Although writing a business plan can be a lengthy, intimidating project, it is not necessarily difficult. Here is an overview of how to write a successful business plan.

What to Include in Your Business Plan

Your business plan needs to demonstrate that you have thoroughly considered all aspects of running your business. To that end, the standard business plan has nine major sections, covering everything from your business’s mission statement to a detailed financial analysis.

Executive Summary

The first – and most important – section of your business plan is the executive summary. This section is so important that it should literally be the first thing the reader sees – even before the table of contents! However, it should also be written last, as you’ll have a better understanding of the overall message of your business plan after you’ve researched and written the other sections.

One of the most important parts of the executive summary is the mission statement. The mission statement is only three or four sentences long, but it should pack the most punch out of everything else in your business plan: Those four sentences are responsible for not only defining your business, but also capturing the interest of your reader.

The rest of your executive summary should fill in the important details that the mission statement glosses over. For instance, your executive summary should include a short history of the business, including founder profiles and start date; a current snapshot, listing locations, numbers of employees, and products or services offered; and a summary of future plans and goals.

This section is a candidate for a bulleted format, which allows you to list main points in a manner that is easy to scan. Avoid using too much detail – remember, this section is a summary. A page or two is usually sufficient for an executive summary.

Market Analysis

The next section of your business plan focuses on market analysis. In order to show that your business has a reasonable chance for success, you will need to thoroughly research the industry and the market you intend to sell to. No bank or investor is going to back a doomed venture, so this section is sure to fall under especially close scrutiny if you are looking for financing.

Your market analysis should describe your industry, including the size, growth rate, and trends that could affect the industry. This section should also describe your target market – that is, the type or group of customers that your company intends to serve. The description of your target market should include detail such as:

• Distinguishing characteristics
• The needs your company or product line will meet
• What media and/or marketing methods you’ll use to reach them
• What percentage of your target market you expect to be able to wrest away from your competitors

In addition, your market analysis should include the results of any market tests you have done, and an analysis of the strengths and weaknesses of your competitors.

Company Description

After your market analysis, your business plan will need to include a description of your company. This section should describe:

• The nature of your business
• The needs of the market
• How your business will meet these needs
• Your target market, including specific individuals and/or organizations
• The factors that set you apart from your competition and make you likely to succeed

Although some of these things overlap with the previous section, they are still necessary parts of your company description. Each section of your business plan should have the ability to stand on its own if need be. In other words, the company description should thoroughly describe your company, even if certain aspects are covered in other sections.

Organization and Management

Once you have described the nature and purpose of your company, you will need to explain your staff setup. This section should include:

• The division of labor – how company processes are divided among the staff
• The management hierarchy
• Profiles of the company’s owner(s), management personnel, and the Board of Directors
• Employee incentives, such as salary, benefits packages, and bonuses

This goal of this section is to demonstrate not only good organization within the company, but also the ability to create loyalty in your employees. Long-term employees minimize human resource costs and increase a business’s chances for success, so banks and investors will want to see that you have an effective system in place for maintaining your staff.

Marketing and Sales Management

The purpose of the marketing and sales section of your business plan is to outline your strategies for marketing your products or services. This section also plans for company growth by describing how the growth could take place.

The section should describe your company’s:

• Marketing methods
• Distributions methods
• Type of sales force
• Sales activities
• Growth strategies

Product or Services

Following the marketing section of your business plan, you will need a section focusing on the product or services your business offers. This is more than a simple description of your product or services, though. You will also need to include:

• The specific benefits your product or service offers customers
• The specific needs of the market, and how your product will meet them
• The advantages your product has over your competitors
• Any copyright, trade secret, or patent information pertaining to your product
• Where any new products or services are in the research and development process
• Current industry research that you could use in the development of products and services

Funding Request

Only once you have described your business from head to toe are you ready to detail your funding needs. This section should include everything a bank or investor needs in order to understand what type of funding you want:

• How much money you need now
• How much money you think you will need over the next five years
• How the money you borrow will be used
• How long you will need funding
• What type of funding you want (i.e. loans, investors, etc.)
• Any other terms you want the funding arrangement to include

Financials

The financials section in your business plan supports your request for outside funding. This section provides an analysis of your company’s prospective financial success. The section also details your company’s financial track record for the past three to five years, unless you are seeking financing for a startup business.

The financials section should include:

• Company income statements for prior years
• Balance sheets for prior years
• Cash flow statements for prior years
• Forecasted company income statements
• Forecasted balance sheets
• Forecasted cash flow statements
• Projections for the next five years – every month or quarter for the first year, with longer intervals for the remaining years
• Collateral you can use to secure a loan

The financials section is a great place to include visuals such as graphs, particularly if you predict a positive trend in your projected financials. A graph allows the reader to quickly take in this information, and may do a better job of encouraging a bank or investor to finance your business. However, be sure that the amount of financing you are requesting is in keeping with your projected financials – no matter how impressive your projections are, if you are asking for more money than is warranted, no bank or investor will give it to you.

