what is key personnel in business plan

How Do You Draft the Personnel Section of the Business Plan? The Personnel Section of a Business Plan Explained.

One of the key sections of a Business Plan is the section that describes the plan to grow or scale the business. This often involves hiring staff and staff often represent the single largest ongoing expense that a company will have. As such, it is important to plan exactly who will be hired, how much they will be paid and when staff will join the team.

What Should a Personnel Plan Look Like?

The personnel section of a Business Plan should contain the following components.

Job Descriptions – The job descriptions should provide the reader with enough detail so that they understand the job function of prospective hires
Organizational Chart – An organizational chart show who will work for who and allows a reader to get an overview of the overall management and staffing structure of the company.
Type of Hire – Staff can either be salaried employees or independent contractors. It is important to distinguish between these two types of workers for tax and other labor compliance issues.
Salary Amount – Details of either yearly or hourly pay should be included.
Salary Assumptions – common assumptions include an estimate of raises over time (eg. 5%) and a burden rate assigned to cover company benefits like health insurance (eg. 20% of salary costs)
When Hires Will Take Place – Staff are usually hired over a period of time and staggered. As such, it is helpful to include detail surrounding when a particular employee will start. If you will have temporary staff of contractors, you should also specify when the employment will end.

What Do the Numbers Look Like?

The sample chart below is an example of the financial section of a business plan. It is for illustrative purposes only and each plan is unique and requires tailoring to meet the specific needs of the company.

	FY2015	FY2016	FY2017	FY2018	FY2019
Coder	$0	$48,000	$50,400	$52,920	$55,572
Sales – 2 Sales Staff	$0	$48,000	$50,400	$52,920	$55,566
Sales Manager	$0	$0	$24,000	$25,200	$26,460
Marketing Head	$0	$0	$0	$24,000	$25,200
Distribution Manager	$0	$0	$0	$0	$24,000
Founder 1 – Founder Founder	$91,667	$105,000	$110,250	$115,763	$121,551
Founder 2	$0	$100,000	$105,000	$110,250	$115,763
Founder 3	$0	$100,000	$105,000	$110,250	$115,763
Total	$91,667	$401,000	$445,050	$491,303	$539,875

What Should the Explanation of a Personnel Plan Look Like?

The detail below is a summary of some of the possible explanation that could be included in a Personnel Plan for the above data. The description is an excerpt of possible language that could be used.

The company will start out utilizing the three founders and salaries have been allocated for each founder at $100,000 per year. Founder 1 will start taking a salary in FY2015 while the other two founders will start taking a salary in FY2016. Founders will also take dividends as issued by the Board of Directors.

The budget contemplates hiring 2 employees in the sales area in fiscal 2016 and one software engineer . Until that time, one of the founders who specializes in application development (Hellen Bussiere), will work on developing the tech side of the business. In addition, the plan includes hiring 1 sales person a year after that. Sales people will make approx.. $25,000 per year. In year 4, the application will be completed and we will hire a marketing head to promote the product. The marketing head will make $24,000 a year and will be a part time position. In year 5, a distribution manager will be hired and he/she will also be part time and make $24,000 per year.

Full job descriptions are included in Section A.2 of the plan.

The total number of employees at the end of year 5 is 9 people (including the founders). This is a modest estimate and may increase significantly if more users sign up.

All salaries include a raise estimated at 5% per year. 20% of salary costs have been included for benefits such as health care and 401K matching.

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Key Management Personnel: Roles, Responsibilities, and Impact

Explore the roles, responsibilities, and impact of key management personnel on corporate governance and organizational success.

Effective leadership is crucial for the success and sustainability of any organization. Key management personnel (KMP) play a pivotal role in steering companies towards their strategic goals, ensuring operational efficiency, and maintaining robust corporate governance.

Understanding the roles, responsibilities, and impact of KMP is essential for stakeholders to appreciate how these individuals influence organizational outcomes.

Key Management Personnel Roles and Responsibilities

Key management personnel are the backbone of an organization, responsible for making strategic decisions that shape the company’s future. These individuals typically include the CEO, CFO, COO, and other senior executives who hold significant authority and influence. Their roles are multifaceted, encompassing strategic planning, financial oversight, and operational management.

Strategic planning is a primary responsibility of KMP, requiring them to set long-term goals and develop actionable plans to achieve them. This involves analyzing market trends, assessing competitive landscapes, and identifying growth opportunities. For instance, a CEO might spearhead a new market entry strategy, while a CFO could develop financial models to support this expansion. These strategic initiatives are crucial for maintaining the company’s competitive edge and ensuring sustainable growth.

Financial oversight is another critical area where KMP make a significant impact. They are tasked with ensuring the organization’s financial health by managing budgets, overseeing financial reporting, and implementing robust internal controls. The CFO, for example, plays a vital role in financial planning and analysis, helping the company navigate economic uncertainties and allocate resources efficiently. This financial stewardship is essential for maintaining investor confidence and securing funding for future projects.

Operational management is equally important, as it involves the day-to-day running of the organization. KMP must ensure that business operations are aligned with strategic objectives and that resources are utilized effectively. The COO, for instance, might focus on optimizing supply chain processes or improving production efficiency. By streamlining operations, KMP can enhance productivity and reduce costs, contributing to the overall profitability of the company.

Identifying Key Management Personnel

Identifying key management personnel within an organization involves recognizing those individuals who hold significant decision-making authority and influence over the company’s strategic direction and operational execution. These individuals are not merely high-ranking officials but are integral to the company’s leadership structure, often possessing a unique blend of expertise, experience, and vision.

The process of identifying KMP typically begins with an examination of the organizational hierarchy. This involves looking beyond job titles to understand the actual influence and responsibilities of each role. For instance, while the CEO is often the most visible leader, other executives such as the Chief Technology Officer (CTO) or Chief Marketing Officer (CMO) may also be considered KMP due to their substantial impact on the company’s strategic initiatives and market positioning. The CTO, for example, might drive innovation and technological advancements that are crucial for the company’s growth, while the CMO could shape the brand’s identity and customer engagement strategies.

Another important aspect of identifying KMP is understanding the specific contributions of these individuals to the company’s success. This requires a thorough analysis of their roles in key projects, decision-making processes, and overall leadership effectiveness. For example, a Chief Human Resources Officer (CHRO) who successfully implements a transformative talent management strategy, thereby enhancing employee engagement and retention, would be recognized as a key management personnel. Their ability to align human capital with the company’s strategic goals underscores their importance within the leadership team.

In addition to internal assessments, external factors such as industry standards and regulatory requirements also play a role in identifying KMP. Regulatory bodies often mandate the disclosure of certain executives as KMP, particularly in publicly traded companies. This ensures transparency and accountability, allowing stakeholders to understand who is responsible for the company’s strategic decisions and performance. For instance, the Securities and Exchange Commission (SEC) in the United States requires companies to disclose the compensation and roles of top executives, providing a clear picture of the key individuals driving the organization.

Compensation Structures for Key Management Personnel

Compensation structures for key management personnel are designed to attract, retain, and motivate top talent, ensuring that these individuals are aligned with the company’s long-term objectives. These structures are often multifaceted, combining various elements such as base salary, performance-based incentives, equity awards, and additional benefits. The complexity and diversity of these packages reflect the significant responsibilities and influence that KMP hold within the organization.

Base salary forms the foundation of KMP compensation, providing a stable and predictable income. However, to truly incentivize performance and align the interests of executives with those of shareholders, companies often incorporate performance-based incentives. These incentives can take the form of annual bonuses tied to specific financial metrics, such as revenue growth or earnings per share. For instance, a CEO might receive a substantial bonus if the company surpasses its revenue targets, thereby directly linking compensation to the company’s success.

Equity awards, such as stock options and restricted stock units (RSUs), are another critical component of KMP compensation. These awards not only provide significant financial rewards but also align the interests of executives with the long-term performance of the company. By granting stock options, companies encourage KMP to focus on increasing shareholder value, as the value of their compensation is directly tied to the company’s stock price. For example, a CFO who holds a considerable number of stock options is likely to prioritize financial strategies that enhance the company’s market valuation.

Beyond financial incentives, comprehensive benefits packages play a crucial role in the overall compensation structure for KMP. These packages often include health insurance, retirement plans, and other perks such as company cars or club memberships. Additionally, many companies offer executive development programs, which provide opportunities for continuous learning and professional growth. These benefits not only enhance the overall attractiveness of the compensation package but also contribute to the long-term retention and satisfaction of key management personnel.

Impact on Corporate Governance

The influence of key management personnel on corporate governance is profound, shaping the ethical framework and strategic direction of an organization. Effective governance relies heavily on the integrity and leadership of KMP, who are responsible for establishing a culture of transparency, accountability, and ethical behavior. Their decisions and actions set the tone at the top, influencing the entire organization’s approach to governance.

One significant aspect of this impact is the development and enforcement of corporate policies. KMP are instrumental in crafting policies that govern everything from financial reporting to risk management. For instance, a Chief Risk Officer (CRO) might implement comprehensive risk assessment protocols to mitigate potential threats, ensuring that the company operates within its risk appetite. These policies not only safeguard the company’s assets but also enhance stakeholder confidence by demonstrating a commitment to prudent management practices.

Moreover, KMP play a crucial role in fostering effective communication between the board of directors and the management team. This communication is vital for informed decision-making and strategic alignment. By providing the board with accurate and timely information, KMP enable directors to fulfill their oversight responsibilities more effectively. For example, regular updates from the Chief Information Officer (CIO) on cybersecurity measures can help the board make informed decisions about technology investments and data protection strategies.

Disclosure Requirements for Key Management Personnel

Transparency is a cornerstone of effective corporate governance, and disclosure requirements for key management personnel are designed to ensure that stakeholders have access to pertinent information about those at the helm of the organization. Regulatory bodies, such as the Securities and Exchange Commission (SEC) in the United States, mandate that publicly traded companies disclose detailed information about their KMP. This includes their compensation, stock holdings, and any potential conflicts of interest. Such disclosures provide investors and other stakeholders with a clear understanding of the incentives and potential risks associated with the company’s leadership.

These disclosure requirements serve multiple purposes. Firstly, they promote accountability by making the actions and decisions of KMP visible to the public. For instance, detailed compensation reports allow shareholders to assess whether executive pay is aligned with company performance. Secondly, they help mitigate risks associated with conflicts of interest. By requiring KMP to disclose their financial interests and relationships, companies can identify and address any potential conflicts that might compromise their decision-making. This transparency is crucial for maintaining investor trust and ensuring that the company operates in an ethical and responsible manner.

Succession Planning for Key Management Personnel

Succession planning is a strategic process that ensures the continuity of leadership within an organization. It involves identifying and developing internal candidates who can step into key management roles when the need arises. Effective succession planning is not just about filling vacancies; it’s about preparing the next generation of leaders to take the company forward. This process typically includes leadership development programs, mentorship opportunities, and performance evaluations to identify high-potential employees.

A well-executed succession plan provides several benefits. It minimizes disruptions during leadership transitions, ensuring that the company continues to operate smoothly. For example, if a CEO unexpectedly steps down, a robust succession plan would have a qualified successor ready to take over, maintaining stability and investor confidence. Additionally, succession planning fosters a culture of continuous improvement and professional growth. By investing in the development of future leaders, companies can build a strong leadership pipeline that is capable of driving long-term success.

Integrating Stakeholder Value into Corporate Strategy

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How to Write the Management Team Section of a Business Plan + Examples

Written by Dave Lavinsky

Over the last 20+ years, we’ve written business plans for over 4,000 companies and hundreds of thousands of others have used the best business plan template and our other business planning materials.

From this vast experience, we’ve gained valuable insights on how to write a business plan effectively , specifically in the management section.

What is a Management Team Business Plan?

A management team business plan is a section in a comprehensive business plan that introduces and highlights the key members of the company’s management team. This part provides essential details about the individuals responsible for leading and running the business, including their backgrounds, skills, and experience.

It’s crucial for potential investors and stakeholders to evaluate the management team’s competence and qualifications, as a strong team can instill confidence in the company’s ability to succeed.

Why is the Management Team Section of a Business Plan Important?

Your management team plan has 3 goals:

To prove to you that you have the right team to execute on the opportunity you have defined, and if not, to identify who you must hire to round out your current team
To convince lenders and investors (e.g., angel investors, venture capitalists) to fund your company (if needed)
To document how your Board (if applicable) can best help your team succeed

What to Include in Your Management Team Section

There are two key elements to include in your management team business plan as follows:

Management Team Members

For each key member of your team, document their name, title, and background.

Their backgrounds are most important in telling you and investors they are qualified to execute. Describe what positions each member has held in the past and what they accomplished in those positions. For example, if your VP of Sales was formerly the VP of Sales for another company in which they grew sales from zero to $10 million, that would be an important and compelling accomplishment to document.

Importantly, try to relate your team members’ past job experience with what you need them to accomplish at your company. For example, if a former high school principal was on your team, you could state that their vast experience working with both teenagers and their parents will help them succeed in their current position (particularly if the current position required them to work with both customer segments).

This is true for a management team for a small business, a medium-sized or large business.

Management Team Gaps

In this section, detail if your management team currently has any gaps or missing individuals. Not having a complete team at the time you develop your business plan. But, you must show your plan to complete your team.

As such, describe what positions are missing and who will fill the positions. For example, if you know you need to hire a VP of Marketing, state this. Further, state the job description of this person. For example, you might say that this hire will have 10 years of experience managing a marketing team, establishing new accounts, working with social media marketing, have startup experience, etc.

To give you a “checklist” of the employees you might want to include in your Management Team Members and/or Gaps sections, below are the most common management titles at a growing startup (note that many are specific to tech startups):

Founder, CEO, and/or President
Chief Operating Officer
Chief Financial Officer
VP of Sales
VP of Marketing
VP of Web Development and/or Engineering
UX Designer/Manager
Product Manager
Digital Marketing Manager
Business Development Manager
Account Management/Customer Service Manager
Sales Managers/Sales Staff
Board Members

If you have a Board of Directors or Board of Advisors, you would include the bios of the members of your board in this section.

A Board of Directors is a paid group of individuals who help guide your company. Typically startups do not have such a board until they raise VC funding.

If your company is not at this stage, consider forming a Board of Advisors. Such a board is ideal particularly if your team is missing expertise and/or experience in certain areas. An advisory board includes 2 to 8 individuals who act as mentors to your business. Usually, you meet with them monthly or quarterly and they help answer questions and provide strategic guidance. You typically do not pay advisory board members with cash, but offering them options in your company is a best practice as it allows you to attract better board members and better motivate them.

Management Team Business Plan Example

Below are examples of how to include your management section in your business plan.

Key Team Members

Jim Smith, Founder & CEO

Jim has 15 years of experience in online software development, having co-founded two previous successful online businesses. His first company specialized in developing workflow automation software for government agencies and was sold to a public company in 2003. Jim’s second company developed a mobile app for parents to manage their children’s activities, which was sold to a large public company in 2014. Jim has a B.S. in computer science from MIT and an M.B.A from the University of Chicago

Bill Jones, COO

Bill has 20 years of sales and business development experience from working with several startups that he helped grow into large businesses. He has a B.S. in mechanical engineering from M.I.T., where he also played Division I lacrosse for four years.

We currently have no gaps in our management team, but we plan to expand our team by hiring a Vice President of Marketing to be responsible for all digital marketing efforts.

Vance Williamson, Founder & CEO

Prior to founding GoDoIt, Vance was the CIO of a major corporation with more than 100 retail locations. He oversaw all IT initiatives including software development, sales technology, mobile apps for customers and employees, security systems, customer databases/CRM platforms, etc. He has a B.S in computer science and an MBA in operations management from UCLA.

We currently have two gaps in our Management Team:

A VP of Sales with 10 years of experience managing sales teams, overseeing sales processes, working with manufacturers, establishing new accounts, working with digital marketing/advertising agencies to build brand awareness, etc.

In addition, we need to hire a VP of Marketing with experience creating online marketing campaigns that attract new customers to our site.

How to Finish Your Business Plan in 1 Day!

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Other Resources for Writing Your Business Plan

How to Write an Executive Summary
How to Expertly Write the Company Description in Your Business Plan
How to Write the Market Analysis Section of a Business Plan
The Customer Analysis Section of Your Business Plan
Completing the Competitive Analysis Section of Your Business Plan
Financial Assumptions and Your Business Plan
How to Create Financial Projections for Your Business Plan
Everything You Need to Know about the Business Plan Appendix
Business Plan Conclusion: Summary & Recap

What Is a Company Key Person? An Essential Guide

The term company key person refers to an individual who holds a significant position within a business, contributing uniquely to its overall success and sustainability. These individuals are often the ones with specialized skills, knowledge, or connections that are not easily replicated. Understanding what is a company key person is crucial for businesses as they strategize for growth and risk management. Visit our website to learn more and get started today! Click here.

