You have a great idea for a new product or service, or perhaps you’ve been running a business out of your home. You are ready to take the next step by seeking investors or expanding or incorporating. Before you can begin, you need a business plan.

A business plan is a road map. It is not an ironclad contract. A good business plan will give you a flexible framework for success as you move ahead, and will also provide documentation for third parties including lenders and investors. A business plan shows where you want to be in one year, two years, five years. It is a place where you can preview challenges and forecast growth.

What are the main elements of a business plan? There are two: the narrative, which is the story of your business, and the financials, which are the numbers. Both are equally important.

Let’s walk through a typical business plan. It is divided into sections or chapters, like a book.

1. Executive Summary. Here is where you quickly sketch why your business is necessary and what its activities will be. Briefly describe your service or product, the expected market, and the ownership and management of the business.

2. Objectives. In this section you describe more specifically your goals for your business and how you plan to reach them. Outline the structure of your business, set benchmarks and deadlines, and provide sales goals.

3. Mission Statement. This is the underlying rationale for the business and how it benefits your community. It can be one sentence or a paragraph.

4. Action Plan for Success. Here you expand upon the strategies you intend to use to reach your goals. This section includes specific elements. If you intend to manufacture a product, for example, you would outline the manufacturing process, the location, expected suppliers, and the mechanism for distribution and sales.

5. Time Line. This is typically a reference table showing dates and milestones to be reached. Your business plan will include much of the same information in both narrative and table form.

6. Company Summary and Ownership. The plan provides specific information on the company’s ownership and capitalization-where your money is coming from.

7. Company Location. The physical location of your offices and other facilities.

8. Products Summary. This is a more detailed description of your products or services. Include support services such as warranties and customer service.

9. Costs and Method of Production. Provide a more detailed description of how you plan to create your product or service and what the costs are.

10. Market Analysis. Chances are you are entering a market that is already established. You need to demonstrate knowledge of your competition and where your company will be positioned. Are you a budget or luxury provider? Is your product hi-tech or artisan?

11. Market Segment. What demographic are you targeting? What market share do you hope to capture?

12. Marketing and Promotion. Describe how you plan to reach your target market. Provide goals and a time line for reaching those goals.

13. Revenue Strategy. Detail how your company plans to generate income. This may not be as simple as it sounds, especially for an Internet company. Provide annual income goals.

14. Sales Strategy. Describe the process of entering the market and making sales. This is similar to the revenue strategy but with a focus on the customer transaction.

15. Management Summary. Provide names and qualifications of all key personnel. This information will be of great interest to investors.

16. Management and Staff Plan. Describe how your company will grow during the next five years and your staffing expectations. Include costs.

17. Financial Plans. This section includes a set of detailed tables or spreadsheets encompassing the next three to five years. They include annual budgets, a profit and loss projection, and projected cash flows. Any significant financial element must be included. These tables are the bottom-line standards to which the company’s performance will be judged in the years to come. They should be adjusted on a regular basis in order to remain relevant.

A well-written business plan can provide you with a road map to the future and serve as a powerful sales tool when partnering with investors.

Thomas Hauck Communications Services provides writing and editing solutions for businesses and nonprofits. Visit us at http://www.thomashauck.net/ for information on how THCS can impact your bottom line.