One part of your business plan that's important to potential investors and potential employees is where it explains the organization and management of your new business. Investors and employees want to be part of a winning team, and here you'll explain who the key players are and what they do to make the business a winner.

Organization Outline

This section of the plan won't be very big if your company is made up of you and one or two other entrepreneurs or family members. Regardless of the size, though, you need to explain the positions in your company, what they're responsible for and who answers to whom. Are there different departments and functions, such as manufacturing, sales and advertising?

An easy way to tackle this task is to draw a flow chart or diagram showing each position and a brief explanation of its responsibilities and duties. The key here is to show that you've thought about everything and your business is efficient. Every task or job is covered by someone, no one's sitting idle and work isn't being duplicated.

Who Owns What?

The organization and management section needs to explain who, exactly, owns the business, as well its legal structure. In other words, is it a corporation, a partnership or a sole proprietorship? Whether the business is big or small, just you or dozens of staff, it should describe:

  • The names of anyone who owns any part of the business and exactly how much each owns, 10 percent, 50 percent, etc.
  • How much involvement each owner has in the business. For instance, does an owner actually work daily in the store, maybe as a manager?
  • Is there "stock" or other securities in the business? How much of it is held by the owners?
  • How much are owners paid, how are they paid and how often?

Management's Credentials

Here you need details about the key people in the business, the ones who make the day-to-decisions and make the business go: The management. Of course, if you're the only person owning and running the company, you can skip this part because you've provided the information elsewhere.

If you're not alone, ask your managers for their resumes and include copies of them in the business plan. Also, provide a short description about each of them with information like:

  • The managers' names
  • The position or job they'll perform and the duties and responsibilities connected to that job
  • Their educational and training background. Did they go to college or vocational school? Where? What did they study or get a degree in?
  • What experience do they have? Have they held similar jobs in the past? How long have they been in this business?
  • Do they have a " proven track record?" Is it easy to see from their past jobs and experiences that they can manage your business successfully?
  • How much are they paid and how often? Is it salary or hourly wages? Are they eligible for bonuses, and if so, based on what and how much?

Try to give solid examples of your managers' abilities and skills. For example, explain how many workers or staff she managed or supervised in her last position and how much sales or profits increased under her lead. Remember, you need to prove your team is a winner.

Like many entrepreneurs just starting out, you may not know who your managers are yet - unless, of course you're the only one running the business. Don't worry. Instead of specific names and credentials, explain the type of person you're looking for to fill a position. For example, you can say, "This position will be filled by someone with a college degree in business management," or "The ideal candidate for this position will have at least five years' experience in sales."

Questions for Your Attorney

  • Can I try to hire managers and staff from one of my competitors? Are there any legal issues I need to be concerned about?
  • If I use a person's name and credentials in my business plan, does that mean I have to hire that person? What if I change my mind and want to hire someone else?
  • If I'm financing my new business, do I have to let my investors know about any changes I make to my organization and management plan?