafting this section, think like the reader. See your reader as someone who has no idea about your products and services. You are using the products and services section to provide the needed information to help your reader understand your products and services. As a result, you have to be clear and to the point.
While you want to educate your readers about your products or services, you also do not want to bore them with lots of technical details. Show your products and services and not your fancy choice of words.
Your products and services section should provide the answer to the “what” question for your business. You and your management team may run the business, but it is your products and services that are the lifeblood of the business.
Answering these questions can help you write your products and services section quickly and in a way that will appeal to your readers.
You can also hint at the marketing or promotion plans you have for your products or services such as how you plan to build awareness or retain customers. The next section is where you can go fully into details about your business’s marketing and sales plan.
Providing great products and services is wonderful, but it means nothing if you do not have a marketing and sales plan to inform your customers about them. Your marketing and sales plan is critical to the success of your business.
The sales and marketing section is where you show and offer a detailed explanation of your marketing and sales plan and how you plan to execute it. It covers your pricing plan, proposed advertising and promotion activities, activities and partnerships you need to make your business a success, and the benefits of your products and services.
There are several ways you can approach your marketing and sales strategy. Ideally, your marketing and sales strategy has to fit the unique needs of your business.
In this section, you describe how the plans your business has for attracting and retaining customers, and the exact process for making a sale happen. It is essential to thoroughly describe your complete marketing and sales plans because you are still going to reference this section when you are making financial projections for your business.
The sales and marketing section is where you outline your business’s unique selling proposition (USP). When you are developing your unique selling proposition, think about the strongest reasons why people should buy from you over your competition. That reason(s) is most likely a good fit to serve as your unique selling proposition (USP).
Plans on how to get your products or services to your target market and how to get your target audience to buy them go into this section. You also highlight the strengths of your business here, particularly what sets them apart from your competition.
Before you start writing your marketing and sales plan, you need to have properly defined your target audience and fleshed out your buyer persona. If you do not first understand the individual you are marketing to, your marketing and sales plan will lack any substance and easily fall.
Marketing your products and services is an investment that requires you to spend money. Like any other investment, you have to generate a good return on investment (ROI) to justify using that marketing and sales plan. Good marketing and sales plans bring in high sales and profits to your company.
Avoid spending money on unproductive marketing channels. Do your research and find out the best marketing and sales plan that works best for your company.
Your marketing and sales plan can be broken into different parts: your positioning statement, pricing, promotion, packaging, advertising, public relations, content marketing, social media, and strategic alliances.
Your positioning statement is the first part of your marketing and sales plan. It refers to the way you present your company to your customers.
Are you the premium solution, the low-price solution, or are you the intermediary between the two extremes in the market? What do you offer that your competitors do not that can give you leverage in the market?
Before you start writing your positioning statement, you need to spend some time evaluating the current market conditions. Here are some questions that can help you to evaluate the market
After answering these questions, then you can start writing your positioning statement. Your positioning statement does not have to be in-depth or too long.
All you need to explain with your positioning statement are two focus areas. The first is the position of your company within the competitive landscape. The other focus area is the core value proposition that sets your company apart from other alternatives that your ideal customer might consider.
Here is a simple template you can use to develop a positioning statement.
For [description of target market] who [need of target market], [product or service] [how it meets the need]. Unlike [top competition], it [most essential distinguishing feature].
For example, let’s create the positioning statement for fictional accounting software and QuickBooks alternative , TBooks.
“For small business owners who need accounting services, TBooks is an accounting software that helps small businesses handle their small business bookkeeping basics quickly and easily. Unlike Wave, TBooks gives small businesses access to live sessions with top accountants.”
You can edit this positioning statement sample and fill it with your business details.
After writing your positioning statement, the next step is the pricing of your offerings. The overall positioning strategy you set in your positioning statement will often determine how you price your products or services.
Pricing is a powerful tool that sends a strong message to your customers. Failure to get your pricing strategy right can make or mar your business. If you are targeting a low-income audience, setting a premium price can result in low sales.
You can use pricing to communicate your positioning to your customers. For example, if you are offering a product at a premium price, you are sending a message to your customers that the product belongs to the premium category.
Basic Rules to Follow When Pricing Your Offering
Setting a price for your offering involves more than just putting a price tag on it. Deciding on the right pricing for your offering requires following some basic rules. They include covering your costs, primary and secondary profit center pricing, and matching the market rate.
Pricing Strategy
Your pricing strategy influences the price of your offering. There are several pricing strategies available for you to choose from when examining the right pricing strategy for your business. They include cost-plus pricing, market-based pricing, value pricing, and more.
After carefully sorting out your positioning statement and pricing, the next item to look at is your promotional strategy. Your promotional strategy explains how you plan on communicating with your customers and prospects.
As a business, you must measure all your costs, including the cost of your promotions. You also want to measure how much sales your promotions bring for your business to determine its usefulness. Promotional strategies or programs that do not lead to profit need to be removed.
There are different types of promotional strategies you can adopt for your business, they include advertising, public relations, and content marketing.
Advertising
Your business plan should include your advertising plan which can be found in the marketing and sales plan section. You need to include an overview of your advertising plans such as the areas you plan to spend money on to advertise your business and offers.
Ensure that you make it clear in this section if your business will be advertising online or using the more traditional offline media, or the combination of both online and offline media. You can also include the advertising medium you want to use to raise awareness about your business and offers.
Some common online advertising mediums you can use include social media ads, landing pages, sales pages, SEO, Pay-Per-Click, emails, Google Ads, and others. Some common traditional and offline advertising mediums include word of mouth, radios, direct mail, televisions, flyers, billboards, posters, and others.
A key component of your advertising strategy is how you plan to measure the effectiveness and success of your advertising campaign. There is no point in sticking with an advertising plan or medium that does not produce results for your business in the long run.
Public Relations
A great way to reach your customers is to get the media to cover your business or product. Publicity, especially good ones, should be a part of your marketing and sales plan. In this section, show your plans for getting prominent reviews of your product from reputable publications and sources.
Your business needs that exposure to grow. If public relations is a crucial part of your promotional strategy, provide details about your public relations plan here.
Content Marketing
Content marketing is a popular promotional strategy used by businesses to inform and attract their customers. It is about teaching and educating your prospects on various topics of interest in your niche, it does not just involve informing them about the benefits and features of the products and services you have,
Businesses publish content usually for free where they provide useful information, tips, and advice so that their target market can be made aware of the importance of their products and services. Content marketing strategies seek to nurture prospects into buyers over time by simply providing value.
Your company can create a blog where it will be publishing content for its target market. You will need to use the best website builder such as Wix and Squarespace and the best web hosting services such as Bluehost, Hostinger, and other Bluehost alternatives to create a functional blog or website.
If content marketing is a crucial part of your promotional strategy (as it should be), detail your plans under promotions.
Including high-quality images of the packaging of your product in your business plan is a lovely idea. You can add the images of the packaging of that product in the marketing and sales plan section. If you are not selling a product, then you do not need to include any worry about the physical packaging of your product.
When organizing the packaging section of your business plan, you can answer the following questions to make maximum use of this section.
Your 21st-century business needs to have a good social media presence. Not having one is leaving out opportunities for growth and reaching out to your prospect.
You do not have to join the thousands of social media platforms out there. What you need to do is join the ones that your customers are active on and be active there.
Businesses use social media to provide information about their products such as promotions, discounts, the benefits of their products, and content on their blogs.
Social media is also a platform for engaging with your customers and getting feedback about your products or services. Make no mistake, more and more of your prospects are using social media channels to find more information about companies.
You need to consider the social media channels you want to prioritize your business (prioritize the ones your customers are active in) and your branding plans in this section.
If your company plans to work closely with other companies as part of your sales and marketing plan, include it in this section. Prove details about those partnerships in your business plan if you have already established them.
Strategic alliances can be beneficial for all parties involved including your company. Working closely with another company in the form of a partnership can provide access to a different target market segment for your company.
The company you are partnering with may also gain access to your target market or simply offer a new product or service (that of your company) to its customers.
Mutually beneficial partnerships can cover the weaknesses of one company with the strength of another. You should consider strategic alliances with companies that sell complimentary products to yours. For example, if you provide printers, you can partner with a company that produces ink since the customers that buy printers from you will also need inks for printing.
1. Focus on Your Target Market
Identify who your customers are, the market you want to target. Then determine the best ways to get your products or services to your potential customers.
2. Evaluate Your Competition
One of the goals of having a marketing plan is to distinguish yourself from your competition. You cannot stand out from them without first knowing them in and out.
You can know your competitors by gathering information about their products, pricing, service, and advertising campaigns.
These questions can help you know your competition.
3. Consider Your Brand
Customers' perception of your brand has a strong impact on your sales. Your marketing and sales plan should seek to bolster the image of your brand. Before you start marketing your business, think about the message you want to pass across about your business and your products and services.
4. Focus on Benefits
The majority of your customers do not view your product in terms of features, what they want to know is the benefits and solutions your product offers. Think about the problems your product solves and the benefits it delivers, and use it to create the right sales and marketing message.
Your marketing plan should focus on what you want your customer to get instead of what you provide. Identify those benefits in your marketing and sales plan.
5. Focus on Differentiation
Your marketing and sales plan should look for a unique angle they can take that differentiates your business from the competition, even if the products offered are similar. Some good areas of differentiation you can use are your benefits, pricing, and features.
You may want to include samples of marketing materials you plan to use such as print ads, website descriptions, and social media ads. While it is not compulsory to include these samples, it can help you better communicate your marketing and sales plan and objectives.
The purpose of the marketing and sales section is to answer this question “How will you reach your customers?” If you cannot convincingly provide an answer to this question, you need to rework your marketing and sales section.
If you are writing your business plan to ask for funding from investors or financial institutions, the funding request section is where you will outline your funding requirements. The funding request section should answer the question ‘How much money will your business need in the near future (3 to 5 years)?’
A good funding request section will clearly outline and explain the amount of funding your business needs over the next five years. You need to know the amount of money your business needs to make an accurate funding request.
Also, when writing your funding request, provide details of how the funds will be used over the period. Specify if you want to use the funds to buy raw materials or machinery, pay salaries, pay for advertisements, and cover specific bills such as rent and electricity.
In addition to explaining what you want to use the funds requested for, you need to clearly state the projected return on investment (ROI) . Investors and creditors want to know if your business can generate profit for them if they put funds into it.
Ensure you do not inflate the figures and stay as realistic as possible. Investors and financial institutions you are seeking funds from will do their research before investing money in your business.
If you are not sure of an exact number to request from, you can use some range of numbers as rough estimates. Add a best-case scenario and a work-case scenario to your funding request. Also, include a description of your strategic future financial plans such as selling your business or paying off debts.
When making your funding request, specify the type of funding you want. Do you want debt or equity? Draw out the terms that will be applicable for the funding, and the length of time the funding request will cover.
Case for Equity
If your new business has not yet started generating profits, you are most likely preparing to sell equity in your business to raise capital at the early stage. Equity here refers to ownership. In this case, you are selling a portion of your company to raise capital.
Although this method of raising capital for your business does not put your business in debt, keep in mind that an equity owner may expect to play a key role in company decisions even if he does not hold a major stake in the company.
Most equity sales for startups are usually private transactions . If you are making a funding request by offering equity in exchange for funding, let the investor know that they will be paid a dividend (a share of the company’s profit). Also, let the investor know the process for selling their equity in your business.
Case for Debt
You may decide not to offer equity in exchange for funds, instead, you make a funding request with the promise to pay back the money borrowed at the agreed time frame.
When making a funding request with an agreement to pay back, note that you will have to repay your creditors both the principal amount borrowed and the interest on it. Financial institutions offer this type of funding for businesses.
Large companies combine both equity and debt in their capital structure. When drafting your business plan, decide if you want to offer both or one over the other.
Before you sell equity in exchange for funding in your business, consider if you are willing to accept not being in total control of your business. Also, before you seek loans in your funding request section, ensure that the terms of repayment are favorable.
You should set a clear timeline in your funding request so that potential investors and creditors can know what you are expecting. Some investors and creditors may agree to your funding request and then delay payment for longer than 30 days, meanwhile, your business needs an immediate cash injection to operate efficiently.
The funding request section is not necessary for every business, it is only needed by businesses who plan to use their business plan to secure funding.
If you are adding the funding request section to your business plan, provide an itemized summary of how you plan to use the funds requested. Hiring a lawyer, accountant, or other professionals may be necessary for the proper development of this section.
You should also gather and use financial statements that add credibility and support to your funding requests. Ensure that the financial statements you use should include your projected financial data such as projected cash flows, forecast statements, and expenditure budgets.
If you are an existing business, include all historical financial statements such as cash flow statements, balance sheets and income statements .
Provide monthly and quarterly financial statements for a year. If your business has records that date back beyond the one-year mark, add the yearly statements of those years. These documents are for the appendix section of your business plan.