Key persons can be found in various roles, such as executives, department heads, or subject matter experts. Their influence is such that their sudden absence due to unforeseen circumstances could lead to significant operational disruptions or financial losses. Companies often take measures to identify these pivotal team members and ensure that there are plans in place to mitigate the risk associated with their potential loss, such as through key person insurance policies.

Recognizing a company key person involves looking at the impact of their contributions. Do they possess irreplaceable talents? Are they responsible for a substantial portion of revenue? Do they have exclusive relationships with critical clients or suppliers? Answering these questions can help a company pinpoint which employees are truly indispensable to their operations and, as a result, warrant additional focus in terms of succession planning and risk mitigation strategies.

The Impact of Key Persons on Business Continuity

The presence of a company key person is deeply interwoven with the concept of business continuity. These individuals often have such a profound impact on the operations and strategic direction of a company that their loss could lead to serious repercussions. The impact of key persons on business continuity is multifaceted, affecting everything from daily operations to long-term strategic planning.

For instance, key persons may be responsible for maintaining critical business relationships or possess unique expertise that drives innovation and competitive advantage. Should a key person be suddenly unable to fulfill their role, the company might face operational bottlenecks, loss of valuable knowledge, and weakened customer or supplier relationships. These risks underline the necessity for robust succession planning and the development of internal talent capable of filling such crucial roles.

Furthermore, the financial stability of a business can be tied to the contributions of key persons. They may be instrumental in securing major contracts, leading high-performing teams, or managing projects that represent a significant portion of the company's revenue. When assessing the potential impact on business continuity, it's important to consider not only the immediate effects but also the long-term implications, such as the cost and time associated with recruiting and training a replacement, and the potential for decreased morale among remaining staff.

Criteria for Identifying a Company Key Person

Understanding what is a company key person involves recognizing the specific criteria that highlight their significance within a business structure. The identification process is critical, as it allows organizations to implement protective measures and make informed strategic decisions. There are several criteria that can help pinpoint who these individuals are within a company.

Expertise and Knowledge: Look for employees with specialized skills or knowledge that are difficult to replace and critical to the company's products or services.
Leadership and Influence: Those who hold leadership roles or have significant influence over decision-making processes are often considered key persons.
Revenue Generation: Evaluate which employees directly contribute to a substantial portion of the company's revenue through sales, innovation, or strategic partnerships.
Client Relationships: Individuals who manage major client accounts or have unique relationships with customers that could be difficult to maintain without them.
Project Management: Employees who lead projects that are vital to the company's success, particularly if these projects would be at risk without their guidance.
Irreplaceability: Consider how challenging it would be to replace the individual due to their unique skill set, experience, or industry reputation.

Once identified, it is crucial for businesses to ensure that contingency plans are in place for each key person. This helps mitigate the risk their absence would pose and safeguards the company's operational and financial health. Identifying a company key person is not a one-time task but an ongoing process that requires regular review as the business evolves, roles change, and new talent emerges.

Strategies for Protecting Your Company's Key Persons

Once a company has identified its key persons, the next crucial step is to implement strategies to protect these valuable assets. Protecting your company's key persons is essential to maintaining business continuity and safeguarding against potential losses that could occur if these individuals were unable to fulfill their roles. Here are strategic measures that can be implemented:

Key Person Insurance: One common strategy is to take out a key person insurance policy. This type of insurance provides financial compensation to the company in the event that a key person is lost due to death or incapacitation.
Succession Planning: Developing a detailed succession plan ensures there is a clear process for transferring knowledge and responsibilities to another capable individual, reducing the impact of the transition.
Training and Development: Investing in training and development helps build a deeper bench of talent within the organization, ensuring that there are others who can step into key roles when necessary.
Competitive Compensation Packages: Offering competitive salaries, benefits, and incentives can help retain key persons and prevent them from being lured away by competitors.
Contingency Planning: Preparing contingency plans for different scenarios can help the company quickly adapt if a key person is suddenly unavailable.
Legal Agreements: Implementing non-compete and confidentiality agreements can protect the company's interests by preventing key persons from sharing sensitive information or joining a competitor.

It is important for businesses to regularly review and update their protection strategies to reflect changes in the company's structure and the evolving roles of key personnel. Proactive measures not only secure the company's most important human assets but also build a resilient organizational culture capable of withstanding unforeseen challenges.

Key Person Insurance: What You Need to Know

Key person insurance is a specialized type of life insurance policy that a business takes out on its most valuable employees. These are the individuals whose expertise, management, or deep knowledge are critical to the company’s operations. Understanding the nuances of key person insurance is crucial for any business considering this protective measure.

This insurance policy provides a financial safety net, allowing the company to absorb the impact of losing the insured individual due to death or incapacitation. The company pays the premiums and is the beneficiary of the policy. In the event of a claim, the payout can be used for a variety of purposes, such as:

Offsetting lost income that may result from the key person's absence.
Funding the search and training of a replacement.
Paying off debts, distributing money to investors, or providing liquidity.
Reassuring creditors and investors that the business can sustain operations.

The amount of coverage should correlate with the estimated financial loss the company would incur if the key person were no longer available. When determining the level of coverage, businesses consider factors such as the individual's role in the company, their contribution to profits, and the potential costs of finding and training a successor.

It's essential for businesses to work with a knowledgeable insurance broker or financial advisor to tailor a key person insurance policy that meets their specific needs. Regular reviews of the policy are advisable, as the value of key persons may change over time with the growth and evolution of the company.

Ultimately, key person insurance is about more than just financial compensation—it's about providing peace of mind and stability for the company's future.

Succession Planning for Key Persons in a Company

Succession planning is a strategic process that ensures a company remains stable and prosperous, even as inevitable changes occur within its leadership ranks. For key persons within an organization, whose roles are often so specialized and integral to business success, having a robust succession plan is not just prudent; it's essential.

Effective succession planning involves identifying potential risks and preparing for transitions by nurturing a pipeline of talented individuals who can step into key roles as needed. This includes:

Assessing key roles and the associated skills and qualifications necessary for each.
Identifying high-potential employees who could potentially fill these roles.
Providing ongoing training and development to prepare these candidates.
Establishing a timeline for succession to ensure a smooth transition.

Moreover, successful succession planning must be a continuous effort, integrated into the company's strategic planning. It should align with the company's long-term goals and adapt to changing circumstances within the industry and the organization itself.

For businesses that have not yet considered succession planning, or for those looking to refine their strategy, professional guidance is invaluable. Experts in organizational development can assist in creating a plan that not only identifies potential successors but also aligns with the company's culture and objectives.

As you look toward securing the future of your business, remember that the right support and resources are just a click away. Visit our website to learn more and get started today! Click here.

Don't wait for an unforeseen event to disrupt your operations. Take the necessary steps today to protect your company’s tomorrow through sound succession planning.

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Business Roles: Lead Management and Key Personnel Positions

January 4, 2021

In organizations, there are several kinds of business roles crucial to company operations . From executives to entry-level workers , these positions involve specific tasks contributing to a company’s overall success. Understanding the different business roles involved in a company can help you make a defined career path.

Here are the different lead management positions and key personnel in a company and what you need to know about them—from their responsibilities to how they help a company succeed.

Chief Executive Officer

The Chief Executive Officer (CEO) of companies is the highest role. They’re the ones responsible for making all top-level decisions and getting resources to support a business and drive operational and structural changes, influencing organizational growth. Business owners often can hold this title as well.

Chief Financial Officer

The Chief Financial Officer (CFO) is the one who’s in charge of monitoring and regulating the cash flow and overall finances of a business. CFOs are responsible for searching for reputable investors and conducting external funding opportunities for growing their company. However, not every company can find a CFO with enough experience and skill to handle important duties in the company. This is why some firms opt to hire outsourced CFO services from reputable firms in Atlanta.

Chief Operating Officer

The Chief Operating Officer (COO) manages a company’s overall operations. The COO is often referred to as the general manager in smaller businesses, which possesses the same tasks as COOs. A COO is a top-level business role that ensures processes run efficiently while overseeing different departments, ensuring employees are completing tasks correctly and promptly.

Chief Marketing Officer

The Chief Marketing Officer (CMO) is the professional in charge of directing marketing campaigns, plans, and budgets while managing an organization’s entire marketing department. A CMO is often responsible for several marketing teams, each with their respective leaders. They also make the final decisions regarding the implementation or development of marketing campaigns.

Chief Technology Officer

The Chief Technology Officer (CTO) is in charge of managing an entire organization’s technological functions. CTOs often integrate the latest technology trends to a company, ensuring the technologies they introduce meets their organization’s needs. Additionally, in businesses that have prominent IT departments, the CTO is the one that oversees all high-level functions.

Instead of a traditional CEO, some companies designated a president. While most responsibilities of a company ‘president’ are the same as a CEO, presidents may tackle additional tasks that conventional CEOs may not. Presidents may perform some of the jobs that COO and CFOs handle. However, as a business grows, the president’s role may consist of more ‘defined’ jobs such as handling top-level decisions rather than general executive functions.

Vice President

The vice president of a company initiates the president’s decisions and plans by instructing managers and team leaders about different tasks, acting as an ‘operational role.’ Vice presidents generally oversee business operations and initiate organizational structure, among other positions.

Executive Assistants

Executive assistants typically report directly to the CEO or president, handling most of their administrative tasks. Businesses often rely on this professional to maintain a CEO or president’s schedules and appointments. They’re the backbone behind every successful business owner.

As you make your business plan, management teams need to be pulled together with serious thoughts given to the ‘key’ roles that need to get filled and who should fill them.

Management teams often evolve. If you work for a company or run one, expect to see different organization members wear several hats until the company grows and can hire additional staff. Large businesses may have some or all the positions mentioned—but no matter the role, each one provides crucial contributions to the company’s growth and success.

About the Author

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How To Write the Management Section of a Business Plan

Susan Ward wrote about small businesses for The Balance for 18 years. She has run an IT consulting firm and designed and presented courses on how to promote small businesses.

Ownership Structure

Internal management team, external management resources, human resources, frequently asked questions (faqs).

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.

Key Takeaways

The management section of a business plan helps show how your management team and company are structured.
The first section shows the ownership structure, which might be a sole proprietorship, partnership, or corporation.
The internal management section shows the department heads, including sales, marketing, administration, and production.
The external management resources help back up your internal management and include an advisory board and consultants.
The human resources section contains staffing requirements—part-time or full-time—skills needed for employees and the costs.

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.

The internal management section should describe the business management categories relevant to your business, identify who will have responsibility for each category, and then include a short profile highlighting each person's skills.

The primary business categories of sales, marketing , administration, and production usually work for many small businesses. If your business has employees, you will also need a human resources section. 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 serve. You may wish to present this as an organizational chart in your business plan, although the list format is also appropriate.

Along with this section, you should include the complete resumés of each management team member (including your own). Follow this with an explanation of how each member will be compensated and 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.

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.

Advisory Board

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 are genuinely interested in seeing your business do well and have the patience and time to provide sound advice.

Recently retired executives or managers, other successful entrepreneurs, and/or vendors would be good choices for an Advisory Board.

Professional Services

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 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 possess.
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 1,500 customers in your first year, your business will need 10 employees.
Determine how much each employee will receive and total the salary cost 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 will find the staff your business needs and how you will train them. Your description of staff recruitment should explain whether or not sufficient local labor is available and how you will 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.

What is the management section of a business plan?

The 'management section' describes your management team, staff, resources, and how your business ownership is structured.

What are the 5 sections of a business plan?

A business plan provides a road map showing your company's goals and how you'll achieve them. The five sections of a business plan are as follows:

The market analysis outlines the demand for your product or service.
The competitive analysis section shows your competition's strengths and weaknesses and your strategy for gaining market share.
The management plan outlines your ownership structure, the management team, and staffing requirements.
The operating plan details your business location and the facilities, equipment, and supplies needed to operate.
The financial plan shows the map to financial success and the sources of funding, such as bank loans or investors.

SCORE. " Why Small Businesses Should Consider Workers’ Comp Insurance ."

Key Personnel: Understanding Your Essential Workers

Nov 2, 2020

Some of these are employees who have the authority to directly or indirectly plan and control business operations, and significantly influence your day-to-day operations and processes. These essential workers are your key personnel.

What are Key Personnel?

Key personnel are individuals who perform essential functions in your business. Often, these employees in an organization are experts in specific areas. They may be the only ones who know how to complete specific tasks, or who have information about a specific part of your business.

Also called key employees, they directly, significantly, and positively contribute to the company’s value . They exceed expectations in fulfilling their responsibilities and making important decisions, which improves sales, profitability, product development, and other critical business drivers.

If these employees are not available in crucial times, it could affect your ability to do business effectively.

Who are your Key Personnel?

When you think of key personnel, you most likely visualise a company’s CEO, Vice President, and other key management employees or the people positioned at the top and have a say in the company’s long-term strategy and overall operations.

While small businesses usually have top executives, they also have other types of key personnel including mid-level managers and regular professional staff whose duties might involve carrying out top-level strategy, leading their departments, or even performing operational work.

A small business has non-management professionals who are also key assets for the company’s success. Some of these positions include:

Accountants and Bookkeepers. These roles are essential for monitoring the company’s financial status and may involve analyzing financial data, creating reports, handling day-to-day transactions, implementing security controls, and handling the company’s taxes.

Human resources professionals . While top managers have a say in the hiring process, HR professionals assist with recruitment, training, performance management, employee relations issues, compensation, and employee policies.

Marketing professionals . When the company decides to offer a product or service, these professionals are the ones who come up with how to make them appealing to customers as well as advertising methods and how to set the price.

IT professionals . These professionals are crucial to small businesses whether they keep the business’s systems running, secure confidential data, run the company’s website or ensure good performance of company networks. In small businesses in the technology sector, their presence is even more crucial.

Creative staff. Content creators such as writers and video editors have a key role in presenting important information about the company in an appealing way, while graphic designers focus on visuals seen in advertising materials and on the web.

How do you manage your Key Personnel?

It is no longer enough for businesses to simply put together an amazing team. The key to success and longevity in today’s competitive business environment begins and ends with managing your vital workers and ensuring employee retention. The financial implications of a high turnover rate, where the cost of training and recruitment is lost, are high. On average, employee replacement costs a company one-fifth of that worker’s salary. Since those numbers rise according to position and salary, retaining key employees is a critical financial, as well as strategic, consideration for your business.

Implementing workplace policies that benefit workers and help boost employee retention is not simply a “nice” thing for businesses to do for their employees. Maintaining a stable workforce by reducing employee turnover through better compensation and flexible workplace management and policies also makes good business sense, as it can result in significant cost savings to employers.

Here are a few ways on how to better manage your key personnel and ensure employee satisfaction and retention:

Identify your key players. Focus on key employees whose departure would have the biggest impact on your company. While high potential employees may seem to be the obvious choice, delve deeper, to include those with exceptional relationships, knowledge or expertise in critical areas of your business. Identify the skill sets of those you hire; you may find that certain employees could be contributing far more than their current position indicate s .

Open the lines of communication. Nurture an environment in which employees are comfortable providing honest feedback or offering ideas or suggestions, knowing their voices will be heard. In addition to an annual employee review, make time to meet with staff individually to find out what’s working and what’s not, to ensure your key employees are challenged and motivated and that their needs are being met.

Overcompensate. Be clear about the structure of pay, bonuses, and raises, and when they can expect to receive compensation, as well as what they can do to achieve their compensatory goals. Have this type of conversation on a consistent basis to avoid any misunderstandings or employee frustrations. Additionally, one of the best pieces of advice for managing key employees is to pay them a salary equivalent to or above the market value. A well-compensated employee will be much less likely to start looking around for greener financial pastures.

Give them room to grow. Your best employees are the ones that aren’t “ satisfied ” with their job, but want to grow and develop, taking their careers to the next level. Provide them the opportunity to learn, advance and contribute in new ways, nurturing those talents discovered along the way.

Provide a healthy environment. Financial compensation provides employees with a sense of value. But continue to nurture that value by showing appreciation through formal employee recognition. Positive feedback and acknowledgement can go a long way towards instilling a sense of pride and accomplishment and provides incentive for employees to remain a vital part of your organization.

Do you have a backup?

Employees with skills that are uniquely valuable to a company’s success are worth their weight in gold, but what happens when they leave, taking that institutional knowledge with them?

Relying on key personnel carries risks that, if not properly managed, may cripple profits, productivity, and confidence among remaining employees. Also, at stake is the company’s image, which is particularly critical for those that rely on earning and keeping trust.

