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Every business plan needs an organization and management section. This document will help you convey your vision for how your business will be structured. Here's how to write a good one.
The organization and management section of your business plan should summarize information about your business structure and team. It usually comes after the market analysis section in a business plan. It's especially important to include this section if you have a partnership or a multi-member limited liability company (LLC). However, if you're starting a home business or are writing a business plan for one that's already operating, and you're the only person involved, then you don't need to include this section.
You can separate the two terms to better understand how to write this section of the business plan.
The "organization" in this section refers to how your business is structured and the people involved. "Management" refers to the responsibilities different managers have and what those individuals bring to the company.
In the opening of the section, you want to give a summary of your management team, including size, composition, and a bit about each member's experience.
For example, you might write something like "Our management team of five has more than 20 years of experience in the industry."
The organization section sets up the hierarchy of the people involved in your business. It's often set up in a chart form. If you have a partnership or multi-member LLC, this is where you indicate who is president or CEO, the CFO, director of marketing, and any other roles you have in your business. If you're a single-person home business, this becomes easy as you're the only one on the chart.
Technically, this part of the plan is about owner members, but if you plan to outsource work or hire a virtual assistant, you can include them here, as well. For example, you might have a freelance webmaster, marketing assistant, and copywriter. You might even have a virtual assistant whose job it is to work with your other freelancers. These people aren't owners but have significant duties in your business.
Some common types of business structures include sole proprietorships, partnerships, LLCs, and corporations.
This type of business isn't a separate entity. Instead, business assets and liabilities are entwined with your personal finances. You're the sole person in charge, and you won't be allowed to sell stock or bring in new owners. If you don't register as any other kind of business, you'll automatically be considered a sole proprietorship.
Partnerships can be either limited (LP) or limited liability (LLP). LPs have one general partner who takes on the bulk of the liability for the company, while all other partner owners have limited liability (and limited control over the business). LLPs are like an LP without a general partner; all partners have limited liability from debts as well as the actions of other partners.
A limited liability company (LLC) combines elements of partnership and corporate structures. Your personal liability is limited, and profits are passed through to your personal returns.
There are many variations of corporate structure that an organization might choose. These include C corps, which allow companies to issue stock shares, pay corporate taxes (rather than passing profits through to personal returns), and offer the highest level of personal protection from business activities. There are also nonprofit corporations, which are similar to C corps, but they don't seek profits and don't pay state or federal income taxes.
This section highlights what you and the others involved in the running of your business bring to the table. This not only includes owners and managers but also your board of directors (if you have one) and support professionals. Start by indicating your business structure, and then list the team members.
Provide the following information on each owner/manager/member:
A board of directors is another part of your management team. If you don't have a board of directors, you don't need this information. This section provides much of the same information as in the ownership and management team sub-section.
Even a one-person business could benefit from a small group of other business owners providing feedback, support, and accountability as an advisory board.
Especially if you're seeking funding, let potential investors know you're on the ball with a lawyer, accountant, and other professionals that are involved in your business. This is the place to list any freelancers or contractors you're using. Like the other sections, you'll want to include:
Writing a business plan seems like an overwhelming activity, especially if you're starting a small, one-person business. But writing a business plan can be fairly simple.
Like other parts of the business plan, this is a section you'll want to update if you have team member changes, or if you and your team members receive any additional training, awards, or other resume changes that benefit the business.
Because it highlights the skills and experience you and your team offer, it can be a great resource to refer to when seeking publicity and marketing opportunities. You can refer to it when creating your media kit or pitching for publicity.
The point of this section is to clarify who's in charge of what. This document can clarify these roles for yourself, as well as investors and employees.
The organization and management section should explain the chain of command, roles, and responsibilities. It should also explain a bit about what makes each person particularly well-suited to take charge of their area of the business.
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