Business planning: understand the main sections of a business plan

The idea

A business plan is a written document that sets out how a business idea will be turned into a viable operation. Its main sections usually include: the business idea and objectives; the market and competitor analysis; the marketing mix; operations and resources; financial forecasts; and the owner's background and funding requirements. For example, a new café plan might state its aim to break even within 12 months, describe local competitors, set prices, list equipment and staff needs, and include a cash-flow forecast showing monthly inflows and outflows. Understanding each section means knowing its purpose and how the sections connect, so the plan gives a complete picture of the proposal.

What earns the marks

• Identifies the main sections of a business plan, such as the business idea and objectives, market analysis, marketing mix, operations, financial forecasts, and owner background or funding needs.
• Explains the purpose of each section, for example that the financial forecasts show expected cash inflows and outflows and help assess whether the idea is viable.
• Shows how sections link together, such as using market research to justify pricing in the marketing mix and to support sales forecasts in the financial section.
• Applies understanding to a given business context, for example selecting the sections most relevant to a small start-up seeking a bank loan.
• Uses appropriate business terminology accurately, such as cash-flow forecast, break-even, target market and unique selling point.

Common mistakes and how to put them right

• Treating the business plan as only a financial document.

  Put it right: Recognise that it also covers the idea, market, marketing, operations and the owner's skills.

• Listing sections without explaining their purpose.

  Put it right: State what each section is for and how it helps the owner or an external stakeholder.

• Confusing a cash-flow forecast with a profit forecast.

  Put it right: Note that cash flow records the timing of money in and out, while profit compares total revenue with total costs over a period.

Exam tips

• Read the command word carefully: 'identify' needs brief section names, while 'explain' requires a reason or consequence for each section.
• Use a named business context from the case study to show how a section would be completed in practice.
• Link sections together in your answer to show understanding of the plan as a whole, not just a list.