BUS501: Strategic Management

Though business plans have many different presentation formats, business plans typically cover five major content areas:

1. Background information
2. A marketing plan
3. An operational plan
4. A financial plan
5. A discussion of the decision-making criteria that should be used to approve the plan.

Some of these content areas may be more or less important depending on the kind of business plan. There is no fixed content for a business plan. Rather the content and format of the business plan is determined by the goals and audience. A business plan should contain whatever information is needed to decide whether or not to pursue a goal.

Once a business plan has been developed, the key decision making points are usually summarized in an #Executive Summary|executive summary.

Executive Summary

The executive summary summarizes the key points of the business plan. It should define the decision to be made and the reasons for approval. The specific content will be highly dependent on the core purpose and target audience. To get a sense of the difference the purpose and target audience can make, here are three different sets of key points for an executive summary - one for a loan request, one for a start-up seeking venture finance, and one for an internal plan. Items unique to a particular kind of plan are highlighted in bold:

A loan request executive summary might contain the following information:

• Company information: name of company, years in business, legal structure, minority and majority owners
• Brief description of project
• Amount and length of loan
• Objective reasons why the bank should be confident that the loan will be paid back. This likely will include
  • Financial track record
  • The future revenue stream
  • Any contracts in place that might guarantee the revenue stream is more than just a forecast.

For a new venture, the executive summary might contain:

• Company information: name of company, proposed legal structure, current legal structure, minority and majority investors.
• Amount of investment requested
• Expected terminal value
• Description of market opportunity
• Objective reasons why the market opportunity can be exploited by this particular team

For an internal project plan, the executive summary might look like this:

• Company information: not applicable
• Description of project
• Project mandate: who requested the proposal, who is being assigned to carry it out
• Strategic, tactical and financial justifications
• Summary of resources needed: staff, funds, facilities

In some cases information will overlap. For example, some of the reasons why a loan is likely to be repaid might equally as well be used as justification for the kind of extraordinary return expected by venture capitalists.

In some cases the business plan as a whole contains similar information, but for one type of plan it is mere detail and for another it is a key decision making factor. For instance, both start-ups and internal projects need staff and facilities. However the staffing and facilities needs are considered details in a plan for start-up financing. In a plan for internal projects they are key elements and, in fact, may be the only resources needed.