list 8 components of a business plan

The Essential Elements: 8 Key Components of a Comprehensive Business Plan

• September 27, 2023
• Mariah Parks

Embarking on a journey as an entrepreneur requires more than just a great idea; it demands meticulous planning and strategic thinking. A well-thought-out business plan acts as the cornerstone upon which your entrepreneurial dreams are built. It’s the document that not only paints a vivid picture of your vision but also demonstrates your commitment to making it a reality.

Think of your business plan as the compass that will steer you through the uncharted waters of the business world. It’s not just a mere formality but a vital tool that will guide you through the complexities of starting and scaling a business. Whether you’re seeking investors, applying for a loan, or simply charting your path forward, a comprehensive business plan is your secret weapon.

In this blog post, we’ll dissect the eight essential components that make up a robust business plan. Each element plays a critical role in shaping your business’s trajectory, from clarifying your mission and defining your target market to fine-tuning your financial projections and outlining your marketing strategies. Together, these components will empower you to navigate the challenges, seize the opportunities, and ultimately transform your entrepreneurial vision into a thriving and sustainable reality. So, let’s dive into the world of business planning and set you on the path to success.

Executive Summary: Painting the Big Picture

The executive summary, although appearing at the outset of your business plan, is often the final piece you’ll create. This strategic snapshot distills your entire plan into its essential elements, making it a crucial first impression. Within its concise framework, the executive summary conveys your business’s fundamental mission, outlines the enticing market opportunities it seeks to seize, and underscores the competitive edge that sets you apart. It provides a glimpse into your financial outlook and reveals your blueprint for growth. When crafted effectively, this executive prelude can pique the curiosity of potential investors or partners, compelling them to delve deeper into the comprehensive details that follow. It serves as your business plan’s enticing opening chapter, beckoning readers to explore the full narrative of your entrepreneurial journey.

Business Description: Defining Your Identity

Here, you’ll elaborate on your business idea, its mission, and vision. Explain your product or service, detailing its unique features and benefits. But that’s not all; the stage is set for you to unveil your understanding of the market. Share insights into your target audience, their demographics, preferences, and pain points. Explain how your positioning strategy will set you apart from competitors and emphasize the value you offer to your customers in a way that others cannot.

Additionally, clarify the essential structural elements of your business. Detail your company’s legal structure, whether it’s a sole proprietorship, partnership, corporation, or LLC. Mention the location of your operations and provide any relevant historical context that sheds light on the genesis of your business idea and its evolution over time. This section serves as the foundation upon which your business plan is built, ensuring that readers have a solid understanding of your business’s roots, purpose, and the value it brings to the market.

Market Analysis: Knowing Your Landscape

Conducting a thorough market analysis also involves delving into the regulatory landscape that may impact your business. Evaluate any legal and compliance requirements specific to your industry, as these can greatly influence your business operations. Additionally, examining emerging technologies and innovations within your field is crucial to stay ahead of the competition and adapt to changing market dynamics.

Furthermore, analyzing consumer sentiment through surveys, focus groups, or social media monitoring can provide valuable insights into customer perceptions and brand reputation. It’s also essential to keep an eye on macroeconomic factors, such as inflation rates and interest rates, as these can affect consumer spending habits and overall market conditions.

Incorporating data on regional variations and global market trends can help tailor your marketing strategies for specific geographic areas and potentially expand your reach internationally. A comprehensive market analysis not only demonstrates your commitment to understanding the market but also forms the foundation for making informed business decisions and ultimately achieving sustainable growth.

Organization and Management: Building the Dream Team

In addition to showcasing the qualifications of your management team, it’s important to highlight the cohesion and synergy within the group. Emphasize how their collaborative efforts will drive the company forward and align with the overall business strategy. Provide examples of successful projects or ventures that demonstrate the team’s ability to work together effectively.

To further bolster investor confidence, outline the key decision-making processes within your organization. Explain how the management team will handle major strategic decisions, resolve conflicts, and adapt to changing market conditions. Demonstrating a structured approach to decision-making can instill trust in potential investors and partners. Consider elaborating on your company’s culture and values within this section. Describe the core principles that guide your team’s actions and interactions. A positive and well-defined company culture can be a powerful asset in attracting and retaining top talent, as well as fostering a productive work environment.

Lastly, provide insights into your long-term talent acquisition and development strategy. Detail how you plan to nurture the skills and talents of your existing team members and how you intend to recruit new talent as the company grows. This forward-looking approach can illustrate your commitment to building a strong, adaptable team capable of meeting future challenges and opportunities.

Product or Service Line: Showcasing Your Value Proposition

Delve into the specifics of what you’re offering. Describe the features of your product or service and how it addresses the needs and pain points of your target audience. Highlight your unique selling points and any intellectual property or patents associated with your offering. This section should make it clear why customers would choose your solution over others. You should provide a comprehensive breakdown of your pricing strategy, including any tiered pricing options or subscription models. Explain how your pricing aligns with the value your product or service delivers and how it compares to competitors in the market. Offering transparent and competitive pricing can be a key factor in attracting potential customers.

To strengthen your position, include customer testimonials, case studies, or user feedback that showcase the real-world benefits and positive experiences others have had with your offering. This social proof can substantiate your claims and build trust with prospective customers. Consider discussing your product roadmap or service expansion plans. Share insights into how you intend to innovate and improve your offering over time, demonstrating your commitment to long-term customer satisfaction and product evolution.

Lastly, touch upon your customer support and service capabilities. Describe the resources and channels available to assist customers, such as a dedicated support team, online resources, or community forums. A robust customer support infrastructure can enhance the overall customer experience and set you apart from competitors.

Sales and Marketing Strategy: Spreading the Word

This is where you outline how you plan to attract and retain customers. Describe your pricing strategy, sales channels, and distribution methods. Detail your promotional efforts, such as advertising, social media, content marketing, and partnerships. Include a timeline for launching your product or service and building brand awareness. In addition to your pricing strategy, elaborate on your sales tactics and how you intend to convert leads into paying customers. Discuss your sales team structure, if applicable, and their roles in the sales process. Explain any lead generation strategies, sales scripts, or customer relationship management (CRM) systems you plan to implement to optimize your sales efforts.

Provide a breakdown of your customer acquisition cost (CAC) and customer lifetime value (CLV) calculations, showing how your sales and marketing strategies align with sustainable growth and profitability. This financial analysis can assure investors and stakeholders that you have a clear grasp of your business’s financial viability. Consider discussing your post-sale customer engagement plan, which can include onboarding processes, customer retention strategies, and upselling or cross-selling opportunities. Building a loyal customer base is often more cost-effective than acquiring new customers, so outlining your retention efforts is crucial.

Detail your digital marketing strategy, highlighting the specific platforms and channels you plan to leverage, as well as your content creation and distribution plan. Explain how you will measure the effectiveness of your marketing campaigns through key performance indicators (KPIs) like click-through rates, conversion rates, and return on investment (ROI).

Lastly, emphasize any strategic partnerships or collaborations that will bolster your marketing efforts or expand your reach. Whether through affiliate marketing, influencer partnerships, or co-marketing initiatives, these alliances can play a significant role in amplifying your brand’s visibility and credibility in the market.

Financial Projections: Crunching the Numbers

Numbers speak volumes in the world of business, and investors want to see a solid financial plan. Provide realistic projections for revenue, expenses, and profits over the next three to five years. Include a detailed breakdown of costs, such as production, marketing, and overhead. Address how much funding you need and how you plan to use it. Make sure your financial projections are backed by thorough market research and grounded assumptions.

In addition to revenue and expense projections, offer a clear outline of your financial assumptions and variables. Explain the factors that underpin your financial model, such as growth rates, market penetration, customer acquisition costs, and churn rates. Highlight any external factors that could impact your financial projections, like changes in market conditions, regulatory shifts, or competitive dynamics. To further bolster the credibility of your financial plan, include sensitivity analyses or “what-if” scenarios that demonstrate how variations in key variables could affect your financial outcomes. This not only shows investors that you’ve considered potential risks but also showcases your ability to adapt and make informed decisions in dynamic business environments.

