key personnel for business plan

How to Write the Management Team Section of a Business Plan + Examples

Written by Dave Lavinsky

Over the last 20+ years, we’ve written business plans for over 4,000 companies and hundreds of thousands of others have used the best business plan template and our other business planning materials.

From this vast experience, we’ve gained valuable insights on how to write a business plan effectively , specifically in the management section.

What is a Management Team Business Plan?

A management team business plan is a section in a comprehensive business plan that introduces and highlights the key members of the company’s management team. This part provides essential details about the individuals responsible for leading and running the business, including their backgrounds, skills, and experience.

It’s crucial for potential investors and stakeholders to evaluate the management team’s competence and qualifications, as a strong team can instill confidence in the company’s ability to succeed.

Why is the Management Team Section of a Business Plan Important?

Your management team plan has 3 goals:

• To prove to you that you have the right team to execute on the opportunity you have defined, and if not, to identify who you must hire to round out your current team
• To convince lenders and investors (e.g., angel investors, venture capitalists) to fund your company (if needed)
• To document how your Board (if applicable) can best help your team succeed

What to Include in Your Management Team Section

There are two key elements to include in your management team business plan as follows:

Management Team Members

For each key member of your team, document their name, title, and background.

Their backgrounds are most important in telling you and investors they are qualified to execute. Describe what positions each member has held in the past and what they accomplished in those positions. For example, if your VP of Sales was formerly the VP of Sales for another company in which they grew sales from zero to $10 million, that would be an important and compelling accomplishment to document.

Importantly, try to relate your team members’ past job experience with what you need them to accomplish at your company. For example, if a former high school principal was on your team, you could state that their vast experience working with both teenagers and their parents will help them succeed in their current position (particularly if the current position required them to work with both customer segments).

This is true for a management team for a small business, a medium-sized or large business.

Management Team Gaps

In this section, detail if your management team currently has any gaps or missing individuals. Not having a complete team at the time you develop your business plan. But, you must show your plan to complete your team.

As such, describe what positions are missing and who will fill the positions. For example, if you know you need to hire a VP of Marketing, state this. Further, state the job description of this person. For example, you might say that this hire will have 10 years of experience managing a marketing team, establishing new accounts, working with social media marketing, have startup experience, etc.

To give you a “checklist” of the employees you might want to include in your Management Team Members and/or Gaps sections, below are the most common management titles at a growing startup (note that many are specific to tech startups):

• Founder, CEO, and/or President
• Chief Operating Officer
• Chief Financial Officer
• VP of Sales
• VP of Marketing
• VP of Web Development and/or Engineering
• UX Designer/Manager
• Product Manager
• Digital Marketing Manager
• Business Development Manager
• Account Management/Customer Service Manager
• Sales Managers/Sales Staff
• Board Members

If you have a Board of Directors or Board of Advisors, you would include the bios of the members of your board in this section.

A Board of Directors is a paid group of individuals who help guide your company. Typically startups do not have such a board until they raise VC funding.

If your company is not at this stage, consider forming a Board of Advisors. Such a board is ideal particularly if your team is missing expertise and/or experience in certain areas. An advisory board includes 2 to 8 individuals who act as mentors to your business. Usually, you meet with them monthly or quarterly and they help answer questions and provide strategic guidance. You typically do not pay advisory board members with cash, but offering them options in your company is a best practice as it allows you to attract better board members and better motivate them.

Management Team Business Plan Example

Below are examples of how to include your management section in your business plan.

Key Team Members

Jim Smith, Founder & CEO

Jim has 15 years of experience in online software development, having co-founded two previous successful online businesses. His first company specialized in developing workflow automation software for government agencies and was sold to a public company in 2003. Jim’s second company developed a mobile app for parents to manage their children’s activities, which was sold to a large public company in 2014. Jim has a B.S. in computer science from MIT and an M.B.A from the University of Chicago

Bill Jones, COO

Bill has 20 years of sales and business development experience from working with several startups that he helped grow into large businesses. He has a B.S. in mechanical engineering from M.I.T., where he also played Division I lacrosse for four years.

We currently have no gaps in our management team, but we plan to expand our team by hiring a Vice President of Marketing to be responsible for all digital marketing efforts.

Vance Williamson, Founder & CEO

Prior to founding GoDoIt, Vance was the CIO of a major corporation with more than 100 retail locations. He oversaw all IT initiatives including software development, sales technology, mobile apps for customers and employees, security systems, customer databases/CRM platforms, etc. He has a  B.S in computer science and an MBA in operations management from UCLA.

We currently have two gaps in our Management Team: 

A VP of Sales with 10 years of experience managing sales teams, overseeing sales processes, working with manufacturers, establishing new accounts, working with digital marketing/advertising agencies to build brand awareness, etc. 

In addition, we need to hire a VP of Marketing with experience creating online marketing campaigns that attract new customers to our site.

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Other Resources for Writing Your Business Plan

• How to Write an Executive Summary
• How to Expertly Write the Company Description in Your Business Plan
• How to Write the Market Analysis Section of a Business Plan
• The Customer Analysis Section of Your Business Plan
• Completing the Competitive Analysis Section of Your Business Plan
• Financial Assumptions and Your Business Plan
• How to Create Financial Projections for Your Business Plan
• Everything You Need to Know about the Business Plan Appendix
• Business Plan Conclusion: Summary & Recap

Other Helpful Business Plan Articles & Templates

How Do You Draft the Personnel Section of the Business Plan? The Personnel Section of a Business Plan Explained.

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How to Create an Investor-Ready Personnel Plan and Forecast Employee Costs

Posted march 22, 2021 by noah parsons.

A personnel plan is a critical part of your business plan and financial forecast . In addition to helping you budget for current and future employees, your personnel plan enables you to think through who you should hire and when you should hire them.

If you’re pitching to angel investors or venture capitalists for funding, they will want to see why your team is uniquely suited to grow and scale your business, as well as your hiring plan.

Investors will want to know:

• What positions do you need to fill?
• When you plan on filling them?
• How much it’s going to cost to build the team you need??

What to include in the personnel section of your business plan

For many startups and small businesses, the people who do the work—your team—are both the most costly and most valuable asset. It makes sense that hiring the right person at the right time can have a significant impact on your ability to meet your company’s milestones and goals , not to mention your cash flow .

Thinking strategically about human resources — when to add positions, compensation levels, and whether to hire full-time or on a contract basis are all pieces of a healthy personnel plan.

So, whether you’re seeking investment or not, building a personnel plan and forecast is an essential part of business planning and strategic planning for the long-term viability of your company. Let’s dive right in and look at the five key steps to build an investor-ready personnel plan.

1. Describe your team

In the “team” section of your business plan, you will typically include an overview of the key positions in your company and the background of the people who will be in those critical roles. Usually, you’ll highlight each of the management positions in your company and then speak more generally about other departments and teams.

You don’t need to include full resumes for each team member—a quick summary of why each person is qualified to do the job is enough. Describe each person’s skills and experience and what they will be doing for the company.

Emphasize your team’s strengths. How do they make your team stronger? What specific expertise and experience do they have in your (or a related) industry? Assuming your market research identified a great opportunity, why are you the right team to capitalize on it? 

For potential investors, this section helps qualify why each team member is necessary for the success of the business. It acts as a justification for their salary and equity share if they are part owners of the company.

2. Describe your organizational structure

The organizational structure of your company is frequently represented as an “org chart” that shows who reports to whom and who is responsible for what.

You don’t have to create a visual org chart, though—describing your organization in the text is just fine. Just make sure to show that you have a clear structure for your company.

Is authority adequately distributed among the team? Do you have the resources to get everything done that you need to grow your company?

You’ll also want to mention the various teams your company is going to have in the future. These might include sales, customer service, product development, marketing, manufacturing, and so on.

You don’t need to plan on hiring all of these people right away. Think of this section as an outline of what you plan to do in the future with your company.

3. Explain the gaps

It’s alright to have gaps on your team, especially if you’re a startup. You may not have identified all the “right” team members yet, or you may not have the funds available yet to hire for essential roles . That’s okay.

The key is to know that you do have gaps on your team—this is how you figure out who you need to hire and when you need to hire them. Also, it’s much better to define and identify weaknesses in your team than to pretend that you have all the key roles that you need. In your business plan , explain where your organization is weak and what your plans are to correct the problem as you grow.

It might be tempting to hide your potential weaknesses from investors, but they’ll see through that right away. It’s much better to be open and honest about where you have management gaps and your plans to solve those problems. You want them to know you have identified and made plans to mitigate risks .

You also need to keep in mind that employees might wear a lot of hats in the early days of a company, but that specialization will happen as the company grows.

For example, initially, the CEO might also be the VP of Sales. But, eventually, the VP of Sales role should be filled by a specialist to take on that responsibility. Include these types of changes in your personnel plan to explain to investors that you understand how your company is going to grow and scale.

4. List your advisors, consultants, and board members

For some companies, external advisors, board members , and even consultants can play a crucial role in setting business strategy. These people might even fill key positions temporarily as your company grows. If this is the case, you’ll want to list these people in your business plan. Like your management team, provide a brief background on each principal advisor that explains the value they provide.

If your advisors don’t hold key roles or are not critical to your success, you don’t necessarily have to list them. But, do list anyone that is adding substantial value to the company by providing advice, connections, or operational expertise.

5. Forecast your personnel costs

Most business plans should include a personnel table to forecast the expense of your employees. Here are the expenses you’ll need to be aware of when forecasting.

Direct and indirect labor expenses

You’ll want to include both direct expenses , which usually comprise salaries, as well as indirect expenses which include: 

• Paid time off
• Healthcare and insurance
• Payroll costs

 As well as any other costs you incur for each employee beyond their salary. Here’s an example of what a personnel forecast can look like using LivePlan .

Burden rate and employee-related expenses

There are different names for the indirect expenses of personnel. Still, I like to call it “burden rate” or “employee-related expenses,” which is an expense over and above the direct wages and salaries. These expenses typically include payroll taxes, worker’s compensation insurance, health insurance, and other benefits and taxes.

For business planning purposes, don’t stress about coming up with the exact figure for the burden rate. Instead, estimate it using a percentage of total monthly salaries. Somewhere between 15 percent and 25 percent usually makes sense, but it depends on what kind of benefits you plan on offering.

In your personnel plan, you can list both individual people as well as groups of people. You’ll probably want to list out key people and other highly paid employees, but group together other departments or groups of people. For example, you might list out your management team, but then group together departments like Marketing, Customer Service, and Manufacturing.

Then, add in your personnel burden to cover benefits and insurance. In the example personnel table above, this is called “Employee-Related Expenses.”

You’ll then take the total number of your salaries plus personnel burden and include this in your profit and loss forecast as an expense. Suppose you’re using LivePlan to build your personnel forecast. In that case, this how-to article on entering personnel shows where you’ll see personnel costs appear on your cash flow statement, profit and loss (income statement), and your balance sheet.

Do you need a personnel plan if you have no employees?

If you are a sole proprietor and don’t have employees, you should still include your own salary as part of the business plan. Make sure to include your salary as an expense in your Profit & Loss Statement . Even if you, the business owner, don’t take the salary, so you can keep the cash in your business, you’ll want to record what you should have been paid.

In the case of a sole proprietor, you probably don’t need a full table for the personnel plan, like in the example above. But, when you do start planning to hire a team, you should use the format I’ve described here.

Personnel planning is a valuable part of the business planning process because it forces you to think about what needs to get done in your business and who’s going to do it. Take the time to work through this part of your financial forecast, and you’ll have a much better sense of what it’s going to take to make your business successful.

*Editors Note: This article was initially written in 2019 and updated for 2021.

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How To Write the Management Section of a Business Plan

Susan Ward wrote about small businesses for The Balance for 18 years. She has run an IT consulting firm and designed and presented courses on how to promote small businesses.

Ownership Structure

Internal management team, external management resources, human resources, frequently asked questions (faqs).

When developing a business plan , the 'management section' describes your management team, staff, resources, and how your business ownership is structured. This section should not only describe who's on your management team but how each person's skill set will contribute to your bottom line. In this article, we will detail exactly how to compose and best highlight your management team.

