The Elements of a Good Business Plan - dummies

The Elements of a Good Business Plan

By Jim Muehlhausen

Many businesspeople mistakenly believe that a business plan and a business model are one and the same. Your business model is the core concept upon which you build your business plan. Therefore, your business model should be a significant portion of your business plan.

Many business plans gloss over the business model in favor of lengthy financial projections and operational details that go along with business plans. Without a solid business model, these projections and details are premature.

This table lists the components of a traditional business plan and describes their purpose. Without incorporating the aspects of the business model into a business plan, traditional business plans are incomplete.

Elements of a Business Plan
Section Purpose Weakness
Executive summary Summarizes the key points of the business plan, including a
brief description of the product, market opportunity, and funds
Background information Explains the history of the concept, purpose, and management
Marketing plan Explains the marketing methods, segments, and so on Can presuppose the value proposition, marketability, and
ability of product to generate profitable sales
Operations plan Shows management expertise and operational systems Spends significant energy explaining how company will deliver
on sales that may never happen
Financial plan Shows expected profitability of the company under various
May assume sales targets will simply happen when more proof is
needed to show how sales will occur
Risk analysis Explains potential risks and how they’ll be

All the sections of a business plan listed in this table are important in the running of a business. However, none of these areas creates a good business. Instead, these areas sustain a good business. To create a good business, you need a good business model.