Consider presenting a detailed cash flow forecast alongside your income statement and balance sheet. Cash flow is critical for day-to-day operations and can significantly impact a company’s ability to grow and weather financial challenges. Highlight your plans for managing cash flow, such as working capital strategies, credit terms with suppliers, and contingency plans for unexpected expenses. Address your funding needs with transparency. Explain not only how much capital you require but also the timing of these capital injections and how they align with your business milestones. If you’re seeking investment, provide a breakdown of how the funds will be allocated across different aspects of your business, such as product development, marketing, and scaling operations.

Lastly, demonstrate your commitment to financial discipline and risk management. Discuss your plans for establishing financial controls, key performance indicators (KPIs) to monitor financial health, and any measures in place to mitigate potential financial setbacks. A robust financial plan should not only showcase your growth potential but also your ability to navigate the financial complexities of your business.

Funding Request: Seeking Investment

If you’re seeking external funding, clearly state how much capital you need and what you’ll use it for. Whether you’re approaching banks, angel investors, venture capitalists, or crowdfunding platforms, this section should outline the terms of your funding request. Specify whether you’re seeking debt financing, equity financing, or a combination of both. Be transparent about the potential risks and returns for investors.

In addition to the specifics of your funding request, provide a compelling narrative that explains why your business is an attractive investment opportunity. Highlight the market demand for your product or service and the growth potential it offers. Emphasize how your management team’s expertise and track record position your company for success.

If you’re seeking equity financing, detail the ownership structure of your business and the percentage of equity you’re willing to offer in exchange for the investment. Discuss any potential exit strategies for investors, whether it’s through an initial public offering (IPO), acquisition, or other means. Demonstrating a clear path to a profitable exit can instill confidence in equity investors. For debt financing, lay out the terms and conditions of the loan or credit facility you’re seeking. Explain the interest rates, repayment schedule, and any collateral or guarantees you can provide. It’s crucial to assure lenders of your ability to meet your financial obligations and manage debt effectively.

Consider addressing the potential risks and challenges your investors might encounter. Be honest about market risks, competitive threats, and any regulatory hurdles your business may face. Providing a risk assessment shows that you’ve thoroughly evaluated the landscape and are prepared to mitigate potential setbacks.

Lastly, emphasize the potential returns on investment (ROI) that your investors can expect. Use realistic financial projections to showcase the growth trajectory of your business and how it can translate into value for investors. This can include projected revenue growth, profitability milestones, and potential exit valuations. Investors want to know not only how their capital will be used but also the potential rewards for taking the risk of investing in your venture.

Conclusion:

Crafting a business plan is a foundational step toward building a successful enterprise. It’s a dynamic document that evolves with your business and guides decision-making along the way. By including these eight essential components—executive summary, business description, market analysis, organization and management, product or service line, sales and marketing strategy, financial projections, and funding request—you’ll be well-prepared to communicate your business idea effectively, secure funding, and steer your company toward growth and prosperity. Remember, a well-thought-out business plan is not just a tool for external stakeholders; it’s a roadmap that can lead your business toward its full potential.

For more information or to find a reputable business coach in your area visit HOA.com now!

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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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Martin luenendonk.

Martin loves entrepreneurship and has helped dozens of entrepreneurs by validating the business idea, finding scalable customer acquisition channels, and building a data-driven organization. During his time working in investment banking, tech startups, and industry-leading companies he gained extensive knowledge in using different software tools to optimize business processes.

This insights and his love for researching SaaS products enables him to provide in-depth, fact-based software reviews to enable software buyers make better decisions.

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10 Essential Components of a Business Plan and How to Write Them

Business Plan Template

Ayush Jalan

• January 4, 2024

12 Min Read

A business plan is an essential document for any business, whether it’s a startup or an established enterprise. It’s the first thing any interested investor will ask for if they like your business idea and want to partner with you. 

That’s why it’s important to pay attention when writing your business plan and the components inside it. An incomplete business plan can give the impression that you’re unqualified—discouraging investors and lenders. 

A good business plan reduces ambiguity and communicates all essential details such as your financials, market analysis, competitive analysis, and a timeline for implementation of the plan. In this article, we’ll discuss the 10 important business plan components. 

10 Important Business Plan Components

A comprehensive and well-thought-out business plan acts as a roadmap that guides you in making sound decisions and taking the right actions at the right times. Here are its key components and what to include in them.

1. Executive summary

The executive summary is one of the most important parts of a business plan. It’s the first thing potential investors will read and should therefore provide a clear overview of your business and its goals.

In other words, it helps the reader get a better idea of what to expect from your company. So, when writing an executive summary of your business, don’t forget to mention your mission and vision statement.

Mission statement

A mission statement is a brief statement that outlines your objectives and what you want to achieve. It acts as a guiding principle that informs decisions and provides a clear direction for the organization to follow.

For instance, Google’s mission is to “organize the world’s information and make it universally accessible and useful.” It’s short, inspiring, and immediately communicates what the company does.

A mission statement should be realistic, and hint towards a goal that is achievable in a reasonable amount of time with the resources you currently have or are going to acquire in the near future.

Vision statement

While a mission statement is more actionable and has an immediate effect on the daily activities of the company, a vision statement is more aspirational and has a much broader scope.

In other words, it highlights where the company aims to go in the future and the positive change it hopes to make in the world within its lifetime.

2. Company description

The second component of your business plan is the company description. Here, you provide a brief overview of your company, its products or services, and its history. You can also add any notable achievements if they are significant enough for an investor to know.

A company overview offers a quick bird’s-eye view of things such as your business model , operational capabilities, financials, business philosophy, size of the team, code of conduct, and short-term and long-term objectives.

Products and services

The products and services part of your company description explains what your business offers to its customers, how it’s delivered, and the costs involved in acquiring new customers and executing a sale.

Company History

Company history is the timeline of events that took place in your business from its origin to the present day. It includes a brief profile of the founder(s) and their background, the date the company was founded, any notable achievements and milestones, and other similar facts and details.

If you’re a startup, you’ll probably not have much of a history to write about. In that case, you can share stories of the challenges your startup faced during its inception and how your team overcame them.

3. Market analysis

The market analysis section of your business plan provides an in-depth analysis of the industry, target market, and competition. It should underline the risks and opportunities associated with your industry, and also comment on the attributes of your target customer.

Demographics and segmentation

Understanding the demographics of your customers plays a big role in how well you’re able to identify their traits and serve them.

By dividing your target audience into smaller and more manageable groups, you can tailor your services and products to better meet their needs.

You can use demographics such as age, gender, income, location, ethnicity, and education level to better understand the preferences and behaviors of each segment, and use that data to create more effective marketing strategies.     

Target market and size

Understanding your target market lies at the core of all your marketing endeavors. After all, if you don’t have a clear idea of who you’re serving, you won’t be able to serve well no matter how big your budget is.

For instance, Starbucks’ primary target market includes working professionals and office workers. The company has positioned itself such that many of its customers start their day with its coffee.

Estimating the market size helps you know how much scope there is to scale your business in the future. In other words, you’re trying to determine how much potential revenue exists in this market and if it’s worth the investment.

Market need

The next step is to figure out the market need, i.e., the prevalent pain points that people in that market experience. The easiest way to find these pain points is to read the negative reviews people leave on Amazon for products that are similar to yours.

The better your product solves those pain points, the better your chances of capturing that market. In addition, since your product is solving a problem that your rivals can’t, you can also charge a premium price.

To better identify the needs of your target customers, it helps to take into account things such as local cultural values, industry trends, buying habits, tastes and preferences, price elasticity, and more.