Succession planning is critical in these situations. Identify, in advance, who will be responsible for important decisions and assign at least one back up. For example, who can approve and/or access funds for emergency services or supplies if the individual who normally makes those decisions is unavailable. In an emergency situation, the department manager may not be the only key personnel. You may have personnel who operate specific equipment or that have received specialized training/certifications.

Assign cross training as a professional development activity and include it as part of your performance evaluations. This helps back up personnel understand how the business functions within networks, builds appreciation for roles and relationships, and supports retention by increasing opportunities and flexibility within your workforce.

Provide alternate or backup personnel with opportunities to practice the assigned tasks during normal operations. This builds experience, confidence, and trust before they have to step in during a disaster.

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Dai is a Master of Business Administration graduate of the University of New England, Registered BAS Agent and member of the Institute of Certified Bookkeepers. For 16 years he owned, operated and managed businesses in the tourism and hospitality industry – particularly Accommodation, Event Management, and Food & Beverage Management. In recent years, Dai has worked in the Not for Profit sector, Real Estate, Motorsports, and Motor Trades industry and business services, in Finance, Administration, and Practice Management roles, before becoming a Professional Bookkeeper in 2009.

How to Create an Investor-Ready Personnel Plan and Forecast Employee Costs

Posted march 22, 2021 by noah parsons.

A personnel plan is a critical part of your business plan and financial forecast . In addition to helping you budget for current and future employees, your personnel plan enables you to think through who you should hire and when you should hire them.

If you’re pitching to angel investors or venture capitalists for funding, they will want to see why your team is uniquely suited to grow and scale your business, as well as your hiring plan.

Investors will want to know:

What positions do you need to fill?
When you plan on filling them?
How much it’s going to cost to build the team you need??

What to include in the personnel section of your business plan

For many startups and small businesses, the people who do the work—your team—are both the most costly and most valuable asset. It makes sense that hiring the right person at the right time can have a significant impact on your ability to meet your company’s milestones and goals , not to mention your cash flow .

Thinking strategically about human resources — when to add positions, compensation levels, and whether to hire full-time or on a contract basis are all pieces of a healthy personnel plan.

So, whether you’re seeking investment or not, building a personnel plan and forecast is an essential part of business planning and strategic planning for the long-term viability of your company. Let’s dive right in and look at the five key steps to build an investor-ready personnel plan.

1. Describe your team

In the “team” section of your business plan, you will typically include an overview of the key positions in your company and the background of the people who will be in those critical roles. Usually, you’ll highlight each of the management positions in your company and then speak more generally about other departments and teams.

You don’t need to include full resumes for each team member—a quick summary of why each person is qualified to do the job is enough. Describe each person’s skills and experience and what they will be doing for the company.

Emphasize your team’s strengths. How do they make your team stronger? What specific expertise and experience do they have in your (or a related) industry? Assuming your market research identified a great opportunity, why are you the right team to capitalize on it?

For potential investors, this section helps qualify why each team member is necessary for the success of the business. It acts as a justification for their salary and equity share if they are part owners of the company.

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2. Describe your organizational structure

The organizational structure of your company is frequently represented as an “org chart” that shows who reports to whom and who is responsible for what.

You don’t have to create a visual org chart, though—describing your organization in the text is just fine. Just make sure to show that you have a clear structure for your company.

Is authority adequately distributed among the team? Do you have the resources to get everything done that you need to grow your company?

You’ll also want to mention the various teams your company is going to have in the future. These might include sales, customer service, product development, marketing, manufacturing, and so on.

You don’t need to plan on hiring all of these people right away. Think of this section as an outline of what you plan to do in the future with your company.

3. Explain the gaps

It’s alright to have gaps on your team, especially if you’re a startup. You may not have identified all the “right” team members yet, or you may not have the funds available yet to hire for essential roles . That’s okay.

The key is to know that you do have gaps on your team—this is how you figure out who you need to hire and when you need to hire them. Also, it’s much better to define and identify weaknesses in your team than to pretend that you have all the key roles that you need. In your business plan , explain where your organization is weak and what your plans are to correct the problem as you grow.

It might be tempting to hide your potential weaknesses from investors, but they’ll see through that right away. It’s much better to be open and honest about where you have management gaps and your plans to solve those problems. You want them to know you have identified and made plans to mitigate risks .

You also need to keep in mind that employees might wear a lot of hats in the early days of a company, but that specialization will happen as the company grows.

For example, initially, the CEO might also be the VP of Sales. But, eventually, the VP of Sales role should be filled by a specialist to take on that responsibility. Include these types of changes in your personnel plan to explain to investors that you understand how your company is going to grow and scale.

4. List your advisors, consultants, and board members

For some companies, external advisors, board members , and even consultants can play a crucial role in setting business strategy. These people might even fill key positions temporarily as your company grows. If this is the case, you’ll want to list these people in your business plan. Like your management team, provide a brief background on each principal advisor that explains the value they provide.

If your advisors don’t hold key roles or are not critical to your success, you don’t necessarily have to list them. But, do list anyone that is adding substantial value to the company by providing advice, connections, or operational expertise.

5. Forecast your personnel costs

Most business plans should include a personnel table to forecast the expense of your employees. Here are the expenses you’ll need to be aware of when forecasting.

Direct and indirect labor expenses

You’ll want to include both direct expenses , which usually comprise salaries, as well as indirect expenses which include:

Paid time off
Healthcare and insurance
Payroll costs

As well as any other costs you incur for each employee beyond their salary. Here’s an example of what a personnel forecast can look like using LivePlan .

See how to forecast your personnel costs using LivePlan

Burden rate and employee-related expenses

There are different names for the indirect expenses of personnel. Still, I like to call it “burden rate” or “employee-related expenses,” which is an expense over and above the direct wages and salaries. These expenses typically include payroll taxes, worker’s compensation insurance, health insurance, and other benefits and taxes.

For business planning purposes, don’t stress about coming up with the exact figure for the burden rate. Instead, estimate it using a percentage of total monthly salaries. Somewhere between 15 percent and 25 percent usually makes sense, but it depends on what kind of benefits you plan on offering.

In your personnel plan, you can list both individual people as well as groups of people. You’ll probably want to list out key people and other highly paid employees, but group together other departments or groups of people. For example, you might list out your management team, but then group together departments like Marketing, Customer Service, and Manufacturing.

Then, add in your personnel burden to cover benefits and insurance. In the example personnel table above, this is called “Employee-Related Expenses.”

You’ll then take the total number of your salaries plus personnel burden and include this in your profit and loss forecast as an expense. Suppose you’re using LivePlan to build your personnel forecast. In that case, this how-to article on entering personnel shows where you’ll see personnel costs appear on your cash flow statement, profit and loss (income statement), and your balance sheet.

Do you need a personnel plan if you have no employees?

If you are a sole proprietor and don’t have employees, you should still include your own salary as part of the business plan. Make sure to include your salary as an expense in your Profit & Loss Statement . Even if you, the business owner, don’t take the salary, so you can keep the cash in your business, you’ll want to record what you should have been paid.

In the case of a sole proprietor, you probably don’t need a full table for the personnel plan, like in the example above. But, when you do start planning to hire a team, you should use the format I’ve described here.

Personnel planning is a valuable part of the business planning process because it forces you to think about what needs to get done in your business and who’s going to do it. Take the time to work through this part of your financial forecast, and you’ll have a much better sense of what it’s going to take to make your business successful.

*Editors Note: This article was initially written in 2019 and updated for 2021.

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The Secrets of a Great Personnel Plan

Investing in human resources (HR) is a key element of healthy personnel planning and strategy. A hallmark of effective leadership is efficient HR which means hiring employees in a cost-effective manner and mostly when needed. Your business plan should always include an informative and up-to-date personnel plan section to provide direction for the company and help entrepreneurs stay focused.

At the heart of every business owner is the desire to excel. The best way to excel is to define your plans and proceed with purpose. Your business plan comprises a business description , a competition analysis, a marketing plan, a personnel section, the HR section and key financial information.

The personnel plan is designed to help company owners put their plans into action. It helps to clarify objectives for the current and forthcoming year. Thus, a good understanding of personnel plan and how to implement it in your business is vital.

What is a personnel plan?

A personnel plan is a vital part of every company plan and financial forecast, which aids future and current budgeting and defines the type of employee to hire and when to hire such employees.

When you are seeking funding, venture capitalists and angel investors will want a breakdown of your team. Who are they? What talents and skills do they bring to the table? What is your hiring plan for the first year, second year, and so on? How will your team drive business growth and success?

All this information will include the positions you will need employees for, the period in which the management intends to fill the plan, and the financial implications of the implementation of the plan. Just as you would assess if your business is financially feasible , you’ll need to apply this same sentiment when hiring employees.

The personnel plan represents a consolidated strategy for hiring the best people for all company positions, while keeping an eye on future expansion.

Michael E. Gerber, the author of The E-Myth Revisited, posited that an effective personnel plan designed as an efficient workplace game will help employers prime employees for organizational goals while creating job satisfaction. This means that an effective hiring process is vital to an efficient process of personnel planning.

The majority of employers find personnel planning difficult especially those whose staff work in shifts. Organizational challenges like these can easily be taken care of with TimeTrack Duty Roster which helps employers create a suitable overview of their workforce and personalize shifts according to any number of criteria, including their location and skills.

Features of the TimeTrack Duty Roster

Key elements of a personnel plan

Each company’s needs may differ, but in general, these are common elements that should form part of every personnel plan.

Job description

Clearly explained requirements of the various job functions. Use easy-to-understand language and phrases.

Organizational chart and type of hiring

The chart of the organization should show who works for whom and provide a good overview of the overall management and employee structure of the company.
The plan should be clear on whether employees are independent contractors or receive salaries. This is essential for labor compliance issues and the workers’ tax.

Remuneration (salary amount and assumptions)

Details of hourly or yearly payments are defined, including relevant assumptions that comprise estimates of salary increases over time. You also need to account for company benefits, including health insurance. This may be a percentage of salary costs employers pay to staff.

Time of recruitment

The hiring of employees is often done over time and staggered. Thus, your plan must include details about when an employee will start and the end date for temporary staff.

Incorporate key personnel into the business plan

Employees are the most valuable assets any company can have. This means that hiring the right person should always be a key priority for every company. Your staff will have a significant impact on revenue, customer experience/satisfaction and the success of the company.

Incorporating the personnel section into your business plan is an important part of strategic planning for long-term viability. The information below serves as guide on how to implement a personnel plan in your business.

Team dynamics

This presents an overview of all the key positions in your business and the backgrounds of staff in their critical roles and departments. Add the total number of staff and their experiences. Emphasize the strengths of individuals and how to upskill where necessary. A great team is typically the fulcrum of business success because they have the responsibility of and possess the ability to translate policies into business success.

Organizational structure

The structure of your company is represented in the company’s organizational chart, which shows the hierarchy of duties and management. Is authority finely distributed and are the various company teams properly mentioned? This includes customer service, product development, marketing, manufacturing and sales.

When planning the company’s organizational details, you will need a strategy to manage absences and leave. TimeTrack Leave Management feature helps you to finetune these details so you can easily (and quickly!) oversee employee absences, vacation time and keep track of working hours for compliance management.

TimeTrack Leave Management

Gaps and stumbling blocks

While it may be difficult to identify gaps in your team, chances are that if you look closely, you will observe a section of your company in need of quality talent. You need to figure out how to fill this gap. Don’t hide the weakness of your team from potential investors. Always remember that specialization will evolve as the company grows.

Where advisors, board members and consultants are applicable to your company, list them. Where they will fill key positions as the business grows, you need to list them and provide background on the value they provide.

The fine print

Every personnel plan needs to include a section addressing employment benefits , rights and conditions, especially for managers. Design your company’s management personnel plan and include a table of staff expenses, including both direct and indirect labor expenses, a burden rate and employee-related expenses, while adding payroll tax, workers’ compensation, salaries and health insurance.

Checklist for personnel planning

Personnel improvement

Improving conditions for personnel involve the identification of gaps, developing and implementing action plans and taking follow-up actions. Managers should develop a performance improvement plan before taking disciplinary action against employees.

Identify skills or performance gaps

A gap analysis is designed to help you identify potential and current issues and is an essential part of the personnel process. Incorporate characteristics of human resource planning into your business planning.

Provide proof of a skills gap or underperformance of the workforce using a consistent format across all employment cadres. Design your format, including employee information and a description of performance discrepancies using expected and actual performance criteria.

Have a face-to-face meeting with your employees to share observed issues or concerns and gain insights into causal factors of underperformance. Use your documentation to share insights on performance challenges. Let the affected employees know they have committed specific policy infractions. Focus only on the outcomes of behaviors to help affected staff understand how their behaviors affect company success.

Develop action plans

Establish specific and measurable improvement goals for your workforce. Avoid generalizations and focus on key goals. Setting bit-sized goals is an effective way of working while monitoring task on time .

Provide detailed resources, including advanced tools that can help employees improve. This also means providing the management with essential tools that will help with the efficient oversight of the workforce.

Create a timeline for achieving performance improvement goals. This will help keep the staff on track towards achieving expectations. Don’t forget to identify metrics for measuring progress. Be specific about what you want employees to achieve and define the intended consequences in the event of failure to complete performance improvement plan. Be specific about actions you will take whether or not targets are met.

Schedule regular appointments to review the performance improvement plan with your employees and implement their feedback.

Incorporating a personnel plan into your business strategy is a key factor for efficient planning. To maximize the opportunity presented by personnel planning, use any of the effective and reliable TimeTrack planning and absence management software tools.

I am a researcher, writer, and self-published author. Over the last 9 years, I have dedicated my time to delivering unique content to startups and non-governmental organizations and have covered several topics, including wellness, technology, and entrepreneurship. I am now passionate about how time efficiency affects productivity, business performance, and profitability.

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How to Create a Personnel Plan for Investors

What is a personnel plan?

A personnel plan is a document that outlines an organization’s staffing needs, goals, and strategies for managing its workforce. Whether taken upon yourself or delegated to a trusted manager, this is essential for business.

It is a key component of human resource management and provides a roadmap for the recruitment, selection, training, development, retention, and management of employees.

A personnel plan is critical within the business plan you would have created as a start-up or entrepreneur. It will help you in your financial forecasting, anticipating the right times to hire and expand.

What to include in the personnel section of your business plan

The personnel section of a business plan should include information about the management team and staff that will be involved in operating the business. The people who do the work are the most important asset, which of course comes with a cost. Understanding when to hire, when to think about human resources, and when to grow your business at the right time can be enormously important in meeting business objectives, setting yourself up for success with great personal benchmarks.

Building out a personnel plan within your business plan is going to be essential in planning for the long term success of your business. Forecasting this data can be the best way to ensure longevity.

Who is your management team?

This should include a brief introduction to the key members of the management team, including their backgrounds, experience, and relevant skills. It’s important to highlight their qualifications and how they will contribute to the success of the business.

This can be brief and doesn’t require a full resume for each member of the team. A simple explanation detailing qualifications and relevant experience applicable within the company is all that’s required.

What is the organizational structure?

This section should provide an overview of the organizational structure of the company, including who will be in charge of each department or functional area, as well as any outside consultants or advisors who will be involved.

In line with forecasting, you will want to illustrate the future of your company and who will be included. As you develop, you can anticipate your team growing from a just few employees into staff across multiple sectors, such as customer service, marketing, and support.

What are your staffing needs?

Outline the staffing needs of the business, including the number and types of employees needed to run the business successfully. This should also include the qualifications and skills required for each position.

Here you can identify the weaknesses and risks across your team, ensuring that you have a capable understanding of the roles and responsibilities that are important to the business in the future – though they may not be in place right now. Investors are quick to highlight “perfect” personnel plans, so you will want to embrace that you have identified risks in staffing.

As an example, your head of customer support may also be your head of sales, but in time these two roles will need to be separated.

What will recruitment and training look like?

This section should detail how the company plans to recruit and train employees, including any training programs or on-the-job training that will be provided.

What will the compensations and benefits be?

Outline the compensation and benefits packages that will be offered to employees, including salaries, bonuses, health benefits, retirement plans, and any other perks or incentives.

Outline the Human Resources policies

Detail the company’s policies on issues such as employee performance reviews , disciplinary procedures, and termination policies.

What to include in the personnel section of your business plan

Does a business plan need personnel planning if I have no staff?

Even if you don’t have any employees right now, having a personnel plan is beneficial for your business in the long term.

Without a personnel plan, you may find it challenging to scale your business or adapt to changes in your industry or market. For example, if you suddenly need to hire someone to fill a critical role, you may not know where to start or what qualifications you should look for.

Creating a personnel plan can also help you to clarify your business goals and objectives. By determining the roles and responsibilities required to meet those goals, you can better prioritize and focus on the essential tasks that need to be done.

