Defining the Main Components of a Business Plan and Information Memorandum

 

Although a business plan is different from an Information Memorandum, many of the components are the same, although they may go by different names from document to document. These are some of the most common sections that overlap between the two.

1. Executive Summary – It is always recommended that you write the executive summary last. This is a one- or two-page overview of your entire Business Plan or information memorandum. It will include, at a minimum, a description of the main products or services, why you’re starting/selling the business, and will touch on the topline financials.

2. Investment Opportunity – You may touch on the investment opportunity in the Executive Summary but, in this section of the information memorandum or business plan you will go in depth about why the business is a good fit for an investor or acquirer. It will touch on some of the strongest and most compelling aspects such as existing big-name clients, percent of market capture, committed future sales, or strong management team.

3. Company Description – This is the background of the company. It will cover important information such as year of establishment, business structure, recent news and sometimes will include top line financials but, with slightly more detail than the Executive Summary.

4. Product/Service Overview – This section of the Information Memorandum or business plan is where you will go into depth about the products/services offered. You will likely discuss what is top selling, what makes up the majority of sales, as well as the margin that is captured from each various product or service category. If you have a limited number of products, you will likely discuss each one individually. If you have several, you will discuss them in segments or groups.

5. Market Overview – In this section, often thought of as one of the most important foundational elements of the business plan or information memorandum, you will discuss the business’s position in the larger business landscape. It includes a statement about the entire industry, trends, competitors, as well as who the target markets are.

6. Management & Structure – Potential investors often want to know who is responsible for the day to day decisions in the business. Typically, this section will include an organizational chart as well as a description about key management positions and a biography of the people that fill them.

7. Financials – In the end, it is often all about the numbers. You will likely touch on various financial elements throughout the business plan or information memorandum as it makes sense. This is where they will be covered in detail. At a minimum, this will include projections of the key financial statements. Existing businesses will also present their recent and current actuals.

How these sections are ordered will vary between the business plan and information memorandum. It may even vary business plan to business plan or information memorandum to information memorandum. Beyond the Executive Summary, which is always first, and the Financials, which will almost always be last or second to last, the order of the rest of the sections may change to make sense for the specific plan. Some of these sections will also be broken down and covered over multiple sections depending on the business.

If you’re unsure how to construct your Business Plan or information memorandum to be the best representation for your business, consider hiring professional business plan or information memorandum writers like those at Joorney.