Key Takeaways

• The management section of a business plan helps show how your management team and company are structured.
• The first section shows the ownership structure, which might be a sole proprietorship, partnership, or corporation.
• The internal management section shows the department heads, including sales, marketing, administration, and production.
• The external management resources help back up your internal management and include an advisory board and consultants.
• The human resources section contains staffing requirements—part-time or full-time—skills needed for employees and the costs.

This section outlines the legal structure of your business. It may only be a single sentence if your business is a sole proprietorship. If your business is a partnership or a corporation, it can be longer. You want to be sure you explain who holds what percentage of ownership in the company.

The internal management section should describe the business management categories relevant to your business, identify who will have responsibility for each category, and then include a short profile highlighting each person's skills.

The primary business categories of sales, marketing , administration, and production usually work for many small businesses. If your business has employees, you will also need a human resources section. You may also find that your company needs additional management categories to fit your unique circumstances.

It's not necessary to have a different person in charge of each category; some key management people often fill more than one role. Identify the key managers in your business and explain what functions and experience each team member will serve. You may wish to present this as an organizational chart in your business plan, although the list format is also appropriate.

Along with this section, you should include the complete resumés of each management team member (including your own). Follow this with an explanation of how each member will be compensated and their benefits package, and describe any profit-sharing plans that may apply.

If there are any contracts that relate directly to your management team members, such as work contracts or non-competition agreements, you should include them in an Appendix to your business plan.

While external management resources are often overlooked when writing a business plan , using these resources effectively can make the difference between the success or failure of your managers. Think of these external resources as your internal management team's backup. They give your business credibility and an additional pool of expertise.

Advisory Board

An Advisory Board can increase consumer and investor confidence, attract talented employees by showing a commitment to company growth and bring a diversity of contributions. If you choose to have an Advisory Board , list all the board members in this section, and include a bio and all relevant specializations. If you choose your board members carefully, the group can compensate for the niche forms of expertise that your internal managers lack.

When selecting your board members, look for people who are genuinely interested in seeing your business do well and have the patience and time to provide sound advice.

Recently retired executives or managers, other successful entrepreneurs, and/or vendors would be good choices for an Advisory Board.

Professional Services

Professional Services should also be highlighted in the external management resources section. Describe all the external professional advisors that your business will use, such as accountants, bankers, lawyers, IT consultants, business consultants, and/or business coaches. These professionals provide a web of advice and support outside your internal management team that can be invaluable in making management decisions and your new business a success .

The last point you should address in the management section of your business plan is your human resources needs. The trick to writing about human resources is to be specific. To simply write, "We'll need more people once we get up and running," isn't sufficient. Follow this list:

• Detail how many employees your business will need at each stage and what they will cost.
• Describe exactly how your business's human resources needs can be met. Will it be best to have employees, or should you operate with contract workers or freelancers ? Do you need full-time or part-time staff or a mix of both?
• Outline your staffing requirements, including a description of the specific skills that the people working for you will need to possess.
• Calculate your labor costs. Decide the number of employees you will need and how many customers each employee can serve. For example, if it takes one employee to serve 150 customers, and you forecast 1,500 customers in your first year, your business will need 10 employees.
• Determine how much each employee will receive and total the salary cost for all your employees.
• Add to this the cost of  Workers' Compensation Insurance  (mandatory for most businesses) and the cost of any other employee benefits, such as company-sponsored medical and dental plans.

After you've listed the points above, describe how you will find the staff your business needs and how you will train them. Your description of staff recruitment should explain whether or not sufficient local labor is available and how you will recruit staff.

When you're writing about staff training, you'll want to include as many specifics as possible. What specific training will your staff undergo? What ongoing training opportunities will you provide your employees?

Even if the plan for your business is to start as a sole proprietorship, you should include a section on potential human resources demands as a way to demonstrate that you've thought about the staffing your business may require as it grows.

Business plans are about the future and the hypothetical challenges and successes that await. It's worth visualizing and documenting the details of your business so that the materials and network around your dream can begin to take shape.

What is the management section of a business plan?

The 'management section' describes your management team, staff, resources, and how your business ownership is structured.

What are the 5 sections of a business plan?

A business plan provides a road map showing your company's goals and how you'll achieve them. The five sections of a business plan are as follows:

• The  market analysis  outlines the demand for your product or service.
• The  competitive analysis  section shows your competition's strengths and weaknesses and your strategy for gaining market share.
• The management plan outlines your ownership structure, the management team, and staffing requirements.
• The  operating plan  details your business location and the facilities, equipment, and supplies needed to operate.
• The  financial plan  shows the map to financial success and the sources of funding, such as bank loans or investors.

SCORE. " Why Small Businesses Should Consider Workers’ Comp Insurance ."

The Secrets of a Great Personnel Plan

Investing in human resources (HR) is a key element of healthy personnel planning and strategy. A hallmark of effective leadership is efficient HR which means hiring employees in a cost-effective manner and mostly when needed. Your business plan should always include an informative and up-to-date personnel plan section to provide direction for the company and help entrepreneurs stay focused.

At the heart of every business owner is the desire to excel. The best way to excel is to define your plans and proceed with purpose. Your business plan comprises a business description , a competition analysis, a marketing plan, a personnel section, the HR section and key financial information.

The personnel plan is designed to help company owners put their plans into action. It helps to clarify objectives for the current and forthcoming year. Thus, a good understanding of personnel plan and how to implement it in your business is vital.

What is a personnel plan?

A personnel plan is a vital part of every company plan and financial forecast, which aids future and current budgeting and defines the type of employee to hire and when to hire such employees.

When you are seeking funding, venture capitalists and angel investors will want a breakdown of your team. Who are they? What talents and skills do they bring to the table? What is your hiring plan for the first year, second year, and so on? How will your team drive business growth and success?

All this information will include the positions you will need employees for, the period in which the management intends to fill the plan, and the financial implications of the implementation of the plan. Just as you would assess if your business is financially feasible , you’ll need to apply this same sentiment when hiring employees.

The personnel plan represents a consolidated strategy for hiring the best people for all company positions, while keeping an eye on future expansion.

Michael E. Gerber, the author of The E-Myth Revisited, posited that an effective personnel plan designed as an efficient workplace game will help employers prime employees for organizational goals while creating job satisfaction. This means that an effective hiring process is vital to an efficient process of personnel planning.

The majority of employers find personnel planning difficult especially those whose staff work in shifts. Organizational challenges like these can easily be taken care of with TimeTrack Duty Roster which helps employers create a suitable overview of their workforce and personalize shifts according to any number of criteria, including their location and skills.

Features of the TimeTrack Duty Roster

Key elements of a personnel plan

Each company’s needs may differ, but in general, these are common elements that should form part of every personnel plan.

Job description

• Clearly explained requirements of the various job functions. Use easy-to-understand language and phrases.

Organizational chart and type of hiring

• The chart of the organization should show who works for whom and provide a good overview of the overall management and employee structure of the company.
• The plan should be clear on whether employees are independent contractors or receive salaries. This is essential for labor compliance issues and the workers’ tax.

Remuneration (salary amount and assumptions)

• Details of hourly or yearly payments are defined, including relevant assumptions that comprise estimates of salary increases over time. You also need to account for company benefits, including health insurance. This may be a percentage of salary costs employers pay to staff.

Time of recruitment

• The hiring of employees is often done over time and staggered. Thus, your plan must include details about when an employee will start and the end date for temporary staff.

Incorporate key personnel into the business plan

Employees are the most valuable assets any company can have. This means that hiring the right person should always be a key priority for every company. Your staff will have a significant impact on revenue, customer experience/satisfaction and the success of the company.

Incorporating the personnel section into your business plan is an important part of strategic planning for long-term viability. The information below serves as guide on how to implement a personnel plan in your business.

Team dynamics

This presents an overview of all the key positions in your business and the backgrounds of staff in their critical roles and departments. Add the total number of staff and their experiences. Emphasize the strengths of individuals and how to upskill where necessary. A great team is typically the fulcrum of business success because they have the responsibility of and possess the ability to translate policies into business success.

Organizational structure

The structure of your company is represented in the company’s organizational chart, which shows the hierarchy of duties and management. Is authority finely distributed and are the various company teams properly mentioned? This includes customer service, product development, marketing, manufacturing and sales.

When planning the company’s organizational details, you will need a strategy to manage absences and leave. TimeTrack Leave Management feature helps you to finetune these details so you can easily (and quickly!) oversee employee absences, vacation time and keep track of working hours for compliance management.

TimeTrack Leave Management

Gaps and stumbling blocks

While it may be difficult to identify gaps in your team, chances are that if you look closely, you will observe a section of your company in need of quality talent. You need to figure out how to fill this gap. Don’t hide the weakness of your team from potential investors. Always remember that specialization will evolve as the company grows.

Where advisors, board members and consultants are applicable to your company, list them. Where they will fill key positions as the business grows, you need to list them and provide background on the value they provide.

The fine print

Every personnel plan needs to include a section addressing employment benefits , rights and conditions, especially for managers. Design your company’s management personnel plan and include a table of staff expenses, including both direct and indirect labor expenses, a burden rate and employee-related expenses, while adding payroll tax, workers’ compensation, salaries and health insurance.

Checklist for personnel planning

Personnel improvement

Improving conditions for personnel involve the identification of gaps, developing and implementing action plans  and taking follow-up actions. Managers should develop a performance improvement plan before taking disciplinary action against employees.

Identify skills or performance gaps

A gap analysis is designed to help you identify potential and current issues and is an essential part of the personnel process. Incorporate characteristics of human resource planning into your business planning.

Provide proof of a skills gap or underperformance of the workforce using a consistent format across all employment cadres. Design your format, including employee information and a description of performance discrepancies using expected and actual performance criteria.

Have a face-to-face meeting with your employees to share observed issues or concerns and gain insights into causal factors of underperformance. Use your documentation to share insights on performance challenges. Let the affected employees know they have committed specific policy infractions. Focus only on the outcomes of behaviors to help affected staff understand how their behaviors affect company success.

Develop action plans

Establish specific and measurable improvement goals for your workforce. Avoid generalizations and focus on key goals. Setting bit-sized goals is an effective way of working while monitoring task on time .

Provide detailed resources, including advanced tools that can help employees improve. This also means providing the management with essential tools that will help with the efficient oversight of the workforce.

Create a timeline for achieving performance improvement goals. This will help keep the staff on track towards achieving expectations. Don’t forget to identify metrics for measuring progress. Be specific about what you want employees to achieve and define the intended consequences in the event of failure to complete performance improvement plan. Be specific about actions you will take whether or not targets are met.

Schedule regular appointments to review the performance improvement plan with your employees and implement their feedback.

Incorporating a personnel plan into your business strategy is a key factor for efficient planning. To maximize the opportunity presented by personnel planning, use any of the effective and reliable TimeTrack planning and absence management software tools.

I am a researcher, writer, and self-published author. Over the last 9 years, I have dedicated my time to delivering unique content to startups and non-governmental organizations and have covered several topics, including wellness, technology, and entrepreneurship. I am now passionate about how time efficiency affects productivity, business performance, and profitability.

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Business Plan Section 3: Organization and Management

This section explains how your business runs and who’s on your team. Learn how to present the information in this section of your business plan.

This section of your business plan, Organization and Management, is where you’ll explain exactly how you’re set up to make your ideas happen, plus you’ll introduce the players on your team.

As always, remember your audience. If this is a plan for your internal use, you can be a little more general than if you’ll be presenting it to a potential lender or investor. No matter what its purpose, you’ll want to break the organization and management section into two segments: one describing the way you’ve set up the company to run (its organizational structure), and the other introducing the people involved (its management).

Business Organization

Having a solid plan for how your business will run is a key component of its smooth and successful operation. Of course, you need to surround yourself with good people, but you have to set things up to enable them to work well with each other and on their own.

It’s important to define the positions in the company, which job is responsible for what, and to whom everyone will report. Over time, the structure may grow and change and you can certainly keep tweaking it as you go along, but you need to have an initial plan.

