business plan

Key management tool that focuses on business objectives, the products or services involved, estimated market potential, expertise in the firm, projected financial results, the money required from investors, and the likely investment return.

Business plans usually contain the following components: executive summary of the plan, including a concise summary – known as the elevator pitch; the space – a description of the market the business is in; marketing – an outline of marketing strategy and projected costs; management team – details of the team, its areas of expertise and relevant experience; projected financial results – including the breakeven point and burn rate; and exit strategy – an appraisal of how the investors will recoup their investment. Although a business plan is necessary for management to focus on a firm's future growth and plan for change, it is also vital when there is a need to raise capital. Potential investors will want to see a business plan before making any assessment of the firm's viability.