When developing a business plan, the 'management section' describes your management team, staff, resources, and how your business ownership is structured. This section should not only describe who's on your management team but how each person's skill set will contribute to your bottom line. In this article, we will detail exactly how to compose and best highlight your management team. A convenient way to organize this section is to break it into the following points:
- Ownership Structure
- Internal Management Team
- External Management Resources
- Human Resources
This section outlines the legal structure of your business. It may only be a single sentence if your business is a sole proprietorship. If your business is a partnership or a corporation, it can be longer. You want to be sure you explain who holds what percentage of ownership in the company.
Internal Management Team
This section should describe the business management categories relevant to your business, identify who's going to have responsibility for each category, and then include a short profile highlighting each person's skills.
The basic business categories of sales, marketing, administration, and production work for many small businesses. If your business has employees you will need a human resources section, as well. You may also find that your company needs additional management categories to fit your unique circumstances.
It's not necessary to have a different person in charge of each category; some key management people often fill more than one role. Identify the key managers in your business and explain what functions and experience each team member will fill. You may wish to present this as an organizational chart in your business plan, although list format is also appropriate.
Along with this section, you should include complete resumés of each member of your management team (including your own). Follow this with an explanation of how each member will be compensated, their benefits package, and describe any profit-sharing plans that may apply.
If there are any contracts that relate directly to your management team members, such as work contracts or non-competition agreements, you should include them in an Appendix to your business plan.
External Management Resources
While external management resources are often overlooked when writing a business plan, using these resources effectively can make the difference between the success or failure of your managers. Think of these external resources as your internal management team's backup. They give your business credibility and an additional pool of expertise.
An Advisory Board can increase consumer and investor confidence, attract talented employees by showing a commitment to company growth, and bring a diversity of contributions. If you choose to have an Advisory Board, list all the board members in this section, and include a bio and all relevant specializations. If you choose your board members carefully, the group can compensate for the niche forms of expertise that your internal managers lack.
When selecting your board members, look for people who have a genuine interest in seeing your business do well and have the patience and time to provide good advice.
Recently retired executives or managers, other successful entrepreneurs, and/or vendors would be good choices for an Advisory Board.
Professional Services should also be highlighted in the external management resources section. Describe all the external professional advisors that your business will use, such as accountants, bankers, lawyers, IT consultants, business consultants, and/or business coaches. These professionals provide a web of advice and support outside your internal management team that can be invaluable in making management decisions and making your new business a success.
The last point you should address in the management section of your business plan is your human resources needs. The trick to writing about human resources is to be specific. To simply write, "We'll need more people once we get up and running" isn't sufficient. Follow this list:
- Detail how many employees your business will need at each stage and what they will cost.
- Describe exactly how your business's human resources needs can be met. Will it be best to have employees or should you operate with contract workers or freelancers? Do you need full-time or part-time staff or a mix of both?
- Outline your staffing requirements, including a description of the specific skills that the people working for you will need to have.
- Calculate your labor costs. Decide the number of employees you will need and how many customers each employee can serve. For example, if it takes one employee to serve 150 customers, and you forecast 1500 customers in your first year, your business will need 10 employees.
- Determine how much salary each employee will receive, and total the cost of salary for all your employees.
- Add to this the cost of Workers' Compensation Insurance (mandatory for most businesses) and the cost of any other employee benefits, such as company-sponsored medical and dental plans.
After you've listed the points above, describe how you're going to find the staff your business needs, and how you're going to train them. Your description of staff recruitment should explain whether or not sufficient local labor is available and how you're going to recruit staff.
When you're writing about staff training, you'll want to include as many specifics as possible. What specific training will your staff undergo? What ongoing training opportunities will you provide your employees?
Even if the plan for your business is to start as a sole proprietorship, you should include a section on potential human resources demands as a way to demonstrate that you've thought about the staffing your business may require as it grows.
Business plans are about the future and the hypothetical challenges and successes that await. It's worth visualizing and documenting the details of your business so that the materials and network around your dream can begin to take shape.