Therefore, even if you don’t have any employees currently, it’s still a good idea to develop a personnel plan to help you prepare for future growth and ensure that you have the right team in place to support your business objectives.

Is there an easy way to forecast a personnel plan?

Personnel planning is a long process as it requires dedicated thought as to what needs to happen in your business and where you want to take it. Typically, this require a lengthy process of spreadsheets and equations to figure out exactly who needs to be working with you, and at what cost.

Business planning software can ensure that this part of your business plan, alongside other key components, is created with ease – simply needing a few data entries to be entered throughout the software.

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Key Employee: The IRS Term for Highly Compensated Employees

Erika Rasure is globally-recognized as a leading consumer economics subject matter expert, researcher, and educator. She is a financial therapist and transformational coach, with a special interest in helping women learn how to invest.

What is a Key Employee?

A key employee is an employee with major ownership and/or decision-making role in the business. Key employees are usually highly compensated either monetarily or with benefits, or both. Key employees may also receive special benefits as an incentive both to join the company and to stay with the company.

Understanding Key Employee

The term key employee is also used by the Internal Revenue Service . The IRS uses this term with regard to company-sponsored defined contribution retirement plans. It refers:

to an employee who owns more than 5% of the business,
or has annual compensation greater than a certain amount or is an officer with compensation greater than a certain amount.

How a Key Employee Affects a Business

From an internal perspective, apart from the IRS classification, a key employee may be considered to be an intrinsic part of a company’s operations. Such an employee could be influential in securing capital for the business, which may occur through their connections or by virtue of their work.

Key Takeaways

Key employees are often considered crucial to a company's operations.
Key employees may enjoy monetary bonuses and other benefits.
Employers may address compensation for key employees in a different manner than other staff members.

For example, the employee may hold a role tied directly to sales channels for the company, intertwining their performance and business activities with the cash flow. The employee might be the top-performing salesperson at the company, driving a significant portion of the regular revenue. The employee, for a variety of reasons, may represent a public face associated with the company’s brand and is thus seen as crucial to maintaining the investment and support of shareholders and customers.

There are other IRS and government rules that have different definitions of "key employee" for different purposes.

The company may define the work of the employee as vital to the infrastructure and operation of the business, even though that employee may not have a highly-visible role in terms of the public or outside business relations.

For instance, the chief scientist on a team developing a novel new product expected to be a mainstay behind the business’s revenue and income could be regarded as a key employee.

Special Considerations

Employers may feel the need to address compensation for key employees differently from the majority of the staff beyond providing salary. This can include offering a variety of options for them to save for retirement or presenting them work-life balance benefits to keep them engaged in the business.

Conversely, employers might adopt a different stance if a key employee makes use of the Family and Medical Leave Act to take unpaid leave from work. Such employees, who may rank among the top 10 percent of salaried workers at a company, might not be reinstated by the employer under certain circumstances.

Internal Revenue Service. " Issue Snapshot - Identifying Highly Compensated Employees in an Initial or Short Plan Year ."

Internal Revenue Service. " 2024 Limitations Adjusted as Provided in Section 415(d), etc ." Page 2.

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Personnel Management Business Plan

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OutReSources

Executive summary executive summary is a brief introduction to your business plan. it describes your business, the problem that it solves, your target market, and financial highlights.">.

OutReSources, Inc. will be a consulting company specializing in the design and delivery of training products and services in statewide and regional markets. The company offers health care providers a reliable, high-quality alternative to in-house resources for business development, market development, training, and quality assurance.

OutReSources will initially be created as a Greenstate DBA company under the umbrella of Flowstone, Inc., based in the Central County area of Greenstate, the heart of Greenstate’s population and growth.

Within the state, OutReSources plans to target health care service providers, tailoring our services to their needs. One of OutReSources’ challenges will be establishing itself as a real consulting and training company, positioned as a relatively risk-free purchase.

Industry competition comes in several forms, the most significant being companies and agencies that choose to do business development and training in-house rather than outsourcing. There are also State and independent organizations providing training and development resources. Many of these companies are generalist in nature and do not focus on a niche market. Furthermore, they are often hampered by a flawed organizational structure that does not provide the most experienced people for the client’s projects. OutReSources’ advantage over such companies is that it provides high-level consulting to help integrate practice with theory and in concert with the client companies’ goals.

OutReSources will be priced at the upper edge of what the market will bear. The pricing will fit with the general positioning of OutReSources as providing high-level expertise. Sales are estimated to be substantial and an excellent cash balance in the first year.

The company’s founders are former and current health care service providers, all in the “fee-for-service” provider markets we will target. They are founding OutReSources to formalize the consulting services they already offer. OutReSources will be managed by working partners, in a structure taken mainly from Flowstone, Inc. In the beginning we assume three partners, Khallie Locharnold and Soren Aboukir (from Flowstone Inc.) and Yuriatin Guadalquivir.

The firm estimates healthy profits by the first year with a commensurate net profit margin. The company does not anticipate any cash flow problems arising.

Personnel management business plan, executive summary chart image

1.1 Objectives

OutReSources has set several objectives for the first year.

Develop and implement a training service that targets both for-profit and non-profit health care providers that provide fee-for-services and which are required to meet standards set by state and federal regulations, and/or private associations.
Raise the standards for quality of care while breaking free of the confines of the “fee-for-service that is Medicaid” by developing a service to support those health care providers who still operate within those confines.
Develop a company with low overhead and liability to optimize net profit margins.

1.2 Mission

Our mission is to raise the standards of health care services by improving the skills, abilities, and efficiencies of those who provide such services. We wish to educate and train those who provide health care services and are reimbursed and regulated by the state governing agencies. We aim to be transitional educators and trainers to those with the education but without the experience.

1.3 Keys to Success

Quality and Credibility

Employing trainers within the appropriate disciplines who have

Credentials: Education, Licenses, Certifications
Proven successful track record
Continuing Education Units

Strong Formal Methodology

Developing strong formalized training methodologies for all services

Policy and Procedures
Hierarchy roles in the Organizational Structure: Qualifications and Duties
Confidentiality control
Feedback Reporting: Finished Product

Promotion and Marketing

Starting with what we know: Our first offerings are based on our expertise
Reaching a large targeted population: Expanding our offerings
Spring boarding off current credentials

Operations and Liability

Maintaining low overhead and liability by:

Maximizing abilities and simplifying roles
Assessing the market and initiating with “High End” targets (large providers, high fee-for-service rate services)
Strong investments in quality equipment vs cost by including
Mobility vs Center or combinations
Space and supplies
Finished products (manuals, pamphlets, protocols)

Company Summary company overview ) is an overview of the most important points about your company—your history, management team, location, mission statement and legal structure.">

OutReSources, Inc. is a new company providing high-level expertise consulting to health care providers, including business development, training development, quality assurance strategies, and marketing of additional training services. It will focus initially on:

Providing “How-to’s of Best Practice” with development and training for Developmental Disability, Service Coordination, and a multitude of Mental Health Service providers.
Audit Preparation reviews to enable companies and agencies to avoid costly recoupment or pay backs, and avoid damaging citations.

As OutReSources grows it will take on people and consulting work in related markets becoming more diversified, such as supportive training services like First Aid/CPR, Cultural Diversity, Health and Wellness in the workplace, Research Resource Center, Mobility, Business Practices in the Business System, and so on. It will also look for additional leverage by developing partnerships with key advocacy organizations and state officials.

2.1 Company Ownership

OutReSources, Inc. is projected as a Limited Partnership in conjunction with Flowstone, Inc., but may switch the preferred structure to a “C” Corporation or Limited Liability Corporation, for purposes of investment structuring.

OPERATING PARTNERS (initial)

General Managing Partners, with 62% ownership by Flowstone, Inc.
Vice Managing Partner for Programmatic Development and Operations, with 28% ownership.

INVESTMENT PARTNERS

Flowstone, Inc. with 95% ownership from start-up date.
Limited Partner Yuriatin Guadalquivir, with 5% ownership from start date.

Structure of Partnership

Flowstone, Inc. will provide the initial starting capital investment necessary to begin OutReSources, Inc., making them the primary stock holder. Yuriatin Guadalquivir will begin as the General Operating Manager responsible for development and implementation, receiving compensation through salary and stock acquisition. First year salary of $41,000 will be paid by Flowstone, Inc. An appropriate profit percentage may be paid at each year end. If a loss is realized at the end of any year then Yuriatin Guadalquivir receives no payout of stock in the company.

Following first calander year, Flowstone, Inc. will reimburse Yuriatin Guadalquivir for service by turning 5% of stock ownership of OutReSources, Inc. over to him.
Each additional year Flowstone will increase Yuriatin Guadalquivir’s stock ownership by 5% to a maximum of 33% ownership in OutReSources, Inc.
Once equal partnership between Flowstone, Inc. and Yuriatin Guadalquivir has been reached then Guadalquivir becomes a full partner, assuming equal voting rights, and liability.
Liability will include equal share in all legal and financial obligations.

2.2 Start-up Summary

Total start-up expenses includae legal costs, logo design, stationery and related expenses.

Start-up

Requirements

Start-up Expenses
Legal (Formalization of Partnership)	$2,000
Presentation Equipment	$3,500
Office Computers, Printers, and Equipment	$4,000
Promotion and Marketing	$1,000
Operational Supplies (Develop & Produce Training Documents)	$1,000
Lodging and Meals	$3,000
Total Start-up Expenses	$14,500

Start-up Assets
Cash Required	$24,500
Other Current Assets	$1,000
Long-term Assets	$0
Total Assets	$25,500

Total Requirements	$40,000

OutReSources, Inc. will begin by providing multiple training services for health care providers and public agencies in the areas of Developmental Therapy, and Service Coordination, but will later progress and diversify into Psychosocial Rehabilitation, Case Management, Clinical Therapies, and a multitude of supportive and more specific concepts. These concepts may range from Health Care Business Practices, Health and Wellness Promotion, Specific Disabilities and Treatments.

The initial service training categories for Developmental Therapy and Service Coordination are:

Standard DS training (DS for Children and Adults) and state certification
Paraprofessional Supervision by a Developmental Disabilities Professional
Quality Assurance practices and implementation of the “Best Practice/Client 1st” concept
Audit simulation in conjunction with training and assistance.
First Aid/CPR Certifications
Business analysis and restructuring consultations
Specific acute “Hot Topic” analysis (treatment/therapy methods, disorders, customer service, adult transition to include Medicaid/SSI, guardianship, community resource)

Market Analysis Summary how to do a market analysis for your business plan.">

OutReSources, Inc. is a business that has become necessary because of today’s ever increasing demand on the need for community health care. There are an increasing number of providers who have become dependent on Medicaid reimbursement, which has created the need for training resources. There are 100s of agencies providing fee-for-services reimbursed by Medicaid. Combine this with regional Medicaid units being severely understaffed and underbudgeted and you have a declining system unable to meet the huge need for support. OutReSources is therefore, ideally positioned to deliver these support and training services to provider companies and agencies.

4.1 Market Segmentation

The are many Medicaid providers. There are 79 listed in the Centerville Yellow Pages under the Mental Health and Developmental Disability categories, most of which provide a variety of service treatments or therapies. Several are either incorporated or franchised across the state. All of them provide at least one Medicaid reimbursed service (most offer several) and are required to maintain certain standards, self regulate, and educate. This creates the prime market for our services:

Pre-Audit preparation which would be on a sliding scale from finding, fixing, and training.
Certification Training (Specialist Certifications, CPR/First Aid, etc…)
Supportive training options (Diversity, Language, Parenting, “Best Practice”, Business and HR in Health Care, etc…)

The segmentation of the market is a new concept within the Mental Health and Developmental Disabilities fields of service but is not new to the general health care industry, and other service fields leaving a strong need for specific services:

Developmental Disabilities: Largest population in target with even larger body of regulations.
Service Coordination: Little regulation but severe lack of quality service.
Psychology/Social Rehabilitation: Smaller population but strong need for improvements in both quality and quantity.

It makes logical sense for OutReSources, Inc. to primarily direct its marketing approach at these three segments. In 2000, the market potential for the disabled service population is estimated to be around 200,498 people reporting some disability in Greenstate (Census 2000). Nationally the number was nearly 50 million. At the same time, the market potential for the need of bilingual services was estimated to be around 127,609 people speaking another language other than English at home of which 85% speak Spanish. Each of these populations are expected to grow at a steady rate of 5.6% per year.

In the table and chart below:

Agency Group 1 = State Licensed Developmental Disabilities Agencies
Agency Group 2 = State Licensed Service Coordination Agencies
Agency Group 3 = Other Medicaid Providers in Need of Cross Training and Continuing Education Units

Personnel management business plan, market analysis summary chart image

Market Analysis
		Year 1	Year 2	Year 3	Year 4	Year 5
Potential Customers	Growth						CAGR
Agency Group 1	25%	60	75	94	118	148	25.32%
Agency Group 2	25%	40	50	63	79	99	25.43%
Agency Group 3	5%	100	105	110	116	122	5.10%
Total	16.55%	200	230	267	313	369	16.55%

4.2 Target Market Segment Strategy

OutReSources, Inc. chooses to make the above segments its targeted market is because we have the applied first hand experience and the credentials having provided these services for significant periods of time, earning credibility with substantial marks in quality. Through our experiences as providers we have developed a strong knowledge of what services would be greatly needed, appreciated and valued.

We have and are continually increasing our credentials as providers to improve our current services allowing us to utilize those gained credentials in support of our new offerings. Through the years we have developed a reputation of providing high-quality services among state regulators, providers, and the community.

4.3 Service Business Analysis

Consulting participants range from major international name-brand consultants to tens of thousands of individuals. One of OutReSources’ challenges will be establishing itself as a real consulting company, positioned as a relatively risk-free organizational purchase.

There really is not much local competition specific to the field of Mental Health and Developmental Disabilities, only small private entities that are usually sole proprietors consulting from the basis of that one individual’s own knowledge and/or theories, and their own interpretations but with varying levels of practical application experience.

Our program will minimize its starting cost and have almost no overall risk by developing our new offerings based on the services services Flowstone, Inc. currently provides. This allows us to minimize up front cost and overhead while improving services within OutReSources. Flowstone will provide the inial start-up expenses in return for partial ownership, profit, and free access to services rendered.

4.3.1 Competition and Buying Patterns

The key element in purchase decisions made at the OutReSources’ client level is trust in the professional reputation and reliability of the consulting firm.

Strategy and Implementation Summary

OutReSources, Inc. will primarily focus on three service markets, Developmental Disability, Service Coordination, and Mental Health Providers, and in limited product segments: Pre-audit Review, Training, and Certifications.

5.1 Competitive Edge

Clearly, our competitive edge is the customer service experience and approach that our management team will bring to the table. Our “Best Practice” and “Client First” approach to all of our services is evident, and highly appreciated.

5.2 Marketing Strategy

An overview of the marketing plan includes:

Networking via word of mouth
Joining Associations of potential clients
Evolve Flowstone’s services to optimized levels to maximize profit and quality
Community involvement through volunteering, providing free seminars or scholarships to families in need to attend seminars
Symposium and Conferences
Website
Calling on connections within key state departments, agencies, and other affiliates
High profile interaction between our managers, and the customers
Excellent service and high quality results

5.3 Sales Strategy

The Team Supervisor needs and expects close contact and cooperation with the client agency’s staff. The General Operational Manger is under pressure to get a quotation together. The GOM and Trainers must be armed with quick reference guide to pricing. The important caller should be told that the GOM will “call right back.” The more successful the marketing strategy is in making in-roads into the foundation of a market, the more important this communication response will become.

In respect to the prospect list of clients, it is essential that a “salesman’s” approach be adopted to insure an organized, orderly approach to each prospect. Notes need to be kept on each client. Follow-up and persistence will pay off.

5.3.1 Sales Forecast

OutReSources, Inc. is a start-up and a relatively new concept in the field within a fairly common concept of consultation and training services. It is difficult to forecast without any benchmarks. However, since our overhead and start-up cost will be minimal we are able to use basic forecast principles by estimating our primary cost of salary (what it cost us to provide the service) which includes staffs estimated operating costs of lodging, meals and travel expenses to forecast our cost.

We want a 50% profit margin (to allow room for adjustments as needed) and so will double operating expenses to project revenue. This results in a Net profit of 50% on the dollar or 2-1 on our money. Of course, as services are implemented adjustments will be made based on total sales, realized cost, accessibility, feasibility, etc.