If you’re applying for funding to start a business or expand one, you may not even have employees to fit all the roles in the organization. However, you can still list them in your plan for how the company will ideally operate once you have the ability to do so.

Obviously, for small businesses, the organization will be far more streamlined and less complicated than it is for larger ones, but your business plan still needs to demonstrate an understanding of how you’ll handle the workflow. At the very least, you’ll need to touch on sales and marketing, administration, and the production and distribution of your product or the execution of your service.

For larger companies, an organizational plan with well-thought-out procedures is even more important. This is the best way to make sure you’re not wasting time duplicating efforts or dealing with internal confusion about responsibilities. A smooth-running operation runs far more efficiently and cost-effectively than one flying by the seat of its pants, and this section of your business plan will be another indication that you know what you’re doing. A large company is also likely to need additional operational categories such as human resources and possibly research and development.

One way to explain your organizational structure in the business plan is graphically. A simple diagram or flowchart can easily demonstrate levels of management and the positions within them, clearly illustrating who reports to whom, and how different divisions of the company (such as sales and marketing) relate to each other.

Here is where you can also talk about the other levels of employees in your company. Your lower-level staff will carry out the day-to-day work, so it’s important to recognize the types of people you’ll need, how many, what their qualifications should be, where you’ll find them, and what they’ll cost.

If the business will use outside consultants, freelancers, or independent contractors, mention it here as well. And talk about positions you’d want to add in the future if you’re successful enough to expand.

Business Management

Now that we understand the structure of your business, we need to meet the people who’ll be running it. Who does what, and why are they onboard? This section is important even for a single practitioner or sole proprietorship, as it will introduce you and your qualifications to the readers of your plan.

Start at the top with the legal structure and ownership of the business. If you are incorporated, say so, and detail whether you are a C or S corporation. If you haven’t yet incorporated, make sure to discuss this with your attorney and tax advisor to figure out which way to go. Whether you’re in a partnership or are a sole owner, this is where to mention it.

List the names of the owners of the business, what percent of the company each of them owns, the form of ownership (common or preferred stock, general or limited partner), and what kind of involvement they’ll have with day-to-day operations; for example, if they’re an active or silent partner.

Here’s where you’ll list the names and profiles of your management team, along with what their responsibilities are. Especially if you’re looking for funding, make sure to highlight the proven track record of these key employees. Lenders and investors will be keenly interested in their previous successes, particularly in how they relate to this current venture.

Include each person’s name and position, along with a short description of what the individual’s main duties will be. Detail his or her education, and any unique skills or experience, especially if they’re relevant to the job at hand. Mention previous employment and any industry awards or recognition related to it, along with involvement with charities or other non-profit organizations.

Think of this section as a resume-in-a-nutshell, recapping the highlights and achievements of the people you’ve chosen to surround yourself with. Actual detailed resumes for you and your management team should go in the plan’s appendix, and you can cross-reference them here. You want your readers to feel like your top staff complements you and supplements your own particular skill set. You also want readers to understand why these people are so qualified to help make your business a success.

This section will spell out the compensation for management team members, such as salary, benefits, and any profit-sharing you might be offering. If any of the team will be under contract or bound by non-compete agreements, you would mention that here, as well.

If your company will have a Board of Directors, its members also need to be listed in the business plan. Introduce each person by name and the position they’ll hold on the board. Talk about how each might be involved with the business (in addition to board meetings.

Similar to what you did for your management team, give each member’s background information, including education, experience, special skills, etc., along with any contributions they may already have had to the success of the business. Include the full resumes for your board members in the appendix.

Alternately, if you don’t have a Board of Directors, include information about an Advisory Board you’ve put together, or a panel of experts you’ve convened to help you along the way. Having either of these, by the way, is something your company might want to consider whether or not you’re putting together the organization and management section or your business plan.

NEXT ARTICLE > Business Plan Section 4: Products and Services

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How to Create a Personnel Plan for Investors

What is a personnel plan?

A personnel plan is a document that outlines an organization’s staffing needs, goals, and strategies for managing its workforce.

It is a key component of human resource management and provides a roadmap for the recruitment, selection, training, development, retention, and management of employees.

A personnel plan is critical within the business plan you would have created as a start-up or entrepreneur. It will help you in your financial forecasting, anticipating the right times to hire and expand.

What to include in the personnel section of your business plan

The personnel section of a business plan should include information about the management team and staff that will be involved in operating the business. The people who do the work are the most important asset, which of course comes with a cost. Understanding when to hire, when to think about human resources, and when to grow your business at the right time can be enormously important in meeting business objectives, setting yourself up for success with great personal benchmarks.

Building out a personnel plan within your business plan is going to be essential in planning for the long term success of your business. Forecasting this data can be the best way to ensure longevity.

Who is your management team?

This should include a brief introduction to the key members of the management team, including their backgrounds, experience, and relevant skills. It’s important to highlight their qualifications and how they will contribute to the success of the business.

This can be brief and doesn’t require a full resume for each member of the team. A simple explanation detailing qualifications and relevant experience applicable within the company is all that’s required.

What is the organizational structure?

This section should provide an overview of the organizational structure of the company, including who will be in charge of each department or functional area, as well as any outside consultants or advisors who will be involved.

In line with forecasting, you will want to illustrate the future of your company and who will be included. As you develop, you can anticipate your team growing from a just few employees into staff across multiple sectors, such as customer service, marketing, and support.

What are your staffing needs?

Outline the staffing needs of the business, including the number and types of employees needed to run the business successfully. This should also include the qualifications and skills required for each position.

Here you can identify the weaknesses and risks across your team, ensuring that you have a capable understanding of the roles and responsibilities that are important to the business in the future – though they may not be in place right now. Investors are quick to highlight “perfect” personnel plans, so you will want to embrace that you have identified risks in staffing.

As an example, your head of customer support may also be your head of sales, but in time these two roles will need to be separated.

What will recruitment and training look like?

This section should detail how the company plans to recruit and train employees, including any training programs or on-the-job training that will be provided.

What will the compensations and benefits be?

Outline the compensation and benefits packages that will be offered to employees, including salaries, bonuses, health benefits, retirement plans, and any other perks or incentives.

Outline the Human Resources policies

Detail the company’s policies on issues such as employee performance reviews, disciplinary procedures, and termination policies.

Does a business plan need personnel planning if I have no staff?

Even if you don’t have any employees right now, having a personnel plan is beneficial for your business in the long term.

Without a personnel plan, you may find it challenging to scale your business or adapt to changes in your industry or market. For example, if you suddenly need to hire someone to fill a critical role, you may not know where to start or what qualifications you should look for.

Creating a personnel plan can also help you to clarify your business goals and objectives. By determining the roles and responsibilities required to meet those goals, you can better prioritize and focus on the essential tasks that need to be done.

Therefore, even if you don’t have any employees currently, it’s still a good idea to develop a personnel plan to help you prepare for future growth and ensure that you have the right team in place to support your business objectives.

Is there an easy way to forecast a personnel plan?

Personnel planning is a long process as it requires dedicated thought as to what needs to happen in your business and where you want to take it. Typically, this require a lengthy process of spreadsheets and equations to figure out exactly who needs to be working with you, and at what cost.

Business planning software can ensure that this part of your business plan, alongside other key components, is created with ease – simply needing a few data entries to be entered throughout the software.

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How To Write A Business Plan (2024 Guide)

Updated: Aug 20, 2022, 2:21am

Table of Contents

Brainstorm an executive summary, create a company description, brainstorm your business goals, describe your services or products, conduct market research, create financial plans, bottom line, frequently asked questions.

Every business starts with a vision, which is distilled and communicated through a business plan. In addition to your high-level hopes and dreams, a strong business plan outlines short-term and long-term goals, budget and whatever else you might need to get started. In this guide, we’ll walk you through how to write a business plan that you can stick to and help guide your operations as you get started.

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Drafting the Summary

An executive summary is an extremely important first step in your business. You have to be able to put the basic facts of your business in an elevator pitch-style sentence to grab investors’ attention and keep their interest. This should communicate your business’s name, what the products or services you’re selling are and what marketplace you’re entering.

Ask for Help

When drafting the executive summary, you should have a few different options. Enlist a few thought partners to review your executive summary possibilities to determine which one is best.

After you have the executive summary in place, you can work on the company description, which contains more specific information. In the description, you’ll need to include your business’s registered name , your business address and any key employees involved in the business. 

The business description should also include the structure of your business, such as sole proprietorship , limited liability company (LLC) , partnership or corporation. This is the time to specify how much of an ownership stake everyone has in the company. Finally, include a section that outlines the history of the company and how it has evolved over time.

Wherever you are on the business journey, you return to your goals and assess where you are in meeting your in-progress targets and setting new goals to work toward.

Numbers-based Goals

Goals can cover a variety of sections of your business. Financial and profit goals are a given for when you’re establishing your business, but there are other goals to take into account as well with regard to brand awareness and growth. For example, you might want to hit a certain number of followers across social channels or raise your engagement rates.

Another goal could be to attract new investors or find grants if you’re a nonprofit business. If you’re looking to grow, you’ll want to set revenue targets to make that happen as well.

Intangible Goals

Goals unrelated to traceable numbers are important as well. These can include seeing your business’s advertisement reach the general public or receiving a terrific client review. These goals are important for the direction you take your business and the direction you want it to go in the future.

The business plan should have a section that explains the services or products that you’re offering. This is the part where you can also describe how they fit in the current market or are providing something necessary or entirely new. If you have any patents or trademarks, this is where you can include those too.

If you have any visual aids, they should be included here as well. This would also be a good place to include pricing strategy and explain your materials.

This is the part of the business plan where you can explain your expertise and different approach in greater depth. Show how what you’re offering is vital to the market and fills an important gap.

You can also situate your business in your industry and compare it to other ones and how you have a competitive advantage in the marketplace.

Other than financial goals, you want to have a budget and set your planned weekly, monthly and annual spending. There are several different costs to consider, such as operational costs.

Business Operations Costs

Rent for your business is the first big cost to factor into your budget. If your business is remote, the cost that replaces rent will be the software that maintains your virtual operations.

Marketing and sales costs should be next on your list. Devoting money to making sure people know about your business is as important as making sure it functions.

Other Costs

Although you can’t anticipate disasters, there are likely to be unanticipated costs that come up at some point in your business’s existence. It’s important to factor these possible costs into your financial plans so you’re not caught totally unaware.

Business plans are important for businesses of all sizes so that you can define where your business is and where you want it to go. Growing your business requires a vision, and giving yourself a roadmap in the form of a business plan will set you up for success.

How do I write a simple business plan?

When you’re working on a business plan, make sure you have as much information as possible so that you can simplify it to the most relevant information. A simple business plan still needs all of the parts included in this article, but you can be very clear and direct.

What are some common mistakes in a business plan?

The most common mistakes in a business plan are common writing issues like grammar errors or misspellings. It’s important to be clear in your sentence structure and proofread your business plan before sending it to any investors or partners.

What basic items should be included in a business plan?

When writing out a business plan, you want to make sure that you cover everything related to your concept for the business,  an analysis of the industry―including potential customers and an overview of the market for your goods or services―how you plan to execute your vision for the business, how you plan to grow the business if it becomes successful and all financial data around the business, including current cash on hand, potential investors and budget plans for the next few years.

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Create a Personal Business Plan That You'll Really Use Develop a customized tool that will serve to focus you on your most important objectives. Write it in user-friendly prose so you'll check it weekly.

By Marty Fukuda • Oct 7, 2014

Opinions expressed by Entrepreneur contributors are their own.

Every successful business leader I've encountered is in some way a prolific goal setter. For this reason, the single most important piece of advice I give any aspiring entrepreneur or business professional is to figure out exactly what you want, document it on paper and then attack it every day.

A personal business plan is something that I develop each year to help me put my own advice into action. Creating a plan can clarify your objectives for the coming year but don't just shove it in drawer. It is something that should become weekly, if not daily, reading material.