4. Product Summary

The product summary section of your business plan goes into detail about the features and benefits that your products and services offer, and how they differ from your competitors. It also outlines the manufacturing process, pricing, cost of production, inventory, packaging, and capital requirements.

5. Competitive analysis

Unless you’ve discovered an untapped market, you’re probably going to face serious competition and it’s only going to increase as you scale your business later down the line.

This is where the competitive analysis section helps; it gives an overview of the competitive landscape, introduces your immediate rivals, and highlights the current dominant companies and their market share.

In such an environment, it helps to have certain competitive advantages against your rivals so you can stand out in the market. Simply put, a competitive advantage is the additional value you can provide to your customers that your rivals can’t—perhaps via unique product features, excellent customer service, or more.

Want to Perform Competitive Analysis for Your Business?

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6. Marketing and sales plan

The marketing and sales plan is one of the most important business plan components. It explains how you plan to penetrate the market, position your brand in the minds of the buyers, build brand loyalty, increase sales, and remain competitive in an ever-changing business environment.

Unique selling proposition

A unique selling proposition (USP) conveys how your products and services differ from those of your competitors, and the added value those differences provide.

A strong USP will stand out in a competitive market and make potential customers more likely to switch to your brand—essentially capturing the market share of your rivals.

Marketing Plan

Your product might be unique, but if people don’t even know that it exists, it won’t sell. That’s where marketing comes in.

A marketing plan outlines strategies for reaching your target market and achieving sales goals. It also outlines the budget required for advertising and promotion.

You may also include data on the target market, target demographics, objectives, strategies, a timeline, budget, and the metrics considered for evaluating success.

Sales and distribution plan

Once people are made aware of your product, the next step is to ensure it reaches them. This means having a competent sales and distribution plan and a strong supply chain.

Lay out strategies for reaching potential customers, such as online marketing, lead generation, retail distribution channels, or direct sales.

Your goal here is to minimize sales costs and address the risks involved with the distribution of your product. If you’re selling ice cream, for example, you would have to account for the costs of refrigeration and cold storage.

Pricing strategy

Pricing is a very sensitive yet important part of any business. When creating a pricing strategy , you need to consider factors such as market demand, cost of production, competitor prices, disposable income of target customers, and profitability goals.

Some businesses have a small profit margin but sell large volumes of their product, while others sell fewer units but with a massive markup. You will have to decide for yourself which approach you want to follow.

Before setting your marketing plans into action, you need a budget for them. This means writing down how much money you’ll need, how it will be used, and the potential return you are estimating on this investment.

A budget should be flexible, meaning that it should be open to changes as the market shifts and customer behavior evolves. The goal here is to make sure that the company is making the best use of its resources by minimizing the wastage of funds.

7. Operations plan

The operations plan section of your business plan provides an overview of how the business is run and its day-to-day operations. This section is especially important for manufacturing businesses.

It includes a description of your business structure, the roles and responsibilities of each team member, the resources needed, and the procedures you will use to ensure the smooth functioning of your business. The goal here is to maximize output whilst minimizing the wastage of raw material or human labor.

8. Management team

At the core of any successful business lies a dedicated, qualified, and experienced management team overlooking key business activities. 

This section provides an overview of the key members of your management team including their credentials, professional background, role and responsibilities, experience, and qualifications.

A lot of investors give special attention to this section as it helps them ascertain the competence and work ethic of the members involved.

Organizational structure

An organizational structure defines the roles, responsibilities, decision-making processes, and authority of each individual or department in an organization.

Having a clear organizational structure improves communication, increases efficiency, promotes collaboration, and makes it easier to delegate tasks. Startups usually have a flatter organizational hierarchy whereas established businesses have a more traditional structure of power and authority.

9. Financial Plan

Financials are usually the least fun thing to talk about, but they are important nonetheless as they provide an overview of your current financial position, capital requirements, projections, and plans for repayment of any loans. 

Your financial plan should also include an analysis of your startup costs, operating costs, administration costs, and sources of revenue.

Funding requirements

Once an investor has read through your business plan, it’s time to request funding. Investors will want to see an accurate and detailed breakdown of the funds required and an explanation of why the requested funds are necessary for the operation and expansion of your business.

10. Appendix

The appendix is the last section of your business plan and it includes additional supporting documents such as resumes of key team members, market research documents, financial statements, and legal documents. 

In other words, anything important or relevant that couldn’t fit in any of the former sections of your business plan goes in the appendix.

Write a Business Plan Worth Reading

Starting a business is never easy, but it’s a little less overwhelming if you have a well-made business plan. It helps you better navigate the industry, reduce risk, stay competitive, and make the best use of your time and money.

Remember, since every business is unique, every business plan is unique too, and must be regularly updated to keep up with changing industry trends. Also, it’s very likely that interested investors will give you feedback, so make sure to implement their recommendations as well.

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About the Author

Ayush is a writer with an academic background in business and marketing. Being a tech-enthusiast, he likes to keep a sharp eye on the latest tech gadgets and innovations. When he's not working, you can find him writing poetry, gaming, playing the ukulele, catching up with friends, and indulging in creative philosophies.

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8 Essential Components of a Successful Business Plan

Today we are talking about the 8 components of creating a business plan. Starting a business is both exciting and challenging. You can design your own career, be your own boss, and pursue your passion. But, according to the Small Business Administration, only two-thirds of businesses survive at least two years. About half survive at least five years.

Want to know the secret to start off on the right foot?  It’s a killer business plan. You need to define your strategy and tactics for establishing a business with a strong financial foundation.

Are you feeling unsure or overwhelmed about how to get started? Don’t worry. Momentum CFO can help. Let’s start by learning the 8 essential components of a killer business plan. 

Table of Contents

1 | Executive Summary

The Executive Summary is the first section of your business plan. It’s a concise and compelling summary of all the other  sections of your plan. It’s the first content section of your business plan, but it should be the last thing you write. Make it short and sweet. Give the reader the big picture of what your business is all about.

2 | Business Description and Mission

Second, describe your business and its mission. Why are you starting the business? When will you launch it? What is your mission? Your vision? Describe your business goals. Make sure your goals are SMART: specific, measurable, achievable, realistic, and time bound.

Provide this information, along with facts about where your business is located, how it’s organized as a legal entity, and your contact information.

3 | Products and Services

Third, the Products and Services section is where you describe the products and/or services you’ll sell. What is their purpose? Why are they unique? How will you price them? 

New business owners often initially set their prices by “gut feel”.  They don’t do the research and analysis required to ensure that their pricing is profitable. Pricing analysis is complex. But, it’s also crucial to the success of your business. Engage an experienced CFO to develop a profitable pricing framework.

4 | Market Research and Competitive Analysis

Fourth, use the Market Research section to describe a problem or need exists in your industry and how your business addresses it. What are the key attributes of your ideal customer? Be specific. The more specific you are, the easier it will be to design a targeted marketing and sales strategy.

Analyze your main competitors. How long have they been in business? What is their market share? What advantages do they have over your business and vice versa?

5 | Marketing and Sales Strategy

Fifth, the Marketing and Sales Strategy section details your plan for acquiring new customers. New business owners are often overly optimistic about how many customers they can bring on in their first year. That’s why is vital to develop a comprehensive sales and marketing strategy.

In this section, describe your overall marketing strategy. Explain the specific tactics you’ll use to drive brand awareness and sales.  How will you reach your target customers? What advertising and promotion channels will you use? Will you develop an awesome website? Ensure it’s optimized for search? Run social media marketing campaigns? Use print or online ads? 

Think about this carefully. You need enough customers to have a viable business.

6 | Organization and Management

The Organization and Management section is up next. Provide information about yourself and your leadership team here. Lenders and investors want to be assured that leadership is competent.

Describe your education and experience. What are your notable achievements? Are you a member of relevant professional organizations? What makes you suited to run this business? Highlight your accomplishments. Next, do the same for other key leaders in your organization.