If you used the funding request section in your business plan, supplement it with a financial plan, metrics, and projections. This section paints a picture of the past performance of your business and then goes ahead to make an informed projection about its future.
The goal of this section is to convince readers that your business is going to be a financial success. It outlines your business plan to generate enough profit to repay the loan (with interest if applicable) and to generate a decent return on investment for investors.
If you have an existing business already in operation, use this section to demonstrate stability through finance. This section should include your cash flow statements, balance sheets, and income statements covering the last three to five years. If your business has some acceptable collateral that you can use to acquire loans, list it in the financial plan, metrics, and projection section.
Apart from current financial statements, this section should also contain a prospective financial outlook that spans the next five years. Include forecasted income statements, cash flow statements, balance sheets, and capital expenditure budget.
If your business is new and is not yet generating profit, use clear and realistic projections to show the potentials of your business.
When drafting this section, research industry norms and the performance of comparable businesses. Your financial projections should cover at least five years. State the logic behind your financial projections. Remember you can always make adjustments to this section as the variables change.
The financial plan, metrics, and projection section create a baseline which your business can either exceed or fail to reach. If your business fails to reach your projections in this section, you need to understand why it failed.
Investors and loan managers spend a lot of time going through the financial plan, metrics, and projection section compared to other parts of the business plan. Ensure you spend time creating credible financial analyses for your business in this section.
Many entrepreneurs find this section daunting to write. You do not need a business degree to create a solid financial forecast for your business. Business finances, especially for startups, are not as complicated as they seem. There are several online tools and templates that make writing this section so much easier.
The financial plan, metrics, and projection section is a great place to use graphs and charts to tell the financial story of your business. Charts and images make it easier to communicate your finances.
Accuracy in this section is key, ensure you carefully analyze your past financial statements properly before making financial projects.
Keep your financial plan, metrics, and projection realistic. It is okay to be optimistic in your financial projection, however, you have to justify it.
You should also address the various risk factors associated with your business in this section. Investors want to know the potential risks involved, show them. You should also show your plans for mitigating those risks.
The financial plan, metrics, and projection section of your business plan should have monthly sales and revenue forecasts for the first year. It should also include annual projections that cover 3 to 5 years.
A three-year projection is a basic requirement to have in your business plan. However, some investors may request a five-year forecast.
Your business plan should include the following financial statements: sales forecast, personnel plan, income statement, income statement, cash flow statement, balance sheet, and an exit strategy.
1. Sales Forecast
Sales forecast refers to your projections about the number of sales your business is going to record over the next few years. It is typically broken into several rows, with each row assigned to a core product or service that your business is offering.
One common mistake people make in their business plan is to break down the sales forecast section into long details. A sales forecast should forecast the high-level details.
For example, if you are forecasting sales for a payroll software provider, you could break down your forecast into target market segments or subscription categories.
Your sales forecast section should also have a corresponding row for each sales row to cover the direct cost or Cost of Goods Sold (COGS). The objective of these rows is to show the expenses that your business incurs in making and delivering your product or service.
Note that your Cost of Goods Sold (COGS) should only cover those direct costs incurred when making your products. Other indirect expenses such as insurance, salaries, payroll tax, and rent should not be included.
For example, the Cost of Goods Sold (COGS) for a restaurant is the cost of ingredients while for a consulting company it will be the cost of paper and other presentation materials.
2. Personnel Plan
The personnel plan section is where you provide details about the payment plan for your employees. For a small business, you can easily list every position in your company and how much you plan to pay in the personnel plan.
However, for larger businesses, you have to break the personnel plan into functional groups such as sales and marketing.
The personnel plan will also include the cost of an employee beyond salary, commonly referred to as the employee burden. These costs include insurance, payroll taxes , and other essential costs incurred monthly as a result of having employees on your payroll.
3. Income Statement
The income statement section shows if your business is making a profit or taking a loss. Another name for the income statement is the profit and loss (P&L). It takes data from your sales forecast and personnel plan and adds other ongoing expenses you incur while running your business.
Every business plan should have an income statement. It subtracts your business expenses from its earnings to show if your business is generating profit or incurring losses.
The income statement has the following items: sales, Cost of Goods Sold (COGS), gross margin, operating expenses, total operating expenses, operating income , total expenses, and net profit.
4. Cash Flow Statement
The cash flow statement tracks the money you have in the bank at any given point. It is often confused with the income statement or the profit and loss statement. They are both different types of financial statements. The income statement calculates your profits and losses while the cash flow statement shows you how much you have in the bank.
5. Balance Sheet
The balance sheet is a financial statement that provides an overview of the financial health of your business. It contains information about the assets and liabilities of your company, and owner’s or shareholders’ equity.
You can get the net worth of your company by subtracting your company’s liabilities from its assets.
6. Exit Strategy
The exit strategy refers to a probable plan for selling your business either to the public in an IPO or to another company. It is the last thing you include in the financial plan, metrics, and projection section.
You can choose to omit the exit strategy from your business plan if you plan to maintain full ownership of your business and do not plan on seeking angel investment or virtual capitalist (VC) funding.
Investors may want to know what your exit plan is. They invest in your business to get a good return on investment.
Your exit strategy does not have to include long and boring details. Ensure you identify some interested parties who may be interested in buying the company if it becomes a success.
Your financial plan, metrics, and projection section helps investors, creditors, or your internal managers to understand what your expenses are, the amount of cash you need, and what it takes to make your company profitable. It also shows what you will be doing with any funding.
You do not need to show actual financial data if you do not have one. Adding forecasts and projections to your financial statements is added proof that your strategy is feasible and shows investors you have planned properly.
Here are some key questions to answer to help you develop this section.
Adding an appendix to your business plan is optional. It is a useful place to put any charts, tables, legal notes, definitions, permits, résumés, and other critical information that do not fit into other sections of your business plan.
The appendix section is where you would want to include details of a patent or patent-pending if you have one. You can always add illustrations or images of your products here. It is the last section of your business plan.
When writing your business plan, there are details you cut short or remove to prevent the entire section from becoming too lengthy. There are also details you want to include in the business plan but are not a good fit for any of the previous sections. You can add that additional information to the appendix section.
Businesses also use the appendix section to include supporting documents or other materials specially requested by investors or lenders.
You can include just about any information that supports the assumptions and statements you made in the business plan under the appendix. It is the one place in the business plan where unrelated data and information can coexist amicably.
If your appendix section is lengthy, try organizing it by adding a table of contents at the beginning of the appendix section. It is also advisable to group similar information to make it easier for the reader to access them.
A well-organized appendix section makes it easier to share your information clearly and concisely. Add footnotes throughout the rest of the business plan or make references in the plan to the documents in the appendix.
The appendix section is usually only necessary if you are seeking funding from investors or lenders, or hoping to attract partners.
People reading business plans do not want to spend time going through a heap of backup information, numbers, and charts. Keep these documents or information in the Appendix section in case the reader wants to dig deeper.
The appendix section includes documents that supplement or support the information or claims given in other sections of the business plans. Common items you can include in the appendix section include:
Avoid using the appendix section as a place to dump any document or information you feel like adding. Only add documents or information that you support or increase the credibility of your business plan.
To achieve a perfect business plan, you need to consider some key tips and strategies. These tips will raise the efficiency of your business plan above average.
When writing a business plan, you need to know your audience . Business owners write business plans for different reasons. Your business plan has to be specific. For example, you can write business plans to potential investors, banks, and even fellow board members of the company.
The audience you are writing to determines the structure of the business plan. As a business owner, you have to know your audience. Not everyone will be your audience. Knowing your audience will help you to narrow the scope of your business plan.
Consider what your audience wants to see in your projects, the likely questions they might ask, and what interests them.
Writing a business plan from scratch as an entrepreneur can be daunting. That is why you need the right inspiration to push you to write one. You can gain inspiration from the successful business plans of other businesses. Look at their business plans, the style they use, the structure of the project, etc.
To make your business plan easier to create, search companies related to your business to get an exact copy of what you need to create an effective business plan. You can also make references while citing examples in your business plans.
When drafting your business plan, get as much help from others as you possibly can. By getting inspiration from people, you can create something better than what they have.
Many business owners make use of strong adjectives to qualify their content. One of the big mistakes entrepreneurs make when preparing a business plan is promising too much.
The use of superlatives and over-optimistic claims can prepare the audience for more than you can offer. In the end, you disappoint the confidence they have in you.
In most cases, the best option is to be realistic with your claims and statistics. Most of the investors can sense a bit of incompetency from the overuse of superlatives. As a new entrepreneur, do not be tempted to over-promise to get the interests of investors.
The concept of entrepreneurship centers on risks, nothing is certain when you make future analyses. What separates the best is the ability to do careful research and work towards achieving that, not promising more than you can achieve.
To make an excellent first impression as an entrepreneur, replace superlatives with compelling data-driven content. In this way, you are more specific than someone promising a huge ROI from an investment.
When writing business plans, ensure you keep them simple throughout. Irrespective of the purpose of the business plan, your goal is to convince the audience.
One way to achieve this goal is to make them understand your proposal. Therefore, it would be best if you avoid the use of complex grammar to express yourself. It would be a huge turn-off if the people you want to convince are not familiar with your use of words.
Another thing to note is the length of your business plan. It would be best if you made it as brief as possible.
You hardly see investors or agencies that read through an extremely long document. In that case, if your first few pages can’t convince them, then you have lost it. The more pages you write, the higher the chances of you derailing from the essential contents.
To ensure your business plan has a high conversion rate, you need to dispose of every unnecessary information. For example, if you have a strategy that you are not sure of, it would be best to leave it out of the plan.
A perfect business plan must have touched every part needed to convince the audience. Business owners get easily tempted to concentrate more on their products than on other sections. Doing this can be detrimental to the efficiency of the business plan.
For example, imagine you talking about a product but omitting or providing very little information about the target audience. You will leave your clients confused.
To ensure that your business plan communicates your full business model to readers, you have to input all the necessary information in it. One of the best ways to achieve this is to design a structure and stick to it.
This structure is what guides you throughout the writing. To make your work easier, you can assign an estimated word count or page limit to every section to avoid making it too bulky for easy reading. As a guide, the necessary things your business plan must contain are:
Some specific businesses can include some other essential sections, but these are the key sections that must be in every business plan.
When writing a business plan, you must tie all loose ends to get a perfect result. When you are done with writing, call a professional to go through the document for you. You are bound to make mistakes, and the way to correct them is to get external help.
You should get a professional in your field who can relate to every section of your business plan. It would be easier for the professional to notice the inner flaws in the document than an editor with no knowledge of your business.
In addition to getting a professional to proofread, get an editor to proofread and edit your document. The editor will help you identify grammatical errors, spelling mistakes, and inappropriate writing styles.
Writing a business plan can be daunting, but you can surmount that obstacle and get the best out of it with these tips.
1. hubspot's one-page business plan.
The one-page business plan template by HubSpot is the perfect guide for businesses of any size, irrespective of their business strategy. Although the template is condensed into a page, your final business plan should not be a page long! The template is designed to ask helpful questions that can help you develop your business plan.
Hubspot’s one-page business plan template is divided into nine fields:
Bplans' free business plan template is investor-approved. It is a rich template used by prestigious educational institutions such as Babson College and Princeton University to teach entrepreneurs how to create a business plan.
The template has six sections: the executive summary, opportunity, execution, company, financial plan, and appendix. There is a step-by-step guide for writing every little detail in the business plan. Follow the instructions each step of the way and you will create a business plan that impresses investors or lenders easily.
HubSpot’s downloadable business plan template is a more comprehensive option compared to the one-page business template by HubSpot. This free and downloadable business plan template is designed for entrepreneurs.
The template is a comprehensive guide and checklist for business owners just starting their businesses. It tells you everything you need to fill in each section of the business plan and how to do it.
There are nine sections in this business plan template: an executive summary, company and business description, product and services line, market analysis, marketing plan, sales plan, legal notes, financial considerations, and appendix.
My Own Business Institute (MOBI) which is a part of Santa Clara University's Center for Innovation and Entrepreneurship offers a free business plan template. You can either copy the free business template from the link provided above or download it as a Word document.
The comprehensive template consists of a whopping 15 sections.
There are lots of helpful tips on how to fill each section in the free business plan template by MOBI.
Score is an American nonprofit organization that helps entrepreneurs build successful companies. This business plan template for startups by Score is available for free download. The business plan template asks a whooping 150 generic questions that help entrepreneurs from different fields to set up the perfect business plan.
The business plan template for startups contains clear instructions and worksheets, all you have to do is answer the questions and fill the worksheets.
There are nine sections in the business plan template: executive summary, company description, products and services, marketing plan, operational plan, management and organization, startup expenses and capitalization, financial plan, and appendices.
The ‘refining the plan’ resource contains instructions that help you modify your business plan to suit your specific needs, industry, and target audience. After you have completed Score’s business plan template, you can work with a SCORE mentor for expert advice in business planning.