Related: Why Business Leaders Must Set a Personal Mission

1. Start with a simple brainstorming list.

Break down your role in the company into small parts and be sure it's comprehensive. This could mean taking each department that you oversee or are involved in, and breaking it down into further segments. For instance, for my company's graphic-design department, I would create separate objectives for its leadership development, equipment and software needs, anticipated hiring, the continued education plan and efficiency.

2. Prioritize objectives.

Your brainstorming list probably contains an overwhelming number of potential starting points. The key is narrowing them down into a manageable and realistic number of goals. Since you'll review the finished personal business plan often, don't write a novel.

I made the mistake of developing a massive 100-page personal business plan that I never looked at. The very thought of reviewing it was scary. A user-friendly one- to two-page document will do the trick.

Take your brainstorming list and organize it according to the biggest potential impact. You'll also have some must-dos (if not tackled business will fall apart). Then you'll have some items that aren't necessary or don't require much of your focus and perhaps can be delegated.

My company's CEO, Duane Hixon, does a wonderful job of narrowing down his list into what he refers to as his "rocks." These are the biggest areas of impact, the areas to which a person should offer most of his or her attention. These will make up the heart of the personal business plan.

Related: How to Build a Business Plan For Your Personal Brand

3. Be specific.

Once you've narrowed things down to a handful of rocks, be sure the plan includes specifics that will allow you to measure and track progress. For this year's plan, one of my rocks was maintaining company culture while building the team. Obviously, this is a broad, difficult-to-measure objective. For my plan, I developed a strategy for accomplishing the mission by including more details such as creating a company culture slide show and a plan for both current employees and new hires.

4. Set challenges but be realistic.

A goal that doesn't take much effort to accomplish isn't really a goal. Setting an objective that has a slim chance of realization, however, amounts to little more than a hope and can leave you feeling discouraged. Aim for a perfect balance between the two -- something that stretches you but doesn't break you.

Related: Write a Winning Business Plan With These 8 Key Elements

5. Set deadlines.

The beautiful thing about your personal business plan is that it's yours. You don't have to wait until the start of a new year to create one. While I create a plan annually, that doesn't mean that each objective has a deadline that's one year out. Set a deadline no matter what it is to keep you focused and provide a call to action (as opposed to adopting an open-ended objective).

6. Share the plan.

I recommend that you show your plan to a colleage whom you respect. Ask for feedback. This individual may think of an angle you have not. Equally important, this person will hold you accountable. It's a lot tougher to hit the eject button on a plan after you've shared it with someone you respect. And everyone can use a cheerleader in the workplace from time to time.

I personally love it when an employee shares a plan with me. It shows initiative and forward thinking. There are few things more impressive than when an employee has clear-cut objectives and works hard to meet them.

7. Revisit the plan weekly.

Creating the plan is just the first step. Put the plan in a prominent spot where you're going to remember to review it or place reminders in your calendar.If you've got a great plan, it can and will inspire you every time you see it.

Related: Your Mission Statement May Be Utterly Useless or a Gold Mine

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12 Key Elements of a Business Plan (Top Components Explained)

Starting and running a successful business requires proper planning and execution of effective business tactics and strategies .

You need to prepare many essential business documents when starting a business for maximum success; the business plan is one such document.

When creating a business, you want to achieve business objectives and financial goals like productivity, profitability, and business growth. You need an effective business plan to help you get to your desired business destination.

Even if you are already running a business, the proper understanding and review of the key elements of a business plan help you navigate potential crises and obstacles.

This article will teach you why the business document is at the core of any successful business and its key elements you can not avoid.

Let’s get started.

Why Are Business Plans Important?

Business plans are practical steps or guidelines that usually outline what companies need to do to reach their goals. They are essential documents for any business wanting to grow and thrive in a highly-competitive business environment .

1. Proves Your Business Viability

A business plan gives companies an idea of how viable they are and what actions they need to take to grow and reach their financial targets. With a well-written and clearly defined business plan, your business is better positioned to meet its goals.

2. Guides You Throughout the Business Cycle

A business plan is not just important at the start of a business. As a business owner, you must draw up a business plan to remain relevant throughout the business cycle .

During the starting phase of your business, a business plan helps bring your ideas into reality. A solid business plan can secure funding from lenders and investors.

After successfully setting up your business, the next phase is management. Your business plan still has a role to play in this phase, as it assists in communicating your business vision to employees and external partners.

Essentially, your business plan needs to be flexible enough to adapt to changes in the needs of your business.

3. Helps You Make Better Business Decisions

As a business owner, you are involved in an endless decision-making cycle. Your business plan helps you find answers to your most crucial business decisions.

A robust business plan helps you settle your major business components before you launch your product, such as your marketing and sales strategy and competitive advantage.

4. Eliminates Big Mistakes

Many small businesses fail within their first five years for several reasons: lack of financing, stiff competition, low market need, inadequate teams, and inefficient pricing strategy.

Creating an effective plan helps you eliminate these big mistakes that lead to businesses' decline. Every business plan element is crucial for helping you avoid potential mistakes before they happen.

5. Secures Financing and Attracts Top Talents

Having an effective plan increases your chances of securing business loans. One of the essential requirements many lenders ask for to grant your loan request is your business plan.

A business plan helps investors feel confident that your business can attract a significant return on investments ( ROI ).

You can attract and retain top-quality talents with a clear business plan. It inspires your employees and keeps them aligned to achieve your strategic business goals.

Key Elements of Business Plan

Starting and running a successful business requires well-laid actions and supporting documents that better position a company to achieve its business goals and maximize success.

A business plan is a written document with relevant information detailing business objectives and how it intends to achieve its goals.

With an effective business plan, investors, lenders, and potential partners understand your organizational structure and goals, usually around profitability, productivity, and growth.

Every successful business plan is made up of key components that help solidify the efficacy of the business plan in delivering on what it was created to do.

Here are some of the components of an effective business plan.

1. Executive Summary

One of the key elements of a business plan is the executive summary. Write the executive summary as part of the concluding topics in the business plan. Creating an executive summary with all the facts and information available is easier.

In the overall business plan document, the executive summary should be at the forefront of the business plan. It helps set the tone for readers on what to expect from the business plan.

A well-written executive summary includes all vital information about the organization's operations, making it easy for a reader to understand.

The key points that need to be acted upon are highlighted in the executive summary. They should be well spelled out to make decisions easy for the management team.

A good and compelling executive summary points out a company's mission statement and a brief description of its products and services.

An executive summary summarizes a business's expected value proposition to distinct customer segments. It highlights the other key elements to be discussed during the rest of the business plan.

Including your prior experiences as an entrepreneur is a good idea in drawing up an executive summary for your business. A brief but detailed explanation of why you decided to start the business in the first place is essential.

Adding your company's mission statement in your executive summary cannot be overemphasized. It creates a culture that defines how employees and all individuals associated with your company abide when carrying out its related processes and operations.

Your executive summary should be brief and detailed to catch readers' attention and encourage them to learn more about your company.

Components of an Executive Summary

Here are some of the information that makes up an executive summary:

• The name and location of your company
• Products and services offered by your company
• Mission and vision statements
• Success factors of your business plan

2. Business Description

Your business description needs to be exciting and captivating as it is the formal introduction a reader gets about your company.

What your company aims to provide, its products and services, goals and objectives, target audience , and potential customers it plans to serve need to be highlighted in your business description.

A company description helps point out notable qualities that make your company stand out from other businesses in the industry. It details its unique strengths and the competitive advantages that give it an edge to succeed over its direct and indirect competitors.

Spell out how your business aims to deliver on the particular needs and wants of identified customers in your company description, as well as the particular industry and target market of the particular focus of the company.

Include trends and significant competitors within your particular industry in your company description. Your business description should contain what sets your company apart from other businesses and provides it with the needed competitive advantage.

In essence, if there is any area in your business plan where you need to brag about your business, your company description provides that unique opportunity as readers look to get a high-level overview.

Components of a Business Description

Your business description needs to contain these categories of information.

• Business location
• The legal structure of your business
• Summary of your business’s short and long-term goals

3. Market Analysis

The market analysis section should be solely based on analytical research as it details trends particular to the market you want to penetrate.

Graphs, spreadsheets, and histograms are handy data and statistical tools you need to utilize in your market analysis. They make it easy to understand the relationship between your current ideas and the future goals you have for the business.

All details about the target customers you plan to sell products or services should be in the market analysis section. It helps readers with a helpful overview of the market.

In your market analysis, you provide the needed data and statistics about industry and market share, the identified strengths in your company description, and compare them against other businesses in the same industry.

The market analysis section aims to define your target audience and estimate how your product or service would fare with these identified audiences.

Market analysis helps visualize a target market by researching and identifying the primary target audience of your company and detailing steps and plans based on your audience location.

Obtaining this information through market research is essential as it helps shape how your business achieves its short-term and long-term goals.

Market Analysis Factors

Here are some of the factors to be included in your market analysis.

• The geographical location of your target market
• Needs of your target market and how your products and services can meet those needs
• Demographics of your target audience

Components of the Market Analysis Section

Here is some of the information to be included in your market analysis.

• Industry description and statistics
• Demographics and profile of target customers
• Marketing data for your products and services
• Detailed evaluation of your competitors

4. Marketing Plan

A marketing plan defines how your business aims to reach its target customers, generate sales leads, and, ultimately, make sales.

Promotion is at the center of any successful marketing plan. It is a series of steps to pitch a product or service to a larger audience to generate engagement. Note that the marketing strategy for a business should not be stagnant and must evolve depending on its outcome.

Include the budgetary requirement for successfully implementing your marketing plan in this section to make it easy for readers to measure your marketing plan's impact in terms of numbers.

The information to include in your marketing plan includes marketing and promotion strategies, pricing plans and strategies , and sales proposals. You need to include how you intend to get customers to return and make repeat purchases in your business plan.

5. Sales Strategy

Sales strategy defines how you intend to get your product or service to your target customers and works hand in hand with your business marketing strategy.

Your sales strategy approach should not be complex. Break it down into simple and understandable steps to promote your product or service to target customers.

Apart from the steps to promote your product or service, define the budget you need to implement your sales strategies and the number of sales reps needed to help the business assist in direct sales.

Your sales strategy should be specific on what you need and how you intend to deliver on your sales targets, where numbers are reflected to make it easier for readers to understand and relate better.

6. Competitive Analysis

Providing transparent and honest information, even with direct and indirect competitors, defines a good business plan. Provide the reader with a clear picture of your rank against major competitors.

Identifying your competitors' weaknesses and strengths is useful in drawing up a market analysis. It is one information investors look out for when assessing business plans.

The competitive analysis section clearly defines the notable differences between your company and your competitors as measured against their strengths and weaknesses.

This section should define the following:

• Your competitors' identified advantages in the market
• How do you plan to set up your company to challenge your competitors’ advantage and gain grounds from them?
• The standout qualities that distinguish you from other companies
• Potential bottlenecks you have identified that have plagued competitors in the same industry and how you intend to overcome these bottlenecks

In your business plan, you need to prove your industry knowledge to anyone who reads your business plan. The competitive analysis section is designed for that purpose.

7. Management and Organization

Management and organization are key components of a business plan. They define its structure and how it is positioned to run.

Whether you intend to run a sole proprietorship, general or limited partnership, or corporation, the legal structure of your business needs to be clearly defined in your business plan.

Use an organizational chart that illustrates the hierarchy of operations of your company and spells out separate departments and their roles and functions in this business plan section.

The management and organization section includes profiles of advisors, board of directors, and executive team members and their roles and responsibilities in guaranteeing the company's success.

Apparent factors that influence your company's corporate culture, such as human resources requirements and legal structure, should be well defined in the management and organization section.

Defining the business's chain of command if you are not a sole proprietor is necessary. It leaves room for little or no confusion about who is in charge or responsible during business operations.

This section provides relevant information on how the management team intends to help employees maximize their strengths and address their identified weaknesses to help all quarters improve for the business's success.

8. Products and Services

This business plan section describes what a company has to offer regarding products and services to the maximum benefit and satisfaction of its target market.

Boldly spell out pending patents or copyright products and intellectual property in this section alongside costs, expected sales revenue, research and development, and competitors' advantage as an overview.