7 | Financials

The Financials section is an extremely important part of your business plan. How will you fund your business? 

Some business owners “bootstrap”, putting their own money into the business. Others seek funds from friends and family. Business owners with larger capital requirements may seek angel or private equity investment. Still others will apply for small business or personal loans.

Are you seeking capital from outside sources? Know that lenders and investors will scrutinize the Financials section. It helps them decide whether to lend to you or invest in your business. Include schedules such as a profit and loss projection and a cash flow projection.

There are several important parts of the Financials section. Don’t have a financial background? Engage a CFO to help. It’s important to get this section right. You can’t run a profitable business without a detailed financial plan.

8 | Finishing Touches: Table of Contents and Appendix

The final subject in our 8 components of a business plan: include a Table of Contents at the beginning of your business plan. Add an Appendix section at the end. Next, include important supporting documents. These may include your financial projections, business licenses, the resumes of you and your leadership team, etc.

Final Thoughts

In conclusion, starting a new business is exciting! It takes careful planning to do it well.  Momentum CFO’s startup planning and implementation services put you on the path to achieving long-term success. 

Our Smart Start Strategy service includes a tailor-made road map for successfully starting your business. It covers:

• Smart Start checklist of crucial startup tasks
• One-on-one financial strategy sessions 
• A comprehensive written business plan 
• Financial projections for your first year in business
• Recommendations for financing your business

Ready to get started? Book a free consultation today! BOOK YOUR CONSULTATION

Be sure to check out our other resources for small business: https://momentumcfo.com/cfo-resources/embed/#?secret=DrIUkEHE8W

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What Is a Business Plan?

Understanding business plans, how to write a business plan, common elements of a business plan, how often should a business plan be updated, the bottom line, business plan: what it is, what's included, and how to write one.

Adam Hayes, Ph.D., CFA, is a financial writer with 15+ years Wall Street experience as a derivatives trader. Besides his extensive derivative trading expertise, Adam is an expert in economics and behavioral finance. Adam received his master's in economics from The New School for Social Research and his Ph.D. from the University of Wisconsin-Madison in sociology. He is a CFA charterholder as well as holding FINRA Series 7, 55 & 63 licenses. He currently researches and teaches economic sociology and the social studies of finance at the Hebrew University in Jerusalem.

A business plan is a document that details a company's goals and how it intends to achieve them. Business plans can be of benefit to both startups and well-established companies. For startups, a business plan can be essential for winning over potential lenders and investors. Established businesses can find one useful for staying on track and not losing sight of their goals. This article explains what an effective business plan needs to include and how to write one.

Key Takeaways

• A business plan is a document describing a company's business activities and how it plans to achieve its goals.
• Startup companies use business plans to get off the ground and attract outside investors.
• For established companies, a business plan can help keep the executive team focused on and working toward the company's short- and long-term objectives.
• There is no single format that a business plan must follow, but there are certain key elements that most companies will want to include.

Investopedia / Ryan Oakley

Any new business should have a business plan in place prior to beginning operations. In fact, banks and venture capital firms often want to see a business plan before they'll consider making a loan or providing capital to new businesses.

Even if a business isn't looking to raise additional money, a business plan can help it focus on its goals. A 2017 Harvard Business Review article reported that, "Entrepreneurs who write formal plans are 16% more likely to achieve viability than the otherwise identical nonplanning entrepreneurs."

Ideally, a business plan should be reviewed and updated periodically to reflect any goals that have been achieved or that may have changed. An established business that has decided to move in a new direction might create an entirely new business plan for itself.

There are numerous benefits to creating (and sticking to) a well-conceived business plan. These include being able to think through ideas before investing too much money in them and highlighting any potential obstacles to success. A company might also share its business plan with trusted outsiders to get their objective feedback. In addition, a business plan can help keep a company's executive team on the same page about strategic action items and priorities.

Business plans, even among competitors in the same industry, are rarely identical. However, they often have some of the same basic elements, as we describe below.

While it's a good idea to provide as much detail as necessary, it's also important that a business plan be concise enough to hold a reader's attention to the end.

While there are any number of templates that you can use to write a business plan, it's best to try to avoid producing a generic-looking one. Let your plan reflect the unique personality of your business.

Many business plans use some combination of the sections below, with varying levels of detail, depending on the company.

The length of a business plan can vary greatly from business to business. Regardless, it's best to fit the basic information into a 15- to 25-page document. Other crucial elements that take up a lot of space—such as applications for patents—can be referenced in the main document and attached as appendices.

These are some of the most common elements in many business plans:

• Executive summary: This section introduces the company and includes its mission statement along with relevant information about the company's leadership, employees, operations, and locations.
• Products and services: Here, the company should describe the products and services it offers or plans to introduce. That might include details on pricing, product lifespan, and unique benefits to the consumer. Other factors that could go into this section include production and manufacturing processes, any relevant patents the company may have, as well as proprietary technology . Information about research and development (R&D) can also be included here.
• Market analysis: A company needs to have a good handle on the current state of its industry and the existing competition. This section should explain where the company fits in, what types of customers it plans to target, and how easy or difficult it may be to take market share from incumbents.
• Marketing strategy: This section can describe how the company plans to attract and keep customers, including any anticipated advertising and marketing campaigns. It should also describe the distribution channel or channels it will use to get its products or services to consumers.
• Financial plans and projections: Established businesses can include financial statements, balance sheets, and other relevant financial information. New businesses can provide financial targets and estimates for the first few years. Your plan might also include any funding requests you're making.

The best business plans aren't generic ones created from easily accessed templates. A company should aim to entice readers with a plan that demonstrates its uniqueness and potential for success.

2 Types of Business Plans

Business plans can take many forms, but they are sometimes divided into two basic categories: traditional and lean startup. According to the U.S. Small Business Administration (SBA) , the traditional business plan is the more common of the two.

• Traditional business plans : These plans tend to be much longer than lean startup plans and contain considerably more detail. As a result they require more work on the part of the business, but they can also be more persuasive (and reassuring) to potential investors.
• Lean startup business plans : These use an abbreviated structure that highlights key elements. These business plans are short—as short as one page—and provide only the most basic detail. If a company wants to use this kind of plan, it should be prepared to provide more detail if an investor or a lender requests it.

Why Do Business Plans Fail?

A business plan is not a surefire recipe for success. The plan may have been unrealistic in its assumptions and projections to begin with. Markets and the overall economy might change in ways that couldn't have been foreseen. A competitor might introduce a revolutionary new product or service. All of this calls for building some flexibility into your plan, so you can pivot to a new course if needed.

How frequently a business plan needs to be revised will depend on the nature of the business. A well-established business might want to review its plan once a year and make changes if necessary. A new or fast-growing business in a fiercely competitive market might want to revise it more often, such as quarterly.

What Does a Lean Startup Business Plan Include?

The lean startup business plan is an option when a company prefers to give a quick explanation of its business. For example, a brand-new company may feel that it doesn't have a lot of information to provide yet.

Sections can include: a value proposition ; the company's major activities and advantages; resources such as staff, intellectual property, and capital; a list of partnerships; customer segments; and revenue sources.

A business plan can be useful to companies of all kinds. But as a company grows and the world around it changes, so too should its business plan. So don't think of your business plan as carved in granite but as a living document designed to evolve with your business.

Harvard Business Review. " Research: Writing a Business Plan Makes Your Startup More Likely to Succeed ."

U.S. Small Business Administration. " Write Your Business Plan ."

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8 Elements of a Successful Business Plan

Perhaps you’ve heard the old saying that failing to plan is the same as planning to fail.

It’s commonly attributed to Benjamin Franklin, the 18th century inventor and politician whose belief in the value of preparation was strong enough that he once made a list of more than 12 character traits around which he planned to structure his life.

