Ten elements of a good business plan.

• Author: Larson, Paul
• Position: Economic Development

A business plan is a comprehensive description of your business, the environment in which it operates, and how you will run it over the next three to five years. Preparing one takes effort, but forces you to think critically about the viability of a new venture. Besides, most bankers and venture capitalists won't even talk to you if you don't have one.

Typically, a business plan includes at least the following ten elements, which are described in some detail below:

* Executive summary

* Description of the company

* Market and competitiors

* Marketing strategy

* Design and development plans

* Manufacturing and operations

plans

* Management team

* Overall schedule

* Critical risks and problems

* Financial plan

Executive summary

Potential investors read this first to see if the plan merits a complete reading. The summary should be concise (one to two pages) and compelling. Briefly describe the basics of your business plan: market opportunity, management team, financial returns, and terms of the investment you're seeking.

Description of the company

Described how and when the company (or idea) got started, and what stage it is in the development process. Briefly delineate the firm's product and services, how the major players go involved, and what the current opportunity is. Your company's general strategy also should be included here. Strategic elements include the company's growth stages over the next several years; primary advantages over competitors; tactics you'll use (i.e., cost leadership, differentiation, focus); plans for raising money; and personal goals for the business.

Market and competitors

Analyses of your industry, competitors, and customers help establish that markets do exist for your products and that you can successfully compete in them. The first analysis should include specifics on total sales, growth rates, typical gross margins, and average profitability for your industry. The industry's entry barriers should be described, as should its driving forces, the characteristics of its strategic groups, and the factors required to succeed in it.

Once you've detailed what it takes to succeed in your industry, construct a table that rates competitors on these factors. For each competitor, evaluate the quality, reputation and market share of their products; their financial, managerial, and technical resources; their warranty, manufacturing, research and development, and distribution systems; and the loyalty customers and...