The minimalist architecture business plan template is a simple template by Venngage that you can customize to suit your business needs .
There are five sections in the template: an executive summary, statement of problem, approach and methodology, qualifications, and schedule and benchmark. The business plan template has instructions that guide users on what to fill in each section.
The Small Business Administration (SBA) offers two free business plan templates, filled with practical real-life examples that you can model to create your business plan. Both free business plan templates are written by fictional business owners: Rebecca who owns a consulting firm, and Andrew who owns a toy company.
There are five sections in the two SBA’s free business plan templates.
The one-page business plan by the $100 startup is a simple business plan template for entrepreneurs who do not want to create a long and complicated plan . You can include more details in the appendices for funders who want more information beyond what you can put in the one-page business plan.
There are five sections in the one-page business plan such as overview, ka-ching, hustling, success, and obstacles or challenges or open questions. You can answer all the questions using one or two sentences.
The free business plan template by PandaDoc is a comprehensive 15-page document that describes the information you should include in every section.
There are 11 sections in PandaDoc’s free business plan template.
You have to sign up for its 14-day free trial to access the template. You will find different business plan templates on PandaDoc once you sign up (including templates for general businesses and specific businesses such as bakeries, startups, restaurants, salons, hotels, and coffee shops)
PandaDoc allows you to customize its business plan templates to fit the needs of your business. After editing the template, you can send it to interested parties and track opens and views through PandaDoc.
InvoiceBerry is a U.K based online invoicing and tracking platform that offers free business plan templates in .docx, .odt, .xlsx, and .pptx formats for freelancers and small businesses.
Before you can download the free business plan template, it will ask you to give it your email address. After you complete the little task, it will send the download link to your inbox for you to download. It also provides a business plan checklist in .xlsx file format that ensures you add the right information to the business plan.
A business plan is very important in mapping out how one expects their business to grow over a set number of years, particularly when they need external investment in their business. However, many investors do not have the time to watch you present your business plan. It is a long and boring read.
Luckily, there are three alternatives to the traditional business plan (the Business Model Canvas, Lean Canvas, and Startup Pitch Deck). These alternatives are less laborious and easier and quicker to present to investors.
The business model canvas is a business tool used to present all the important components of setting up a business, such as customers, route to market, value proposition, and finance in a single sheet. It provides a very focused blueprint that defines your business initially which you can later expand on if needed.
The sheet is divided mainly into company, industry, and consumer models that are interconnected in how they find problems and proffer solutions.
The business model canvas was developed by founder Alexander Osterwalder to answer important business questions. It contains nine segments.
The lean canvas is a problem-oriented alternative to the standard business model canvas. It was proposed by Ash Maurya, creator of Lean Stack as a development of the business model generation. It uses a more problem-focused approach and it majorly targets entrepreneurs and startup businesses.
Lean Canvas uses the same 9 blocks concept as the business model canvas, however, they have been modified slightly to suit the needs and purpose of a small startup. The key partners, key activities, customer relationships, and key resources are replaced by new segments which are:
While the business model canvas compresses into a factual sheet, startup pitch decks expand flamboyantly.
Pitch decks, through slides, convey your business plan, often through graphs and images used to emphasize estimations and observations in your presentation. Entrepreneurs often use pitch decks to fully convince their target audience of their plans before discussing funding arrangements.
Considering the likelihood of it being used in a small time frame, a good startup pitch deck should ideally contain 20 slides or less to have enough time to answer questions from the audience.
Unlike the standard and lean business model canvases, a pitch deck doesn't have a set template on how to present your business plan but there are still important components to it. These components often mirror those of the business model canvas except that they are in slide form and contain more details.
Using Airbnb (one of the most successful start-ups in recent history) for reference, the important components of a good slide are listed below.
It is important to support your calculations with pictorial renditions. Infographics, such as pie charts or bar graphs, will be more effective in presenting the information than just listing numbers. For example, a six-month graph that shows rising profit margins will easily look more impressive than merely writing it.
Lastly, since a pitch deck is primarily used to secure meetings and you may be sharing your pitch with several investors, it is advisable to keep a separate public version that doesn't include financials. Only disclose the one with projections once you have secured a link with an investor.
Business plans are important for any entrepreneur who is looking for a framework to run their company over some time or seeking external support. Although they are essential for new businesses, every company should ideally have a business plan to track their growth from time to time. They can be used by startups seeking investments or loans to convey their business ideas or an employee to convince his boss of the feasibility of starting a new project. They can also be used by companies seeking to recruit high-profile employee targets into key positions or trying to secure partnerships with other firms.
Business plans often vary depending on your target audience, the scope, and the goals for the plan. Startup plans are the most common among the different types of business plans. A start-up plan is used by a new business to present all the necessary information to help get the business up and running. They are usually used by entrepreneurs who are seeking funding from investors or bank loans. The established company alternative to a start-up plan is a feasibility plan. A feasibility plan is often used by an established company looking for new business opportunities. They are used to show the upsides of creating a new product for a consumer base. Because the audience is usually company people, it requires less company analysis. The third type of business plan is the lean business plan. A lean business plan is a brief, straight-to-the-point breakdown of your ideas and analysis for your business. It does not contain details of your proposal and can be written on one page. Finally, you have the what-if plan. As it implies, a what-if plan is a preparation for the worst-case scenario. You must always be prepared for the possibility of your original plan being rejected. A good what-if plan will serve as a good plan B to the original.
A good business plan has 10 key components. They include an executive plan, product analysis, desired customer base, company analysis, industry analysis, marketing strategy, sales strategy, financial projection, funding, and appendix. Executive Plan Your business should begin with your executive plan. An executive plan will provide early insight into what you are planning to achieve with your business. It should include your mission statement and highlight some of the important points which you will explain later. Product Analysis The next component of your business plan is your product analysis. A key part of this section is explaining the type of item or service you are going to offer as well as the market problems your product will solve. Desired Consumer Base Your product analysis should be supplemented with a detailed breakdown of your desired consumer base. Investors are always interested in knowing the economic power of your market as well as potential MVP customers. Company Analysis The next component of your business plan is your company analysis. Here, you explain how you want to run your business. It will include your operational strategy, an insight into the workforce needed to keep the company running, and important executive positions. It will also provide a calculation of expected operational costs. Industry Analysis A good business plan should also contain well laid out industry analysis. It is important to convince potential investors you know the companies you will be competing with, as well as your plans to gain an edge on the competition. Marketing Strategy Your business plan should also include your marketing strategy. This is how you intend to spread awareness of your product. It should include a detailed explanation of the company brand as well as your advertising methods. Sales Strategy Your sales strategy comes after the market strategy. Here you give an overview of your company's pricing strategy and how you aim to maximize profits. You can also explain how your prices will adapt to market behaviors. Financial Projection The financial projection is the next component of your business plan. It explains your company's expected running cost and revenue earned during the tenure of the business plan. Financial projection gives a clear idea of how your company will develop in the future. Funding The next component of your business plan is funding. You have to detail how much external investment you need to get your business idea off the ground here. Appendix The last component of your plan is the appendix. This is where you put licenses, graphs, or key information that does not fit in any of the other components.
The business model canvas is a business management tool used to quickly define your business idea and model. It is often used when investors need you to pitch your business idea during a brief window.
A pitch deck is similar to a business model canvas except that it makes use of slides in its presentation. A pitch is not primarily used to secure funding, rather its main purpose is to entice potential investors by selling a very optimistic outlook on the business.
Business plan competitions help you evaluate the strength of your business plan. By participating in business plan competitions, you are improving your experience. The experience provides you with a degree of validation while practicing important skills. The main motivation for entering into the competitions is often to secure funding by finishing in podium positions. There is also the chance that you may catch the eye of a casual observer outside of the competition. These competitions also provide good networking opportunities. You could meet mentors who will take a keen interest in guiding you in your business journey. You also have the opportunity to meet other entrepreneurs whose ideas can complement yours.
Martin luenendonk.
Martin loves entrepreneurship and has helped dozens of entrepreneurs by validating the business idea, finding scalable customer acquisition channels, and building a data-driven organization. During his time working in investment banking, tech startups, and industry-leading companies he gained extensive knowledge in using different software tools to optimize business processes.
This insights and his love for researching SaaS products enables him to provide in-depth, fact-based software reviews to enable software buyers make better decisions.
Learn how to create a business plan
A business plan is a document that contains the operational and financial plan of a business, and details how its objectives will be achieved. It serves as a road map for the business and can be used when pitching investors or financial institutions for debt or equity financing .
A business plan should follow a standard format and contain all the important business plan elements. Typically, it should present whatever information an investor or financial institution expects to see before providing financing to a business.
A business plan should be structured in a way that it contains all the important information that investors are looking for. Here are the main sections of a business plan:
The title page captures the legal information of the business, which includes the registered business name, physical address, phone number, email address, date, and the company logo.
The executive summary is the most important section because it is the first section that investors and bankers see when they open the business plan. It provides a summary of the entire business plan. It should be written last to ensure that you don’t leave any details out. It must be short and to the point, and it should capture the reader’s attention. The executive summary should not exceed two pages.
The industry overview section provides information about the specific industry that the business operates in. Some of the information provided in this section includes major competitors, industry trends, and estimated revenues. It also shows the company’s position in the industry and how it will compete in the market against other major players.
The market analysis section details the target market for the company’s product offerings. This section confirms that the company understands the market and that it has already analyzed the existing market to determine that there is adequate demand to support its proposed business model.
Market analysis includes information about the target market’s demographics , geographical location, consumer behavior, and market needs. The company can present numbers and sources to give an overview of the target market size.
A business can choose to consolidate the market analysis and competition analysis into one section or present them as two separate sections.
The sales and marketing plan details how the company plans to sell its products to the target market. It attempts to present the business’s unique selling proposition and the channels it will use to sell its goods and services. It details the company’s advertising and promotion activities, pricing strategy, sales and distribution methods, and after-sales support.
The management plan provides an outline of the company’s legal structure, its management team, and internal and external human resource requirements. It should list the number of employees that will be needed and the remuneration to be paid to each of the employees.
Any external professionals, such as lawyers, valuers, architects, and consultants, that the company will need should also be included. If the company intends to use the business plan to source funding from investors, it should list the members of the executive team, as well as the members of the advisory board.
The operating plan provides an overview of the company’s physical requirements, such as office space, machinery, labor, supplies, and inventory . For a business that requires custom warehouses and specialized equipment, the operating plan will be more detailed, as compared to, say, a home-based consulting business. If the business plan is for a manufacturing company, it will include information on raw material requirements and the supply chain.
The financial plan is an important section that will often determine whether the business will obtain required financing from financial institutions, investors, or venture capitalists. It should demonstrate that the proposed business is viable and will return enough revenues to be able to meet its financial obligations. Some of the information contained in the financial plan includes a projected income statement , balance sheet, and cash flow.
The appendices and exhibits part is the last section of a business plan. It includes any additional information that banks and investors may be interested in or that adds credibility to the business. Some of the information that may be included in the appendices section includes office/building plans, detailed market research , products/services offering information, marketing brochures, and credit histories of the promoters.
Here is a basic template that any business can use when developing its business plan:
Section 1: Executive Summary
Section 2: Industry Overview
Section 3: Market Analysis and Competition
Section 4: Sales and Marketing Plan
Section 5: Management Plan
Section 6: Operating Plan
Section 7: Financial Plan
Section 8: Appendices and Exhibits
Thank you for reading CFI’s guide to Business Plans. To keep learning and advancing your career, the following CFI resources will be helpful:
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One of the key sections of a Business Plan is the section that describes the plan to grow or scale the business. This often involves hiring staff and staff often represent the single largest ongoing expense that a company will have. As such, it is important to plan exactly who will be hired, how much they will be paid and when staff will join the team.
What Should a Personnel Plan Look Like?
The personnel section of a Business Plan should contain the following components.
What Do the Numbers Look Like?
The sample chart below is an example of the financial section of a business plan. It is for illustrative purposes only and each plan is unique and requires tailoring to meet the specific needs of the company.
FY2015 | FY2016 | FY2017 | FY2018 | FY2019 | |
Coder | $0 | $48,000 | $50,400 | $52,920 | $55,572 |
Sales – 2 Sales Staff | $0 | $48,000 | $50,400 | $52,920 | $55,566 |
Sales Manager | $0 | $0 | $24,000 | $25,200 | $26,460 |
Marketing Head | $0 | $0 | $0 | $24,000 | $25,200 |
Distribution Manager | $0 | $0 | $0 | $0 | $24,000 |
Founder 1 – Founder Founder | $91,667 | $105,000 | $110,250 | $115,763 | $121,551 |
Founder 2 | $0 | $100,000 | $105,000 | $110,250 | $115,763 |
Founder 3 | $0 | $100,000 | $105,000 | $110,250 | $115,763 |
Total | $91,667 | $401,000 | $445,050 | $491,303 | $539,875 |
What Should the Explanation of a Personnel Plan Look Like?