Related:   It Only Takes 6 Steps to Plan Your Success

Franklin’s preparation paid off. Today, he’s remembered not only for signing the Declaration of Independence but for researching electricity, serving as the U.S. ambassador to France and founding the University of Pennsylvania.

Accomplishments like those illustrate the importance of preparation for entrepreneurs starting or expanding their own businesses, especially since only half of all startups survive their first five years. The secret: A well-crafted business plan can help make yours one of the success stories .

Not only is having one often a prerequisite for lenders and investors, it’s a road map that helps owners identify both risks and opportunities in their markets so that they’re prepared for both.

Indeed, some of the most successful U.S. entrepreneurs were known for their careful strategy. John D. Rockefeller, the oil magnate whose name became a byword for wealth in the late 19th and early 20th centuries, often talked about “our plan” when he was developing Standard Oil Trust.

Rockefeller’s strategy was corralling what had been a haphazard oil supply that often outpaced demand and hurt producers by keeping prices low. His business expanded enough that it eventually controlled the majority of oil production in the U.S. Although it was later broken up by the U.S. government, its descendants—ExxonMobil, Chevron and ConocoPhillips—still dominate the industry today.

“Business planning helps entrepreneurs work smarter, stay alert for roadblocks, test new ideas, stay motivated, help align expectations with stakeholders and investors, and even reduce stress.”

“Business planning helps entrepreneurs work smarter, stay alert for roadblocks, test new ideas, stay motivated , help align expectations with stakeholders and investors, and even reduce stress,” wrote Robert Price, executive director of the Global Entrepreneurship Institute, in an article on the organization’s website.

“Writing a business plan forces you into disciplined thinking if you do an intellectually honest job,” he says. “An idea may sound great in your mind, but when you put down the details and numbers, it may fall apart.”

Related: Think Big, Start Small and Plan for Success

A further advantage of your roadmap is that, ideally, it changes with your business. It’s considered a living document, but despite its adaptability, there are basic elements the Small Business Administration says any plan should contain. They include:

1. Executive Summary:

A snapshot of your plan. This will be the last thing you write, but possibly the most important, since many readers will stop here if they’re unimpressed. If your company is a startup , focus on your background and experience as well as that of any partners to show the underpinnings of the company, the agency says. If you’re better established, make sure to include details such as when the business was started, the names of the founders and their roles, how many employees you have, and where your operations are situated.

2. Company Description:

Explain what your company does and how it stands out from competitors. List major customers as well as markets you plan to target in the future. You’ll want to include competitive advantages, such as expert personnel like the whiz-kid coder you just hired, or location: Perhaps your floral shop is next door to an all-night wedding chapel.

3. Market Analysis:

It’s crucial to understand the market you plan to enter. Find out who your competitors are, analyze their cash flow and profit margins, and research technological developments in the industry that might be game-changers. Part of describing your customers is a general awareness of how much they spend and when. For instance, Black Friday got its name because it kicks off the lucrative Christmas shopping season that moves many retailers into full-year profitability. If your business is grappling with a similar challenge, you’ll want to be sure you have the resources and cash flow to withstand operating at a loss for 11 months out of the year.

4. Organization and Management:

Spell out the details of ownership, including investors and show your organizational chart. Specify whether your business is a sole proprietorship, partnership or corporation, and if it’s the latter, what type.

5. Service or Product Line:

What do you sell, how will it help your customers, and how often will they need to replace it? The answers to those questions can be crucial factors in business sustainability . Include any patents or copyrights you own.

6. Marketing and Sales:

The best idea in the world won’t take off if you don’t let your potential customers know what you have. Are you going to rely on word of mouth, promotional discounts or advertising? Remember, your method will have to be tailored to your market. New York businesses are famous for paying people to stand on the sidewalk promoting everything from discounted pizza slices to bargain jewelry prices, but that doesn’t work nearly as well in cities without a high volume of foot traffic.

7. Funding Request:

You’ll want to include how much you need right now as well as how much more you might need over the next five years. A critical point is how you plan to repay borrowed money to creditors (if you opt for debt financing) or, alternatively, generate returns for investors. Both will want to know how you’re spending their money and when they’ll see a payoff.

8. Financial Projections:

If you need funding, provide realistic forecasts that show how you plan to generate future cash flow. Unless you’re borrowing from your parents, your funding sources will want to know. It’s easier if you can show recent financial statements and base your projections on those, since that will give lenders an idea of how realistic your numbers are.

Related: 11 Things That Can Spark Massive Success in Your Life

Michael Jones

Michael Jones is the Director of Community Management and Content at Bond Street, a company focused on making small business loans simple, transparent and fair.

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8 Key Elements of a Business Plan You Need To Know

Entrepreneurship.

• Innovation & Digital Transformation
• Sustainability
• Education & Training
• Culture & Creativity
• Social Inclusion & Human Rights
• Health & Wellbeing

A business plan serves as the basis for starting and running your new business, and its elements are one of the first things people will look at when deciding whether or not to fund your company. It’s important to know what you should include in your business plan so that you don’t leave anything out that’s important.

A business plan is typically written in a formal report style, which means that it should include,

• an executive summary
• an overview of the company background
• management approach
• mission statement or philosophy
• market analysis
• product descriptions and analysis
• marketing strategy
• sales projections and budget

In addition to these sections, more modern plans may contain other sections such as human resources strategy.

But for our discussion here, these are the eight key elements of a business plan that you need to know:

1) Company overview

The company overview is probably where you’ll take some time to define your overall mission. If it’s a startup,

• What problem are you looking to solve?
• What service or product do you hope to deliver?
• What competitive advantage do you offer over existing solutions in your market space?

This section should also briefly describe your customers, how big your target market is, and why now is the perfect time for your business concept.

This is what readers will see first, so make it count. A good overview will provide context for everything that follows and should generally be no more than 2-3 paragraphs long. In it, describe your industry, how your business compares to other companies in your industry and why someone would want to work with you instead of them.

Keep it straightforward, succinct, and clear. Don’t forget to emphasize why your company exists in 100 words or less. Remember that there are only two ways someone might stop reading at this point: if they don’t think you have something interesting to say or because they become disinterested in what you’re saying.

2) Executive summary

On one page, quickly explain your business, how it’s different from your competitors, and why it’s a good idea. This is also where you’ll want to describe who will buy your product or service, when you plan to launch, and how much you hope to raise in financing.

It should be written in simple language without legal jargon; focus on making it easy for people to understand (not necessarily easy for lawyers).

The first thing many potential investors will do is read your executive summary—ensure they have no trouble understanding exactly what you do and why they should invest in you.

3) Market analysis

As many people will tell you, the elements of your business plan doesn’t need to be particularly original. However, there is one critical aspect that makes it stand out from similar plans: its market analysis.

Your market analysis should answer such questions as:

• Who are my competitors?
• What makes my product or service different?

This is not only important for getting investors on board but also for making sure you have truly identified a gap in your industry that hasn’t been filled before. To gather enough data, do proper communication to reduce the gap before you dive into the next step.

There are certain communication apps for business that help make this part easy to handle. Don’t worry if your plan sounds too much like someone else’s — it’s better to have an overly-researched plan than one without concrete knowledge.

4) Product or service description

This section should describe your business’s product or service in terms that would appeal to your customers. Be specific—include information about materials, colors, smells, features, etc.

If you sell women’s clothing, for example, mention colors and fabrics; don’t just say women’s clothing. Avoid technical jargon whenever possible; keep it simple and use appropriate examples.

Also, include any special care instructions here and details about warranties or return policies. Lastly, if you have images of your product or prototype on hand, i.e., you are selling something physical, be sure to include them as an attachment with your business plan—they will help illustrate your ideas better than mere words ever could!

5) Sales strategy

Prospects will either buy because they need what you’re selling, or they will buy because your sales pitch convinces them that it’s in their best interest to do so. To accomplish either goal, you must present your product or service as a solution to their specific needs and concerns, says Jason Edwards, the chair of the Agent Editor Board of Agent Advice .

