Accounting and Finance Foundations

Unit 12

Accounting and Finance Foundations Unit 12: Budgeting and Business Plans 939

Budgeting and Business Plans Student Guide

Lesson 29.1 The Business Plan

Chapter 29

In addition to a budget, every business needs a business plan to be successful. A business plan is your

company’s business model in written form. This important document is like a map and a compass. You

wouldn’t start out on a long journey without knowing which direction you’re going or where you want to

end up. And you shouldn’t start a business without planning ahead, either.

Although each business plan is unique, a typical business plan includes the following information:

n Executive summary

n Company profile/description

n Industry analysis

n Target market

n Competitive analysis

n Marketing plan and sales strategy

n Operations

n Management and organization

n Long-term development

n Financials

n Appendix

Each of these parts or pieces of information fulfills a particular purpose within the business plan. Let’s take

a closer look at each.

Executive Summary

The first thing that you usually see in a business plan is the executive summary. This section is the most

important part of the business plan because it gives an overview of the entire document.

Within the executive summary, the company emphasizes its main point—its reason for writing the plan.

If the company is looking for funding, the plan shows how that funding will enhance its business opera-

tions or increase its bottom line.

From the executive summary, the reader—perhaps a banker, investor, etc.—can determine whether it is

worthwhile to read any further. A banker is typically looking for evidence that the company is stable and

can pay its bills on time, while a potential investor wants to see that the business is (or soon will be)

growing significantly.

Company Profile/Description

In the company profile or description, the business plan explains the new company or venture. This is

where a start-up business explains what the company is all about, and an existing business includes how

its venture fits into the company’s current operations. The company profile/description should, in essence,

answer the following questions:

n What is your business?

• Are you a retailer, wholesaler, manufacturer, or service provider?


• What need(s) do you meet for your customers?
  n Is your business a start-up or an existing business?

n What is your business’s legal structure?