At this stage of your business plan, the reader needs to know what your business plans to produce and sell and the benefits these products offer in meeting customers' needs.

The supply network of your business product, production costs, and how you intend to sell the products are crucial components of the products and services section.

Investors are always keen on this information to help them reach a balanced assessment of if investing in your business is risky or offer benefits to them.

You need to create a link in this section on how your products or services are designed to meet the market's needs and how you intend to keep those customers and carve out a market share for your company.

Repeat purchases are the backing that a successful business relies on and measure how much customers are into what your company is offering.

This section is more like an expansion of the executive summary section. You need to analyze each product or service under the business.

9. Operating Plan

An operations plan describes how you plan to carry out your business operations and processes.

The operating plan for your business should include:

• Information about how your company plans to carry out its operations.
• The base location from which your company intends to operate.
• The number of employees to be utilized and other information about your company's operations.
• Key business processes.

This section should highlight how your organization is set up to run. You can also introduce your company's management team in this section, alongside their skills, roles, and responsibilities in the company.

The best way to introduce the company team is by drawing up an organizational chart that effectively maps out an organization's rank and chain of command.

What should be spelled out to readers when they come across this business plan section is how the business plans to operate day-in and day-out successfully.

10. Financial Projections and Assumptions

Bringing your great business ideas into reality is why business plans are important. They help create a sustainable and viable business.

The financial section of your business plan offers significant value. A business uses a financial plan to solve all its financial concerns, which usually involves startup costs, labor expenses, financial projections, and funding and investor pitches.

All key assumptions about the business finances need to be listed alongside the business financial projection, and changes to be made on the assumptions side until it balances with the projection for the business.

The financial plan should also include how the business plans to generate income and the capital expenditure budgets that tend to eat into the budget to arrive at an accurate cash flow projection for the business.

Base your financial goals and expectations on extensive market research backed with relevant financial statements for the relevant period.

Examples of financial statements you can include in the financial projections and assumptions section of your business plan include:

• Projected income statements
• Cash flow statements
• Balance sheets
• Income statements

Revealing the financial goals and potentials of the business is what the financial projection and assumption section of your business plan is all about. It needs to be purely based on facts that can be measurable and attainable.

11. Request For Funding

The request for funding section focuses on the amount of money needed to set up your business and underlying plans for raising the money required. This section includes plans for utilizing the funds for your business's operational and manufacturing processes.

When seeking funding, a reasonable timeline is required alongside it. If the need arises for additional funding to complete other business-related projects, you are not left scampering and desperate for funds.

If you do not have the funds to start up your business, then you should devote a whole section of your business plan to explaining the amount of money you need and how you plan to utilize every penny of the funds. You need to explain it in detail for a future funding request.

When an investor picks up your business plan to analyze it, with all your plans for the funds well spelled out, they are motivated to invest as they have gotten a backing guarantee from your funding request section.

Include timelines and plans for how you intend to repay the loans received in your funding request section. This addition keeps investors assured that they could recoup their investment in the business.

12. Exhibits and Appendices

Exhibits and appendices comprise the final section of your business plan and contain all supporting documents for other sections of the business plan.

Some of the documents that comprise the exhibits and appendices section includes:

• Legal documents
• Licenses and permits
• Credit histories
• Customer lists

The choice of what additional document to include in your business plan to support your statements depends mainly on the intended audience of your business plan. Hence, it is better to play it safe and not leave anything out when drawing up the appendix and exhibit section.

Supporting documentation is particularly helpful when you need funding or support for your business. This section provides investors with a clearer understanding of the research that backs the claims made in your business plan.

There are key points to include in the appendix and exhibits section of your business plan.

• The management team and other stakeholders resume
• Marketing research
• Permits and relevant legal documents
• Financial documents

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Guide to Developing a Personnel Plan

• May 12, 2023
• BPO Insights
• Finance and Accounting Services , Financial Analysis & Financial Planning

Table of Contents

A people plan is an essential component of your business strategy and Financial Planning . In addition to assisting you in budgeting for current and prospective employees, your personnel strategy allows you to consider who to hire and when to hire them.

What is a Personnel Plan?

A Personnel Plan is a document that details an organization’s staffing needs, goals, and workforce management practices. It is an essential component of human resource management and serves as a road map for employee recruitment, selection, training, development, retention, and management.

A Personnel Plan is an essential component of any start-up or entrepreneur’s business plan . It will aid you in your financial predictions, allowing you to anticipate the best periods to hire and expand.

When presenting for funding to angel investors or venture capitalists , they will want to see why your team is uniquely equipped to grow and scale your firm, as well as your hiring strategy.

Investors will be interested in learning:

• What positions do you require?
• When do you intend to fill them?
• How much will it cost to assemble the team you require?

What should you put in your Personnel Plan section?

The people who execute the work—your team—are both the most expensive and most important asset for many startups and small businesses . It stands to reason that hiring the appropriate individual at the right moment can have a big impact on your company’s ability to accomplish milestones and goals, not to mention cash flow.

A healthy Personnel Plan includes strategic thinking about human resources, such as whether to expand roles, and salary levels, and whether to hire full-time or on a contract basis.

So, whether you’re looking for investment or not, developing a people plan and forecast is an important aspect of business planning and strategic planning for your company’s long-term success. Look at the 9 critical phases of developing an investor-ready Personnel Plan .

What is the composition of your management team?

Typically, the “team” portion of your business plan will include an overview of the main jobs in your organization as well as the backgrounds of the people who will fill those critical responsibilities. You will highlight each of your company’s executive positions before speaking more broadly about other departments and teams.

Keep it brief .

You do not need to submit whole resumes for each team member; a brief overview of why each person is qualified for the position is sufficient. Describe each individual’s talents and expertise, as well as what they will do for the company.

Highlight your team’s strengths . How do they bolster your group’s strength? What is their special knowledge and experience in your (or a related) industry? If your market research uncovered a fantastic opportunity, why are you the best team to capitalize on it?

This part helps potential investors understand why each team member is critical to the company’s success. It serves as the rationale for their wage and ownership stake in the company if they are part owners.

How is the organizational structure defined?

Your company’s organizational structure is typically portrayed as an “org chart” that indicates who reports to whom and who is accountable for what.

However, you do not need to construct a graphic org chart; simply defining your organization in the text is sufficient . Simply demonstrate that your organization has a well-defined structure.

Is authority divided fairly among the team members? Do you have the resources to do all of the tasks required to expand your business?

You should also explain the many teams that your organization will have in the future . Sales, customer service, product development, marketing, production, and so on are examples.

You don’t have to hire all of these employees right away. Consider this section to be an outline of what you intend to do with your firm in the future.

Compile a list of your advisors, consultants, and board members

External advisers, board members, and even consultants can play an important role in determining a corporate strategy for some organizations. These individuals may even temporarily fill crucial positions as your company grows. You should include a list of these individuals in your Personnel Plan if this is the case. Give a brief background on each main advisor that outlines the value they give, just like you would for your management team.

You don’t have to include your advisors if they don’t play essential roles or aren’t critical to your achievement. However, i nclude anyone who adds significant value to the organization through advice, contacts, or operational skills.

Explain the gaps

It’s normal for your team to have gaps, especially if you’re a startup . You may not yet have identified all of the “right” team members, or you may not yet have the cash to hire for critical roles. That’s OK.

The trick is to recognize that you do have gaps on your team—this is how you determine who to employ and when to hire them . Furthermore, it is far better to describe and recognize team deficiencies than to pretend that you have all of the critical responsibilities that you require. Explain where your organization is weak and how you intend to address the issue as you develop in your business strategy.

Although it may be tempting to conceal potential weaknesses from investors, they will see right through you. It is far preferable to be open and honest about where you have management gaps and your Personnel Strategy to remedy those gaps. You want them to know you’ve identified and planned for dangers.

You should also bear in mind that your Personnel Plan may wear many hats in the early days of a company, but specialization will occur as the company expands.

For example, the CEO may initially also be the VP of Sales. However, the job of VP of Sales should eventually be filled by a specialist to take on that task. Include modifications like these in your personnel plan to show investors that you understand how your company will expand and scale.

What are your personnel requirements?

Outline the company’s personnel requirements, including the number and types of people required to run the business successfully . The credentials and skills required for each post should also be included.

Here you may identify your team’s shortcomings and vulnerabilities , ensuring that you have a competent grasp of the roles and duties that will be crucial to the business in the future – even if they are not currently in existence. Investors are ready to highlight “perfect” people strategies, so you should embrace the fact that you have recognized staffing hazards.

For example, your head of customer service may also be your head of sales, but these two responsibilities will need to be split in the future.

How will recruitment and training be carried out?

This section should explain how the company intends to recruit and train personnel, including any training programs or on-the-job training.

What are the remuneration and benefits?

Outline the salary and benefits packages that will be provided to employees, including salaries, bonuses, health insurance, retirement plans, and any other perks or incentives.

Describe your Human Resources policies

Explain the company’s policies on topics such as employee performance reviews, disciplinary procedures, and termination procedures.

Estimate your personnel costs

Most Personnel Plans should include a personnel table to anticipate labor costs . Here are some expenses to keep in mind when forecasting.

Labor costs, both direct and indirect

You should include both direct expenses, which are often salary, and indirect expenses, which include:

• Paid vacation
• Insurance and healthcare
• Payroll expenses

As well as any extra fees you incur for each employee in addition to their compensation. Here’s an example of a personnel prediction:

Employee-related expenses and the burden rate

The indirect costs of staff are known by various names . Still, Innovature BPO will refer to it as a “burden rate” or “employee-related expenses”, as it is an expense in addition to direct wages and salary . Payroll taxes, worker’s compensation insurance, health insurance, and other benefits and taxes are common examples of these costs.

Don’t worry about calculating the correct burden rate for company planning objectives. Estimate it instead as a proportion of total monthly compensation. A range of 15% to 25% is normally appropriate, but it depends on the type of benefits you intend to provide.

Individuals and groups of individuals can both be listed in your Personnel Plan . You should certainly mention key people and other highly paid employees but put other departments or groups of people together. For example, you may include your management team but then group departments such as marketing, customer service, and manufacturing together.

Then factor in your employee costs for benefits and insurance. In the example personnel table above, this is referred to as “Employee-Related Expenses.”

The whole quantity of your salary and personnel load will then be included as an item in your profit and loss prediction. Assume you’re using HR management software to create a Personnel Prediction. This software explains where you’ll see personnel costs on your cash flow statement, profit and loss (income statement), and balance sheet.

Is it necessary to Personnel Plan in a company strategy if you have no employees?

Even if you don’t currently have any employees, having a Personnel Plan is useful to your firm in the long run.

You may find it difficult to scale your firm or respond to changes in your sector or market if you do not have a Personnel Plan . For example, if you need to hire someone immediately to fill a key function, you may not know where to begin or what qualifications to search for.

Developing a Personnel Plan can also assist you in clarifying your company’s aims and objectives. You can better prioritize and focus on the critical tasks that must be completed by establishing the roles and responsibilities required to fulfill those goals.

As a result, even if you don’t currently have any employees, it’s a good idea to build a Personnel Plan to help you prepare for future growth and ensure that you have the correct team in place to support your business objectives.

Is there an easy approach to forecasting a Personnel Plan?

Personnel Plan is a time-consuming process that necessitates careful consideration of what needs to happen in your company and where you want it to go. Typically, this necessitates a lengthy process of spreadsheets and mathematics to determine who needs to work with you and at what expense.

A financial modeling tool can ensure that this component of your business strategy, along with other critical components, is easily constructed, requiring only a few data entries to be entered throughout the software. Currently, on the market, there are quite a few tools to support Personnel plans and personnel management . Let’s enjoy!

Personnel Plan is an important aspect of the business planning process because it forces you to consider what needs to be done in your company and who will do it. Take the time to work through this section of your financial plan, and you’ll have a lot better idea of what it will take to make your firm a success.