The better you understand these concerns and how you can alleviate them through your product, or services, and price point—the more effective your sales pitch will be. That is why it is important to have a strong understanding of prospect behaviors. For example, if prospects are always looking for ways to save money over time, then offering reduced pricing on longer contracts may be an effective way for them to do just that. A contract automation platform can help make pricing negotiations easier and more seamless.

6) Marketing strategy

A marketing strategy is an overarching business plan that will help lay out exactly how you will bring in revenue and grow your customer base . In the same way, it would be folly to start building before you’ve figured out what you’re building, it’s foolish to put all your energy into acquiring customers without a solid plan on how to keep them engaged.

Your marketing strategy doesn’t have to be elaborate. In fact, writing it can help get your creative juices flowing. In its basic form, a marketing strategy should address:

• What kind of target market are you going after?
• How are you going to reach those people?
• How will you capture their attention?

7) Management approach

This part of your business plan outlines how you intend to manage your company. The management approach is essentially a roadmap outlining what key personnel will be involved in various aspects and departments, along with their responsibilities.

For example, if you’re incorporating your business as an LLC (limited liability company), you might want to include descriptions for each member of your board or executive team so that investors know who they’re dealing with.

Further down in your business plan, you can outline roles and responsibilities for each member. If investors put money into your company, they need to know what they’re getting themselves into!

8) Financial projections

By producing detailed financial projections for your company, you’ll have a better idea of how much capital you’ll need to start or grow your business . These projections should be updated as frequently as possible—ideally, every month or two.

They will also help you assess your progress, which is key to knowing whether your plan is on track. Financial projections are not only useful in terms of gauging startup costs and growth potential; they can also help with hiring decisions by revealing areas that may be lacking in staff. Consider it another step toward building a successful business.

If you want your business to succeed, a well-thought-out, detailed business plan will be a must-have. We have covered the eight key elements of a solid business plan that you must know and implement.

Piyush Shah is a 6 figure affiliate marketer and has helped grow multiple businesses from nothing to making insane business figures. He is currently working as Head of SEO at Dukaan .

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9 essential components of a business plan.

Maybe you’re a small business owner that has been in business for years. Or, you could be going through the process of starting a business. Regardless of where you’re at with your career, tasks and responsibilities will come at you quickly.

You need to worry about to-do lists, scheduled meetings, accounting processes and everything in between. When are you supposed to find the time to put your business plan together? It can be an intimidating process to go through, but having a well-thought-out business plan is incredibly important.

There’s no perfect recipe for a business plan, but one of the best things that you can do is write it before you start your business. It can act as a roadmap for where your business is going in the future and how you’re going to get there. So, where do you start?

Let’s take a look at everything that you need to know for writing a business plan that can get you ahead.

Here’s What We’ll Cover:

What Is a Business Plan?

Tips to make your business plan stand out, 9 components of a business plan, key takeaways.

Think about the last time you needed to get somewhere you hadn’t been before. You might drive, ride your bike or take the train. But no matter the way you get there, you first need to know how to get there. You might put the directions into a GPS, follow a bike path or look up the train schedules.

A business plan works in the exact same way, only it’s a roadmap for your business. It’s a comprehensive document that outlines how your small business is going to grow and develop.

Throughout a business plan, you’re going to communicate who your business is, what you plan on doing and how you plan on doing it. This can give valuable insights into your business for potential investors or hiring new talent.

That all said, a business plan is completely different from a general business concept or business idea. A business plan acts as a blueprint for your business and will highlight who you are. Most banking institutions and venture capitalists won’t invest in a small business unless they have a good business plan.

Potential investors are going to want to know that you have a product or service that fits in the market with a good team in place. Plus, it can show the scalability of your business and how you will grow sales volume.

When Do You Need a Business Plan?

First and foremost, a business plan is important to have regardless of the industry you’re in or the products you offer your customers. It will not only keep you focused and efficient, but a well-written business plan can have other benefits.

A business plan can be helpful when:

• You need new investments, funding or loans
• You are searching for a new partner for your business
• You are attracting and retaining top talent
• You are experiencing slower growth than expected and want a change

Every business plan is going to be a little different compared to others. This is since your business is unique and your business plan is going to reflect that. But, if your plan is badly written or missing key bits of information then it won’t be as attractive to potential investors.

Here are some tips to help you get the most out of your business plan and make it stand out.

• Make it as easy to read as possible. Investors want something that’s easily scannable and is divided into distinct sections. This way, they can quickly look through the plan and spot the key information.
• Keep it brief. Most business plans are going to range anywhere from 10 – 20 pages. But, as long as you cover the essentials and highlight the key points, less can often be more.
• Make sure you proofread and edit. Always double-check for grammatical errors and that it’s formatted properly. Typos and mistakes are not going to reflect positively for your business.
• Have a quality design. Make sure you have the proper layout, formatting and brand messaging throughout. Bookbinding your business plan can make it look more professional.
• Know all your business margins. Include each and every cost that your business incurs. You can make sure that you’re organizing and assigning those costs to the right product or service you offer.

One of the best things that you can do before writing your business plan is to determine who your audience is going to be. Are you pitching to a room full of potential investors? Do you have a meeting with your local financial institution’s venture funding department? Or, do you just want to create an internal document to help guide your business forward?

Being able to define who your audience is going to be will help you figure out how to write your business plan. For example, the language in your business plan might be different depending on who you want to highlight your business to.

Here are the 9 essential components of a business plan.

1. Executive Summary

Your executive summary is going to be at the front of your plan and be one of the first things that someone reads. But, writing the executive summary should be the last thing that you do, even though it’s first on the list. For now, you can leave your executive summary blank.

Why? Because it lays out every piece of vital information that’s included in your business plan, usually in one page or less. It’s basically a high-level summary of each of the sections in the plan. This means you can’t really write the executive summary first.

2. Company Description

This is where you’re going to highlight your business and what you do. Your company description will include three different things: a mission statement, company history and business objectives.

First, let’s look at your mission statement .

A mission statement is basically the main reason why you’re in business. It’s not necessarily about what you do or the products or services that you sell. Rather, it’s all about why your business does what it does.

Try and make your mission statement inspirational, motivational and even emotional. It’s going to be the foundation on which your business is built. Put some thought into the things that motivate you and the reasons why you started your business in the first place. What do you want to get out of it? Why are you doing it?

You can also think about the causes or different experiences which led you to start your business and the problems it can solve for your customers.

Next, let’s look at your company history .

This doesn’t need to be a long or in-depth section, but more of a highlight of what your business has done in the past and where you stand today. To help make things easier, you can even write about your company history in the form of a profile. Here’s some of the important information you can include in your company history.

• The date you founded or started your business
• Any major milestones worth highlighting
• Your business location, or locations
• How many employees you have
• Your executive leadership and the roles that they have within your company
• The flagship services or products that you offer your customers

Finally, let’s look at your business objectives .

Your business objectives are your guiding lights. They’re the goals that you plan on achieving and they will outline how you plan on getting there. When developing your business objectives, base them on the process of SMART goals.

These are specific, measurable, achievable, realistic and time-bound. Basically, each objective gets tied to the key results you want to achieve. If you don’t clearly define your business objectives, it can make it more difficult for your employees to work efficiently towards a common goal.

3. Market Research and Business Potential

This is the section of your business plan where you outline your target demographic and ideal customer base. You’re also going to do research into the potential and actual size of the market you’re going to enter into. Target markets are going to identify specific information about your customers.

Usually, you can research and find the following information for your target customers:

• Location and average income
• Age and gender
• Education level and profession
• Any activities or hobbies that are relevant

Getting as specific as possible will allow you to illustrate your expertise and get a sense of confidence when it comes to your business. For example, if your target market is extremely broad, it will show investors that it might be more difficult to generate revenue.