Personnel management business plan, strategy and implementation summary chart image

Sales Forecast
	Year 1	Year 2	Year 3
Sales
Pre-audit Review	$195,000	$253,500	$329,550
Pre-audit Review with Training	$265,500	$345,150	$448,695
Specialized Trainings	$7,800	$11,700	$17,550
Certification Courses	$11,700	$17,550	$26,325
Total Sales	$480,000	$627,900	$822,120

Direct Cost of Sales	Year 1	Year 2	Year 3
Pre-audit Review	$97,500	$126,750	$164,775
Pre-audit Review with Training	$132,750	$172,575	$224,348
Specialized Trainings	$1,950	$2,925	$4,388
Certification Courses	$1,942	$2,913	$4,370
Subtotal Direct Cost of Sales	$234,142	$305,163	$397,880

5.4 Milestones

Set forth below are the main milestones in the schedule of proposed development. We have carefully reviewed the timelines for start-up and firmly believe that once we are completely funded we can construct and open our initial services within less than one month of external implementation.

Development of Formalized Methodology of all services provided by May 2005 (GOM)
Purchase of High-end Presentation equipment by May 2005 (FLowstone, Inc.)
Preliminary dry run of internal mock services by June 2005 (General Operations Manager)
Approval of final product by July 2005 (Flowstone, Inc. GOM and Training Supervisors)
Marketing for potential clients By July 2005 (Flowstone, Inc. and GOM)
Training Packets, manuals, and documents by May 2005 (GOM, Training Supervisors)
Develop internal operation protocols and employee manual By June 2005 (Flowstone, Inc. and GOM)
Prepare and finalize marketing campaign (pamphlets, advertisements, etc) by June 2005 (Flowstone, Inc. and GOM)
Train staff by June 2005 (GOM and Training Supervisors)
Soft open (training period 30 to 45 days) by July 2005 (GOM and Training Supervisors)

Milestones

Milestone	Start Date	End Date	Budget	Manager	Department
Develop Formalized Methodology	1/15/2005	5/31/2005	$0	GOM	Department
Purchase Presentation Equipment	1/15/2005	5/31/2005	$0	Flowstone	Department
Dry Run of Pre-audit Review	1/15/2005	6/30/2005	$0	GOM	Department
Approval of Products	1/15/2005	7/31/2005	$0	Flowstone, GOM, T-S	Department
Marketing for Potential Clients	1/15/2005	7/31/2005	$0	Flowstone, GOM	Department
Training Packets and Materials	1/15/2005	5/31/2005	$0	GOM, T-S	Department
Internal Protocols/Employee Manual	1/15/2005	6/30/2005	$0	Flowstone, GOM	Department
Prepare/Finalize Mktg Campaign	1/15/2005	6/30/2005	$0	Flowstone, GOM	Department
Hire and Train Staff	1/15/2005	6/30/2005	$0	GOM, T-S	Department
Soft Opening	1/15/2005	7/31/2005	$0	GOM, T-S	Department
Totals			$0

Management Summary management summary will include information about who's on your team and why they're the right people for the job, as well as your future hiring plans.">

The three managers, Flowstone, Inc. owners Khallie Locharnold and Soren Aboukir and General Operations Manager Yuriatin Guadalquivir, have impeccable credentials in this industry. This will benefit OutReSources, Inc. in three ways:

Clients will be brought from existing professional relationships
Respect and recognition by associated organizations and state departments
The experience each has will attract new clients in the area of finance and administration,

The Training Supervisors and Trainers have yet to be formalized but would primarily consist of the Program Managers and Professionals from within Flowstone. Their extensive experience and education in service, and management within the industry will provide a foundation for success for OutReSources, Inc.

6.1 Personnel Plan

All work is, at the moment, produced by Yuriatin Guadalquivir and Flowstone, Inc. Since OutReSources, Inc. still remains in its formative stage and all stock holders’ compensation is purely based on net profit, and currently there is no revenue being generated, there are no salary expenses. There will be added where and when necessary and in line with success in penetrating the plan’s targeted markets. These salary expenses will absorbed by Flowstone, Inc.

By the end of June 2005, it is assumed that increased business volume will require the first Training Supervisor to be brought on board. By the end of August 2005, increased volume will require hiring the first trainer.

In FY2007, OutReSources will have 4 Training Supervisors and 4 trainers working, with the increasing amount of less sensitive work being farmed out to paraprofessionals and administrative support staff of Flowstone. It is assumed that OutReSources will become completely independent of Flowstone’s financial and staff support in year FY2008 or FY2009, depending on demand volume.

As stated earlier the salaries of the owner/consultants, training supervisors and trainers is included in the Cost of Sales. Only those costs for the hourly paraprofessional and administrative staff are shown in the Personnel table below.

Personnel Plan
	Year 1	Year 2	Year 3
Owners/Consultants	$0	$0	$0
Operations Manager	$0	$41,000	$41,000
Training Supervisors	$0	$0	$0
Trainers	$0	$0	$0
Paraprofessionals	$16,000	$32,000	$32,000
Administrative Support	$10,000	$24,000	$24,000
Total People	0	0	0

Total Payroll	$26,000	$97,000	$97,000

Financial Plan investor-ready personnel plan .">

Our main concerns will be aggressive time management, so that our labor costs stay under control, and proper purchasing, keeping costs down. Secondarily, hiring the best team, training them properly and retaining them will be a critical component to good costs. A good trainer does not sacrifice quality for quantity, but rather they optimize their time spent. Growth will be sustained through a contribution to a “roll-over” plan, and from potential future clients.

7.1 Start-up Funding

Total start-up expenses include legal costs, logo design, stationery and related expenses.

Expensed presentation and office equipment include computers and projectors. Start-up assets include initial cash to handle the first few months of consulting operations as accounts receivable play through the cash flow. Flowstone, Inc. is providing some of their used office furniture, chairs, as Other Current Assets.

Flowstone, Inc. will provide seed capital. Soren Aboukir and Khallie Locharnold will each invest at start-up, and anticipate loaning the company additional funds during the year.

Start-up Funding

Start-up Expenses to Fund	$14,500
Start-up Assets to Fund	$25,500
Total Funding Required	$40,000

Assets
Non-cash Assets from Start-up	$1,000
Cash Requirements from Start-up	$24,500
Additional Cash Raised	$0
Cash Balance on Starting Date	$24,500
Total Assets	$25,500


Liabilities and Capital

Liabilities
Current Borrowing	$0
Long-term Liabilities	$0
Accounts Payable (Outstanding Bills)	$0
Other Current Liabilities (interest-free)	$0
Total Liabilities	$0

Capital

Planned Investment
Flowstone, Inc.	$20,000
Khallie Locharnold	$10,000
Soren Aboukir	$10,000
Additional Investment Requirement	$0
Total Planned Investment	$40,000

Loss at Start-up (Start-up Expenses)	($14,500)
Total Capital	$25,500


Total Capital and Liabilities	$25,500

Total Funding	$40,000

7.2 Important Assumptions

We are assuming steady growth from good management, barring any unforseen local, or state disasters, economic slowdown, or Medicaid budget cuts.
We are assuming adequate funding by Flowstone, Inc. and the partners to sustain us during start-up.
We are assuming that health care providers will respond to the new concept of outsourced training and value it enough to pay for it.
We are assuming that the state will support us by referring health care provider clients.
We are assuming that we will be able to market our offerings as high-end services, allowing us to have a large profit potential.
We are assuming that this endeavor will not negatively affect those services already provided by Flowstone, Inc.

7.3 Projected Profit and Loss

Initially, OutReSources will be housed in the Flowstone office spaces and and benefit from the established administrative support system. In January 2006, we anticipate that OutReSources will move to it’s own office when an adjacent suite is due to become available.

As noted earlier, salaries for owner/consultants, training supervisors and trainers are included in Cost of Sales. To correctly calculate the necessary payroll tax withholding, a formula was entered into the P&L table for a percentage of the combined salaried and hourly wages.

Personnel management business plan, financial plan chart image

Pro Forma Profit and Loss
	Year 1	Year 2	Year 3
Sales	$480,000	$627,900	$822,120
Direct Cost of Sales	$234,142	$305,163	$397,880
Other Costs of Sales	$7,800	$10,000	$13,000
Total Cost of Sales	$241,942	$315,163	$410,880

Gross Margin	$238,058	$312,737	$411,240
Gross Margin %	49.60%	49.81%	50.02%


Expenses
Payroll	$26,000	$97,000	$97,000
Marketing/Promotion	$1,560	$3,000	$4,000
Depreciation	$0	$0	$0
Rent	$5,000	$12,000	$15,000
Utilities	$750	$600	$750
Insurance	$1,000	$2,000	$3,000
Payroll Taxes	$28,485	$46,592	$56,327
Training Packet Production	$3,900	$5,820	$8,000
Office Supplies	$2,340	$4,000	$5,500

Total Operating Expenses	$69,035	$171,012	$189,577

Profit Before Interest and Taxes	$169,023	$141,725	$221,663
EBITDA	$169,023	$141,725	$221,663
Interest Expense	$0	$0	$0
Taxes Incurred	$50,707	$42,517	$66,499

Net Profit	$118,316	$99,207	$155,164
Net Profit/Sales	24.65%	15.80%	18.87%

7.4 Break-even Analysis

Our monthly break even figure is based on our anticipated cost of sales, and in-kind administrative support from Flowstone. Break even currently requires an average monthly sales as shown below. This will vary if cost of sales increases or decreases, and if overhead expenses such as administrative support is transferred from Flowstone to us sooner than expected.

Break-even Analysis


Monthly Revenue Break-even	$11,232

Assumptions:
Average Percent Variable Cost	49%
Estimated Monthly Fixed Cost	$5,753

7.5 Projected Cash Flow

The Cash Flow table is based on ideal numbers. The numbers where set as explained previously by basic business principles to permit room for adjustment as the company grows. As seen in the chart as the months go by the Cash Balance remains positive. This is dependent upon reaching sales forecasts each month and keeping our expenses in line. Over time we are assured to make adjustments as stated in the explanation of the forecasting. The key components we will need to monitor that will adjust the overall true numbers are:

The Demand for Service
Cost of Service (The service may be desired, but must be priced right for clients to see the benefit)
Quality of Service (A fine balance of quality vs quantity)
Quality Cost (Salaries will be the primary factor. Can we hire quality trainers and charge a quality price while still receiving a quality profit)

The founding partners anticipate loaning the company additional monies as a short-term loan in mid-year. If sales exceed forecast this may not be necessary. Additional computers and presentation equipment will need to be purchased as new trainers and supervisors are hired.

Pro Forma Cash Flow
	Year 1	Year 2	Year 3
Cash Received

Cash from Operations
Cash Sales	$0	$0	$0
Cash from Receivables	$341,008	$585,073	$765,880
Subtotal Cash from Operations	$341,008	$585,073	$765,880

Additional Cash Received
Sales Tax, VAT, HST/GST Received	$28,800	$37,674	$49,327
New Current Borrowing	$0	$0	$0
New Other Liabilities (interest-free)	$0	$0	$0
New Long-term Liabilities	$0	$0	$0
Sales of Other Current Assets	$0	$0	$0
Sales of Long-term Assets	$0	$0	$0
New Investment Received	$0	$0	$0
Subtotal Cash Received	$369,808	$622,747	$815,208

Expenditures	Year 1	Year 2	Year 3

Expenditures from Operations
Cash Spending	$26,000	$97,000	$97,000
Bill Payments	$285,781	$446,114	$558,592
Subtotal Spent on Operations	$311,781	$543,114	$655,592

Additional Cash Spent
Sales Tax, VAT, HST/GST Paid Out	$28,800	$37,674	$49,327
Principal Repayment of Current Borrowing	$0	$0	$0
Other Liabilities Principal Repayment	$0	$0	$0
Long-term Liabilities Principal Repayment	$0	$0	$0
Purchase Other Current Assets	$4,000	$4,000	$6,000
Purchase Long-term Assets	$0	$0	$0
Dividends	$0	$0	$0
Subtotal Cash Spent	$344,581	$584,788	$710,919

Net Cash Flow	$25,228	$37,959	$104,288
Cash Balance	$49,728	$87,686	$191,975

7.6 Projected Balance Sheet

The balance sheet is not a key factor at this point since OutReSources, Inc. will be operating as a company within a company and utilizing Flowstone, Inc.’s assets. Given that any start-up cost or realized loss can be deemed as an assets expense for Flowstone there is truly little to no liability or risk thereof.

Pro Forma Balance Sheet
	Year 1	Year 2	Year 3
Assets

Current Assets
Cash	$49,728	$87,686	$191,975
Accounts Receivable	$138,992	$181,818	$238,058
Other Current Assets	$5,000	$9,000	$15,000
Total Current Assets	$193,719	$278,505	$445,033

Long-term Assets
Long-term Assets	$0	$0	$0
Accumulated Depreciation	$0	$0	$0
Total Long-term Assets	$0	$0	$0
Total Assets	$193,719	$278,505	$445,033

Liabilities and Capital	Year 1	Year 2	Year 3

Current Liabilities
Accounts Payable	$49,903	$35,482	$46,846
Current Borrowing	$0	$0	$0
Other Current Liabilities	$0	$0	$0
Subtotal Current Liabilities	$49,903	$35,482	$46,846

Long-term Liabilities	$0	$0	$0
Total Liabilities	$49,903	$35,482	$46,846

Paid-in Capital	$40,000	$40,000	$40,000
Retained Earnings	($14,500)	$103,816	$203,023
Earnings	$118,316	$99,207	$155,164
Total Capital	$143,816	$243,023	$398,187
Total Liabilities and Capital	$193,719	$278,505	$445,033

Net Worth	$143,816	$243,023	$398,187

7.7 Business Ratios

The following table shows the projected business ratios. We expect to maintain healthy ratios for profitability, risk, and return. The industry comparisons are for SIC 8742.0200, Human Resources Consulting, part of the larger Management Consulting Services category. The most noteworthy catagory is the percent of sales. You will notice that OutReSources, Inc. and Industry Standards are comparable until gross profit margin wherein OutReSources falls back by 50% from industry standards. This is primarily due to the majority of our expenses coming from staff compensation. However, OutReSources more than compensates in general administrative expenses. Though the numbers are based on ideal assumptions and are subject to change, OutReSources’ owner and management structure will continue to minimize general admin costs.

Ratio Analysis
	Year 1	Year 2	Year 3	Industry Profile
Sales Growth	0.00%	30.81%	30.93%	6.61%

Percent of Total Assets
Accounts Receivable	71.75%	65.28%	53.49%	18.68%
Other Current Assets	2.58%	3.23%	3.37%	49.64%
Total Current Assets	100.00%	100.00%	100.00%	71.06%
Long-term Assets	0.00%	0.00%	0.00%	28.94%
Total Assets	100.00%	100.00%	100.00%	100.00%

Current Liabilities	25.76%	12.74%	10.53%	35.28%
Long-term Liabilities	0.00%	0.00%	0.00%	15.95%
Total Liabilities	25.76%	12.74%	10.53%	51.23%
Net Worth	74.24%	87.26%	89.47%	48.77%

Percent of Sales
Sales	100.00%	100.00%	100.00%	100.00%
Gross Margin	49.60%	49.81%	50.02%	100.00%
Selling, General & Administrative Expenses	24.95%	34.01%	31.15%	83.35%
Advertising Expenses	0.00%	0.00%	0.00%	1.13%
Profit Before Interest and Taxes	35.21%	22.57%	26.96%	2.92%

Main Ratios
Current	3.88	7.85	9.50	1.49
Quick	3.88	7.85	9.50	1.25
Total Debt to Total Assets	25.76%	12.74%	10.53%	60.96%
Pre-tax Return on Net Worth	117.53%	58.32%	55.67%	7.36%
Pre-tax Return on Assets	87.25%	50.89%	49.81%	18.86%

Additional Ratios	Year 1	Year 2	Year 3
Net Profit Margin	24.65%	15.80%	18.87%	n.a
Return on Equity	82.27%	40.82%	38.97%	n.a

Activity Ratios
Accounts Receivable Turnover	3.45	3.45	3.45	n.a
Collection Days	55	93	93	n.a
Accounts Payable Turnover	6.73	12.17	12.17	n.a
Payment Days	27	36	26	n.a
Total Asset Turnover	2.48	2.25	1.85	n.a

Debt Ratios
Debt to Net Worth	0.35	0.15	0.12	n.a
Current Liab. to Liab.	1.00	1.00	1.00	n.a

Liquidity Ratios
Net Working Capital	$143,816	$243,023	$398,187	n.a
Interest Coverage	0.00	0.00	0.00	n.a

Additional Ratios
Assets to Sales	0.40	0.44	0.54	n.a
Current Debt/Total Assets	26%	13%	11%	n.a
Acid Test	1.10	2.72	4.42	n.a
Sales/Net Worth	3.34	2.58	2.06	n.a
Dividend Payout	0.00	0.00	0.00	n.a