• What is Financial Analysis of a company and Financial Analysis Outsourcing Process you need to know
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• Mastering the Income Statement: A Beginner’s Guide to Financial Analysis
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• Comparing the Financial Statements: Income Statement vs Balance Sheet
• A Beginner’s Guide to Cash Flow Statement: Examples and Explanation
• Understanding the Statement of Shareholder Equity: Key Concepts and Examples
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• From Data to Insights: How to Build Accurate Sales Forecasts
• How Innovation Tools Change Financial Modeling for Strategic Success?

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Key Personnel: Understanding Your Essential Workers

Nov 2, 2020

Some of these are employees who have the authority to directly or indirectly plan and control business operations, and significantly influence your day-to-day operations and processes. These essential workers are your key personnel.    

What are Key Personnel?  

Key personnel are individuals who perform essential functions in your business. Often, these employees in an organization are experts in specific areas. They may be the only ones who know how to complete specific tasks, or who have information about a specific part of your business.   

Also called key employees, they directly, significantly, and positively contribute to the company’s value . They exceed expectations in fulfilling their responsibilities and making important decisions, which improves sales, profitability, product development, and other critical business drivers.  

If these employees are not available in crucial times, it could affect your ability to do business effectively.  

Who are your Key Personnel?  

When you think of key personnel, you most likely visualise a company’s CEO, Vice President, and other key management employees or the people positioned at the top and have a say in the company’s long-term strategy and overall operations.   

While small businesses usually have top executives, they also have other types of key personnel including mid-level managers and regular professional staff whose duties might involve carrying out top-level strategy, leading their departments, or even performing operational work.   

A small business has non-management professionals who are also key assets for the company’s success. Some of these positions include:  

Accountants and Bookkeepers. These roles are essential for monitoring the company’s financial status and may involve analyzing financial data, creating reports, handling day-to-day transactions, implementing security controls, and handling the company’s taxes.  

Human resources professionals . While top managers have a say in the hiring process, HR professionals assist with recruitment, training, performance management, employee relations issues, compensation, and employee policies.  

Marketing professionals . When the company decides to offer a product or service, these professionals are the ones who come up with how to make them appealing to customers as well as advertising methods and how to set the price.  

IT professionals . These professionals are crucial to small businesses whether they keep the business’s systems running, secure confidential data, run the company’s website or ensure good performance of company networks. In small businesses in the technology sector, their presence is even more crucial.  

Creative staff. Content creators such as writers and video editors have a key role in presenting important information about the company in an appealing way, while graphic designers focus on visuals seen in advertising materials and on the web.  

How do you manage your Key Personnel?  

It is no longer enough for businesses to simply put together an amazing team. The key to success and longevity in today’s competitive business environment begins and ends with managing your vital workers and ensuring employee retention. The financial implications of a high turnover rate, where the cost of training and recruitment is lost, are high. On average, employee replacement costs a company one-fifth of that worker’s salary. Since those numbers rise according to position and salary, retaining key employees is a critical financial, as well as strategic, consideration for your business.  

Implementing workplace policies that benefit workers and help boost employee retention is not simply a “nice” thing for businesses to do for their employees. Maintaining a stable workforce by reducing employee turnover through better compensation and flexible workplace management and policies also makes good business sense, as it can result in significant cost savings to employers.  

Here are a few ways on how to better manage your key personnel and ensure employee satisfaction and retention:  

Identify your key players. Focus on key employees whose departure would have the biggest impact on your company. While high potential employees may seem to be the obvious choice, delve deeper, to include those with exceptional relationships, knowledge or expertise in critical areas of your business. Identify the skill sets of those you hire; you may find that certain employees could be contributing far more than their current position indicate s .   

Open the lines of communication. Nurture an environment in which employees are comfortable providing honest feedback or offering ideas or suggestions, knowing their voices will be heard. In addition to an annual employee review, make time to meet with staff individually to find out what’s working and what’s not, to ensure your key employees are challenged and motivated and that their needs are being met.  

Overcompensate. Be clear about the structure of pay, bonuses, and raises, and when they can expect to receive compensation, as well as what they can do to achieve their compensatory goals. Have this type of conversation on a consistent basis to avoid any misunderstandings or employee frustrations. Additionally, one of the best pieces of advice for managing key employees is to pay them a salary equivalent to or above the market value. A well-compensated employee will be much less likely to start looking around for greener financial pastures.  

Give them room to grow. Your best employees are the ones that aren’t “ satisfied ” with their job, but want to grow and develop, taking their careers to the next level. Provide them the opportunity to learn, advance and contribute in new ways, nurturing those talents discovered along the way.  

Provide a healthy environment. Financial compensation provides employees with a sense of value. But continue to nurture that value by showing appreciation through formal employee recognition. Positive feedback and acknowledgement can go a long way towards instilling a sense of pride and accomplishment and provides incentive for employees to remain a vital part of your organization.  

Do you have a backup?  

Employees with skills that are uniquely valuable to a company’s success are worth their weight in gold, but what happens when they leave, taking that institutional knowledge with them?  

Relying on key personnel carries risks that, if not properly managed, may cripple profits, productivity, and confidence among remaining employees. Also, at stake is the company’s image, which is particularly critical for those that rely on earning and keeping trust.  

Succession planning is critical in these situations. Identify, in advance, who will be responsible for important decisions and assign at least one back up. For example, who can approve and/or access funds for emergency services or supplies if the individual who normally makes those decisions is unavailable. In an emergency situation, the department manager may not be the only key personnel. You may have personnel who operate specific equipment or that have received specialized training/certifications.  

Assign cross training as a professional development activity and include it as part of your performance evaluations. This helps back up personnel understand how the business functions within networks, builds appreciation for roles and relationships, and supports retention by increasing opportunities and flexibility within your workforce.  

Provide alternate or backup personnel with opportunities to practice the assigned tasks during normal operations. This builds experience, confidence, and trust before they have to step in during a disaster.  

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Dai is a Master of Business Administration graduate of the University of New England, Registered BAS Agent and member of the Institute of Certified Bookkeepers. For 16 years he owned, operated and managed businesses in the tourism and hospitality industry – particularly Accommodation, Event Management, and Food & Beverage Management. In recent years, Dai has worked in the Not for Profit sector, Real Estate, Motorsports, and Motor Trades industry and business services, in Finance, Administration, and Practice Management roles, before becoming a Professional Bookkeeper in 2009.

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8 Business Plan Templates You Can Get for Free

8 min. read

Updated April 10, 2024

A business plan template can be an excellent tool to simplify the creation of your business plan. 

The pre-set structure helps you organize ideas, covers all critical business information, and saves you time and effort on formatting.

The only issue? There are SO many free business plan templates out there. 

So, which ones are actually worth using? 

To help remove the guesswork, I’ve rounded up some of the best business plan templates you can access right now. 

These are listed in no particular order, and each has its benefits and drawbacks.

What to look for in a business plan template

Not all business plan templates are created equal. As you weigh your options and decide which template(s) you’ll use, be sure to review them with the following criteria in mind:

• Easy to edit: A template should save you time. That won’t be the case if you have to fuss around figuring out how to edit the document, or even worse, it doesn’t allow you to edit at all.
• Contains the right sections: A good template should cover all essential sections of a business plan , including the executive summary, product/service description, market/competitive analysis, marketing and sales plan, operations, milestones, and financial projections. 
• Provides guidance: You should be able to trust that the information in a template is accurate. That means the organization or person who created the template is highly credible, known for producing useful resources, and ideally has some entrepreneurial experience.
• Software compatibility: Lastly, you want any template to be compatible with the software platforms you use. More than likely, this means it’s available in Microsoft Word, Google Docs, or PDF format at a minimum. 

1. Bplans — A plan with expert guidance

Since you’re already on Bplans, I have to first mention the templates that we have available. 

Our traditional and one-page templates were created by entrepreneurs and business owners with over 80 years of collective planning experience. We revisit and update them annually to ensure they are approachable, thorough, and aligned with our team’s evolving best practices.  

The templates, available in Word, PDF, or Google Doc formats, include in-depth guidance on what to include in each section, expert tips, and links to additional resources. 

Plus, we have over 550 real-world sample business plans you can use for guidance when filling out your template.

Download: Traditional lender-ready business plan template or a simple one-page plan template .

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2. SBA — Introduction to business plans

The U.S. Small Business Administration (SBA) offers two different business plan templates along with a short planning guide. 

While not incredibly in-depth, it’s enough to help you understand how traditional and lean plans are structured and what information needs to be covered. The templates themselves are more like examples, providing you with a finished product to reference as you write your plan.

The key benefit of using these templates is that they were created by the SBA. While they may provide less guidance, you can be assured that the information and structure meet their expectations.

Explore: The SBA’s planning guide and free templates

3. SCORE — Planning workbook

SCORE’s template is more like a workbook. It includes exercises after each section to help you get your ideas down and turn them into a structured plan.

The market research worksheets are especially useful. They provide a clear framework for identifying your target market and analyzing competitors from multiple angles. Plus, they give you an easy way to document all the information you’re collecting.

You will likely have to remove the exercises in this template to make it investor-ready. But it can be worth it if you’re struggling to get past a blank page and want a more interactive planning method.

Download: SCORE’s business plan template

4. PandaDoc — A template with fillable forms

PandaDoc’s library offers a variety of industry-specific business plan templates that feature a modern design flair and concise instructions. 

These templates are designed for sharing. They include fillable fields and sections for non-disclosure agreements, which may be necessary when sending a plan to investors.  

But the real benefit is their compatibility with PandaDoc’s platform. Yes, they are free, but if you’re a PandaDoc subscriber, you’ll have far more customization options. 

Out of all their templates, the standard business plan template is the most in-depth. The rest, while still useful, go a bit lighter on guidance in favor of tailoring the plan to a specific industry.

Explore: PandaDoc’s business plan template library  

5. Canva — Pitch with your plan

Canva is a great option for building a visually stunning business plan that can be used as a pitch tool. It offers a diverse array of templates built by their in-house team and the larger creative community, meaning the number of options constantly grows.

You will need to verify that the information in the template you choose matches the standard structure of a traditional business plan. 

You should do this with any template, but it’s especially important with any tool that accepts community submissions. While they are likely reviewed and approved, there may still be errors.

Remember, you can only edit these templates within Canva. Luckily, you only need a free subscription, and you may just miss out on some of the visual assets being used. 

To get the most value, it may be best to create a more traditional planning document and transfer that information into Canva. 

Explore: Canva’s business plan gallery

6. ClickUp — The collaborative template

Out of all the project management tools that offer free business plan templates, ClickUp’s is the most approachable.

Rather than throwing you into all the features and expecting you to figure it out—ClickUp provides a thorough startup guide with resource links, images, and videos explaining how to write a plan using the tool. 

There’s also a completed sample plan (structured like an expanded one-page plan) for you to reference and see how the more traditional document can connect to the product management features. You can set goals, target dates, leave comments, and even assign tasks to someone else on your team. 

These features are limited to the ClickUp platform and will not be useful for everyone. They will likely get in the way of writing a plan you can easily share with lenders or investors. 

But this is a great option if you’re looking for a template that makes internal collaboration more fluid and keeps all your information in one place.

Sign Up: Get a free trial of ClickUp and explore their template library

7. Smartsheet — A wide variety of templates

I’m including Smartsheet’s library of templates on this list because of the sheer number of options they provide. 

They have a simple business plan template, a one-page plan, a fill-in-the-blank template, a plan outline, a plan grading rubric, and even an Excel-built project plan. All are perfectly usable and vary in visual style, depth of instructions, and the available format.

Honestly, the only drawback (which is also the core benefit) is that the amount of templates can be overwhelming. If you’re already uncertain which plan option is right for you, the lengthy list they provide may not provide much clarity.

At the same time, it can be a great resource if you want a one-stop shop to view multiple plan types.

Explore: Smartsheet’s business plan template library  

8. ReferralRock affiliate marketing business plan

I’m adding ReferralRock’s template to this list due to its specificity. 

It’s not your standard business plan template. The plan is tailored with specific sections and guidance around launching an affiliate marketing business. 

Most of the template is dedicated to defining how to choose affiliates, set commissions, create legal agreements, and track performance.

So, if you plan on starting an affiliate marketing business or program, this template will provide more specific guidance. Just know that you will likely need to reference additional resources when writing the non-industry sections of your plan.