4. Competitive Analysis

What is your competition doing? Competitor research is going to start by identifying any companies that are currently in the market you want to enter into. Understanding everything you can about your competition can seem overwhelming and intimidating.

But having this information is extremely useful and will help you make more informed business decisions in the future. Here are a few common questions that you can ask yourself when you’re doing competitive research.

• Where are they investing most in marketing and advertising?
• Do they get any press coverage? If they do, how are they getting it?
• What is their customer service like? Does your customer service stack up against theirs?
• What are their pricing strategies and what are their sales?
• Do they have good reviews on third-party rating platforms?

One of the best ways to do competitive research is to check out your competition’s website. Read through their About Us page or their value and mission statements. This will give you a better understanding of who they are, what they’re doing and how they’re doing it.

Being able to distinguish your business from your competition is a critical element of any business plan. Take some time to think about what sets your business apart and how you’re going to provide a solution to a problem.

5. Describe You Products or Services

What do you offer your customers? What product or service is your business built on? This section of your business plan is going to detail everything about your product or service. Plus, it’s going to highlight why what your business offers is better than the competition.

Touch on the benefits that your product or service offers, the production process and the product life cycle.

When you’re describing the benefits, try and focus on things like unique features and how they translate into benefits. You can also highlight intellectual property rights or patents that differentiate your products.

For the production process, you can explain how you create your existing or new products or services and how you source the raw materials. Other things such as quality control, quality assurance and supply chain logistics can get included.

With your product life cycle, you can highlight any cross-sells, down-sells or upsells. As well as your future plans for research and development.

6. Marketing and Sales Strategy

You could spend weeks putting together an in-depth business plan that highlights your company and what you do. But, if you don’t have a solid marketing and sales strategy in place then it won’t matter how good your business plan is. You still need to know how you’re going to generate sales.

This part of your plan is entirely dependant on the type of products or services that you offer. You can include your company’s value proposition, ideal target market and your existing customer segments. Then, you can start with some more specifics.

What’s the launch plan that you have in place to help attract new business? What are your growth tactics to help your business expand in the future? Do you have any retention strategies in place, such as customer loyalty or referral programs? What about advertising across print, social media, search engines or television?

These are all good questions to ask yourself when putting together your sales and marketing strategy. You can use this part of the business plan to highlight your business strengths and how you differentiate from the competition.

7. Business Financials

If you are just starting your business then you aren’t going to have much financial data. You won’t have things like financial statements or an income statement. But, you still need to put together some type of financial plan and budget. If you have been operating for a while, you will have some important information to include, such as:

• Profit and loss statements
• Income statements
• Cash flow statement
• Balance sheets
• Revenue vs net income
• The ratio of liquidity to debt repayment

Make sure that the data and figures that you include are accurate. For example, things like costs, profit margins and sale prices can be closely linked together. If you don’t have access to historical data, you can put together financial projections.

8. Management and Organization

The people that you have working for your business are the driving force behind your overall success. Without the right people in place, your business won’t likely be successful. This is the part of your business plan where you’re going to highlight your team.

Identify the members of your team and explain how they are going to help turn your business idea into a reality. Plus, you can highlight the qualifications and expertise of each team member. This will position your business as one that’s worth potentially investing in.

9. Include an Appendix

This is where you’re going to compile and include everything that both investors and your team will need access to. Include everything that’s useful for an investor to conduct due diligence.

Here are some of the most common official documents you can include in a well-organized appendix.

• Any legal documents, local permits or deeds
• Professional licenses or business registries
• Any patents or intellectual property
• Any industry memberships or associations
• Your business identification numbers or codes
• Any key purchase orders or customer contracts that you have in place

It can also be helpful to include a table of contents in your appendix. This can make it easier to find the right information or allow you to highlight the most important documents.

It’s worth noting that a business plan doesn’t just have to be a way to attract potential investors. There are several other reasons why having a business plan is important.

You can better clarify the goals and objections that you want your business to accomplish and you can gain insights into your target market. Team members can have a much better sense as to the direction the business is going and how they can contribute to its success and growth. Plus, you can establish and define the roles of each team member, all while setting achievable benchmarks.

Creating a business plan will act as a roadmap for your business. It’s going to highlight the goals and objectives you have. As well as touch on things like marketing, advertising, your management team and financials. Here’s a quick review of the 9 essential components of a business plan.

• Executive summary, which you will write after you have completed steps 2 – 9
• Company description, including a mission statement, company history and business objectives
• Competitive analysis
• Market research and business potential
• Your products or services
• Marketing and sales strategy
• Business financials
• Management and organization

Follow the 9 components outlined in this article to help you develop a business plan. You can clearly define your business goals and have a roadmap to help your business be successful.

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Nine states plan to ban gas-powered car sales by 2035

Advanced clean cars ii rules look to phase out sales of new gas-powered cars in next decade.

Electric vehicles can't be imposed on middle America: Sen. Cynthia Lummis

 Sen. Cynthia Lummis, R-Wy., says the Biden administration doesn't have regard for the law on 'Kudlow.'

Nine states are planning to ban new gasoline-powered vehicle sales by 2035 as part of an initiative to cut climate-warming emissions.

The Advanced Clean Cars II rules originated in California with the state Air Resources Board. The regulations in California look to phase out the sale of new gas vehicles beginning with the 2026 model year, scaling back over time until 2035 – when a total ban on the sales will go into effect.

Since the rules were first adopted in California in 2022, eight other states have followed suit, with several others considering the plan.

So far, the other states that have implemented the plan to hit the goal of selling zero new gas-powered vehicles by 2035 include Washington, Oregon, New York, New Jersey, Rhode Island, Massachusetts, Delaware and Maryland.

BIDEN ADMIN SET TO FINALIZE MAJOR GAS CAR CRACKDOWN OVER WARNINGS FROM AUTOMAKERS, ENERGY INDUSTRY

Nine states have undertaken a plan to scale back the sales of new gas-powered vehicles over the next decade, with the goal of completely eliminating the sales by 2035. (Fox News / Fox News)

The rules do not stop residents in these states from owning or using gas-powered cars, nor do they force consumers to buy electric vehicles (EVs). Dealerships can still sell used cars powered by gas, and consumers in these states can purchase the gas-powered vehicles in other states – as long as they meet certain emissions standards. 

Not everyone, however, supports this effort.

The New Jersey Business and Industry Association (NJBIA) led a campaign last year to try and stop New Jersey's adoption of the Advanced Clean Cars II rule.

Ray Cantor, the chief deputy government affairs officer at the NJBIA, told Fox News Digital in a statement that the plan ignores the cost to consumers and lack of current infrastructure.

"The ban on new gas-powered cars in such an expedited time does not take costs or feasibility into account," Cantor said. "It does not take the lack of local and highway infrastructure into account. It does not take grid capacity into account. It ignores consumer choice. It doesn’t take New Jersey residents into account, especially low- and moderate-income families. And it doesn’t take the lack of actual environmental benefit into account."

Under the action, residents can still own and drive gas-powered vehicles and purchase new gas-powered cars in other states. (iStock / iStock)

Cantor urged New Jersey to "apply the brakes" to what he called an obvious "bureaucratic overreach" before the mandate starts to affect consumers.

"There's nothing wrong with working to reduce carbon emissions," Cantor said. "And the marketplace would have likely seen a natural increase of EV users with an organic time frame to build appropriate capacities. But the near-term, targeted mandates will increase the prices of both new and used gas-powered cars."

VIRGINIA DEMOCRATS UPHOLD STATE'S EV MANDATE DESPITE GROWING OPPOSITION: 'DEFY COMMON SENSE'

In support of the action, Rhode Island Department of Environmental Management Director Terry Gray has called the rules a "major step" in the fight against climate change in the transportation sector.