Sales Forecast
		Month 1	Month 2	Month 3	Month 4	Month 5	Month 6	Month 7	Month 8	Month 9	Month 10	Month 11	Month 12
Sales
Pre-audit Review	0%	$2,500	$5,000	$7,500	$10,000	$12,500	$15,000	$17,500	$20,000	$22,500	$25,000	$27,500	$30,000
Pre-audit Review with Training	0%	$3,500	$7,000	$10,500	$14,000	$17,500	$20,000	$23,500	$27,000	$30,500	$34,000	$37,500	$40,500
Specialized Trainings	0%	$100	$200	$300	$400	$500	$600	$700	$800	$900	$1,000	$1,100	$1,200
Certification Courses	0%	$150	$300	$450	$600	$750	$900	$1,050	$1,200	$1,350	$1,500	$1,650	$1,800
Total Sales		$6,250	$12,500	$18,750	$25,000	$31,250	$36,500	$42,750	$49,000	$55,250	$61,500	$67,750	$73,500

Direct Cost of Sales		Month 1	Month 2	Month 3	Month 4	Month 5	Month 6	Month 7	Month 8	Month 9	Month 10	Month 11	Month 12
Pre-audit Review		$1,250	$2,500	$3,750	$5,000	$6,250	$7,500	$8,750	$10,000	$11,250	$12,500	$13,750	$15,000
Pre-audit Review with Training		$1,750	$3,500	$5,250	$7,000	$8,750	$10,000	$11,750	$13,500	$15,250	$17,000	$18,750	$20,250
Specialized Trainings		$25	$50	$75	$100	$125	$150	$175	$200	$225	$250	$275	$300
Certification Courses		$25	$50	$75	$100	$125	$149	$174	$199	$224	$249	$274	$299
Subtotal Direct Cost of Sales		$3,050	$6,100	$9,150	$12,200	$15,250	$17,799	$20,849	$23,899	$26,949	$29,999	$33,049	$35,849

Personnel Plan
		Month 1	Month 2	Month 3	Month 4	Month 5	Month 6	Month 7	Month 8	Month 9	Month 10	Month 11	Month 12
Owners/Consultants	0%	$0	$0	$0	$0	$0	$0	$0	$0	$0	$0	$0	$0
Operations Manager	0%	$0	$0	$0	$0	$0	$0	$0	$0	$0	$0	$0	$0
Training Supervisors	0%	$0	$0	$0	$0	$0	$0	$0	$0	$0	$0	$0	$0
Trainers	0%	$0	$0	$0	$0	$0	$0	$0	$0	$0	$0	$0	$0
Paraprofessionals	0%	$0	$0	$0	$0	$2,000	$2,000	$2,000	$2,000	$2,000	$2,000	$2,000	$2,000
Administrative Support	0%	$0	$0	$0	$0	$0	$0	$0	$2,000	$2,000	$2,000	$2,000	$2,000
Total People		0	0	0	0	0	0	0	0	0	0	0	0

Total Payroll		$0	$0	$0	$0	$2,000	$2,000	$2,000	$4,000	$4,000	$4,000	$4,000	$4,000

Pro Forma Profit and Loss
		Month 1	Month 2	Month 3	Month 4	Month 5	Month 6	Month 7	Month 8	Month 9	Month 10	Month 11	Month 12
Sales		$6,250	$12,500	$18,750	$25,000	$31,250	$36,500	$42,750	$49,000	$55,250	$61,500	$67,750	$73,500
Direct Cost of Sales		$3,050	$6,100	$9,150	$12,200	$15,250	$17,799	$20,849	$23,899	$26,949	$29,999	$33,049	$35,849
Other Costs of Sales		$100	$200	$300	$400	$500	$600	$700	$800	$900	$1,000	$1,100	$1,200
Total Cost of Sales		$3,150	$6,300	$9,450	$12,600	$15,750	$18,399	$21,549	$24,699	$27,849	$30,999	$34,149	$37,049

Gross Margin		$3,100	$6,200	$9,300	$12,400	$15,501	$18,101	$21,201	$24,301	$27,401	$30,501	$33,601	$36,451
Gross Margin %		49.60%	49.60%	49.60%	49.60%	49.60%	49.59%	49.59%	49.59%	49.59%	49.60%	49.60%	49.59%


Expenses
Payroll		$0	$0	$0	$0	$2,000	$2,000	$2,000	$4,000	$4,000	$4,000	$4,000	$4,000
Marketing/Promotion		$20	$40	$60	$80	$100	$120	$140	$160	$180	$200	$220	$240
Depreciation		$0	$0	$0	$0	$0	$0	$0	$0	$0	$0	$0	$0
Rent		$0	$0	$0	$0	$0	$0	$0	$1,000	$1,000	$1,000	$1,000	$1,000
Utilities		$0	$0	$0	$0	$0	$0	$0	$150	$150	$150	$150	$150
Insurance		$0	$0	$0	$0	$0	$0	$0	$200	$200	$200	$200	$200
Payroll Taxes	15%	$320	$640	$961	$1,281	$1,901	$2,169	$2,489	$3,109	$3,430	$3,750	$4,070	$4,364
Training Packet Production	15%	$50	$100	$150	$200	$250	$300	$350	$400	$450	$500	$550	$600
Office Supplies		$30	$60	$90	$120	$150	$180	$210	$240	$270	$300	$330	$360

Total Operating Expenses		$420	$840	$1,261	$1,681	$4,401	$4,769	$5,189	$9,259	$9,680	$10,100	$10,520	$10,914

Profit Before Interest and Taxes		$2,680	$5,360	$8,040	$10,719	$11,099	$13,332	$16,012	$15,041	$17,721	$20,401	$23,081	$25,537
EBITDA		$2,680	$5,360	$8,040	$10,719	$11,099	$13,332	$16,012	$15,041	$17,721	$20,401	$23,081	$25,537
Interest Expense		$0	$0	$0	$0	$0	$0	$0	$0	$0	$0	$0	$0
Taxes Incurred		$804	$1,608	$2,412	$3,216	$3,330	$3,999	$4,803	$4,512	$5,316	$6,120	$6,924	$7,661

Net Profit		$1,876	$3,752	$5,628	$7,504	$7,770	$9,332	$11,208	$10,529	$12,405	$14,281	$16,157	$17,876
Net Profit/Sales		30.01%	30.01%	30.01%	30.01%	24.86%	25.57%	26.22%	21.49%	22.45%	23.22%	23.85%	24.32%

Pro Forma Cash Flow
		Month 1	Month 2	Month 3	Month 4	Month 5	Month 6	Month 7	Month 8	Month 9	Month 10	Month 11	Month 12
Cash Received

Cash from Operations
Cash Sales		$0	$0	$0	$0	$0	$0	$0	$0	$0	$0	$0	$0
Cash from Receivables		$0	$208	$6,458	$12,708	$18,958	$25,208	$31,425	$36,708	$42,958	$49,208	$55,458	$61,708
Subtotal Cash from Operations		$0	$208	$6,458	$12,708	$18,958	$25,208	$31,425	$36,708	$42,958	$49,208	$55,458	$61,708

Additional Cash Received
Sales Tax, VAT, HST/GST Received	6.00%	$375	$750	$1,125	$1,500	$1,875	$2,190	$2,565	$2,940	$3,315	$3,690	$4,065	$4,410
New Current Borrowing		$0	$0	$0	$0	$0	$0	$0	$0	$0	$0	$0	$0
New Other Liabilities (interest-free)		$0	$0	$0	$0	$0	$0	$0	$0	$0	$0	$0	$0
New Long-term Liabilities		$0	$0	$0	$0	$0	$0	$0	$0	$0	$0	$0	$0
Sales of Other Current Assets		$0	$0	$0	$0	$0	$0	$0	$0	$0	$0	$0	$0
Sales of Long-term Assets		$0	$0	$0	$0	$0	$0	$0	$0	$0	$0	$0	$0
New Investment Received		$0	$0	$0	$0	$0	$0	$0	$0	$0	$0	$0	$0
Subtotal Cash Received		$375	$958	$7,583	$14,208	$20,833	$27,398	$33,990	$39,648	$46,273	$52,898	$59,523	$66,118

Expenditures		Month 1	Month 2	Month 3	Month 4	Month 5	Month 6	Month 7	Month 8	Month 9	Month 10	Month 11	Month 12

Expenditures from Operations
Cash Spending		$0	$0	$0	$0	$2,000	$2,000	$2,000	$4,000	$4,000	$4,000	$4,000	$4,000
Bill Payments		$146	$4,520	$8,894	$13,268	$17,629	$21,603	$25,314	$29,706	$34,617	$38,991	$43,365	$47,728
Subtotal Spent on Operations		$146	$4,520	$8,894	$13,268	$19,629	$23,603	$27,314	$33,706	$38,617	$42,991	$47,365	$51,728

Additional Cash Spent
Sales Tax, VAT, HST/GST Paid Out		$375	$750	$1,125	$1,500	$1,875	$2,190	$2,565	$2,940	$3,315	$3,690	$4,065	$4,410
Principal Repayment of Current Borrowing		$0	$0	$0	$0	$0	$0	$0	$0	$0	$0	$0	$0
Other Liabilities Principal Repayment		$0	$0	$0	$0	$0	$0	$0	$0	$0	$0	$0	$0
Long-term Liabilities Principal Repayment		$0	$0	$0	$0	$0	$0	$0	$0	$0	$0	$0	$0
Purchase Other Current Assets		$0	$0	$0	$0	$2,000	$0	$0	$2,000	$0	$0	$0	$0
Purchase Long-term Assets		$0	$0	$0	$0	$0	$0	$0	$0	$0	$0	$0	$0
Dividends		$0	$0	$0	$0	$0	$0	$0	$0	$0	$0	$0	$0
Subtotal Cash Spent		$521	$5,270	$10,019	$14,768	$23,504	$25,793	$29,879	$38,646	$41,932	$46,681	$51,430	$56,138

Net Cash Flow		($146)	($4,312)	($2,436)	($560)	($2,671)	$1,605	$4,111	$1,002	$4,341	$6,217	$8,093	$9,981
Cash Balance		$24,354	$20,043	$17,607	$17,047	$14,376	$15,981	$20,093	$21,095	$25,436	$31,654	$39,747	$49,728

Pro Forma Balance Sheet
		Month 1	Month 2	Month 3	Month 4	Month 5	Month 6	Month 7	Month 8	Month 9	Month 10	Month 11	Month 12
Assets	Starting Balances

Current Assets
Cash	$24,500	$24,354	$20,043	$17,607	$17,047	$14,376	$15,981	$20,093	$21,095	$25,436	$31,654	$39,747	$49,728
Accounts Receivable	$0	$6,250	$18,542	$30,833	$43,125	$55,417	$66,708	$78,033	$90,325	$102,617	$114,908	$127,200	$138,992
Other Current Assets	$1,000	$1,000	$1,000	$1,000	$1,000	$3,000	$3,000	$3,000	$5,000	$5,000	$5,000	$5,000	$5,000
Total Current Assets	$25,500	$31,604	$39,584	$49,440	$61,172	$72,793	$85,690	$101,126	$116,420	$133,053	$151,562	$171,947	$193,719

Long-term Assets
Long-term Assets	$0	$0	$0	$0	$0	$0	$0	$0	$0	$0	$0	$0	$0
Accumulated Depreciation	$0	$0	$0	$0	$0	$0	$0	$0	$0	$0	$0	$0	$0
Total Long-term Assets	$0	$0	$0	$0	$0	$0	$0	$0	$0	$0	$0	$0	$0
Total Assets	$25,500	$31,604	$39,584	$49,440	$61,172	$72,793	$85,690	$101,126	$116,420	$133,053	$151,562	$171,947	$193,719

Liabilities and Capital		Month 1	Month 2	Month 3	Month 4	Month 5	Month 6	Month 7	Month 8	Month 9	Month 10	Month 11	Month 12

Current Liabilities
Accounts Payable	$0	$4,228	$8,457	$12,685	$16,913	$20,764	$24,329	$28,557	$33,322	$37,550	$41,779	$46,007	$49,903
Current Borrowing	$0	$0	$0	$0	$0	$0	$0	$0	$0	$0	$0	$0	$0
Other Current Liabilities	$0	$0	$0	$0	$0	$0	$0	$0	$0	$0	$0	$0	$0
Subtotal Current Liabilities	$0	$4,228	$8,457	$12,685	$16,913	$20,764	$24,329	$28,557	$33,322	$37,550	$41,779	$46,007	$49,903

Long-term Liabilities	$0	$0	$0	$0	$0	$0	$0	$0	$0	$0	$0	$0	$0
Total Liabilities	$0	$4,228	$8,457	$12,685	$16,913	$20,764	$24,329	$28,557	$33,322	$37,550	$41,779	$46,007	$49,903

Paid-in Capital	$40,000	$40,000	$40,000	$40,000	$40,000	$40,000	$40,000	$40,000	$40,000	$40,000	$40,000	$40,000	$40,000
Retained Earnings	($14,500)	($14,500)	($14,500)	($14,500)	($14,500)	($14,500)	($14,500)	($14,500)	($14,500)	($14,500)	($14,500)	($14,500)	($14,500)
Earnings	$0	$1,876	$5,628	$11,255	$18,759	$26,529	$35,861	$47,069	$57,598	$70,003	$84,283	$100,440	$118,316
Total Capital	$25,500	$27,376	$31,128	$36,755	$44,259	$52,029	$61,361	$72,569	$83,098	$95,503	$109,783	$125,940	$143,816
Total Liabilities and Capital	$25,500	$31,604	$39,584	$49,440	$61,172	$72,793	$85,690	$101,126	$116,420	$133,053	$151,562	$171,947	$193,719

Net Worth	$25,500	$27,376	$31,128	$36,755	$44,259	$52,029	$61,361	$72,569	$83,098	$95,503	$109,783	$125,940	$143,816

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Original text

Crafting a winning business plan isn't just about putting ideas on paper; it's about strategically paving the road to success. Whether you're starting a new venture or looking to scale an existing one, having a well-structured business plan is essential.

It serves as your roadmap, guiding decisions and attracting potential investors.

This comprehensive document must cover seven key elements that collectively provide direction, showcase potential, and demonstrate viability.

Let's delve into what makes each element indispensable for your business's success.

7 Key Elements for a Successful Business Plan

Creating a solid business plan is crucial for any successful venture. These seven key elements will guide you through the process, ensuring your plan is comprehensive and compelling.

1. Executive Summary

The executive summary is your business plan’s opening statement and should capture the essence of your company in a concise manner. It needs to succinctly outline your business mission, vision, and core values.

Additionally, it should highlight key aspects such as the problems your product or service solves, your unique value proposition, and a brief overview of your target market.

This section is often what potential investors will read first, so make sure it clearly communicates why your business is worth their attention and investment. By effectively summarizing these elements, you set a strong foundation for the rest of your business plan.

2. Market Analysis

Understanding your market is crucial for the success of your business. You need to identify your target audience, understand their needs and preferences, and study the competitive landscape.

Conducting thorough research allows you to anticipate trends and spot potential opportunities or threats within the industry. For instance, if you're venturing into the beverage industry, utilizing a complete alcohol pricing guide can provide valuable insights into setting competitive prices.

By analyzing consumer behavior and competitor strategies, you’ll be better positioned to carve out a niche for your product or service in a crowded marketplace, ensuring long-term growth.

3. Company Description

Your company description provides an in-depth look at the heart of your business. Start by explaining the nature of your business and the industry in which you operate.

Highlight the unique aspects that set you apart from competitors, such as innovative products or exceptional services. Detail your business structure, mentioning whether it's a sole proprietorship, partnership, or corporation.

Include relevant information about your location and any significant milestones reached thus far. This section should give readers a clear understanding of who you are, what you do, and why you're positioned for success in your market.

4. Organization and Management

In this section, you’ll outline the organizational structure of your company. Introduce the key members of your management team and provide insights into their roles, backgrounds, and expertise. Highlight how their unique skills contribute to the company's success. If applicable, include an organizational chart to visually depict team hierarchy and reporting lines.

Also, discuss any advisory boards or consultants that add strategic value. This part is crucial because potential investors need confidence in the team's ability to execute the business plan effectively and steer the company toward its goals.

5. Products or Services Line

Detailing your products or services is essential for conveying their value to potential investors and customers. Describe each offering, including its features, benefits, and the problems it solves. Explain what makes your products or services unique compared to those of competitors.

Highlight any proprietary technology, special ingredients, or innovative processes that set you apart.

Additionally, consider discussing future developments or upcoming product lines that could further enhance your market position. By clearly defining what you offer, you'll help stakeholders understand why your business fills a critical need in the marketplace.

6. Marketing Strategy

Your marketing strategy outlines how you plan to attract and retain customers. Begin by identifying your target market and understanding their behaviors and preferences.