Appendices

The appendix is the final section in your business plan. Essentially, this is where you put all of the information that doesn’t fit in the other eight sections, but that someone – particularly a bank or investor – might need to see.

For instance, the market analysis section of your business plan may list the results of market studies you have done as part of your market research. Rather than listing the details of the studies in that section, where they will appear cumbersome and detract from the flow of your business plan, you can provide this information in an appendix.

Other information that should be relegated to an appendix includes:

• Credit histories for both you and your business
• Letters of reference
• References that have bearing on your company and your product or service, such as magazines or books on the topic
• Company licenses and patents
• Copies of contracts, leases, and other legal documents
• Resumes of your top managers
• Names of business consultants, such as your accountant and attorney

Writing a Successful Business Plan

Despite the quantity of information contained in your business plan, it should be laid out in a format that is easy to read. Just like with any piece of business writing, it is important to craft your business plan with your intended audience in mind – and the bankers, investors, and other busy professionals who will read your business plan almost certainly won’t have time to read a tedious document with long-winded paragraphs and large blocks of text.

Business plans for startup companies and company expansions are typically between twenty to forty pages long, but formatting actually accounts for a lot of this length. A strong business plan uses bullet points throughout to break up long sections and highlight its main points. Visuals such as tables and charts are also used to quickly relay specific information, such as trends in sales and other financial information. These techniques ensure that the reader can skim the business plan quickly and efficiently.

Think of your audience as only having fifteen minutes to spend on each business plan that comes across their desks. In that fifteen minutes, you not only have to relay your most important points, but also convince the reader that your business venture merits a financial investment. Your best bet is a well-researched business plan, with an organized, easy-to-read format and clear, confident prose.

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The first three principles address some of the new realities faced by today’s retirees.

1. Principle #1 is Expect to Outlive the Averages. Since almost half of the people reaching age 65 today will live beyond an average life expectancy, it’s very dangerous to use averages in your own individual planning
2. Principle #2 is Adjust for Changing Income Needs. Because people are living longer today, it’s more important than ever to account for inflation and the possibility of fluctuating lifestyle expenses. It’s simply not good enough any more to plan for a fixed amount of income throughout retirement.
3. Principle #3 is Create Dependable Income for the Rest of Your Life, and it’s one of the most important concepts in the book. As Grangaard says early on, When you get to retirement, you have to be prepared to replace your paycheck as soon as you stop working.? 

   The next four principles address some of the most important overall financial concepts.

4. Principle #4 is Count on Compounding During Retirement. Of course, compounding is key to accumulating assets for retirement, too — but when you’re living longer during retirement, it’s just as important over the last 20 or 30 years of your life.
5. Principle #5 is Invest in the Right Stuff. You need to have the right amount of money set aside in lower-risk assets to replace your paycheck, but you also need to have enough invested in growth-oriented investments to take care of your income later on. As Grignard puts it, you have to know how to thread the financial needle.
6. Principle #6 is Be a Long-Term Investor During Retirement. If you decide to invest some of your assets to go after higher rates of return, you’ll need to be able to manage the risk of taking a more aggressive investment posture — and having a long-term planning horizon can really help.
7. Principle #7 is Know When to Sell. During retirement, most people will be overall sellers of stock market investments, since they’ll have to use the proceeds to generate the income they need to live on. In fact, the real value of being a long-term investor in retirement is that you’ll have more time to figure out when it’s a good time to sell. 

   Principles #8, #9 and #10 address some of the other key issues important to all retirement investors.

8. Principle #8 is Don’t Let Dollar-Price-Erosion Catch You Off-Guard. Dollar cost averaging into the stock market is great advice for younger investors, but dollar cost averaging out of the stock market can get you into a lot of trouble in retirement.
9. Principle #9 is Diversify. Diversification is important at every stage of life, and even more so in retirement. Since you will be selling stocks periodically to get more income to live on, having a well-diversified portfolio will make it more likely that you will always have something in a good position to sell whenever you need to.
10. Principle #10 is Keep It Tax-Deferred.? Reducing income taxes is an important part of any investment strategy, and it’s particularly important during retirement. You can’t afford to pay taxes too soon, because you’ll be giving up too much future growth — and therefore, too much future income as well. 

    The last two principles focus primarily on taking action.

