A business plan is the road map to your business. It outlines the plans for growth and the foundation on which the business is placed. This living document, which will grow and adapt along with the company, generally projects 3-5 years ahead. This is an important step in the establishment of your company.

Additionally, if you need to seek out investors or get a loan from the bank, having a strong business plan in place will help the individual to achieve this.

Here are the major components of a business plan:

Executive Summary: This section of the business plan summarizes the overall plan. This should be written after completing the other sections. It should include the executive’s background, goals and expectations. This is often considered the most important section in a business plan. This section should highlight the strengths of the plan and it should appear as the first section in the plan.

Marketing Analysis: Include market research about your industry and information about your targeted customer, including their size, distinguishing characteristics, demographics, locations, etc. This section should also include an outline of the competition and an analysis of their abilities.

Company Description: Explain the nature of the business and the marketplace in which it operates. Explain how the product and services provided by the company fulfill the needs of the customer. Explain the competitive advantages the company will have over the competition.

Products and Services: Like it sounds, this section contains in-depth descriptions of the individual products and services. Include factors that make your products unique or effective.

Operations/Personnel: This section will cover the information on the day-to-day business of the company. It should include a description of the production of the product. It should establish the location of the company. It should also give a detailed description of the staff involved.

Financial Plan: This is the section that will include the money put into the company and the projected future of the revenue. It should include personal financial statements, a detailed outline of startup expenses, profit projections for the first year and the next three or four years, cash-flow projections, and a break-even analysis.

Special Considerations: If presenting your plan for a bank loan, include the amount of the loan and details on how the funds will be used. If your audience is a group of investors, you should also add what you estimate as a return on their investment and explain their portion of ownership.

Business plans should have images and charts to help demonstrate certain necessary areas of the business plan. These are some of the most important areas that should have a table that explains them: Cash Flow, Sales Forecast, Profit and Loss statements, projected Balance Sheet, projected Business Ratios and Market Analysis tables.

Writing an effective business plan isn’t always easy, but it is something you should revisit and alter as the vision of your business changes. Don’t let the business plan become a restriction to growing a successful company.