Business Plan is very important

The Company section of a Business Plan speaks to all the pertinent details of your particular company. For instance, how it is formed; what your company does; how it is organized; your Vision, Mission and Goal Statements: history of the company; where it is located; how you can be contacted and so forth. This section comes first in the Business Plan as it serves as an introduction to the necessary details and background of your company.
Business Plan Section Three: Management and Operations
This section builds on the Company Section explaining in detail who will run the company; who founded the company; who the key employees are within the company; how the company will be run; what are the specific qualifications of those who will run the company, work in the company and be responsible for sales, marketing and strategic direction; the specific gaps in Management and talent, providing a plan to fill or overcome those present gaps; and so forth. You can have the greatest business idea or concept but lack the people to execute the plan. Therefore, the Management Section of the Business Plan is the most important element of the plan and often scrutinized as such by finance sources, customers and your Business Plan audience.
Business Plan Section Four: Products and Services
Now that you have developed the Company and Management sections, it is time to describe in detail your company's Product or Service (P/S). This section also contains information on your competitor's P/S. One of the most important aspects of the P/S section of the Business Plan explains why your P/S is unique: i.e. its competitive advantage or put another way, the utility of your P/S. On the converse, the P/S section states where you have weaknesses in your P/S line-up.
A Resource Audit is an honest self-evaluation of your company. In this analysis you identify your strengths, weaknesses, opportunities and threats, which will be considered in your Marketing Plan and addressed in your Strategic Plan. You develop your P/S price points, features and value to be fully exploited in the Marketing Plan and implemented in the Strategic Plan. Customer identification, analysis and segmentation starts in the P/S Section to be later developed in the Marketing Plan (and yes, implemented in the Strategic Plan).
Business Plan Section Five: Marketing Plan
The Marketing Plan fully develops how your P/S will be marketed; summarizes your Marketing Research (actual research contained in the Appendix); fully details your specific Target Market Segments; and explains your P/S Competitive Advantage. In essence, The Marketing Plan explains in great detail how your P/S will be positioned in the market and should be supported by detailed, believable market research. The Marketing Plan carves out your niche(s) and develops effective Marketing Programs, along with a Strategic Marketing Plan.
Resource: Please see the ABC Article How to Write a Marketing Plan for more details on the Marketing Plan Section.
Business Plan Section Six: Strategic and Sales Plan
The Strategic Plan puts the Marketing Plan into action. The Strategic Plan will show how to implement the Marketing Plan. The Strategic Plan equals action and implementation. It also details your Sales Forecast for each particular product or service. The Strategic Plan translates what will be the result of the Marketing Plan, and how it will be implemented and achieved. The Strategic Plan takes the vast amount of marketing information and research and puts it into a clearly defined Sales Plan. It is very important a Strategic Plan is believable and achievable. It works out the "kinks" and road blocks in your Marketing Planand illustrates how you will overcome your Competitive Gaps.
The Strategic Plan also provides a process for Strategic Management, Strategic Auditing and Strategic Reassessment. The end product not only implements The Company's Strategy, but also it provides measurable performance, control functions, corrective actions and reassessment when necessary. It is a top down and bottom up approach, completely integral with your Company's Operations, from the Vision and Leadership of the CEO, to Management's implementation oversight of the Strategy, to the Sales and Operations units of the company. It provides a Company-Wide Strategic Vision, Focus, Structure and Discipline, while providing an atmosphere of learning and awareness, with a process for identifying deficiencies, and in turn, fixing those problems.
Resource: For more information on developing a Strategic and Sales Plan, please see the ABC Article: How to Write a Strategic Plan.
Business Plan Section Seven: Financials
If you develop your Strategic Plan effectively, completing the Financials will not be difficult. The principal reason why business owners have such a hard time with the Financials Section of a Business Plan is often due to a cursory job on their Strategic Planning (as well as other important sections). Financial Projections are not believable chiefly because a suitable, well developed Strategic Plan wasn't accomplished. Guess what makes a successful Strategic Plan? The proceeding section, the Marketing Plan. As stated previously, the sections and the order of the sections in a business plan are very important because each section builds on the previous section, the culmination of which makes for certain data from which solid Financial Projections can be made.
Types of Financials
You should have two sets of Financials, simple and detailed, as well as, conservative and best case. The following types of financials are typical for a Business Plan:
1 Cash Flow: Monthly basis for 12 months. Yearly and Quarterly basis for 3 to 5 years.
2 Income Statement: Monthly basis for 12 months. Yearly and Quarterly basis for 3 to 5 years.
3 Balance Sheet: Yearly and Quarterly basis for 3 to 5 years.
The Budget
Another very important Financial in addition to the three prescribed Financials, is the Budget. Budgets are used principally for two purposes: Planning and Control. A Budget matches short term targets with long term Strategic Planning, while providing an indication of problems ahead. A good Budget system will indicate when Expenses are heading over Budget and there is sufficient time to correct the problem. Budgets are often developed during the Strategic Planning Process.
We like Rolling Budgets which look ahead 12 months on a monthly basis, and it budgets an additional Quarter at the end of each Quarter. This way, you always have a 12 month continuous Budget Outlook. A Budget should also be flexible so that you can separate the effects of variations between Actual and Estimated results. Lastly, a Budget is a tool to Evaluate your Business Units and Management's Performance. Needless to say, assembling and actively managing a good Budget requires the input of your entire organization.
Financials Relate
It is important to understand that your Financials relate to each other when building them (a reason why Financial Software Programs are so beneficial). There's a lot of back and forth between the Income Statement, Balance Sheet and Cash Flow Statement. The Cash Flow Statement is the most important Financial for many reasons but principally because it shows in detail how much cash is necessary to finance and grow your company.
Use Software to Develop Financials
Computer Programs are excellent resources for developing your company's Financials, such as Quicken for Business, Quick Books or other Business Planning Financial Software Programs. It is important that these programs allow you to 1) customize the Formats for your needs and 2) are downloadable into Excel Spreadsheets for maximum utility and flexibility.
The Projection Period for Financials
The projection period differs and depends for a particular company, venture or project. For instance, a large scale Real Estate development project's Cash Flow could be 5+ years and 60+ months depending on the length of the project build out. Also, Real Estate development projects require more Financials than detailed above. Typically, a Construction Cost Analysis and Cash Flow, Schedule of Real Estate, Construction Cost Schedule and so forth are requirements. Real Estate Development Financials are developed through a Loan Package and transferred to the Business Plan Financial section, so consult how to properly package a loan in order to learn more about these project specific Financials.
Assumptions Behind the Financials
A very important element of the Financial Section is the Assumptions area. This details the assumptions you have utilized in constructing the financials. You should also list the various calculations and formulas used in your financials since those formulas can be company, deal or project specific. Financials should also include Return of Investment / Return on Equity calculations and the assumptions used in those calculations.