The detail below is a summary of some of the possible explanation that could be included in a Personnel Plan for the above data. The description is an excerpt of possible language that could be used.
The company will start out utilizing the three founders and salaries have been allocated for each founder at $100,000 per year. Founder 1 will start taking a salary in FY2015 while the other two founders will start taking a salary in FY2016. Founders will also take dividends as issued by the Board of Directors.
The budget contemplates hiring 2 employees in the sales area in fiscal 2016 and one software engineer . Until that time, one of the founders who specializes in application development (Hellen Bussiere), will work on developing the tech side of the business. In addition, the plan includes hiring 1 sales person a year after that. Sales people will make approx.. $25,000 per year. In year 4, the application will be completed and we will hire a marketing head to promote the product. The marketing head will make $24,000 a year and will be a part time position. In year 5, a distribution manager will be hired and he/she will also be part time and make $24,000 per year.
Full job descriptions are included in Section A.2 of the plan.
The total number of employees at the end of year 5 is 9 people (including the founders). This is a modest estimate and may increase significantly if more users sign up.
All salaries include a raise estimated at 5% per year. 20% of salary costs have been included for benefits such as health care and 401K matching.
Scott Legal, P.C. regularly prepares business plans for E-2 visas , L-1 Visas and EB-5 visas . We welcome the opportunity to assist you.
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A people plan is an essential component of your business strategy and Financial Planning . In addition to assisting you in budgeting for current and prospective employees, your personnel strategy allows you to consider who to hire and when to hire them.
A Personnel Plan is a document that details an organization’s staffing needs, goals, and workforce management practices. It is an essential component of human resource management and serves as a road map for employee recruitment, selection, training, development, retention, and management.
A Personnel Plan is an essential component of any start-up or entrepreneur’s business plan . It will aid you in your financial predictions, allowing you to anticipate the best periods to hire and expand.
When presenting for funding to angel investors or venture capitalists , they will want to see why your team is uniquely equipped to grow and scale your firm, as well as your hiring strategy.
Investors will be interested in learning:
The people who execute the work—your team—are both the most expensive and most important asset for many startups and small businesses . It stands to reason that hiring the appropriate individual at the right moment can have a big impact on your company’s ability to accomplish milestones and goals, not to mention cash flow.
A healthy Personnel Plan includes strategic thinking about human resources, such as whether to expand roles, and salary levels, and whether to hire full-time or on a contract basis.
So, whether you’re looking for investment or not, developing a people plan and forecast is an important aspect of business planning and strategic planning for your company’s long-term success. Look at the 9 critical phases of developing an investor-ready Personnel Plan .
Typically, the “team” portion of your business plan will include an overview of the main jobs in your organization as well as the backgrounds of the people who will fill those critical responsibilities. You will highlight each of your company’s executive positions before speaking more broadly about other departments and teams.
Keep it brief .
You do not need to submit whole resumes for each team member; a brief overview of why each person is qualified for the position is sufficient. Describe each individual’s talents and expertise, as well as what they will do for the company.
Highlight your team’s strengths . How do they bolster your group’s strength? What is their special knowledge and experience in your (or a related) industry? If your market research uncovered a fantastic opportunity, why are you the best team to capitalize on it?
This part helps potential investors understand why each team member is critical to the company’s success. It serves as the rationale for their wage and ownership stake in the company if they are part owners.
Your company’s organizational structure is typically portrayed as an “org chart” that indicates who reports to whom and who is accountable for what.
However, you do not need to construct a graphic org chart; simply defining your organization in the text is sufficient . Simply demonstrate that your organization has a well-defined structure.
Is authority divided fairly among the team members? Do you have the resources to do all of the tasks required to expand your business?
You should also explain the many teams that your organization will have in the future . Sales, customer service, product development, marketing, production, and so on are examples.
You don’t have to hire all of these employees right away. Consider this section to be an outline of what you intend to do with your firm in the future.
External advisers, board members, and even consultants can play an important role in determining a corporate strategy for some organizations. These individuals may even temporarily fill crucial positions as your company grows. You should include a list of these individuals in your Personnel Plan if this is the case. Give a brief background on each main advisor that outlines the value they give, just like you would for your management team.
You don’t have to include your advisors if they don’t play essential roles or aren’t critical to your achievement. However, i nclude anyone who adds significant value to the organization through advice, contacts, or operational skills.
It’s normal for your team to have gaps, especially if you’re a startup . You may not yet have identified all of the “right” team members, or you may not yet have the cash to hire for critical roles. That’s OK.
The trick is to recognize that you do have gaps on your team—this is how you determine who to employ and when to hire them . Furthermore, it is far better to describe and recognize team deficiencies than to pretend that you have all of the critical responsibilities that you require. Explain where your organization is weak and how you intend to address the issue as you develop in your business strategy.
Although it may be tempting to conceal potential weaknesses from investors, they will see right through you. It is far preferable to be open and honest about where you have management gaps and your Personnel Strategy to remedy those gaps. You want them to know you’ve identified and planned for dangers.
You should also bear in mind that your Personnel Plan may wear many hats in the early days of a company, but specialization will occur as the company expands.
For example, the CEO may initially also be the VP of Sales. However, the job of VP of Sales should eventually be filled by a specialist to take on that task. Include modifications like these in your personnel plan to show investors that you understand how your company will expand and scale.
Outline the company’s personnel requirements, including the number and types of people required to run the business successfully . The credentials and skills required for each post should also be included.
Here you may identify your team’s shortcomings and vulnerabilities , ensuring that you have a competent grasp of the roles and duties that will be crucial to the business in the future – even if they are not currently in existence. Investors are ready to highlight “perfect” people strategies, so you should embrace the fact that you have recognized staffing hazards.
For example, your head of customer service may also be your head of sales, but these two responsibilities will need to be split in the future.
This section should explain how the company intends to recruit and train personnel, including any training programs or on-the-job training.
Outline the salary and benefits packages that will be provided to employees, including salaries, bonuses, health insurance, retirement plans, and any other perks or incentives.
Explain the company’s policies on topics such as employee performance reviews, disciplinary procedures, and termination procedures.
Most Personnel Plans should include a personnel table to anticipate labor costs . Here are some expenses to keep in mind when forecasting.
You should include both direct expenses, which are often salary, and indirect expenses, which include:
As well as any extra fees you incur for each employee in addition to their compensation. Here’s an example of a personnel prediction:
The indirect costs of staff are known by various names . Still, Innovature BPO will refer to it as a “burden rate” or “employee-related expenses”, as it is an expense in addition to direct wages and salary . Payroll taxes, worker’s compensation insurance, health insurance, and other benefits and taxes are common examples of these costs.
Don’t worry about calculating the correct burden rate for company planning objectives. Estimate it instead as a proportion of total monthly compensation. A range of 15% to 25% is normally appropriate, but it depends on the type of benefits you intend to provide.
Individuals and groups of individuals can both be listed in your Personnel Plan . You should certainly mention key people and other highly paid employees but put other departments or groups of people together. For example, you may include your management team but then group departments such as marketing, customer service, and manufacturing together.
Then factor in your employee costs for benefits and insurance. In the example personnel table above, this is referred to as “Employee-Related Expenses.”
The whole quantity of your salary and personnel load will then be included as an item in your profit and loss prediction. Assume you’re using HR management software to create a Personnel Prediction. This software explains where you’ll see personnel costs on your cash flow statement, profit and loss (income statement), and balance sheet.
Even if you don’t currently have any employees, having a Personnel Plan is useful to your firm in the long run.
You may find it difficult to scale your firm or respond to changes in your sector or market if you do not have a Personnel Plan . For example, if you need to hire someone immediately to fill a key function, you may not know where to begin or what qualifications to search for.
Developing a Personnel Plan can also assist you in clarifying your company’s aims and objectives. You can better prioritize and focus on the critical tasks that must be completed by establishing the roles and responsibilities required to fulfill those goals.
As a result, even if you don’t currently have any employees, it’s a good idea to build a Personnel Plan to help you prepare for future growth and ensure that you have the correct team in place to support your business objectives.
Personnel Plan is a time-consuming process that necessitates careful consideration of what needs to happen in your company and where you want it to go. Typically, this necessitates a lengthy process of spreadsheets and mathematics to determine who needs to work with you and at what expense.
A financial modeling tool can ensure that this component of your business strategy, along with other critical components, is easily constructed, requiring only a few data entries to be entered throughout the software. Currently, on the market, there are quite a few tools to support Personnel plans and personnel management . Let’s enjoy!
Personnel Plan is an important aspect of the business planning process because it forces you to consider what needs to be done in your company and who will do it. Take the time to work through this section of your financial plan, and you’ll have a lot better idea of what it will take to make your firm a success.
© Copyright by INNOVATURE BPO | All Rights Reserved.
Investing in human resources (HR) is a key element of healthy personnel planning and strategy. A hallmark of effective leadership is efficient HR which means hiring employees in a cost-effective manner and mostly when needed. Your business plan should always include an informative and up-to-date personnel plan section to provide direction for the company and help entrepreneurs stay focused.
At the heart of every business owner is the desire to excel. The best way to excel is to define your plans and proceed with purpose. Your business plan comprises a business description , a competition analysis, a marketing plan, a personnel section, the HR section and key financial information.
The personnel plan is designed to help company owners put their plans into action. It helps to clarify objectives for the current and forthcoming year. Thus, a good understanding of personnel plan and how to implement it in your business is vital.
A personnel plan is a vital part of every company plan and financial forecast, which aids future and current budgeting and defines the type of employee to hire and when to hire such employees.
When you are seeking funding, venture capitalists and angel investors will want a breakdown of your team. Who are they? What talents and skills do they bring to the table? What is your hiring plan for the first year, second year, and so on? How will your team drive business growth and success?
All this information will include the positions you will need employees for, the period in which the management intends to fill the plan, and the financial implications of the implementation of the plan. Just as you would assess if your business is financially feasible , you’ll need to apply this same sentiment when hiring employees.
The personnel plan represents a consolidated strategy for hiring the best people for all company positions, while keeping an eye on future expansion.
Michael E. Gerber, the author of The E-Myth Revisited, posited that an effective personnel plan designed as an efficient workplace game will help employers prime employees for organizational goals while creating job satisfaction. This means that an effective hiring process is vital to an efficient process of personnel planning.
The majority of employers find personnel planning difficult especially those whose staff work in shifts. Organizational challenges like these can easily be taken care of with TimeTrack Duty Roster which helps employers create a suitable overview of their workforce and personalize shifts according to any number of criteria, including their location and skills.
Features of the TimeTrack Duty Roster
Each company’s needs may differ, but in general, these are common elements that should form part of every personnel plan.
Employees are the most valuable assets any company can have. This means that hiring the right person should always be a key priority for every company. Your staff will have a significant impact on revenue, customer experience/satisfaction and the success of the company.
Incorporating the personnel section into your business plan is an important part of strategic planning for long-term viability. The information below serves as guide on how to implement a personnel plan in your business.
This presents an overview of all the key positions in your business and the backgrounds of staff in their critical roles and departments. Add the total number of staff and their experiences. Emphasize the strengths of individuals and how to upskill where necessary. A great team is typically the fulcrum of business success because they have the responsibility of and possess the ability to translate policies into business success.
The structure of your company is represented in the company’s organizational chart, which shows the hierarchy of duties and management. Is authority finely distributed and are the various company teams properly mentioned? This includes customer service, product development, marketing, manufacturing and sales.
When planning the company’s organizational details, you will need a strategy to manage absences and leave. TimeTrack Leave Management feature helps you to finetune these details so you can easily (and quickly!) oversee employee absences, vacation time and keep track of working hours for compliance management.
TimeTrack Leave Management
While it may be difficult to identify gaps in your team, chances are that if you look closely, you will observe a section of your company in need of quality talent. You need to figure out how to fill this gap. Don’t hide the weakness of your team from potential investors. Always remember that specialization will evolve as the company grows.
Where advisors, board members and consultants are applicable to your company, list them. Where they will fill key positions as the business grows, you need to list them and provide background on the value they provide.
Every personnel plan needs to include a section addressing employment benefits , rights and conditions, especially for managers. Design your company’s management personnel plan and include a table of staff expenses, including both direct and indirect labor expenses, a burden rate and employee-related expenses, while adding payroll tax, workers’ compensation, salaries and health insurance.
Checklist for personnel planning
Improving conditions for personnel involve the identification of gaps, developing and implementing action plans and taking follow-up actions. Managers should develop a performance improvement plan before taking disciplinary action against employees.
A gap analysis is designed to help you identify potential and current issues and is an essential part of the personnel process. Incorporate characteristics of human resource planning into your business planning.
Provide proof of a skills gap or underperformance of the workforce using a consistent format across all employment cadres. Design your format, including employee information and a description of performance discrepancies using expected and actual performance criteria.