Explain the various channels you'll use to reach this audience, from social media campaigns to traditional advertising methods. Discuss your branding approach, including key messages and unique selling points that will resonate with your customers. Outline any partnerships or collaborations that could amplify your marketing efforts.

This section should clearly demonstrate how you intend to build visibility, generate leads, and drive sales for sustained business growth.

7. Financial Projections & Funding Request

This section is vital for illustrating your business’s financial health and future potential. Provide detailed financial projections, including income statements, cash flow statements, and balance sheets for the next three to five years. Clearly outline your assumptions and include any planned investments or operational changes that might impact these projections.

Additionally, specify the amount of funding you’re seeking, and explain how it will be used to achieve your business objectives. Whether it’s for expanding operations, hiring staff, or launching new products, detailing the intended use of funds helps build investor confidence.

These Elements are Necessary for a Successful Business Plan

Now that you understand the seven key elements of a successful business plan, it's time to take action. Start by considering each component and how it applies to your vision and market.

Remember, a well-thought-out plan is your foundation for success, helping you navigate challenges and seize opportunities. Don't wait - begin drafting your business plan today and set yourself on a path toward achieving your entrepreneurial dreams.

Funded, in part, through a Cooperative Agreement with the U.S. Small Business Administration. All opinions, and/or recommendations expressed herein are those of the author(s) and do not necessarily reflect the views of the SBA.

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Key Solutions Blog

How to write a staffing plan for a proposal.

Apr 6, 2023

Proposals oftentimes require a Staffing Plan that shows who, how many, what skillsets, and the Level of Effort (LOE) required to execute the actual work of the contract. The Staffing Plan should go beyond immediate headcount and reflect your understanding of the customer’s mission and flexibility to respond to evolving requirements. It is a key element in increasing the customer’s confidence in your ability to accomplish the work successfully and serves as a bridge connecting your technical and management approaches.

What is a Staffing Plan?

A Staffing Plan is a detailed plan that describes the education, skills, relevant experience, training, certifications, and often security clearances of the proposed staff needed to execute a contract successfully. RFPs usually specify certifications such as PMP and technical credentials, so customers, although interested in training, tend to value professional certifications more than just training.

The Staffing Plan should include the elements in the following table:

Staffing Plan Elements graphic is from the KSI Advantage™ Capture & Proposal Guide

A company should have a strategic Human Resources (HR) plan for its approach to hiring for a project. Of utmost importance is that you have an embedded, proven process that continually identifies personnel with specific skills and can maintain a staffing pipeline to fill vacancies. Provide examples of similar contracts where you have successfully provided and maintained a stable staff. Staffing plans show you have the proper personnel and resources to perform the work, and if you don’t have them, then you have a plan to recruit and retain any needed additional staff. Make sure to establish a planning process by which the personnel needed for a project are assessed and identified. Your ability to team successfully to expand your pool of qualified personnel is also a plus. The staffing plan should include a discussion of how to bring in staff from teammates. Keep in mind that issues of teaming agreements that specify the LOE or work share are almost always of interest to the customer. Your plan should clearly describe how you will handle subcontractors to meet staffing requirements. The customer wants to know that although you will be the prime contractor your team operates as one. Below are the KSI Advantage™ Approach recommended steps for creating a Staffing Plan.

When personnel qualifications are a high evaluation factor in the award of competitive contracts, choosing the best, most highly qualified personnel for the project becomes more important. When developing your content, provide an overview of the resource management strategy of the project. Include an overview of how contractors will be used in conjunction with Federal staff. In addition to providing an overview of how new project team members will be onboarded to the project team, make sure to include the information they will be provided with, onboarding procedures that must be followed, and expectations for their onboarding experience.

Your staffing plan should show the customer your approach for managing project team attrition, including staff retention strategies and procedures that must be followed when a project team member transitions off a project. Make sure that your plan meets the deadline/schedule requirements for identifying and onboarding necessary staff. The RFP will likely identify key personnel positions and may require you to provide names and resumes. If resumes are required, the RFP often dictates the resume format. Sometimes, however, you may need to develop a resume template based on the RFP requirements. When developing the resume format, the layout should be easy to follow, with clear and consistent headings following the order and any format requirements of the RFP.

Three of the most effective formats include table format, single column, and single column with left scholar’s margin. It is effective to include the names of the key personnel in relevant management or technical sections and refer to their skills and experience. When not required, identifying key personnel can demonstrate your level of understanding of the requirements and your commitment to successfully completing the work. Below is a sample table format resume.

Your plan should also address transition support, even if you are the incumbent, and ensure continuity of operations throughout the transition with a clearly defined onboarding and attrition/turnover plan. Make sure your plan:

Provides a low-cost innovative transition approach that meets and exceeds all Transition Service Level Agreement (SLA) requirements.
Proposes a realistic transition of sites that consider critical sites (transition of the network, NOC, and site-specific pieces).
Has provisioning for dual access at critical sites.
Provides an experienced transition team.

The Staffing Plan should summarize all the assessments and analyses conducted, outline the decision-making process, and include concrete numbers of required personnel. By developing a comprehensive Staffing Plan, you demonstrate to the customer that you have the necessary resources to successfully execute the contract. Furthermore, it showcases your ability to recruit and retain skilled personnel, allowing you to respond quickly and effectively to changing requirements. Make sure that your plan defines program and project positions’ roles and responsibilities and their requisite skills and experience levels. A solid Staffing Plan builds a winning team with ample, qualified staff to do the work and a clearly defined organizational structure, leadership team, and management strategy.

Topics: Proposal Writing KSI Advantage Capture & Proposal Guide KSI Advantage Staffing Plan

Written by Melissa Serna

Melissa Serna is a Proposal Development Consultant with Key Solutions. She is an alumnus of Florida International University where she earned a BS in Mass Communication with a concentration in Journalism. Melissa then went on to complete an MS in Higher Education Administration at the University of Miami. She has extensive writing and editing experience and in her free time enjoys yoga, cooking, and traveling.

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Key Personnel - Definition, Responsibilities, and Training

Key personnel are those who have authority or responsibility for the design or management of a project, as well as those involved in recruitment, data collection and management activities, including those responsible for maintaining participant privacy or data confidentiality. Key personnel must have training on file in the IRB Office.

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Individuals who typically do not require training are staff involved only in the analysis or management of de-identified datasets, individuals providing video services, or individuals in the community who distribute written materials or make announcements about the study according to written script(s) provided by the research team. Any person who actually explains the study for recruitment purposes or attempts to answer questions about the research must receive training before doing so.

Investigator Responsibilities

All members of the UNI community are responsible for promoting good ethics in research. Principal investigators are responsible for overseeing and maintaining ethical procedures in all projects under their purview.

Researchers contemplating research involving human participants are required to submit an application to the IRB for review and approval before initiating each project. This requirement encompasses a variety of research activities that can range from the simple use of surveys or interview procedures to more complex activities such as treatment interventions. All research must be conducted in accordance with the following documents.

The Belmont Report - This report is a summary of the basic ethical principles identified by the National Commission for the Protection of Human Subjects of Biomedical and Behavioral Research.

Federalwide Assurance - FWA00002159 - This agreement between UNI and the Office for Human Research Protections (OHRP) of the Department of Health and Human Services assures that investigators conducting human participant research at UNI will follow the ethical principles outlined in the Belmont report.

The Code of Federal Regulations for the Protection of Human Subjects, Title 45 CFR Part 46 - These are federal regulations that describe general standards for the composition, operation, and responsibility of an Institutional Review Board. Compliance with these regulations is intended to protect the rights and welfare of human participants involved in research projects. In some cases, other federal regulations will apply as well.

UNI IRB Policies and Procedures – This outlines all of the requirements for human participants research at UNI. It encompasses and is largely, although not exclusively, based on the three documents above.

Faculty Advisor Responsibilities

Faculty advisors are jointly responsible with student investigators for the conduct of student research projects. This responsibility includes assisting students in becoming familiar with ethical principles and IRB rules and processes. Advisors are expected to assist students in the design of their protocols, carefully review their applications for IRB review to ensure they are complete and appropriate, and help students resolve any questions or concerns that arise during the review. Subsequently, they are responsible for ensuring that the student complies with ethical principles and IRB requirements throughout the study. This includes monitoring to ensure that the student submits modification requests to the IRB prior to initiating changes as well as the timely submission of renewal and/or closure forms. Advisors are encouraged to instruct their students to submit a closure form for each completed study before they leave campus.

Training and Qualifications

Researchers and the members of their team must be qualified to carry out the procedures outlined in their research design or obtain the oversight and/or participation of others who do have the qualifications. If questions arise, the IRB may request that the researchers document that they or their key personnel have the appropriate qualifications. This is typically only an issue when special procedures are being undertaken that require particular expertise, such as certain therapeutic procedures. All key personnel, however, should be trained in human subjects protections and research procedures that they are responsible for (e.g., how to invite participation in a study without introducing undue influence). In addition, the IRB requires that all researchers document they have formal training in human subjects protections before submitting an application for IRB review. See IRB Training for details on some of the training options available.

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Estate Planning Guide and Checklist for 2024

Key takeaways.

Common estate planning documents are wills, trusts, powers of attorney, and living wills.
Everyone can benefit from having a will, no matter how small their estate or simple their wishes.
Online estate planning services offer basic packages for less than $200.
Estate planning attorneys can cost several hundred dollars per hour.
Estate plans must be updated after significant life events.

Why you can trust us

Our Reviews Team consists of trained lawyers who have spent hundreds of hours researching estate planning and using the services we recommend. We only recommend services we find to be helpful and accurate. To develop our reviews and guidance, we:

Spent 300 hours researching and using online estate planning services
Consulted with legal experts, probate attorneys, and financial planners to learn the best practices in estate planning
Went behind the paywall to gain firsthand experience with five of the top online will creation services to review and compare them with each other
Read hundreds of customer reviews on trusted third-party websites, such as Better Business Bureau (BBB) and Trustpilot

What is estate planning?

Organizing your affairs in preparation for the end of your life is an important task, and estate planning is an ongoing process that includes much more than writing a will. This type of planning helps determine who can make decisions on your behalf, who takes care of your dependents, and how to avoid unnecessary taxes and waiting periods.

Estate planning covers any decisions regarding money, property, medical care, dependent care, and other matters that can arise when a person dies.

The biggest benefit of estate planning is peace of mind—you’ll know your wishes will be fulfilled for the benefit of your loved ones. At the very least, everyone should have a simple estate plan in place.

Elements of estate planning

Most of this process consists of creating and finalizing estate planning documents, such as wills, trusts, powers of attorney, and living wills. You can be as detailed as you want. Some people even include a letter of instruction with their estate to walk their family members through the documents.

A will, formally called a “ last will and testament ,” is a legal document stating how you want your executor (the person legally obligated to administer your estate) to distribute your assets when you die.

Dying without a will is known as dying “intestate,” which means state law will dictate what happens with your estate.

Probate refers to the process of distributing your estate after you’ve died. Your estate will go through the probate process whether you die with or without a will, but having a will ensures your executor honors your wishes. Going through probate court without a will is more time consuming and expensive, with the money coming out of your estate first.

If you already know where you want your assets to go, it’s easy to make a will without a lawyer . Online will services offer interactive questionnaires to help you create a legally binding will specific to your state.

A trust is a legal contract that allows another person (the “trustee”) to hold property for you (the “grantor”). This is typically so the beneficiaries (individuals or institutions who stand to inherit something) can use the property at some point in the future. You can place money, physical assets, or anything else of value in a trust.

Trusts are also helpful to hold property when beneficiaries are minor children who are not yet fit to handle their full inheritance. In that situation, the property will stay in the trust until the beneficiaries reach a certain age.

Property is also distributed faster in a trust because you avoid a lengthy probate court process, so it’s sometimes preferred for that reason.

Living trust vs. testamentary trust

You can create a living trust , also called an inter vivos trust, to hold property both before and after your death.

A testamentary trust is a type of trust that a will creates, so it only becomes effective after the grantor’s death.

The difference between these two kinds of trusts is that a living trust is effective while the grantor is alive, and a testamentary trust only becomes effective after the grantor’s death.

Revocable vs. irrevocable living trusts

A revocable living trust is one where the grantor retains the right to modify, amend, revoke, or terminate the trust. In an irrevocable living trust, the grantor is not allowed to make changes to the trust, but some states may allow the trustee to transfer property in and out of an irrevocable trust with permission from the trust’s beneficiaries.

A revocable trust becomes irrevocable when the grantor dies, since they can no longer make changes to it. Some people choose to place their assets in a revocable trust rather than only using a will. Upon the grantor’s death, the executor distributes assets in a trust faster because they don’t have to go through probate.

Helpful hint: Trusts are not just for wealthy people. Anyone who wants their property to go to their relatives in a quick and easy manner can create a trust. For example, parents of young children may put property in a trust specifically designated to fund a child’s education.

Power of attorney

Power of attorney (POA) refers to the authority you give someone else to make legal, financial, or medical decisions on your behalf. These documents are commonly included in online estate planning service packages.

The person to whom you grant power of attorney is called your “agent.” You identify this person in a document that only takes effect when you are considered unable to act on your own behalf, or you can grant someone POA for a specific purpose, such as purchasing a vehicle for you.

If you become unable to manage your own legal or financial affairs and you have not designated an agent to act on your behalf, a court may appoint one for you. Each state has its own laws on POAs, but the general types to be aware of include (but are not limited to) durable, limited, and financial.

A durable power of attorney means your agent can continue to act on your behalf even when your situation changes, such as if you become ill and are unable to make decisions. It can grant broad authority or be restricted to a specific purpose.

Helpful hint: Some states allow “springing” durable POAs, which means the POA only takes effect when you are deemed incapacitated. This is useful if you don’t want to give someone else decision-making authority right away, but want protection if you ever need someone to advocate on your behalf.

A limited power of attorney gives the agent authority to make decisions for a specific purpose, or for a limited period of time. In contrast, a general POA gives the agent broad authority to act.

A financial power of attorney gives the agent authority to manage your financial affairs. You can make this effective immediately or at the time of an event, like a sudden incapacitating illness or death.

Health care decisions

Health care is one of the most common aspects of estate planning. You want someone you trust to help ensure your wishes are respected if you become unable to advocate for yourself. Living wills, health care proxies, and advance health care directives are tools you can use to protect yourself in the future.

Living wills

A living will states your preferences regarding health care planning, such as whether you want life-extending treatment, how you want to manage long-term care, what procedures you do or do not want, and other end-of-life matters.

Health care proxies

A health care proxy is a durable POA specifically for medical treatment—you appoint someone to make decisions on your behalf when you are deemed unable to do so by a medical professional.

Advance health care directives

Advance directives is an umbrella term that can refer to any document regarding future medical decision-making. It can refer to a living will, health care proxy, or other legal document.

One document to include with your advance directive is a HIPAA authorization. HIPAA stands for Health Insurance Portability and Accountability Act (1996). 1 This federal law protects your medical records by requiring a signed authorization form before you grant access to someone other than yourself. Having a signed authorization for your agent ensures they can access your medical records when the directive takes effect.

Tax planning documents

Taxes can take an alarming percentage of what you leave to your beneficiaries, but you can limit what taxes your estate pays in a few ways. Each state has its own tax laws, so your obligation will depend on where you live. While financial and tax planners are best equipped to advise you on these matters, you should consider a few types of taxes when organizing your affairs: estate, inheritance, and gift taxes.

According to the IRS, an estate tax applies to estates valued more than a certain threshold at the time of death. 2 You calculate the tax by:

Adding the fair market value of everything a person owns
Taking out deductions
Adding the value of gifts made during the person’s lifetime
Taking out any credits

If the estate value is above $13.61 million (as of 2024), the estate pays a tax to the federal government.

Inheritance tax

Only six states impose inheritance taxes:

Pennsylvania

While estate taxes are owed to the federal government, inheritance taxes are owed to the state government. Additionally, while estate taxes are paid directly from the estate itself, inheritance taxes are paid by the heir or beneficiaries based on what they received in probate.

These taxes do not apply to surviving spouses or to payouts from life insurance policies. Instead, inheritance taxes usually only apply to more distant relatives and heirs. It’s unlikely this tax affects you, but it’s good to be aware of it if you live in one of the six states that apply it.

Many people choose to make gifts during their lifetime to reduce the value of their estate when they die. According to the IRS, gifting can take different forms : selling something for less than its full value, transferring the right to use income from property, or transferring money or property without expecting to receive the full value in return. 3 Usually, the person giving the gift owes the tax, but other arrangements are possible with the advice of a tax professional.

Estate planning checklist 2024

The best way to approach estate planning for the first time is to make a checklist for yourself. Everyone has unique needs, and an estate planning attorney may be helpful if your needs are complex. Before making the choice whether to hire an attorney or do it yourself, these are general steps you can take to get started.