"In terms of economic impact, states joining together to send a clear signal to the market will result in greater economies of scale, driving down the prices of ZEVs (zero-emission vehicles), and ensuring that Rhode Island dealers and customers have full access to electric vehicles," Gray said.

The rules come as the Biden administration has sought to push the transportation sector from gas-powered vehicles to EVs as part of its climate agenda.

Last year, the  Environmental Protection Agency (EPA)  unveiled its own plan to increase vehicle pollution standards that will impact car model years 2027 through 2032. 

If the EPA’s regulations are finalized, a staggering 67% of new sedan, crossover, SUV and light truck purchases could be electric by 2032, the White House projected. In addition, up to 50% of bus and garbage truck, 35% of short-haul freight tractor and 25% of long-haul freight tractor purchases could be electric by then.

Hybrid cars 'are the future' of the auto industry: Mike Caudill

Auto expert Mike Caudill explains data proving consumers 'aren't ready yet' for a full transition to electric vehicles.

However, the push toward EVs has faced multiple setbacks in the industry.

Earlier this month, Hertz CEO Stephen Scherr resigned after the car rental company's big bet on EVs went bust due to its struggles to keep up with the higher repair cost and lower demand for EV rentals.

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Ford's EV division, Ford Model e, posted a net loss of $4.7 billion last year — with $1.6 billion of that in the last quarter — and Ford's chief financial officer John Lawler explained during the company’s earnings call last month that both "the quarter and year were impacted by challenging market dynamics and investments in next-generation vehicles."

Fox News' Thomas Catenacci and Eric Revell contributed to this report.

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8 Incidents in 2 Weeks: What’s Going on With United’s Planes?

While no one was injured, most of the mishaps required emergency landings or diversions. One safety expert said the incidents were not the result of “systemic problems.”

By Christine Chung

An engine fire sparked by plastic packaging wrap , a tire lost shortly after takeoff and a plane veering off the runway : These are among the eight incidents that have occurred over the past two weeks on flights operated by United Airlines. While no injuries — or worse — have been reported, the mishaps have generated headlines and stoked rising anxiety about aviation safety among federal officials and passengers alike.

All of the incidents happened on flights that took off from or were headed to airports in the United States, and five involved airplanes made by Boeing, a manufacturer already under intense scrutiny. In January, a door plug blew out of an Alaska Airlines Boeing 737 Max 9 jetliner in mid-flight, forcing the plane to make an emergency landing.

United, one of the world’s largest airlines, flies aircraft manufactured mainly by Boeing and Airbus. In an email United began sending to customers on Monday, the company’s chief executive, Scott Kirby, wrote that while the recent incidents were unrelated, they were “reminders of the importance of safety.”

“I want you to know that these incidents have our attention and have sharpened our focus,” he continued, adding that every case was being reviewed by the airline and would influence its safety training and procedures.

Here’s what travelers should know about the latest in airplane woes.

What exactly happened on or to the planes?

Most of the incidents reported in the last two weeks required emergency landings or diversions.

March 4: A Boeing 737-900 departing from George Bush Intercontinental Airport in Houston returned to the airport to make an emergency landing after one of the plane engines ingested and burned plastic wrap .

March 7: A Boeing 777 leaving San Francisco for Osaka, Japan, made an emergency landing at Los Angeles International Airport after the aircraft lost a tire .

March 8: A Boeing 737 Max 8 veered off the runway upon landing at George Bush Airport in Houston and tilted onto the grass .

Later that day, a flight leaving San Francisco for Mexico City was diverted to Los Angeles after the Airbus A320 experienced issues with its hydraulic system.

March 9: An Airbus A320 heading to Salt Lake City turned back to Chicago O’Hare International Airport after it reported maintenance issues .

March 11: A Boeing 777, flying from Sydney, Australia , to San Francisco, turned back after takeoff because the plane had a hydraulic leak.

March 14: An Airbus A320 that departed from Dallas Fort Worth International Airport had a hydraulic leak shortly before it landed in its scheduled destination, San Francisco.

Later that day, a Boeing 737-800 that took off from San Francisco landed at Rogue Valley International Medford Airport in Oregon missing an external panel .

Are the recent issues typical, or cause for concern?

The mishaps were not the result of “systemic problems,” said Robert Sumwalt, a former chairman of the National Transportation Safety Board who now heads a new aviation safety center at Embry-Riddle Aeronautical University.

“Some of these issues are things that happen occasionally, but often don’t get reported in media,” Mr. Sumwalt said, though he emphasized that none were acceptable.

Kyra Dempsey, who writes about aviation accidents in a blog called Admiral Cloudberg, said that United’s recent issues were being “falsely conflated with Boeing’s troubles.”

“While it’s bad luck that United had so many incidents in such a short period, in general such incidents happen frequently around the world and they aren’t on the rise overall,” Ms. Dempsey said.

How has United responded?

Mr. Kirby’s 270-word message to United customers, including to members of the airline’s frequent flier program, started to be sent on Monday morning, said Josh Freed, a spokesman for United.

Starting in May, United pilots will have an extra day of in-person training, a change that was already planned before the incidents, Mr. Kirby wrote. The airline will also use a “centralized training curriculum for our new hire maintenance technicians” and will dedicate additional resources to the carrier’s supply chain.

What government agencies oversee these issues, and how are they responding?

The Federal Aviation Administration regulates the country’s aviation system and investigates safety incidents on U.S. airlines, while the N.T.S.B. investigates the causes of accidents, collisions and crashes involving planes flown by U.S. carriers, in addition to other accidents involving commercial and mass transit operators. Both agencies have discretion on what they investigate, Mr. Sumwalt said.

Currently, the N.T.S.B. is investigating the incident that occurred on March 8 in Houston, when the plane veered off the runway, an agency spokesperson said. The N.T.S.B. is also looking into a Feb. 10 Los Angeles-to-Newark flight , operated by United, that experienced severe turbulence, leading to injuries among more than a dozen passengers. (The Boeing 777 landed normally, but the flight was met by medical personnel.)

Safety experts said some issues don’t necessarily rise to the level of an investigation by either agency.

For example, partial loss of some of an airplane’s multiple hydraulics systems is common, said Michael McCormick, an assistant professor at Embry-Riddle Aeronautical University and a former F.A.A. control tower operator. The F.A.A. may or may not get involved for this kind of issue, unless there’s a pattern, Mr. Sumwalt said.

The January episode involving the blown door plug aboard the Alaska Airlines jet is under investigation by the N.T.S.B. and the Justice Department.

Follow New York Times Travel on Instagram and sign up for our weekly Travel Dispatch newsletter to get expert tips on traveling smarter and inspiration for your next vacation. Dreaming up a future getaway or just armchair traveling? Check out our 52 Places to Go in 2024 .

Christine Chung is a Times reporter covering airlines and consumer travel. More about Christine Chung

Boeing: A Company in Turmoil

Boeing is weathering a particularly difficult period: two fatal crashes, a loose panel that blew out during a flight, quality concerns and production slowdowns..

‘Shortcuts Everywhere’: Quality issues have plagued Boeing  even after two fatal crashes. Many employees blame the company’s focus on increasing production speed .

A Major Reshuffle : Boeing said that it was overhauling its leadership  amid its most significant safety crisis in years, announcing sweeping changes that included the departure of its chief executive, Dave Calhoun , at the end of the year.

United’s Planes : An engine fire sparked by plastic packaging wrap, a tire lost shortly after takeoff and a plane veering off the runway: These are among several recent incidents that have occurred  on Boeing flights operated by United Airlines.

Alaska Airlines Flight 1282: After a section of a plane blew out  10 minutes after it took off , there was increased scrutiny  on the plane’s manufacturer: Boeing . The Justice Department has since launched a criminal investigation .

Quality Control Issues: An audit that was initiated by the Federal Aviation Administration after the Alaska Airlines incident found dozens of problems  throughout Boeing’s manufacturing process and one of its key suppliers.