Have a face-to-face meeting with your employees to share observed issues or concerns and gain insights into causal factors of underperformance. Use your documentation to share insights on performance challenges. Let the affected employees know they have committed specific policy infractions. Focus only on the outcomes of behaviors to help affected staff understand how their behaviors affect company success.
Establish specific and measurable improvement goals for your workforce. Avoid generalizations and focus on key goals. Setting bit-sized goals is an effective way of working while monitoring task on time .
Provide detailed resources, including advanced tools that can help employees improve. This also means providing the management with essential tools that will help with the efficient oversight of the workforce.
Create a timeline for achieving performance improvement goals. This will help keep the staff on track towards achieving expectations. Don’t forget to identify metrics for measuring progress. Be specific about what you want employees to achieve and define the intended consequences in the event of failure to complete performance improvement plan. Be specific about actions you will take whether or not targets are met.
Schedule regular appointments to review the performance improvement plan with your employees and implement their feedback.
Incorporating a personnel plan into your business strategy is a key factor for efficient planning. To maximize the opportunity presented by personnel planning, use any of the effective and reliable TimeTrack planning and absence management software tools.
I am a researcher, writer, and self-published author. Over the last 9 years, I have dedicated my time to delivering unique content to startups and non-governmental organizations and have covered several topics, including wellness, technology, and entrepreneurship. I am now passionate about how time efficiency affects productivity, business performance, and profitability.
Written by Professional Academy guest blogger Lori Wade
Writing a business plan definitely isn’t easy. It’s a long, energy-consuming process that requires paying a lot of attention to the details and making sure that you didn’t forget to mention something in your plan.
This also means that in order to create a proper business plan you shouldn’t focus on the planning process only. You should also remember to mention and describe all the important details that will matter for potential investors – for example, a management summary.
Basically, it’s a section that includes all the most important information about people responsible for company’s management. By adding such section to your business plan you show the investors how exactly is your business structured. You also demonstrate them who are involved in the development of your company and how’s the whole business is managed.
This section is very important because it demonstrates the experience of your team, and therefore the strength of your company the most. It supports all the data provided in other sections of your business plan and can influence the investors’ decision a lot.
For better understanding, you can check the examples of management summaries included in a bakery business plan and in a coffee shop business plan .
1. the founder/the leader of the team..
Without a doubt, focusing on your management team is important. Focusing on a person responsible for selecting and organizing this team is even more important, though.
Write about the team leader, making sure that their background, vision, and credentials are described in details. If possible, explain how exactly did they choose this specific management team. Don’t go into many details but make sure that even a brief explanation is included.
It’s important to write about your managers, of course. The question is how can you do it right?
Don’t forget that your goal is to highlight their skills and professionalism – and to do this quickly and briefly at the same time. The investors won’t have much time to read the detailed descriptions, therefore you should focus on the following things:
Assuming you have them, include them in this section along with the reasons why there were included in the first place.
Your company’s staff isn’t always limited to people who work for you. Sometimes you might need the help of some outside professionals and while the reasons for that could be very different, it’s important to not forget to mention them in this section. This will show the investors that you have every important area of your business covered.
Here are some tips on how can you do so.
1. Describe how your staff interacts with each other.
Sure, describing your employees’ primary roles in your company is important. However, any company doesn’t work strictly as described in the various organizational chart. The employees sometimes go beyond their basic professional duties, interacting with each other and taking different professional roles. It’s crucial to describe it so the investors would understand how your company really functions.
2. Focus on what’s important, discard what’s not.
We’ve already mentioned the details about your management team that is important to include in this section. While some additional information actually might be a plus, you should still pay attention to what you decide to include. Otherwise, there’s a big chance you’ll focus on things that aren’t as relevant – for example, list the whole employees’ bios in this section.
You can still add them to your business plan, though, but not here. Put them in the appendix, for example.
3. Make sure the connections between employees and business activities are clear.
When we’re describing the management team, we do so in order to describe the roles they play in the business. Therefore, it’s important to make the connection between your staff and your company’s achievements evident. Make sure that you relate specific skills and work experience of your employees with the roles that they play and will play in both your company’s present and future.
4. Encourage your team to review your writing.
Of course, no business plan is written without a review. A management summary is also rarely written flawlessly from the first draft – in most cases, you need to review and edit it properly.
It’s a good idea to encourage your management team to participate in reviewing this section of your plan. In this case, they will be able to confirm that all the information about them, their skills, and roles are listed correctly. They might also be able to offer some valuable suggestions to you.
Moreover, such approach will show your team that you value their opinion and care about them. Such things can affect your communication greatly, motivating your staff and boosting their productivity.
Summing this up, just like a thesis statement definition is a crucial part of any essay, a management summary is a very important part of every business plan. Of course, writing it isn’t easy – and doing it the right way is even more challenging. However, these tips will hopefully help you create a strong and impressive management summary that will make the right impression on the potential investors.
What do you think about management summaries? Do you find them important for any business plan or do you think that they aren’t necessary?
Lori Wade is a freelance content writer who is interested in a wide range of spheres from education and online marketing to entrepreneurship. She is also an aspiring tutor striving to bring education to another level like we all do. If you are interested in writing, you can find her on Twitter or Google+ or find her on other social media. Read and take over Lori’s useful insights!
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Business Development > Starting a Business > Business Organization & Structure
Lead management and key personnel positions in a business.
As you develop your business plan, a "management team" needs to be pulled together, with serious thought given to the key positions that need to be filled and who should fill them. The path of least resistance should be avoided - that is, placing close friends and relatives in key positions simply because of who they are. There are two criteria to justify placing someone in a position on your management team. First, does the person have the training and skills to do the job? Second, does the person have the track record to prove his or her talents?
Often, a management team evolves over time. Members of your team may wear several hats until the company grows and the company can afford the additional team members. A large business may have some or all of the following positions.
In a small business there often are few staff people with many duties. Because some people must wear "several hats", it is important to clearly identify the duties and responsibilities of each of the "hats". Below is a sample outline of some of the key personnel in a business. Because the focus of businesses varies greatly, the number of key personnel and organizational structure can also vary substantially. However, most businesses will have many of the key personnel listed below.
Key personnel in a value-added business and their duties include:
Don Hofstrand, retired extension value added agriculture specialist, [email protected] Verl Anders, retired
Retired extension value added agriculture specialist view more from this author, verl anders.
Home >> #realtalk Blog >> Manage a business >> How to Write an Effe…
By Homebase Team
If you’ve started—or are starting—a business, you’ve probably heard the words ‘business plan’ a few too many times. And while the term is definitely tossed around pretty often, there’s a good reason for it: it’s important.
But if you’re imagining a supermassive document that takes ages to create—think again. Not every business plan is the size of an encyclopedia. In fact, in many cases, you might even be able to get away with a one-page business plan.
So if you find yourself in need of one, or need to give your existing plan a refresh, we’ve got your back. Scroll to get all the details you need to create a one-page business plan that’ll kick your business into high gear. We’ve even got a free, downloadable business plan template to help you get started.
A business plan is basically a blueprint for your business. It outlines everything from your business goals to the steps you’ll take to get there.
It serves two main purposes:
While taking the time to create a business plan can feel like you’re wasting all-too-precious time, it can help keep you focused and make better business decisions so you can grow your small business.
Every business plan is unique, which is part of the reason writing one can feel a tad overwhelming. You can’t just copy and paste the plan from another business.
Luckily, the skeleton of every plan is actually very similar. Whether you’re creating a plan for a neighborhood daycare or that cool new bar down the street , here are a few main points that you’ll find in every comprehensive business plan.
Your executive summary is an overview of your business plan.
Think about this section like a TL;DR or too long, don’t read . If someone wants to understand the gist of your business plan in just a few minutes, what information would they need to know?
If you find yourself just sharing your executive summary, consider a one-page business plan instead. More on that below. |
In this section, you should introduce your business to the reader. By the time they finish reading this section, they should have a good idea of who you are, what you do, and what you sell.
Don’t be afraid to dive into your own background and why you decided to start this business as well. Building a small business is personal and your story can go a long way in giving the reader some context behind your business.
Every business needs customers. So, here’s where you’ll dive into who they are and the potential target market of your business.
You’ll also want to take note of potential competitors that may impact your business. These might be direct competitors, but could also be similar businesses that may compete for your customers’ time and money. For example, if you’re opening a cycling studio, you might consider any other type of fitness studio to be a competitor.
Competition isn’t a bad thing, it’s just important to be aware of it and how you can stand out from the crowd.
Here’s where you’ll outline exactly what products or services your business will offer. It doesn’t have to be a complete laundry list but it should give readers a general idea of what to expect.
For example, if you’re opening a bakery , this might be a sample of your menu. Or if you’re an HVAC repair company , you might share an overview of the services you’ll offer your customers.
From managing employees and inventory to securing equipment and a lease, there’s also a lot that happens behind the scenes to keep things running smoothly. Every business plan should touch on how you’ll manage the day-to-day of your business.
This is also a great place to indicate key milestones and timelines so you know that you’re on track for a successful grand opening.
Now that you’ve got all the research and operational plans in place , it’s time to start attracting customers and securing those sales. Even with the best products or services in town, every business can use a little marketing boost. Feel free to get creative. From social media to paid ads, there are tons of ways you can spread the word about your budding business .
No one loves to crunch financials, but when it comes to business, money talks. And a strong financial plan is key to the long-term success of your business.
This final section of your business plan should estimate the costs, revenue, and profits of your business in the short and long term. How do you plan to finance your business? What costs will you incur before opening day ? What are the ongoing costs?
Not only will this give your vendors and investors confidence in your business, but it helps you make sure that your business is profitable in the long run.
A one-page business plan is essentially a condensed version of a full business plan.
It covers all the core information about your business, without overwhelming the reader with irrelevant details. The goal is to summarize your business plan for yourself and potential stakeholders.
Depending on your business needs, this concise document can be all you need to get your business off the ground. Or it could serve as a stepping stone to a more robust plan in the future.
Bigger isn’t always better—and one-page business plans are here to prove it.
Here are some benefits and reasons why you might opt for a one-page business plan:
Remember those sections we mentioned earlier that make up a full business plan? The goal here is to shrink it without losing any of the important details.
So let’s look at the sections and dig into how you can adapt them to cover all the details of your business—all on one page.
Start your one-pager by sharing the name of your business, what you do, and your main value proposition.
In a few sentences, share the problem that your business solves and how you solve it, aka why your business should exist.
Depending on your business, you may also want to share a few of your team members, like an executive chef for a restaurant, or a lead veterinarian for your vet clinic , to help readers put a face to your business.
Briefly describe who you expect to be a customer and their characteristics.
Here, you’ll touch on potential competitors and what makes your business different.
Share the key milestones for your business. For example, when you’ll start marketing your business, when you’ll hire employees , and when you expect to open.
Here you’ll quickly highlight the key marketing activities that you’ll use to drive new customers to your business. Try to stick to the most interesting or high-value stuff, like a website or social media .
Outline your expected revenue , expenses, and profits to give the reader an idea of your financial future.
If you’ve ever written something with a limited word count, you know that sometimes keeping things concise can be easier said than done.
As you get writing your one-page business plan, here are some of our top tips so you can make the most of that one page.
If you’re skeptical that all that information can fit on one page—we get it. Lucky for you, we have proof.
Here’s an example that you can use to start thinking about your business plan.
A one-page business plan is one of the most important pages you’ll write for your business. While there’s a lot to think about, it’s certainly worth the effort.
Good news: we’ve done the heavy lifting for you by putting together this winning one-page business plan template. All that’s left for you to do is fill in the sections and get ready to launch your business.
One page business plan template
Keep your team on track with one app to manage everything from scheduling to team communication. |
Get your team in sync with our easy-to-use, all-in-one employee app.
Why should you create a business plan.
There are several reasons you should create a business plan, such as:
From brand-new small businesses to established corporations, companies of all shapes and sizes need a business plan. It’s a key part of setting your business up for success and improving your business trajectory.
Even if you already have a business plan in place, revisiting it from time to time can help you stay on track with your goals and adapt as your business changes.
Yes, in many cases a business page can be one page. The trick to creating an effective one-page business plan is making sure that you’re covering the most important pieces of information.
Our top tips? Keep it as concise and organized as possible, so you can effectively communicate the value of your business to your audience.
Writing a one-page business plan is simple. You can create a business plan from scratch or use a free template like the one above to stay on track, but generally, the steps to writing a one-page business plan include:
Remember: This is not legal advice. If you have questions about your particular situation, please consult a lawyer, CPA, or other appropriate professional advisor or agency.
June 26, 2024
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June 18, 2024
The business processes that worked when you had fewer team members or before you reached the current scale may now be outdated, inefficient, and ineffective.
Business process management (BPM) helps you analyze and optimize your current processes through proven process improvement practices. This could mean business process improvements like automating repetitive work, removing bottlenecks, fixing inefficient processes, or resetting goals around business outcomes.
Let’s see some business process management examples and best practices that improve efficiency and cost savings and help in digital transformation.