☐ Take an inventory

Write down everything you own of value that you can think of. This may seem overwhelming, but keeping a running list of assets is worth the time to make sure nothing important is left out. Make sure to consider both tangible and intangible assets. Tangible assets are:

Other physical items of value

Intangible assets are:

Bank accounts
Retirement accounts, like 401(k)s or IRAs
Life insurance plans
Financial elements, like bonds or annuities
Other nonphysical items

Listing liabilities, like mortgages, lines of credit, and other debt, is a good idea as well. That’s because certain debts must be paid—even after death. In that case, it will come out of your estate.

☐ List your family members

The purpose of listing your family members is to account for the needs of immediate family and dependents. Your will and life insurance policies are the primary ways to plan for the needs of your surviving spouse and make guardianship designations for children and other dependents. Many people also make arrangements for pets.

☐ Choose which directives you want in place

The more you plan ahead, the fewer decisions you’ll have to make during an already stressful time. The tools discussed in this article (such as living wills, powers of attorney, and trusts) make navigating illness and other end-of-life matters easier because you’ll have a plan for most scenarios. Decide which tools you want in place and how to set them up.

Once you know which directives you want to include in your life plan, talk to anyone you are considering naming as an agent. You’ll want to be sure they are willing to act if needed. You should also consider naming secondary agents if the first person is unavailable when the directive takes effect.

☐ Designate your beneficiaries

A beneficiary is a person or institution inheriting a piece of your estate, such as money, physical property, or control of or interest in a business.

You should name your beneficiaries on your bank accounts, retirement accounts, and life insurance policies. If you name beneficiaries to those accounts in your will, make sure the names match to avoid any confusion.

Choose backup beneficiaries for your assets if a person is unavailable or dies before your estate distribution. You can also name a beneficiary in a “residuary” clause in your will. This person will inherit anything left over after your estate distribution.

Helpful hint: This is a good time to check the named beneficiaries on all of your accounts to make sure they are updated. For example, if you are married for the second time, and your first spouse is still named as a beneficiary of a bank account, you can change it to your current spouse to avoid conflict in the future.

☐ Look up your state’s laws

States have different laws regarding what happens when a person dies. To ensure you have optimal asset protection, check your state’s probate and estate or inheritance tax laws . If you believe an estate or inheritance tax may apply in your state, contact a professional to help you reduce your tax burden as much as possible.

☐ Choose a law firm or online service

Now that you have a clear picture of your estate and who should receive it, you can decide whether an online estate planning service is right for you.

If you aren’t leaving behind any dependents and you have a good idea of how you want to distribute your estate, you can easily find an online legal service to get you started with estate planning documents and help you create a will online. Many services include living wills and POAs, as well as the option for attorney advice.

If you have dependents who will need care after you’ve died, you want to disinherit a family member, or you’re generally having trouble deciding how to divide your estate, you have two options. The first is to use an online estate planning service and opt for the package that includes attorney assistance. Services will typically charge an annual fee to have access to an attorney. Still, this fee is likely to be less than paying for a private attorney.

Our top choices for estate planning services offer basic will packages starting at $39.99. But you can get a package that includes attorney assistance, as well as additional estate planning documents, for around $249. Estate planning attorneys will either offer services for a flat fee or charge several hundred dollars per hour to work with you.

If you have more complex needs, you may want to contact a law firm specializing in estate administration and planning. Many attorneys offer free consultations to help you find the best fit.

After estate planning

Once you’ve finalized all the necessary documents and the originals are in one safe space, remember to keep them updated.

We spoke with Tim Hurban , Esq., an estate planning attorney licensed in Georgia and Michigan with more than 12 years of experience, about how often and when you should update your estate planning documents. He advised “updating your will and other estate planning documents . . . based on individual circumstances and life events.” Specifically, Hurban told us you should review and update these documents in situations such as changes in:

Family structure (marriage, divorce, children, grandchildren)
Assets and liabilities (property, business, financial circumstances)
Laws (tax, inheritance)
Personal wishes
Health care preferences

Typically you should revisit your estate plans every three to five years—even without major life changes. If you create your documents using an online will maker service, many services offer free, unlimited changes for at least the first 30 days after purchase. With services that offer a membership, you’ll generally be able to make unlimited updates to your estate documents, so long as you pay the monthly or annual subscription. The Reviews Team chose Trust & Will as the “Editor’s Pick” in our roundup of the best online will makers of 2024 because of their helpful guidance and ongoing updates, a service that costs $199.99.

You can supplement the benefits of estate planning by using other tools to plan for your future. NCOA’s Age Well Planner gives personalized guidance on financial, health, and other decisions.

Frequently asked questions

Estate planning is not only about your peace of mind—it gives your loved ones guidance on how to move forward after you’re gone. It also plans for the care of individuals or animals who depend on you. Effective estate planning can also minimize the tax burden and probate costs that would typically deplete your estate.

The biggest mistake you can make in estate planning is failing to have a plan at all. A simple will is better than no plan—even if your situation is complicated. Other common mistakes are not properly executing estate planning documents, not providing for future care of dependents, and not expressing wishes for end-of-life care.

Not necessarily. Many small or straightforward estates can be managed using a low-cost online service. These services sometimes provide the option of consulting with an attorney for an additional fee. For very large or complex estates, consulting a specialized attorney or tax professional is a good idea.

Absolutely not! Everyone benefits from estate planning. In fact, failing to plan can lead to lengthy court processes and high probate fees, which affect small estates to a greater degree than large ones. Planning ahead allows your loved ones to keep as much of your estate as possible by avoiding unnecessary costs or taxes.

Have questions about this review? Email us at [email protected] .

Centers for Disease Control and Prevention. Health Insurance Portability and Accountability Act of 1996 (HIPAA). Found on the internet at https://www.cdc.gov/phlp/publications/topic/hipaa.html
IRS.gov. Estate Tax. Found on the internet at https://www.irs.gov/businesses/small-businesses-self-employed/estate-tax
IRS.gov. Frequently Asked Questions on Gift Taxes. Found on the internet at https://www.irs.gov/businesses/small-businesses-self-employed/frequently-asked-questions-on-gift-taxes

Business Continuity Planning and Law

Business continuity planning is intertwined with legal requirements, as it guarantees compliance with various laws and regulations governing an organization's operations and crisis responses. A well-established legal framework provides a foundation for aligning business continuity plans with existing laws and regulations, such as the Sarbanes-Oxley Act and the Health Insurance Portability and Accountability Act. Effective corporate governance and risk assessment are vital for identifying potential vulnerabilities and threats, while data protection and privacy strategies safeguard sensitive information. By understanding the legal landscape, organizations can develop robust business continuity plans that minimize reputational damage, financial penalties, and legal liabilities, and explore further to uncover the intricacies of this complex relationship.

Table of Contents

Understanding Legal Requirements

Compliance with legal requirements is a vital aspect of business continuity planning, as organizations must adhere to relevant laws, regulations, and standards to avoid reputational damage, financial penalties, and legal liabilities. A well-established legal framework provides a foundation for organizations to operate within, guaranteeing that business continuity plans align with existing laws and regulations. This framework incorporates corporate governance, which outlines the roles and responsibilities of stakeholders, including the board of directors, management, and employees. Effective corporate governance confirms that organizations are accountable for their actions and are transparent in their decision-making processes. By understanding the legal requirements that govern their operations, organizations can develop business continuity plans that are compliant with relevant laws and regulations, thereby minimizing the risk of legal liabilities and reputational damage. This understanding is essential for organizations to maintain trust with their stakeholders, including customers, investors, and the broader community.

Key Legislation and Regulations

Organizations must be aware of the various legislations and regulations that govern their operations, as these requirements serve as the foundation for developing effective business continuity plans. Key legislation and regulations influence the development of business continuity plans, as they dictate the minimum standards for risk management, emergency response, and crisis management. For instance, the Sarbanes-Oxley Act (SOX) and the Health Insurance Portability and Accountability Act (HIPAA) require organizations to implement controls to mitigate risks and maintain business continuity.

Industry standards, such as the International Organization for Standardization (ISO) 22301, provide guidelines for business continuity management. These standards emphasize the importance of understanding the business impact of disruptions and developing strategies to mitigate them. Organizations must consider the potential business impact of disruptions, such as reputational damage, financial losses, and operational downtime, when developing their business continuity plans. By understanding key legislation and regulations, organizations can develop thorough business continuity plans that meet regulatory requirements and industry standards, ultimately safeguarding the continuity of their operations.

Compliance and Risk Assessment

A thorough risk assessment is a essential step in developing an effective business continuity plan, as it enables the identification of potential vulnerabilities and threats that could impact operations. This assessment is imperative in identifying areas of non-compliance with relevant laws and regulations, which could lead to business interruption and reputational damage. An exhaustive risk assessment should consider the entire supply chain, including third-party vendors and service providers, to identify potential weaknesses that could disrupt business operations.

The risk assessment should also evaluate the likelihood and impact of various threats, such as natural disasters, cyber-attacks, and supply chain disruptions. By prioritizing these risks, businesses can focus on developing mitigation strategies and contingency plans to minimize the impact of business interruption. In addition, a thorough risk assessment can help businesses identify opportunities to improve operational efficiency, reduce costs, and enhance overall resilience. By integrating risk assessment into the business continuity planning process, organizations can guarantee compliance with relevant laws and regulations, while also protecting their reputation and bottom line.

Data Protection and Privacy

Numerous high-profile data breaches in recent years have underscored the critical importance of robust data protection and privacy measures in business continuity planning. Organizations must prioritize data ethics and cybersecurity governance to safeguard the confidentiality, integrity, and availability of sensitive information. A thorough data protection strategy involves identifying and mitigating risks, implementing robust security controls, and complying with relevant regulations.


Encryption	Protects data from unauthorized access	Key management and decryption complexities
Access Controls	Restricts data access to authorized personnel	Balancing security with usability
Incident Response	Guarantees prompt response to data breaches	Resource intensive and requires regular testing
Data Anonymization	Reduces data sensitivity	May impact data utility and analytics
Regular Security Audits	Identifies vulnerabilities and improves security posture	Resource intensive and requires expertise

Contractual Obligations and Disputes

When developing a business continuity plan, it is vital to take into account the contractual obligations and potential disputes that may arise during a crisis. Effective dispute resolution mechanisms can substantially mitigate the impact of a disruption, ensuring that businesses can continue to operate and fulfill their contractual commitments. In the event of a breach of contract, having a clear understanding of claims and liabilities can help minimize reputational damage and financial losses.

Dispute Resolution Mechanisms

Effective dispute resolution mechanisms are essential components of business continuity planning, as they facilitate the timely and cost-effective resolution of disputes that may arise from contractual obligations. In the event of a dispute, having a well-structured dispute resolution mechanism in place can mitigate the risk of business disruption and reputational damage.

Mediation strategies can be an effective way to resolve disputes, particularly those involving complex commercial relationships. By engaging a neutral third-party mediator, parties can negotiate a mutually beneficial resolution, preserving their business relationship. Arbitration trends, on the other hand, have shifted towards institutional arbitration, which offers a more streamlined and efficient process. The use of arbitration clauses in contracts can provide a clear and binding dispute resolution process, minimizing the risk of protracted and costly litigation. By incorporating these mechanisms into their business continuity plans, organizations can confirm that disputes are resolved efficiently, allowing them to focus on their core business operations and maintain business continuity.

Breach of Contract Claims

In the event of a breach of contract, organizations must be prepared to navigate the complexities of contractual obligations and disputes to minimize the risk of business disruption and reputational damage. A breach of contract occurs when one party fails to perform their contractual obligations, leading to a material breach. This can be due to unforeseen circumstances, such as a Force Majeure event, or intentional non-compliance.

In such cases, the affected party may seek solutions for the breach, including damages, specific performance, or termination of the contract. To mitigate the risks associated with breach of contract claims, organizations should verify that their contracts are thorough, well-drafted, and clearly outline the obligations and responsibilities of all parties involved. Additionally, incorporating dispute resolution mechanisms, such as arbitration or mediation, can help resolve disputes efficiently and avoid costly litigation. By taking a proactive approach to contract management and dispute resolution, organizations can minimize the impact of breach of contract claims on their business operations and reputation.

Crisis Management and Communication

Crisis management and communication are critical components of business continuity planning, as they enable organizations to respond promptly and effectively to disruptions, minimizing the impact on operations and reputation. Effective crisis management involves establishing a clear crisis leadership structure, which defines roles and responsibilities during an emergency. This structure should be supported by well-defined emergency protocols, outlining the procedures to be followed in the event of a disruption. These protocols should be regularly tested and updated to confirm their effectiveness.

Clear communication is also vital during a crisis, as it helps to maintain stakeholder trust and confidence. Organizations should establish communication protocols that guarantee timely and accurate information is shared with stakeholders, including employees, customers, and the media. This can include the designation of a spokesperson, the establishment of a crisis communication team, and the development of key messaging. By having a robust crisis management and communication plan in place, organizations can reduce the risk of reputational damage and confirm business continuity during times of disruption.

Enforcement and Liability Issues

In the domain of business continuity planning, enforcement and liability issues play a critical role in ensuring that organizations are adequately prepared to respond to disruptions while minimizing potential risks. Compliance with relevant regulations and standards is vital to avoid regulatory penalties and reputational damage. Additionally, organizations must also consider legal liability exposure arising from inadequate business continuity planning, which can lead to costly lawsuits and financial losses.

Regulatory Compliance Risks

Five primary regulatory compliance risks pose significant threats to organizations, including enforcement actions, legal liability, reputational damage, financial penalties, and operational disruptions. These risks can have devastating consequences, making it vital for organizations to establish a robust compliance program that aligns with their risk appetite. A well-defined risk appetite enables organizations to identify and prioritize compliance risks, allocate resources effectively, and make informed decisions. In addition, fostering a compliance culture that encourages transparency, accountability, and ethical behavior is key in mitigating regulatory compliance risks. This culture should be embedded throughout the organization, with clear policies, procedures, and training programs in place. By doing so, organizations can reduce the likelihood of non-compliance, minimize the impact of regulatory enforcement actions, and maintain a positive reputation. Effective regulatory compliance risk management is critical in today's complex business environment, and organizations that fail to prioritize it may face severe consequences.

Legal Liability Exposure

Organizations that fail to comply with regulatory requirements may face legal liability exposure, which can result in severe financial penalties, damage to reputation, and even criminal prosecution. This exposure can arise from various sources, including inadequate business continuity planning, insufficient risk management, and poor crisis management.

The consequences of legal liability exposure can be far-reaching and devastating. Some of the key risks include:

Financial Penalties : Organizations may face significant fines and penalties for non-compliance with regulatory requirements.
Reputation Damage : Legal liability exposure can lead to reputational harm, which can result in loss of customer trust, decreased sales, and long-term damage to the organization's brand.
Insurance Coverage : Organizations may find that their insurance coverage is insufficient to cover the costs of legal liability exposure, leaving them with significant out-of-pocket expenses.
Criminal Prosecution : In extreme cases, legal liability exposure can result in criminal prosecution, which can lead to imprisonment and other severe consequences.

To mitigate these risks, organizations must prioritize business continuity planning, regulatory compliance, and risk management. By doing so, they can reduce their legal liability exposure and protect their reputation, finances, and operations.

Frequently Asked Questions

What are the consequences of non-compliance with business continuity laws?.

Non-compliance with business continuity laws can result in severe consequences, including Financial Penalties, Legal Ramifications, and reputational damage, ultimately affecting an organization's bottom line, credibility, and overall sustainability.

How Often Should Business Continuity Plans Be Reviewed and Updated?

Ideally, business continuity plans should undergo a Plan Refresh every 12-18 months, with Cycle Timing influenced by organizational changes, industry developments, and lessons learned from exercises and incidents, ensuring relevance and effectiveness.

Can Business Continuity Planning Be Outsourced to Third-Party Providers?

Outsourcing business continuity planning to third-party providers can be viable, but organizations must carefully assess vendor risk and guarantee seamless service integration to maintain control and oversight over critical continuity processes.

Are Small Businesses Exempt From Business Continuity Planning Regulations?

Small businesses are not inherently exempt from regulations, as the need for risk assessment and mitigation is universal. The regulatory landscape, however, may not impose the same stringent requirements as for larger organizations.

What Is the Role of Insurance in Business Continuity Planning?

Insurance plays a vital role in mitigating risks, providing financial protection against unforeseen events. Through risk assessment, businesses can identify potential threats and transfer risks to insurance providers, ensuring continuity of operations and minimizing financial losses.

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Identifying the Key Personnel at Your Company
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What to include in the personnel section of your business plan

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