Download: ReferralRock affiliate marketing business plan template

Does it matter what business plan template you use?

The short answer is no. As long as the structure is correct, it saves you time, and it helps you write your business plan , then any template will work. 

What it ultimately comes down to, is what sort of value you hope to get from the template. 

• Do you need more guidance? 
• A simple way to structure your plan? 
• An option that works with a specific tool?
• A way to make your plan more visually interesting?

Hopefully, this list has helped you hone in on an option that meets one (or several) of these needs. Still, it may be worth downloading a few of these templates to determine the right fit. 

And really, what matters most is that you spend time writing a business plan . It will help you avoid early mistakes, determine if you have a viable business, and fully consider what it will take to get up and running. 

If you need additional guidance, check out our library of planning resources . We cover everything from plan formats , to how to write a business plan, and even how to use it as a management tool . 

If you don’t want to waste time researching other templates, you can download our one-page or traditional business plan template and jump right into the planning process.

See why 1.2 million entrepreneurs have written their business plans with LivePlan

Kody Wirth is a content writer and SEO specialist for Palo Alto Software—the creator's of Bplans and LivePlan. He has 3+ years experience covering small business topics and runs a part-time content writing service in his spare time.

Table of Contents

• Qualities of a good template
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• Does the template matter?

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Succession Planning 101: Preparing for the Death or Disability of Key Personnel

Death and disability are topics most of us prefer to avoid. So, it’s no surprise that many business owners fail to prepare for the possibility of losing key personnel. Unfortunately, inadequate succession planning can jeopardize the survival of your business. The good news is there are steps you can take to protect your business if something happens to an owner or key employee.  

What Is Succession Planning?

Succession planning is the strategy and process of transitioning key leadership roles in an organization to an employee or vetted outsider. Ultimately, a succession plan helps ensure a business continues to run smoothly after losing key personnel.

In most cases, succession planning is one part of a business owner’s overall exit strategy. However, proper planning can also help you avoid an interruption in routine operations due to the untimely death or disability of an owner or key employee.

Succession Planning vs. Estate Planning: What’s the Difference?

Succession planning and estate planning are similar in that they both document a plan for what happens when you’re gone. However, they differ in that they address two separate concerns: business continuity vs. personal property in your estate.  

As a business owner, you likely use the income you earn from your company to support yourself and your family. If you become disabled or die, that income stops. However, you can purchase disability or life insurance to replace or offset that loss and protect your family’s lifestyle. These steps are part of a comprehensive estate plan.

On the other hand, the sustainability of your business may depend on your contributions or the contributions of others. If a key member of your company becomes disabled or dies, revenue, cash flow, or operations, in general, may be negatively affected. Succession planning helps ensure your business is protected in the absence of key personnel.  

The Benefits of Proper Planning

Indeed, careful succession planning is often critical for the ongoing success of a business. Yet according to a study of 200 privately held companies by Wilmington Trust, 58% of small business owners don’t have a succession plan. Unfortunately, this lack of preparation can have dire consequences—not only for your business but for anyone who depends on your business for their livelihood.   

On the other hand, having a formal succession plan in place has many potential benefits, including:

• Facilitates business continuity. The Covid-19 pandemic taught us that the unexpected can happen at any time. Losing an owner or key employee can be a major setback for a small business. However, a succession plan can help maintain day-to-day operations by creating backup procedures.
• Preserves business value. Without a formal plan in place, the sudden death or disability of an owner or key employee could result in forced liquidation of the business. If so, you or your heirs could potentially receive pennies on the dollar for what your business was previously worth.
• Identifies future leaders. Succession planning allows you to identify talented employees and put them on a path towards leadership.
• Promotes employee engagement. According to a recent Software Advice survey , 62% of employees surveyed said they would be “significantly more engaged” at work if their company had a succession plan. Meanwhile, nearly all employers (94%) reported that having a succession plan positively impacts their employees’ engagement levels.
• Saves time and financial resources . Having a plan in place can help you avoid the often time-consuming and expensive process of finding a replacement for key personnel.
• Establishes formal procedures. If you have multiple owners or key employees, succession planning can help you establish a formal process for replacing leaders within your organization.

How to Plan for the Loss of Key Personnel

You may want to enlist the help of a trusted advisor or attorney to develop and document your succession plan. However, you can begin the process by yourself or with your leadership team by answering a few key questions.

First, which of your company’s owners, employees, or contractors would you least want to lose for an extended period? Once you’ve identified key personnel, what steps can you take to replace them, either temporarily or permanently? And lastly, what would be the cost to the business? These three questions can help lay the foundation for an effective succession plan.

When you have a formal plan in place, it’s a good idea to communicate your strategy to key members within your organization, as well as clients and other stakeholders. This can help prevent departures or loss of business if the unexpected occurs.

Key Personnel Replacement Strategies

There are a variety of succession planning strategies that can help minimize the financial burden on your business if a key member becomes disabled or dies.

#1: Key Person Life Insurance

Key person insurance is a life insurance policy you can purchase for yourself, other owners, top executives, or other individuals you consider to be critical to the business. Each policy can be tailored to the individual’s value and estimated replacement cost.

Your business is the beneficiary of the policy, which provides a cash payout upon the death of the insured individual. You can use these funds as you see fit—for example, to cover associated losses or recruit a qualified replacement.

#2: Key Person Disability Insurance

Similarly, key-person disability insurance can help offset the financial liability of a key contributor becoming disabled. The policy may pay a steady income stream or lump-sum payment if the insured person is unable to work due to disability. This can be beneficial if you need to hire a temporary replacement or outsource responsibilities until the individual returns to work.

#3: Business Overhead Expense Insurance

If your business suffers a temporary financial loss due to the death or disability of key personnel, you still need to pay your expenses in the meantime. Business overhead expense (BOE) insurance can help cover basic expenses for up to two years after a disabling event. However, it’s important to note that BOE insurance only covers fixed business expenses. And unlike key-person disability insurance, it can’t be used to cover the disabled person’s salary.

#4: Buy-Sell Agreements

A buy-sell agreement is a legally binding contract that can help ensure business continuity when ownership needs to change hands for any reason. When executed, it requires one party to sell their ownership interest and another party to buy it.

Notably, a buy-sell agreement must be funded in accordance with the current value of your business. You can use life or disability buy-out insurance to fund the agreement. Alternatively, you can fund it with cash flow from the business or not fund it at all. However, leaving a buy-sell agreement unfunded can present additional financial risks if a transaction is triggered.  

When It Comes to Succession Planning, Don’t Wait Until It’s Too Late

It’s not unusual for business owners to focus on day-to-day responsibilities and neglect succession planning. Unfortunately, failing to prepare for the unexpected can have a devastating impact on your business and the people who depend on it. In other words, if you wait until you need a plan, it’s already too late.

Oak Capital Advisors specializes in the financial planning needs of small business owners. We can help you develop a succession plan that supports your exit strategy and protects you, your family, and your business if the unexpected occurs. Please schedule an introductory conversation and request your complimentary retirement readiness assessment to get started.

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How to Create a Financial Plan for Your Business

Home » Blog » How to Create a Financial Plan for Your Business

A wise old Certified Public Accountant gave me some priceless advice when I began my entrepreneurial journey.

“If the math doesn’t work, neither will your business.” 

Upon seeing my blank expression, he explained it a little further.

“A successful business earns more than it spends, and you ensure that happens (within reason) by creating a financial plan that controls every dollar you make.”

How so? I asked.

“Because your financial plan empowers you to control your cash flow, prepare for uncertainties, and take advantage of future opportunities.”

That’s when I knew I needed one.

If so, my step-by-step guide explains how to create a business financial plan that reflects your goals and controls every dollar you make.

What is a financial plan?

At its most basic level, a business financial plan is a document that shows you what money flows in and out of your business, how you earn it, and where you spend it. 

Similar to businesses, no 2 financial plans are the same.

However, a solid financial plan contains several components, including an income statement, cash flow statement, personnel plan, balance sheet, financial projections, and break-even analysis. 

Together, these enable you to control your budget, highlight potential future risks, set goals, calculate your funding requirements, and implement strategies to achieve them. 

While there’s no such thing as a sure thing in life, your financial plan brings your future into your present so that you can control it now.

Why is a financial plan important for a small business?

As you know (or will when you start your business ), entrepreneurs work long hours and make many decisions to ensure their business is on track. A business financial plan helps remove uncertainty from those decisions, replacing it with figures you can rely on and preparing you to take full advantage of investment opportunities when they arise. 

Here’s what Warren Buffet says about opportunities:

“Opportunities come infrequently. When it rains gold, put out the bucket, not the thimble.”

Your financial plan ensures you’ve got a bucket!

We also use a financial plan to control our cash flow, forecast our future financial business performance (including our income, expenses, and profitability), and stay within budget. 

Together, these help us maximize our assets, confidently navigate any problems during our entrepreneurial journey, and convince investors to believe in our vision. 

What is the difference between a business financial plan and a personal financial plan?

While most financial plans include the same information, some essential differences exist between business and personal plans because your goals likely differ from those of your SMB.

For example, an individual’s financial plan might include retirement, investment strategies, a minimum annual income to reduce tax liabilities, and securing an estate for their children.

In contrast, a business’s financial plan might focus on hiring additional staff, increasing inventory, bringing new products online, expanding into other markets, and even a new brick-and-mortar location. 

As you can see, the goals differ from one to the other, as might yours. That’s why a financial plan is as unique as the business it serves; however, some elements are vital for every financial business plan! 

The key components of a business financial plan

We now know that a thorough financial plan is imperative to the success and stability of your small business. 

Here are the components that can help make that happen:

• Income Statement: Contains information on your revenue, profits, and losses.
• Cash flow statement: Documents how money flows in and out of your business. 
• Balance sheet: Shows your business assets and expenses at a specific time.
• Financial projections: This helps predict your future income and expenses.
• Personnel plan: Identifies if and when you should hire employees.
• Break-Even Analysis: Confirms when you’ll make a profit.

Okay, now let’s look at how you use them to create yours:

How to Create a Business Financial Plan

To create your business financial plan, you must first collect financial information relevant to the 6 critical components you’ll use for its structure. 

Budding entrepreneurs who have yet to start their businesses might be wondering, `How do I collect information I haven’t got?` 

Good point!

Here’s where your business plan comes into play because it contains a financial section that includes your startup and running costs , financial projections, and break-even analysis. 

And those are 3 of the critical components in your business financial plan!

1. Income statement

An income statement (also known as a pro forma income or profit-and-loss statement) contains information on revenue, profits, losses, and fixed and variable operating expenses over a specific period, such as monthly, quarterly, or yearly.

It includes 2 columns containing your income and expenses and, at the bottom, your net profit or loss total.

Here’s an example of how it should look:

• Cost of goods sold (COGS) and operating expenses: These are the direct costs of producing your goods or services and the costs for running your business, such as rent, utilities, wages, insurance, licenses, etc.
• Revenue streams: Usually direct sales or ongoing subscriptions/
• Total net profit or loss: Subtract your costs (and taxes) from your total gross profit.
• Net income: Your total income after you subtract your expenses and taxes.

Next comes your cash flow statement, which might initially look like your income statement, but there are distinct differences.

Your income statement calculates your business’s revenues, expenses, and profits and reflects its financial performance. Your cash flow statement shows where you earn and spend your money, which is essential for staying within budget and paying your bills. 

2. Cash flow statement

Most small businesses need regular cash injections to survive.

But did you know that a lack of cash is the number one reason 82% of small US businesses fail? Source: USChamber.com .

So, it’s crucial to control it using a cash flow statement. 

A cash flow statement for established businesses could include bank statements showing credits (profits) and debits (expenditures). Startups with little cash flow information could include their startup and running costs and any funding sources. 

You can create a cash flow statement using two columns, one for your income and the other for your expenditures. 

And add the name, date, and invoice/receipt number to each transaction to make it easy to follow and correlate with your invoices and receipts. Trust me, your bookkeeper will love you for it!

3. Balance sheet

Your balance sheet is a financial snapshot of your business at a specific moment that lets you view your liabilities, assets, equity, and any up-and-coming extra expenses.