Understanding business process management in detail , 1. human-centric bpm, 2. integration-centric bpm, 3. document-centric bpm, 1. customer onboarding, 2. employee onboarding, 3. compliance management, 4. product lifecycle management, 5. project management, 6. contract management, 7. risk management, 8. acquisition and procurement, 9. vendor management, 10. logistics, 1. designing, 2. modeling, 3. executing, 4. monitoring, 5. optimizing, business process management: future trends.
Business process management, or BPM, is an approach in which organizations evaluate, model, and redesign their business processes to drive maximum efficiency and revenue growth.
A business process is a series of tasks or activities your business performs by coordinating people, systems, and information to produce business outcomes that support your business strategy or achieve specific goals.
BPM aligns business IT investments to business strategy and helps standardize operations, improve agility, increase workflow efficiency , and improve compliance.
A business process involves the different tasks, activities, and workflows that allow organizations to achieve their goals. It drives a business’s day-to-day activities, including customer support, manufacturing, procurement, financial management, etc.
Business process management optimizes these business processes to make them more efficient. It helps manage both the strategic and operational side of your business processes.
Task management focuses on organizing, assigning, prioritizing, and tracking tasks and activities to ensure they are completed on time. You monitor the day-to-day tasks that contribute to larger projects or processes.
Project management oversees all the activities in a project from start to finish. This includes defining project scope, assigning tasks, creating schedules, tracking progress, and allocating resources.
Read more: Project management vs. task management
BPM optimizes different business processes and operations to help organizations achieve larger objectives such as customer relationship management, procurement, employee onboarding, supply chain management, and order fulfillment.
What is it | Involves completion of self-contained and individual tasks | Involves events that have a start and end date | Deals with ongoing strategies and existing processes |
Focuses on | Managing your team’s workload | Oversees singular events as the need arises | Maximizes efficiency of day-to-day business processes |
Goal | Transparency | Efficiency |
Benefits of business process management:
Human-centric BPM revolves around human involvement, typically for tasks requiring approvals .
An example of this would be reviewing data and creating documents such as reports, proposals, and vendor agreements.
You can use BPM to automate supporting functions such as task assignments and stakeholder notifications.
This type of business process management does not require much human involvement for continuous improvement.
Integration-centric business processes depend on APIs and systems that integrate data across different applications, such as customer relationship management (CRM) or project management.
This type of BPM focuses on specific documents , such as proposals or contracts.
It centralizes and standardizes all processes, from document creation to approval to archiving.
For example, when a company purchases a product, the contract has to go through different departments and several rounds of approval for an agreement between the client and vendor.
Let’s look at some relatable business process management examples before you put them into practice.
Here’s how you can implement the BPM lifecycle to streamline workflows in the customer onboarding process.
Example: A bank wants to optimize its customer onboarding process to increase efficiency, minimize errors, and improve the overall customer experience.
Start by building a process map of the different steps involved in onboarding. This includes account application, identity verification, and account setup.
Next, consider what processes you can automate using BPM technologies.
For instance, online account applications can be integrated with banking CRM systems to capture customer information and initiate the identity verification process automatically.
A centralized business process management system can digitally store customer documents, making them easy to access and reducing paperwork. BPM standardizes these processes and ensures smooth handoffs between different departments involved in the onboarding process.
Result: Quicker customer onboarding that also complies with the necessary regulations.
Read more: Here are our 10 favorite workflow templates for virtually any team and process
Employee onboarding BPM helps you to onboard your new hires efficiently. BPM streamlines everything from paperwork to integration into your organization.
Set up triggers and assign tasks using workflow automation tools or a BPM platform to ensure smooth handoffs between departments.
For instance, once HR receives an employee’s completed forms and paperwork, the system automatically assigns tasks to the IT department to help set up the employee’s computer and system access.
Result: Quicker onboarding with minimal manual effort, improving the onboarding HR processes.
You can standardize compliance-related processes across your organization to ensure compliance with industry regulations and internal policies.
Process automation tools help you map out compliance activities and automate compliance checks, approval workflows, and data validation.
Example : A pharmaceutical company must comply with healthcare and government regulations regarding producing and distributing drugs and medicines.
In this case, whenever a new regulation is released, the BPM software immediately triggers an evaluation process to assess the company’s current compliance processes. The system automatically assigns different tasks to the relevant departments involved in the compliance management process.
Once the evaluation is complete, the findings are consolidated into a report, and a workflow is created to implement necessary changes and review and approve them.
This lets you get a complete overview of your compliance processes to ensure that every step is followed. The system sends out alerts whenever a task is overdue or when there is a compliance gap. It also maintains an audit trail to keep track of all compliance-related tasks and activities.
Result: Your business stays compliant, with lower effort required.
Read more: 10 Best business process documentation software
Business process management helps you to systematically manage everything from conception to design to development and distribution of a product.
Example : A software company is developing a new CRM software for small and medium businesses.
Implement BPM to streamline the process of gathering and managing important information, such as user requirements and product specifications. This allows product managers and developers to access critical information easily during product development.
BPM tools can also help you coordinate the deployment process and manage customer communication and support ticketing.
Result : Reduces the time-to-market for software releases and ensures that the product is better aligned with customer needs and expectations.
BPM can be used to streamline processes from initiation to completion of a project.
Example : A marketing agency that has implemented BPM for better project management.
BPM can help standardize campaign planning and customer communication, automate task assignments, manage data with relevant documentation, and allocate resources effectively. It can also give stakeholders a 360-degree view of how different campaign launch activities are progressing.
Result : Optimized project workflows, increased collaboration, and improved quality of project outcomes.
Process automation in contract management allows teams to create and manage contracts faster,
Example : A legal firm uses business process automation to generate and manage contracts. These contracts are then routed through an approval workflow with multiple approvers. When an approver signs off on a document, it is automatically sent to the designated approver in the next stage until it is approved by all the relevant stakeholders.
Since contracts are time-bound, you can set up automated reminders to send out renewal notifications to everyone included in the contract.
Result : Quicker contract processing and renewals.
One of the best business process management examples is BPM which evaluates risk assessment processes.
Example : A financial institution implements process automation software to manage risks associated with loan approval.
The system streamlines the loan approval process by analyzing customer data, credit scores, and previous financials to determine whether the borrower is a credit risk. If the analysis shows that the customer is high-risk, the application is routed to another team for further review.
Low-risk applications are processed immediately without any delays. This helps the financial institution disburse loans without risking its assets.
Result : Reduces errors and helps in risk mitigation .
Business process management in acquisition and procurement streamlines vendor selection, goods delivery, and invoice processing.
Example : Business process management helps a manufacturing company automate creating purchase requests.
When the inventory of any particular product reaches a pre-defined threshold, the BPM software immediately triggers a purchase request. The request passes through an approval workflow and is evaluated against budget, item availability, and vendor qualification factors.
Once the request receives the final sign-off, a purchase order is created and sent electronically to the vendor. The BPM system then tracks the purchase order status and manages communications until the product in question is restocked.
Result : Compliant and efficient procurement process.
You can create processes to automate vendor onboarding and contract management.
Example : A manufacturer of car parts wants to improve vendor management .
It needs machine learning BPM technology to collect and evaluate vendor information. The algorithm rates each vendor based on factors such as compliance, qualifications, and performance history.
These ratings are then consolidated into reports and sent to the relevant stakeholders, who can decide which vendor to proceed with.
Once the vendor is finalized, BPM systems can also be used to manage contracts, renewals, and compliances. This way, you can automate manual tasks such as vendor selection and get visibility into the status of vendor relationships, contracts, compliance, and payments.
Result : Improved vendor relationships.
Business process management in logistics can optimize warehouse management and transportation.
Example : A global shipping company uses BPM tools to improve the efficiency of its logistics operations.
Whenever a customer orders, the BPM system immediately triggers a shipping request. The request is then assigned to the most suitable carrier based on factors such as delivery timelines, shipping routes, costs, and vehicle availability.
When the order is on its way, the system tracks the shipment’s location and sends status updates to the customer so that they know where their order is and when it is expected to be delivered.
If there are any roadblocks, the carrier immediately receives a notification, allowing them to take corrective measures immediately.
Result : Improved delivery times and increased customer satisfaction.
ClickUp’s Project Management Software has many versatile features to help you create your workflows and build a business process management system that works for you.
Let’s look at some business process management examples with ClickUp. The platform can help you improve your BPM with automated workflows, team collaboration, real-time reporting, process mapping templates, a built-in AI assistant, and feedback collection forms.
The best way to design a BPM strategy for your organization will depend on your processes and your organization’s strategic goals .
A SWOT analysis will help you understand what needs to change in the existing business processes, identify potential bottlenecks, and the new process improvements needed.
Also, get input from stakeholders into the daily operations and the new business processes you plan to implement.
Pro tip💡: Document the overall process steps and the goal of the BPM initiative on ClickUp Docs . You can even create internal wikis and share them with your team so they have access to critical details about the BPM project.
The collaborative capabilities of Docs, including real-time editing, adding comments and assigning tasks, and rich formatting, make it easy for stakeholders and your team members to participate in the business process management discussion.
You can use Docs to create SOPs , which are a centralized repository of all process-related information for current and future employees.
Use process maps at the modeling stage to visualize the proposed business processes, including an overview of the various tasks, activities, flows, and events that will contribute to the process you are working on.
Create process models using a BPM tool or workflow management software to analyze the flow of activities, decision points, and dependencies. This breaks down complex processes and steps involved in process automation, adding value and removing inefficient activities.
Here, ClickUp’s Process Mapping Template helps you evaluate the processes that need improvement, gather insights into the bottlenecks, and visualize processes end-to-end.
The template provides all the tools you need to:
Business analysts and project managers love using this template as it simplifies complex processes into easy-to-follow diagrams and shows relationships between different steps in a process.
Pro tip💡: ClickUp’s built-in AI assistant ClickUp Brain is your AI sidekick that manages and automates work such as writing product brief outlines, summarizing meeting notes, assigning tasks, and creating status reports for tasks, docs, and people.
This phase aims to involve automation to reduce repetitive tasks and manual errors.
ClickUp Automations supports business process management by automating task creation, assignment, and status updation. It can automatically change tasks’ statuses as they move through the different stages of your BPM workflow.
You can configure the automation to update a task’s status from ‘In-Progress’ to ‘Completed’ when all the required actions are completed.
Pro tip💡: Define role-based access for each aspect of your business process so that users can access the information they need to complete their tasks while you also keep your information secur e.
ClickUp’s Integrations with 1000+ applications ensure error-free data flow between the BPM software and your tech stack.
Monitoring your business processes’ performance regularly is important to identify bottlenecks and take corrective measures in real time. This can help ensure that processes do not deviate from the expected outcomes.
To monitor the performance of your business processes, identify bottlenecks, and take corrective action, you need real-time dashboards that visualize how different tasks are progressing.
ClickUp Dashboards help you do so with real-time data about your business process model and its performance. Get a high-level and granular view of your operations and processes.
Remember to define key metrics and performance indicators to track the operational efficiency of your business process improvements . You can track metrics like throughput, cost per process, NPS, and compliance metrics to help you track the performance of business processes.
Pro tip💡: You can also use ClickUp Views to slice your data in different ways like List, Table, Timeline, Gantt Chart, and so on.
Organize regular meetings with stakeholders and team members to update everyone about the status of different processes in the workflow. You can review performance data and get stakeholders’ feedback to improve your BPM workflow. This helps in process improvement.
Clickup’s Form View collects feedback from everyone in a standardized format to help you optimize the business process , especially for tasks that need continuous improvement, such as customer support and product development.
Pro tip💡: Take help from ClickUp Brain to analyze the feedback received and create action items.
Keep making iterative changes to your BPM based on changing organizational needs, stakeholder and customer feedback, and data analysis to ensure its effectiveness.
Whether you’re a business analyst or a project manager, low-code and no-code tools for business process management allow you to design process automation without reliance on your tech team, speed up development cycles, and respond faster to changing market conditions.
When integrated into BPM, artificial intelligence automates tasks such as creating documentation and process workflows. Machine learning analyzes large data sets to give insights to optimize existing and new processes.
Customer-centric BPM keeps customer needs at the core and focuses on improving the customer experience. Processes such as customer journey mapping , customer surveys, feedback collection, and personalization will continue to be vital to implementing effective business processes.
Also read: Process improvement templates
The BPM examples stated above show how it goes beyond improving process performance and makes your business agile and responsive to market conditions and customer expectations.
Wherever you plan to implement business process automation—sales, vendor management, customer onboarding, or logistics, it will substantially impact your business, its success, and its competitiveness.
ClickUp is a beginner-friendly business process management software that helps you create complex business processes quickly and easily.
If you’re new to a BPM platform, we recommend you sign up on ClickUp for free and try it out.
1. what are examples of business process management.
Business process management spans across different industries and departments. Here are some of the popular BPM examples:
BPM can streamline customer onboarding for banks, automate order processing, invoicing, and inventory management for e-commerce businesses, and automate processes such as capturing and validating employee information during employee onboarding.