11. Principle #11 is Have a Plan. In fact, the goal of effective retirement planning, says Grignard, is to live better during the day while sleeping better at night. Having a plan, he says, is the key to being able to do that.
12. And finally, Principle #12 is Take Action Now. While Grignard offers a lot of information, theories and strategies, there is also a practical sense of urgency and a plea for action throughout the book. It’s never too early and it’s never too late to do your retirement planning, he says, and then wraps it all up by suggesting that most people don’t plan to fail, they simply fail to plan.

When you invest your money in a mutual fund, you are trusting someone to invest in the stock market for you. Because of this, you want to be sure this person knows what he or she is doing. Also, you want to make sure that this person is not charging you too much to manage your money for you. Mutual funds fees are “hidden,” in the sense that they do not charge you an upfront fee but rather a percentage of the amount of money in your account. If this percentage is too high, you would do better just blindly picking stocks yourself.

Here are five helpful tips for choosing the right mutual funds.

1. Keep the fees low. Generally, expense fees should not be much higher than 1% if it is just a basic domestic equity fund. You should never invest money in a fund that also charges a “load,” which is an additional fee that is ridiculous to pay. Never invest in funds that charge loads; those funds are for suckers.

2. Check the asset base. Mutual fund managers only know of so many good investments. When they have too much money to manage, they begin investing in stocks they don’t like much but need to invest in anyway or else they’ll just have money laying around. There’s little reason to invest in a fund with over $5 billion in assets. It’s best if it’s under $2 billion generally.

3. Consider an index fund. This is a fund that tracks a stock index, such as the S&P 500. For these funds, the manager just buys whatever stocks happen to be in the index. Since this is not much work, the fees are much lower. Even though this method is simple, it has proven to perform better than most mutual funds. Some high performance index funds include FSMKX (Fidelity S&P 500) and VIMSX (Vanguard S&P 400 Midcap.

4. Evaluate the fund’s strategy. If you have a long term outlook, look for a more aggressive fund that invests in small-cap stocks, international stocks, and riskier stocks in general. High risk tends to result in high performance in the long run. If you are more risk-averse, consider an S&P 500 index fund.

5. Keep the fees low. Did I mention this already? Well, I’ll mention it again. This is where most people mess up. Make sure you are not paying a load or paying too much in fees to the mutual fund.

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More information about mutual funds can be found at Research Mutual Funds.

According to Trends in College Pricing — a survey of over 3,200 U.S. post-secondary institutions conducted in 2002 — when a child born in 2003 is ready for college, a four year degree at a public in-state institution will cost $83,169. Four year degrees at public out-of-state and private colleges will cost significantly more, $136,387 and $217,644 respectively. These figures account for a 5 percent college inflation rate.

After the shock from seeing those numbers for the first time wears off, parents start looking into their options, says John Walters, executive vice president for The Hartford’s Investment Products Division. Some will choose to put away money in a savings account every month, others in CDs or mutual funds, but they’re really doing themselves a disservice. All of those options are taxable investments and as a result, don’t maximize earning potential?

If you’re looking for a college savings plan where your money will grow tax deferred,(1) there are two options out there: the federal government authorized Coverdell Education Savings Account and the 529 College Savings Plans, sponsored by each of the 50 states and certain private institutions.

Coverdell accounts allow you to put away up to $2,000 per year per beneficiary for education related expenses, but they are very limiting. You can have more than one Coverdell set up, but have to keep track of how much you put into each account per year. If you exceed the $2,000 maximum for all accounts, you will face tax consequences; and you can only contribute until the beneficiary is 18.

People who invest in 529 plans have more flexibility. The plans can be opened for anyone considering going to college, including children, relatives and parents. You can even set up an account for yourself. These college savings plans usually require only modest amounts to open; and you can add any sum up to the maximum that each plan authorized. Furthermore, you can gift up to $55,000 to a beneficiary once every 5 years without incurring a federal gift tax. (2)

All 50 states have passed legislation authorizing 529 plans, and most have a college savings plan and/or prepaid plan in operation. The nice thing about 529s is you don’t have to live in or go to school in the state that is sponsoring your plan, says Walters.

Hartford Life Insurance Company administers the SMART529 plans offered by the state of West Virginia. Thousands of people from all 50 states have enrolled in SMART529. The plan offers investors access to dozens of investment options, including individual fund options, static portfolios and age-based portfolios. It also offers net asset value transfers, meaning transfers from other 529 plans or Coverdell accounts can be made without an upfront sales charge.

For more information about SMART529 products, visit your financial advisor. If you want to get a better idea of how much college will cost when your child is ready to go, there’s an online calculator on the Hartford Investor’s Web site. Log onto www.hartfordinvestor.com. Under Education Center? on the left hand side of your screen, click on the link that says calculators, then scroll down to the link that says SMART 529 college savings calculator.