You use a balance sheet to subtract your debts (liabilities) from what you own (assets) to show you your net worth, also known as equity.

Let’s break those down so you know what they involve:

Liabilities: 

Your liabilities are business debts, such as outstanding inventory fees, utility bills, employee wages or compensation, and unpaid taxes.

These fall into 2 categories: current and fixed. 

• Your current assets can include your business bank balance, available cash, and outstanding invoices, known as accounts receivable.
• Your fixed assets include tangible things like your business property, equipment, vehicles, or land.

Note: Some businesses also have intangible assets, such as patents and copyrights.

Your business equity is the value of your assets minus your liabilities, which could also include any stock and share options.

4. Financial projections

A financial projection (also called an income projection) forecasts how much money you think might flow in and out of your business over a set period based on past performances or for startups on their business plan’s market research .

Financial projections can help you in several ways, including:

• Many small businesses need financial projections to identify and prepare for slow sales because of low seasonal demand or a shift in consumer buying trends.
• Your financial projections help you understand the cash you need to reach your business goals by estimating their costs.
• Most new businesses need solid (believable) financial projections to get funding, as they help show you can repay your debts.
• And to help entrepreneurs running a side hustle know when they can take it full-time .

To create your income projection, estimate your future sales income minus your fixed and variable expenses.

5. Personnel plan

Most businesses need the right people to meet their goals and maintain a healthy cash flow.

You use a personnel plan to determine whether to hire employees and if they should be full-time, part-time, freelancers, or contractors on a need-only basis. 

Your personnel plan also calculates employee costs like wages, benefits, worker’s compensation insurance, and payroll taxes to ensure you only hire when you can afford to.

6. Break-even analysis

Your break-even analysis projects when you’ll recoup your investment and earn more than your spending to run your business.

You calculate your break-even date by dividing your variable and fixed costs by your gross profit margin to get a financial figure your business must make to break even.

Need help to determine what your fixed and variable costs are?

No worries:

• Your fixed costs include expenses that remain the same regardless of how many products or services you sell. These include your rent, insurance policies, license and permit expenses , accounting fees, and wages.
• Your variable costs fluctuate relative to your sales or production volume.

The takeaway:

Your break-even analysis tells you the number of products or services you must sell to cover your business and production costs. 

Tips on creating an effective financial plan for your business

Preparation is the key to creating a business financial plan, and you prepare by setting goals, assessing present and future credit needs, estimating every business expense, planning for contingencies, and seeking professional financial advice if required. 

And once your plan is in place, regular monitoring helps ensure your business is on its financial target.

Let’s look at how you do it:

Set your financial goals

Your goals are relative to your business. Some examples include forming an LLC , hiring employees, expanding your product range or services, entering a new marketplace, opening a new branch, or trading abroad.

You must define them (regardless of what they are) because your financial plan aims to help you achieve them.

Consider this proverb when choosing your financial business goals:

“The art is not in making money, but making your money work for you.”

And that’s pretty much the secret to how people get rich!

That’s why now is the time to define your goals and create a strategically driven financial business plan that guides every business decision and ensures you maximize your investments.

Speaking of which!

Know your credit needs 

Your business credit needs are any loans you require when starting, running, or expanding your business.

As most small business owners know, the golden rule in running a small business is to minimize your expenditures because the less money you borrow, the higher your profits and the more accurate your business financial plan will be.

But sometimes, we must borrow to exploit market opportunities , buy equipment, or expand, and knowing your credit needs (and score) can help you get the best deals.

Include those little expenses

No income or expense is too small to consider when running a business that relies on a consistent cash flow.

Benjamin Franklin put it this way:

“Beware of little expenses. A small leak will sink a great ship.” 

The problem many new business owners experience is that it’s easy to account for significant expenses (especially fixed costs), but it’s the small, variable everyday ones that can catch us out and scupper our budget. 

To avoid a sinking feeling, evaluate your monthly fixed and variable expenditures and avoid unnecessary, unbudgeted expenses at all costs.

Monitor your goals

Creating your financial plan is your first step, implementing it the second, and monitoring it the third because that’s how you ensure your strategies are achieving your financial goals. 

To monitor your goals, use those key elements of your business financial plan, including your income and cash flow statement, balance sheet, and financial projections, as they provide an up-to-date assessment.

Regular monitoring also helps you identify potential problems and implement any changes before they harm your business’s financial health. 

Plan for contingencies

Planning for problems relative to your niche, like seasonal fluctuations and new competitors, is standard best business practice. But as recent history has taught us, we must also prepare for the unforeseeable!

You can spot worst-case scenarios (like a falling income) by evaluating your business financial plan’s balance sheet and cash flow statement.

Some ways to plan for contingencies are to have a credit line available and cash reserves that can help keep you afloat should the going get rough. 

Consider hiring help 

Many of the most successful business leaders have a shared secret to their success!

They surround themselves with people who know more than they do about every aspect of their business. 

Steve Jobs explains it perfectly:

“It doesn’t make sense to hire smart people and tell them what to do; we hire smart people so they can tell us what to do.”

Fortunately, financial experts are available to help you create your business financial plan.

Consider hiring a financial advisor to inform you of prudent financial decisions and investments, and your bank manager can help assess your creditworthiness while considering any past problems that could affect present loan applications.

Financial planning FAQs

What is a business financial plan.

An effective business financial plan contains your business goals and outlines your strategies.

It’s a GPS that guides your SMB’s financial activities by ensuring you make informed decisions on how and where to invest your resources. 

How do you write a business financial plan?

Your financial plan begins with a strategic plan that contains your business goals and what you’ll need to achieve them.

Next, you must create your financial projections, plan for contingencies, and monitor to assess your actual results against your projections to adjust if required. 

What are the 6 components of a financial plan?

Financial plans are as unique as the business they serve. However, 6 components you must include are:

• Cash flow statement: Documents how money flows in and out of your business.
• Personnel plan: Identifies whether you should hire employees.
• Break-Even Analysis: Confirms when you'll make a profit.

What is the best financial statement for a small business?

Your income statement best assesses your business’s financial performance, containing your profits, losses, and equity.

Your balance sheet and cash flow statement are also crucial for running a profitable business. 

Entrepreneurs need many skills, and one of the most important is financial intelligence because it ensures we keep our fingers on our businesses’ financial pulse.

Learning how to create a business financial plan is a great way to gain that skill.

And when you control your income and expenditures, you take control of your business’s financial destiny. Sweet.

One last thing to remember when creating a business financial plan.

The numbers never lie!

This portion of our website is for informational purposes only. Tailor Brands is not a law firm, and none of the information on this website constitutes or is intended to convey legal advice. All statements, opinions, recommendations, and conclusions are solely the expression of the author and provided on an as-is basis. Accordingly, Tailor Brands is not responsible for the information and/or its accuracy or completeness.

Terry OToole

Terry is a serial entrepreneur with over 25 years of experience building businesses across multiple industries – construction, real estate, e-commerce, hotelier, and now digital media. When not working, Terry likes to kick back and relax with family, explore Taoism’s mysteries, or savor the taste of fine Italian red wine.

Morning Rundown: House Speaker outlines Israel aid plan in wake of Iran attack, 'freak show' described outside Trump trial, man kills Uber driver after both targeted in scam

Myanmar troops retreat as rebels declare control over key border town

About 200 Myanmar military personnel withdrew to a bridge to Thailand on Thursday after a days-long assault by the anti-junta resistance, which declared it had won control of the critical border town of Myawaddy, the latest in a string of rebel wins.

Myanmar’s military-run government is battling insurgencies on several fronts and has suffered a series of defeats in frontier areas since last October, when rebel groups launched a coordinated offensive near the Chinese border.

The impoverished Southeast Asian nation has been in turmoil after the military deposed an elected civilian government in a 2021 coup, setting off a nationwide armed resistance that is now operating alongside some long-established ethnic rebel groups such as the Karen National Union (KNU).

“Today KNU-led joint resistance forces captured the remaining military base in Myawaddy,” Kyaw Zaw, a spokesperson for Myanmar’s National Unity Government, told Reuters.

The body is a shadow administration of ousted lawmakers and anti-junta groups.

“This is a crucial victory for our revolution since Myawaddy is an important border town for the junta, one of the main (sources of) income from border trade,” he added.

A spokesperson for the Myanmar junta did not respond to telephone calls seeking comment.

The retreat of junta troops in Myawaddy, adjacent to the Thai town of Mae Sot, signals the potential loss of another key border trading outpost with direct highway access to parts of central Myanmar.

On Thursday, about 200 fleeing Myanmar soldiers gathered at a border crossing into Thailand, said Saw Taw Nee, spokesperson for the KNU.

News outlet Khit Thit said Thai authorities were in talks with the soldiers to decide whether to grant them refuge.

The assault on Myawaddy began last week after the KNU said it had attacked a junta camp near the town, forcing some 500 security personnel to surrender, along with their families.

The military has already lost control of areas along Myanmar’s borders with Bangladesh, China and India, while suffering a significant loss of manpower that has pushed it to  introduce a draft  for the first time.

“Next the resistance forces might go after major towns across Myanmar,” said political analyst Than Soe Naing, adding that Myanmar’s resistance forces control almost all border trading posts after the latest takeover in Myawaddy.

Border crossings in the area were open for civilians who were arriving in Thailand from Myanmar in large numbers, said police official Borwornphop Soontornlekha, the immigration superintendent in Tak, the province where Mae Sot is located.

“Usually there are about 2,000 people who cross into Mae Sot from Myawaddy each day but the last three days the number was almost 4,000 a day,” Borwornphop told Reuters.

Families with children were among those in long lines at one border crossing near Mae Sot on Thursday, as Thai soldiers checked the bags and belongings of those going across.

Thailand’s military has stepped up security on its side of the border, using army vehicles equipped with roof-mounted machine guns.

Thai Prime Minister Srettha Thavisin , who earlier told Reuters the Myanmar junta was “losing strength” and pushed to open talks with the regime, said Thursday that the recent fighting should not spill into his country’s airspace.

Thailand remains neutral in the Myanmar conflict and is able to accept up to 100,000 people displaced by the turmoil, its foreign minister has said.

At least 2,000 people have been displaced within Myanmar by the latest round of fighting between the rebels and the military, according to civil society group Karen Peace Support Network.

Key lawmakers float new rules for personal data protection; bill would make privacy a consumer right

Two lawmakers from opposing parties are floating a new plan to protect the privacy of Americans' personal data

WASHINGTON -- Two influential lawmakers from opposing parties have crafted a deal on legislation designed to strengthen privacy protections for Americans' personal data.

The sweeping proposal announced Sunday evening would define privacy as a consumer right and create new rules for companies that collect and use personal information. It comes from the offices of Democratic Sen. Maria Cantwell and Republican Rep. Cathy McMorris Rodgers, both of Washington state.

Cantwell chairs the Senate Commerce Committee while McMorris Rodgers leads the House Energy and Commerce Committee. While the proposal has not been formally introduced and remains in draft form, the bipartisan support suggests the bill could get serious consideration.

Congress has long discussed ways to protect the personal data regularly submitted by Americans to a wide range of businesses and services. But partisan disputes over the details have doomed previous proposals.

According to a one-page outline released Sunday, the bill worked out by McMorris Rodgers and Cantwell would strengthen rules requiring consumer consent before a company can collect or transfer certain kinds of information. Companies would have to notify consumers about the details of data collection and retention policies and seek consumer permission for significant changes.

In addition, companies would have to ensure that any algorithms used to analyze personal data aren't biased, and companies that buy and sell personal data would have to register with the Federal Trade Commission.

Consumers would also have greater control over how their data is used under the measure. One provision of the proposal would allow consumers to opt out of targeted ads — i.e., advertisements sent to them based on their personal data.

A new bureau focused on data privacy would be created within the FTC, which would have the authority to enact new rules as technology changes. Enforcement of the law would fall to the FTC as well as state attorneys general.

If passed, the new standard would preempt most state privacy laws — though it wouldn't impact certain states' laws already on the books that protect financial, health or employee data.

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