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The management portion of your business plan, the hr portion of your business plan, frequently asked questions (faqs).
As a startup, it’s never easy to come up with a business plan, let alone the management and human resources sections of a business plan. Despite that, it’s important that you start your business plan for human resources as soon as possible. Doing so gives your management goals a plan that will guide you and keep your business on track as it grows.
The key components of your human resources business plan should include your organizational structure, the philosophy and needs of your HR department, the number of employees you want to hire, how you plan to manage them, and all the estimated costs related with personnel.
You’ll want to start your HR business plan by outlining your own managerial experience and skills as well as those of your team. Highlight the roles of each member of your team, and any particular areas of strength or deficiency in your personnel lineup. For example, your HR team may be strong in compliance and conflict resolution but weak in hiring.
Don't worry if you don’t have a complete team in place when you write your HR business plan. Simply use this section to outline the organizational structure along with job descriptions, how you plan to recruit key team members, and what their responsibilities will be.
This section should look like a pyramid with you at the top and will likely have lateral positions. Be as specific as possible when defining an employee's responsibilities because this is what will drive your business.
If you’re a solo practitioner, you may not think of including an HR manager in your management business plan. However, if you expect to hire non-managerial employees (such as salespeople or clerical workers), you should consider recruiting a human resources manager.
If hiring a human resources manager can’t be done, consider a human resources consultant. Human resource management requires an immense amount of time and paperwork, and an experienced HR consultant will be able to quickly get your payroll and benefits program up and running, affording you more time to concentrate on growing the business. Human resource responsibilities should include:
There are plenty of companies that offer HR management platforms tailored to each business's needs. Research these companies and be sure to include their estimated cost in your HR business plan.
When you develop the HR portion of your business plan, begin by including a brief overview of your HR strategy. Investors may be curious about how your payroll will be handled and the associated costs of administering it, as well as the type of corporate culture you plan to create. Specific items to highlight in the HR section include:
In addition to the key elements above, it helps to have a framework from which to build your HR business plan. Here’s a basic outline that can help you get started:
It may be overwhelming to contemplate these benefits and their costs in the early stages of setting up your business, but in a competitive labor market, your firm needs to offer enough to entice qualified people and, more importantly, to keep them happy.
Consider revisiting your management and HR business plans every couple of years to see if you need to create action steps to refine your processes.
An HR business plan should include a mix of the steps you plan to take to launch an effective HR department, as well as specifics about how you plan to handle time off, insurance, and other benefits you plan to offer.
It helps to start with a simple framework. Try to break the plan down into sections: HR needs, recruitment, hiring, training, pay, and performance reviews. From there, incorporate other aspects of HR, like benefits and promotions.
U.S. Chamber of Commerce. " Does Your Small Business Need an HR Department? "
University of Minnesota. “ Human Resources Management: 2.2 Writing the HRM Plan .”
Mecklenburg County, North Carolina. “ FY 2020-2022 Strategic Business Plan: Human Resources .”
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“Nothing is constant except change” might be a cliche, but it’s true. Businesses would do well to have the saying tacked up to every wall in their offices. Knowing that change is always on the horizon means organizations can prepare for it with a change impact assessment.
To quickly adjust to change and lessen its negative effects requires understanding what change impact assessment is and then knowing how to conduct a change impact analysis. We’ll go over that and add a free change impact assessment template to facilitate the process.
Organizations use the change impact assessment process to understand how changes will affect people, processes, projects, etc. With that knowledge, organizations can mitigate the negative impact of those changes or take advantage of any position effects of the change. Change impact assessment is a key part of managing any organization or project.
After a change impact assessment and change impact analysis, organizations can make better decisions, allocate resources more effectively and reduce risks to the organization or project. Change impact assessment does this by analyzing the type and extent of the change and how it will affect different areas of the organization, such as its employees or teams, processes, technology, culture and competency.
Whether an organization is changing its systems, values, policies and operations or hiring a professional service to implement a change, help with relocation or the production of a new product or service, change impact assessment can make those changes as seamless as possible without disrupting business operations more than necessary.
Once the change impact assessment is done, then the product of implementing that change is next. Project management software helps facilitate that process more efficiently and avoids undue stress on the people, processes and organization.
ProjectManager is award-winning project and portfolio management software that can plan, schedule and track the implementation of changes in real time across multiple tools. Managers can plan and schedule on robust Gantt charts that link dependencies, filter for the critical path and set a baseline to track project variance in real time. Teams can execute their tasks on the list view or kanban boards to manage their workflows. Stakeholders get an overview of everything on the calendar view. Get started with ProjectManager today for free.
A change impact assessment matrix is a tool that helps evaluate the possible effects of a change on a project or organization. It’s used to gauge the impact of change on different aspects of a project, such as quality, cost, time, resources and risks, or an organization, such as financials, processes, operating budget , etc.
Organizations or project managers can also use a change impact assessment matrix to identify areas that might require more or less communication, tracking or stakeholder engagement about the degree of change.
The change impact assessment matrix is often built in Excel and lists key changes in rows and relevant categories or stakeholders in columns. It can not only help to assess changes to an organization or project but also communicate those findings to management when informing them about the needed changes to the project’s status, schedule or process as well as changes that impact the organization.
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Use this free Change Impact Assessment Template for Excel to manage your projects better.
A change impact assessment matrix is used in the change impact analysis. Now that we understand the term and the tools, it’s important to outline the structure of conducting a change impact analysis. To do so, follow the following steps.
The current state of operations is a snapshot of how the organization operates before implementing the change. It’s important to map the current state of the operations from different perspectives, such as process, system, culture and people, to fully understand what the change will impact once it impacts the organization or project.
The future state is how the change will impact the various aspects of the organization or project. This can be a new way of working, technology, or organizational structure. The current state of the operations will then be compared to the future state of operations to identify what is changing, who will be impacted and what impacted users need to know. This information will inform the plan and communicate the actions to mitigate risks and maximize the benefits of the change.
With the current and future state of the operations mapped out, it’s time to define the change that is being proposed and its scope. At this point, identify the impacted areas and analyze the impacts, considering factors such as dependencies, risks, opportunities, assumptions and constraints.
With this information, the next step is creating a change impact assessment matrix. This involves identifying the change drivers, analyzing the change impacts, evaluating the change readiness and developing the change plan. Further down in the blog, there’s a link to download a free change impact assessment template, which can be used for this step.
Once the change impact assessment is complete, the planning to implement that change becomes paramount. This planning begins with estimating the resources that will be required to implement the change. Resources can be people, tools, equipment or anything needed to execute the project and deliver the change. An estimation of resource requirements will inform the budget for the project, too.
Once the scope of the change has been defined, resources estimated and a budget in place, the project now must be scheduled on a timeline. A timeline captures the entire project from beginning to end, with every task populated on that timeline, including its start and end dates, which indicate its estimated duration. It’s a good idea to determine the key performance indicators (KPIs) that will be used to measure the project’s success and track its progress.
There are many examples of a change impact assessment. While some changes can be scheduled, such as the implementation of new tools and processes, others are unexpected. Either way, they must be quickly assessed and dealt with to mitigate risk and take advantage of opportunities.
Some examples of change impact assessment include mergers, appointing new leadership, developing processes that focus on the client or implementing new technology and business models. But anything that changes business as usual changes and requires a change impact assessment to clearly understand that change and successfully implement it.
In simple terms, an example of a change impact assessment is comparing two states, the current state and the future state after the change. Whatever the trigger for that change, the change impact assessment identifies what is changing, who is impacted and what those impacted need to know.
Use this free change impact assessment template when identifying organizational and project changes. This change impact assessment template allows users to define the current state of the operations or projects, the post-change state, the gap between the two and key risks.
The second half of the change impact assessment template lists a series of questions to help understand everything from the scope of the change to the budget needed to implement that change. This change impact assessment matrix is fully customizable allowing users to add or subtract from it as needed.
Changes can’t be avoided, however, they can be managed. Without a change impact assessment, changes happen and organizations or projects are unprepared. This is when a change will have a greater negative impact. By planning, the severity of the change can be mitigated.
Other advantages of conducting a change impact assessment are that it helps businesses see where change will have the greatest impact and also those areas of the organization or project where the change will be least impactful.
As noted, the change impact assessment will determine the scope and scale of the change. It also drives discussions with stakeholders, which helps to keep them informed on the change, its impact and the plan that will be put in place to either implement the change or respond to it.
A change impact assessment matrix is only one of many templates that can help manage change in an organization or project. There are over 100 free project and portfolio management templates available to download on our site covering all aspects of managing projects across many industries. The following are a few that can help with change management.
A change request form is used by project managers to prepare, equip and support change. Use this free change request form template for Word to describe the change and the reason for the request, as well as how the change will impact everything from scope to cost.
Use this change log template for Excel to document changes as they occur and then track them throughout the project. This free template will give project managers greater visibility to monitor the mitigation of a project change.
In construction, the change order form captures any modifications to the scope of work in a project. This free change order form template for Excel can be used to revise the project schedule and budget and amend the contract.
Most of these templates will only get a user so far. They might help understand the impact of a change and how to respond to it, but once action is taken, templates are more trouble than they’re worth. They’re not collaborative documents and every change has to be manually added to the static document. Plus, there’s no way to track changes and responses in real time. Project managers are always going to be one step behind. ProjectManager is award-winning project and portfolio management software that has specific task cards to track risk and changes in real time, plus tools to monitor timelines, costs and progress while keeping the project team and stakeholders informed.
Once the change impact assessment is complete and the plan is implemented, managers will monitor and control the execution to ensure that it’s progressing as planned. Get a high-level overview of progress, cost, workload and more with real-time dashboards. They constantly collect live data and display it in easy-to-read graphs and charts. Plus, there’s no lengthy and complicated setup as with lightweight alternatives. There are also customizable reports on project and portfolio status, timesheets, variance and more, which can be shared with stakeholders to keep them informed on progress.
There is a risk inherent in any change. Managers can identify those changes and risks on task cards that can calculate their impact on the project. These task cards can be assigned to team members, tags can be added to make them easily discoverable and descriptions and resolution for the change or risk can also be added to the card. For risks, there’s even a way to note the likelihood of it occurring. All this allows for the management of change and associated risks so that organizations and projects can avoid negative impacts.
Change management is a large subject that goes beyond a change impact assessment. For those who are curious to learn more about change management as it relates to project management, there are lots of resources available on our site. We published blogs throughout the week and have guides, ebooks, tutorial videos and free templates. The following are some of the change management pieces that we’ve recently published.
ProjectManager is online project and portfolio management software that connects teams whether they’re in the office, out in the field or anywhere in the world. They can share files, comment at the task level and stay up to date with email and in-app notifications. Join teams at Avis, Nestle and Siemens who use our software to deliver successful projects. Get started with ProjectManager today for free.
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Updated: Jun 26, 2024, 4:51pm
No matter the size or scope of your financial goals, a financial plan can help make them a reality.
Financial planning is the process of looking at the current state of your finances and making a step-by-step plan to get it where you want it to be. That may mean devising a plan to become debt-free or figuring out how to save enough money for a down payment on a new home.
This process can include many aspects of personal finance, including investing, debt repayment, building savings, planning for retirement and even purchasing insurance.
Anyone can engage in financial planning—it’s not just for the wealthy. You can get started on making financial goals on your own, and if you choose, you can work with a financial professional to help devise the smartest plan to make those goals a reality.
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A financial plan is devised of smaller goals or tasks that will help support you along your financial journey. Create a financial plan with these five steps:
By identifying your financial goals, you’ll have a clear idea of what you need to accomplish to make them happen. Your goals should be realistic and actionable and include a timeline of when you want to accomplish them.
Making a goal to pay off credit card debt by a certain date, for example, would be an appropriate financial goal that will set you up for success.
Having a clear picture of your finances will make it easier to achieve any financial goals. A budget can help you understand where your money is going each month. It can also help you identify where you may be overspending, giving you opportunities to cut back and allocate that money elsewhere.
One of the easiest budgets to start with is the 50/30/20 budget . This budget plan allocates your monthly income into three buckets: mandatory expenses (50%), savings and debt repayment (20%) and discretionary spending (30%). This is just one of many types of budgeting plans out there.
A budget should be a guide to help you understand your monthly finances and devise smaller goals that will bring you closer to your long-term financial goals. You likely won’t always follow your budget down to every single penny; keeping this in mind will help you stay on track, rather than get discouraged and give up on budgeting altogether.
There are apps out there that make budgeting much easier by helping you visualize your spending and savings choices each month. Some budgeting apps even give you the option to enter your financial goals directly into their platform to help you stay on track. A fully featured budgeting app allows you to track spending, manage recurring bill payments, set savings goals and manage your monthly cash flow.
Building an emergency fund will help make sure that a financial emergency doesn’t become a catastrophic financial event.
