What are the components of a business plan?

A business plan clarifies the values, goals, challenges and strategies for your enterprise. A business plan allows you to make mistakes on paper, providing you the chance to work through business decisions before committing resources. Then, it provides guidance and focus for managing your operations. A business plan may also be helpful in securing financing by providing lenders with a look at your financial situation and expectations. The business plan should be a dynamic document and should be kept up-to-date and reevaluated periodically to reflect changes in your values, goals, challenges and strategies.

The business plan has nine major components, which are described as follows in a suggested but not required order.

1. Executive summary
The executive summary is a one-page summary of your business plan. The summary should briefly describe your enterprise idea and discuss the conclusions made in your financial strategy. This section comes first in your business plan, but it is normally written last.

2. Mission statement
The mission statement reflects the core purpose of your business, stating your values in a focused sentence of less than fifty words.

3. Business concept or idea
Your business idea comprises a one-page, concise, complete and persuasive statement describing the what, where, why and how of your agritourism enterprise. This section includes a description of your

• Enterprise idea
• Product(s) and/or service(s)
• Target audience
• Enterprise ’s “fit” with others in the market, both competitive and complementary

4. Measurable goals, expected outcomes, objectives and action steps
This component of your business plan describes the goals of your enterprise as well as the outcomes you expect, objectives and steps you will take to reach your goals. Goals describe the long-term plans (three to five years) you want to achieve. Objectives are your short-term (one year or less) plans that identify how you will meet your goals. Goals are what is to be accomplished, and objectives are how it is to be accomplished.

5. Background information (industry research and market analysis)
Background information relative to your enterprise is explained in this section. This section includes background on why you are choosing to develop a value-added enterprise and market analysis information. You may describe the need for your enterprise in your area and trends in the industry.

6. Management needs and management history
The management needs and management history section of the business plan explains how you will run your business and describes your management team, the legal structure of the enterprise, insurance needs and staffing needs. It also notes what regulatory agencies you will be working with and how you will address their requirements.  

7. Marketing strategy
This section of the business plans describes the strategies you will use to market your agritourism enterprise. Marketing strategies should be developed for “the four P’s of marketing” – product, price, place and promotion. Start-up costs for the enterprise will need to be estimated.

8. Financial strategy
Your financial strategy is basic to making management decisions and obtaining financing. In this section, you will identify sources of existing debt and financing needs. You will also develop financial statements including a 1) profit-loss statement, 2) balance sheet and 3) cash flow projection including sales projections. These statements will be summarized in this section of the business plan.

9. Exit strategy
An exit strategy specifies situations by which you plan to exit the business or situations which may necessitate the closing of the business. The exit strategy should also outline the method that will be used in exiting the business.

10. Appendix
The appendix is located at the end of the business plan, furnishing supporting documents. Financial statements, customer support statements and credit terms available should all be included.

More information may be found in Agritourism in Focus: A Guide for Tennessee Farmers at http://extension.tennessee.edu/publications/pbfiles/PB1754.pdf