Organization and Management Business Plan Section
- September 8th, 2014
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Step 4: Organization and Management Business Plan Part 2
After you’ve made all of your introductions in the organization and management section of your business plan, it’ll be time to lay out the framework of your organization’s structure.
Remember that you want to make your business plan as easy to understand as possible for your readers, especially potential investors. One of the most effective ways to outline your company’s structure is in an organizational chart with detailed descriptions. By showing that you’ve thought out every role and every job function, you make it clear that you’ve got a handle of everything within your company and aren’t leaving room for slip ups along the way. Having a solid organizational structure from the beginning is critical, because having to reassign tasks and replace management is not only a hindrance to your workflow, but it’s costly (something that will definitely be frowned upon by investors!). If someone’s giving you money to start your business, they want to know they’ll get a return on that investment in a timely fashion.
Next, detail your ownership information for your readers. Provide them with the legal structure of your business, as well as who’s involved as an owner. Is your company incorporated? If so, are you classed as a C or S corporation? Is your company a partnership? If so, is it general or limited? Do you own your company as a sole proprietor? These are important questions to answer.
Include the following ownership information:
- Owner(s) Name(s)
- Ownership percentage breakdown
- Degree to which the owner is involved with the company
- Forms of ownership (common/preferred stock, general/limited partner, etc.)
- Outstanding equity (options, warrants, convertible debt, etc.)
- Common stock (authorized or issued)
It’s a generally accepted belief that a company’s success and growth hinges heavily on the ability and track record of the people in control, i.e. its owner and management team. That’s why it’s incredibly important to give your readers a solid understanding of who’s in charge of your company, and why they deserve to fill the roles that they do. Provide a management profile for every individual in a position of power that includes:
- Position (with a brief description and list of primary duties)
- Primary responsibilities and authority
- Unique experiences and abilities
- Previous employment
- Special skills
- Proven track record
- Industry recognition
- Community involvement
- Number of years with the company
- Compensation basis and levels (be sure that these are reasonable—they can’t be too high or too low)
Make sure that when you list each member’s achievements, you quantify each point as specifically as possible. For example, if Bob managed a team of 20 people at his last company, don’t just write, “Managed a sales team,” but rather, “Managed a sales team of 20 people.” If Susan was responsible for a dramatic increase in revenue in her last position, “Increased revenue by 20 percent in the first quarter” is a lot more impressive than, “Increased revenue.” Ambiguity is not your friend when you’re writing your business plan—investors could easily interpret the last of specific numbers as a negative, and assume that Susan was only responsible for a two percent increase, which likely won’t make them race for their checkbooks.
Really drive the point home that the people on your team are not only powerful forces on their own, but especially strong when they work together. Highlight each member’s unique skill sets in terms of how they complement each other and reinforce that this particular group of people will lead your company to success.
This last section is only applicable for companies with a board of directors. If you have a board of directors, you’ll need to provide their qualifications for serving as advisors to your company. Having an unpaid advisory board is a tremendous help to companies that can’t afford to hire high-caliber experts. Also, with a group of advisors who are well-known and successful in their own business ventures, your company will gain increased credibility and a favorable perception or management expertise within your industry.
The information about each of your board of directors should include:
- Board position
- Individual’s involvement with the company
- Previous and future contributions to the success of the company