Business Plans Key Terms

Understanding crucial elements needed to write a successful business plan

A business plan is a critical tool for obtaining a business loan or the backing of an investor. It gives investors a full understanding of what your company is, the product or service you provide, your goals and aspirations for the company and how likely you are to be successful in your endeavors.

As you put your business plan together, you may find several elements that you don't quite grasp. This article explains some of the more important aspects of a business plan so you have a better understanding of what you need to include.

 

Mission statement

A mission statement is a brief explanation of a company's purpose and goals in providing a product or service. It touches on the objectives, principles and standards of an organization. It states the what, but leaves the how for explaining in the rest of the business plan.
Try: Business Resource Software explains how to use a mission statement in regard to your business plan.

Executive summary

Executive summary is the term used in business to refer to an abstract. It summarizes all of the sections of your business plan in a brief overview. While it should be the first element of your business plan, it is the last element you will write because you need all of the other information to write it accurately.
Try: Visit Palo Alto Software's Bplans website for information on what an executive summary should include and how to write one effectively.

Business structure

Business structure, also referred to as the business entity, is the legal qualification of your company. Business structure possibilities include sole proprietorship, general proprietorship, limited partnership, corporation or limited liability company. Each one of these structures have specific qualifications regarding the ownership and organization of your business.
Try: Obtain a thorough explanation of each type of business structure from Entrepreneur Magazine.

Target market

Target market refers to the specific demographic of people that you wish to sell your product or service to. There are many contributing factors that may contribute to determining your target market, such as gender, age, race, lifestyle, family life and economic standing.
Try: Visit All Business or Virtual Advisor Interactive for more information on determining and understanding your target market.

Market analysis

Market analysis is the result of research on the industry or market you would like to participate in with your business. It includes information about the size and growth rate of the market, profitability, distribution channels and market trends.
Try: The Internet Center for Management and Business Administration provides a more detailed explanation of each element of a market analysis.

Distribution channels

Distribution channels are the ways in which you get your product or service to your target markt. They include everything from advertising to sales to the physicial provision of the product or service.
Try: BizHelp24 provides details on several different types of distribution channels. For more information on the elements of a strong business plan, visit the Small Business Buzz provided by GreatFX Business Cards.

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