Business Plan Writing Guide: Management and Organization StructureFeatured, Small Business, Small Business How to Guides Saturday, March 12th, 2011
If you intend to use your business plan for raising funds, the management and organization structure section will be the most important section that you will write. The management section is often the first section that investors look at while reading a plan. Investors give a lot of value to the management team and understand that the success of any business depends a lot on the quality of the management team. If you want to use your business plan as an internal tool and not as a vehicle for attracting investments, this section will not be as significant. In that case you may still want to create management profiles and see how each of them individually fits into a position and how they can make a synergetic team collectively.
The management and organization section should include your management team’s profile, the organization structure and details about the ownership of business.
This part is used to introduce your management team to the reader. You should begin with brief biographies of the key members of the management team including yourself, the founder. The details that you should include about each member of the management team are:
- Position in the organization
- Key Responsibilities
- Work history
- Special achievements
The idea to present all this information is to sell your management team to the reader so don’t forget to include any important detail. You should provide accurate information as the investors often checks references. Also, you should not make generic statements such as Mr. X handled a large business development team or significantly increased the profits of the company that he worked with previously. While highlighting achievements, make quantifiable statements such as “Mr. A handled a team of 50 business development people spread across three parts of the country” or that his work led to increase in profits by sixty percent.
In case you have an advisory board consisting of notable members be sure to include them here. Having an advisory board with well known and successful business people goes a long way in establishing the credibility of your business. It shows that you are not trying to do everything yourself as well as you recognize that you don’t know everything and will have access to professional help when needed.
An investor would be interested in knowing your organization structure to assess that you know all the key areas and positions required to make your business a success. The organization structure should be presented using an organization chart that outlines all the key positions in the organization, who is currently serving at that position and a brief description of each position. It’s not a problem if you have some key positions vacant in your organization’s structure and you shouldn’t hide that or hesitate in showing that to an investor. It is not unusual for a startup to have some of the key positions vacant and investors also understand that. The important part is to recognize that gap and have a plan for filling up that position as quickly as possible. Also, you should be able to explain who is taking care of the responsibilities of that vacant position currently.
Last but not the least, the investors also want to know the ownership details of the business. In this part, you will need to provide details about the legal structure of your business and ownership distribution. Include in this part, details like:
- Business type – Incorporation, partnership or sole proprietorship
- Owners – Names of owners and their percentage ownership
- Ownership type – Preferred stock, common stock, general partner, limited partner
- Authorized and outstanding equity or equity equivalents such as options
Having a capable management team and a well thought out organization structure is vital for making a business successful. It ensures that right people are deployed to right jobs that match their skills, experience and knowledge.
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