Experts usually recommend having six months’ worth of living expenses saved to cushion you, should the unfortunate unexpected happen, such as losing a job. But six months’ worth of money can be unattainable for those who may be struggling financially, or those living in tight financial means each month.
You can start building an emergency fund by setting a few dollars aside each paycheck. You can start with a small fund goal of $100 to $200 to establish your fund. From there, you can create other smaller goals that will add up to a larger financial cushion. Some budgeting and savings apps also give you the option of rounding up to the nearest dollar in transactions and funnel that spare change toward your savings.
Having to make debt payments each month means you’ll have less money to allocate toward your purchase goals. Plus, carrying credit card debt can be expensive; every month, you’re accruing interest on your balance, which can make it take longer to pay off.
There are a variety of debt payoff methods out there. Two of the most popular include the debt snowball and debt avalanche methods . With the snowball method, you’ll pay off your smallest balance debts first, then make your way to the ones with the higher balances. The debt avalanche, on the other hand, starts with higher interest rate debts first.
Although risky, investing can help grow your money, even if you’re not wealthy. You can get started with investing by enrolling in your company’s 401(k) plan or opening a low-or-no fee account through an online broker .
Keep in mind that investing always involves some risk; you could end up losing the money you invest. There are also robo-advisors that automatically recommend investments based on your goals and risk tolerance.
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A financial plan is composed of a series of smaller goals that will help you achieve a larger financial goal, such as purchasing a home or retiring comfortably. A solid financial plan includes identifying your goals, creating a budget, building an emergency fund, paying off high interest debt and investing.
Jordan Tarver has spent seven years covering mortgage, personal loan and business loan content for leading financial publications such as Forbes Advisor. He blends knowledge from his bachelor's degree in business finance, his experience as a top performer in the mortgage industry and his entrepreneurial success to simplify complex financial topics. Jordan aims to make mortgages and loans understandable.
Key takeaways What is a project plan? A project plan outlines the project’s scope, objectives, and schedule; it details what needs to be done, when, and by whom. The plan includes significant deliverables, methods to achieve them, team roles, stakeholder feedback, and milestones. This transparency makes sure everyone involved understands their role and how it…
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Key takeaways
Jan. 8, 2024: Irene Casucian reviewed the information on this page for accuracy, refined the page layout, and added elements to improve the visual flow of information. She also created a downloadable project plan template.
What is a project plan.
A project plan outlines the project’s scope, objectives, and schedule; it details what needs to be done, when, and by whom. The plan includes significant deliverables, methods to achieve them, team roles, stakeholder feedback, and milestones. This transparency makes sure everyone involved understands their role and how it contributes to the overall goal.
A project plan is the tangible output of the second phase of project management , project planning . This phase involves identifying and arranging each task necessary to cover the project’s scope, achieve deliverables, and meet the project’s goals. A comprehensive project plan developed in this phase is instrumental in tracking dependencies, staying updated on the status, and maintaining productivity throughout the project.
A well-prepared project plan requires several key elements that will outline the project’s goals and define the stakeholders ‘ individual roles. Incorporating these key elements into a project plan is essential for effective project management and a higher success rate.
Element | Description |
---|---|
A concise overview summarizing the project’s purpose, scope, and significance. | |
Specific, measurable objectives aligned with broader business aims. | |
Roles and duties of team members and stakeholders for accountability. | |
Specific activities and expected tangible outcomes of the project. | |
Outline of available and required human, financial, and material resources. | |
Identifying potential risks and strategies to manage them. | |
Significant stages in the project timeline for tracking progress. | |
Schedule of tasks and milestones for time management. | |
Financial estimates, budget allocation, and financial management plans. | |
Methods and frequency of communication within the team and with stakeholders. |
Step 1: define the project’s overall goals and objectives.
Identifying your project’s overall objectives and goals will help you measure the project’s success and keep your team aligned with the overarching mission. In this step, you should determine the desired outcome of your project that would represent its success.
By clearly understanding what the project aims to accomplish, project managers and teams can better identify the necessary tasks and establish the project scope .
When defining your project goals, apply the SMART standards for a solid foundation. Make your objectives specific, measurable, achievable, relevant, and time-bound. This approach guarantees a clear, focused, and actionable framework for your project.
To measure success effectively, align your success criteria with the project’s key deliverables and outcomes, and make sure they are based on its intended result. Confirm that these criteria are quantifiable and accurately reflect the impact and value your project aims to deliver. Such alignment is essential for accurately assessing the project’s performance and its effectiveness in achieving the intended results.
To identify project milestones, break the project down into key tasks and outcomes and specify significant progress points or phase completions as milestones. Consider dependencies when establishing a realistic workflow. Additionally, identify potential risks that can impact task completion and define deliverables clearly as measurable results expected from each project phase.
Your project’s stakeholders include any individuals or groups related to the project. To assess if someone is a stakeholder in a project, determine how much they influence, impact, or have an interest in the project’s outcome. Consider if their involvement is direct, if the project’s results affect them, or if they can influence the project’s direction or success.
Examples of stakeholder groups include:
Once you have determined your stakeholders, you can define their roles and responsibilities. This can help you structure your project team, identify members who are directly responsible for its success, and make sure they are assigned the correct tasks to carry out the project appropriately.
When assigning roles and responsibilities, utilize a RACI chart (Responsible, Accountable, Consulted, Informed) to clarify the involvement of each stakeholder in the project. This provides clear communication and accountability and prevents overlaps or gaps in responsibilities.
Creating a schedule and timeline for each task can provide visibility into the execution process and keep each team member productive.
Consider how much time is required to complete each task necessary for your project milestones. You can even break down tasks into smaller subtasks to make them more manageable. However, be mindful of factors that can cause delays such as:
When creating a project schedule, visual tools like Gantt charts and Kanban boards help you map out task dependencies and timelines. A useful project management tool you can use for this step is Trello. Trello offers an intuitive platform for creating Kanban boards. It allows easy visualization and management of tasks through customizable columns and cards for streamlined project workflow.
To generate an estimated project budget, you must consider all of the necessary project resources, including personnel, labor, materials, and equipment. Establishing a project budget will help you make wise spending decisions throughout the project execution phase to avoid overspending.
A communication plan should show how information is shared among stakeholders. For instance, in a software development project, the communication plan might specify that the development team shares a beta version of the software with the client for feedback every two weeks. It’s a systematic approach to making sure that the client receives consistent updates about the project’s progress. Having a communication plan in place will also outline the channels of communication and frequency to all necessary parties.
Leverage collaboration tools , such as Slack , that integrate with your project management software to receive real-time updates and interactions among team members and stakeholders.
Compile all related planning information and documentation as you plan your project. Some of these vital documents include:
Having these reports in one place will serve as a reference during the project’s execution.
Utilize a centralized digital platform, like Sharepoint , where stakeholders can store, update, and access all project documentation. This approach serves as a reliable reference and streamlines the management and tracking of the project’s progress.
Learn more about Sharepoint and other document management tools in our video overview:
Project plan examples.
Using an appropriate project plan format is essential to keeping stakeholders well-informed. Here are some of the widely-used project plan formats:
Using spreadsheets for project planning is beneficial due to its simplicity and widespread use, especially suitable for small-scale projects with straightforward tasks. Its customizable nature is excellent for simple initiatives like office events or basic marketing plans.
However, a significant drawback of using spreadsheets in project planning is the limited visualization options. While spreadsheets can manage data, they fail to offer comprehensive visual representations essential for a holistic view of project progress. Lastly, the risk of human error in data entry and formula setup in spreadsheets is high and can lead to critical miscalculations affecting the entire project plan.
For more complex projects, Smartsheet is an ideal upgrade. It merges the simplicity of a spreadsheet with advanced project management features such as real-time collaboration, automated workflows , and app integration. More than just a basic spreadsheet tool, Smartsheet is particularly effective for large-scale projects like detailed marketing campaigns or cross-departmental efforts, offering comprehensive task tracking and resource management in a user-friendly format.
Slideshow presentations for project plans provide a visually engaging method to simplify complex information. They effectively break down project components into understandable segments, using visuals, charts, and bullet points to highlight key information and timelines for team members and stakeholders.
However, the downside is that slide shows can oversimplify complex projects and potentially leave out critical nuances. They also require significant preparation time and may not be the best medium for detailed, data-heavy projects.
Microsoft PowerPoint is an excellent choice for creating slide show presentations as part of project plans. It’s user-friendly and offers many templates and design tools. That’s why it’s suitable for beginners and seasoned professionals. PowerPoint’s ability to integrate with other Microsoft Office tools, like Excel for data representation, enhances its utility in project planning.
Gantt charts create a clear visual timeline of a project’s schedule and progress by displaying various project elements’ start and finish dates. This approach helps identify potential bottlenecks and overlaps and facilitates better resource allocation and time management. However, Gantt charts can become cumbersome for complex projects with numerous tasks and dependencies.
Gantt charts are particularly effective in construction projects, event planning, and software development, where timelines and task dependencies are critical.
TeamGantt is an effective PM tool that creates clear visual timelines for project schedules and progress tracking. By allowing users to input various project elements, including tasks, milestones, and dependencies, and then assigning start and finish dates to each, TeamGantt generates an intuitive Gantt chart.
This chart visually represents the project timeline, displaying how different tasks and phases overlap and interconnect over the project duration. The color-coded bars and easy-to-read format make it simple to understand the sequencing of tasks and the project’s overall progress at a glance.
Mind maps differ from other project visualization methods by showing a radial, non-linear format ideal for brainstorming and capturing the holistic view of a project. They emphasize the creative mapping of ideas and relationships. They promote the free flow of ideas and easy visualization of relationships between different aspects of a project. Mind maps can also help identify key components, dependencies, and potential challenges at the early stages of a project.
Moreover, using a mind map before presenting a Gantt chart can help ease the transition from creative brainstorming to detailed scheduling, resource allocation, and progress tracking.
Lucidchart is an excellent software solution for creating mind maps that can be converted into detailed reports. Its intuitive, drag-and-drop interface is ideal for conceptualizing project plans.
Lucidchart also stands out because it integrates with various tools like Google Workspace and Microsoft Office. This integration can facilitate the transition from a visual mind map to a comprehensive written report.
Work breakdown schedule development.
Using a Work Breakdown Structure (WBS) in project planning offers distinct advantages and some drawbacks. The primary benefit of a WBS is its ability to break down a complex project into manageable components. It is then easier to allocate resources, assign responsibilities, and track progress. This hierarchical project decomposition guarantees that every part of the project is apparent.
However, the main disadvantage lies in its potential rigidity; a WBS can become overly prescriptive, limiting flexibility and adaptability to changes or unforeseen challenges. Additionally, creating a comprehensive WBS can be time-consuming, and if not done meticulously, it may lead to gaps or overlaps in project planning.
monday.com includes a work breakdown feature to help teams organize complex projects into manageable tasks. Each task is separated into more minor subtasks assigned to the appropriate individuals. The chart also displays additional information, such as the deliverables, end dates, and schedules based on interdependencies.
Project and documentation management in project planning has its own advantages and disadvantages. With this process, you can make sure that all project-related documents are organized, up-to-date, and easily accessible. This approach is essential for maintaining consistency and clarity throughout the project lifecycle. Yet, the downside includes the possibility of information overload, where team members might get overwhelmed by the sheer volume of documents.
Agile teams use Jira for planning and managing their projects. Here, you can see some of the information regarding risks and dependencies compiled within Jira. This method of organizing this information can be helpful, as the platform can act as a single source of truth to keep team members updated on the status of specific tasks. It also makes it easy for teams to communicate with external stakeholders about factors impacting the project.
Effective project planning is the cornerstone of successful project execution. It involves several key aspects contributing to a project’s smooth functioning and success. Some of these benefits include:
Remember, an effective project plan is not just a document; it’s a strategic tool that integrates various critical elements to secure the project’s success.
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Need real financials. We recommend using LivePlan as the easiest way to create automatic financials for your own business plan. Create your own business plan. Download This Plan. Explore a real-world personnel management business plan example and download a free template with this information to start writing your own business plan.
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Here are a few key positions you would want to include in your management team business plan: Founder and/or CEO. Chief Technical Officer (CTO) Chief Marketing Officer (CMO) Head of Product Management (PM) VP of Sales. VP of Marketing. Business Development Manager. Customer Service Manager.
Consider following these instructions to create an impressive team business plan: 1. Collect resumes from each manager. Resumes typically discuss a professional's credentials, including education, work experience and soft and technical skills. You can use your management team's resumes to guide you into creating content for your business plan.
This document can clarify these roles for yourself, as well as investors and employees. The organization and management section should explain the chain of command, roles, and responsibilities. It should also explain a bit about what makes each person particularly well-suited to take charge of their area of the business.
Let's get started! Contact Noirwolf Consulting today using the website contact form or by emailing [email protected] or call us at +44 113 328 0868. Get In Touch. Every successful business plan should include the organization and management section, helping you communicate your legal structure and team.
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