Every business owner knows that starting a business requires a lot of planning. Coming up with a well-researched business plan is as important as coming up with the idea for the enterprise itself. In fact, this document covers everything one needs to know about the venture and more.
It is important to remember that this document has internal and external purposes, according to Deloitte & Touche LLP (2003). For internal purposes, a business plan serves as “an important management tool” such that “it enables management to plan company growth and to anticipate changes in a structured way” (p. 2). Meanwhile, the external use of this document can help the company secure funding, form alliances, establish mergers and acquisitions, and build relationships (pp. 1-2).
Given the vital role this document plays, entrepreneurs need to focus on the Management Team Section of a business plan. This article tackles the importance of this segment and how to proceed with writing it.
What is the Management Team Section of a Business Plan?
As mentioned, a business plan covers all kinds of information about the business. It is composed of an executive summary, company description, market analysis, and service or product line, just to name a few. All of these provide an insight into what the business will offer and how it will be able to reach its target market.
However, the Management Team section provides a view on how the organization will be managed. It aims to show the reader what the management team looks like, who will be running the business and its operations, and how these individuals can contribute to executing strategies and achieving goals.
According to Deloitte and Touche, “Your business plan should describe how the company is organized and what each individual’s duties and responsibilities are… It is also helpful to explain how the individual talents of the management team contribute to realizing the company’s strategy.”
These elements seek to show how competent and efficient the management team is or will be. Nevertheless, it is important to mention that it should also recognize shortcomings and gaps.
The Need for the Management Team Section
The importance of this section banks on the dual purpose of the business plan. Those who are planning to use it for external matters should keep in mind that potential investors and allies takes the strength of the management team into account as this can influence the success of the venture.
Similarly, the organization itself can use this to improve its operations. By identifying strengths and weaknesses, the company will know what aspects of the management team are performing optimally and what need improvement.
Tips for Writing the Management Team Section
Because the Management Team Section is an integral part of a business plan, it is essential to learn how to write it effectively. Here are some tips that can help entrepreneurs put together an excellent Management Team Section.
Determine the Business Structure
The first thing an entrepreneur needs to know about assembling a management team is that the need for certain roles depends on the business structure. There are different structures to choose from and all of them have an effect on the assets, liabilities, responsibilities, and operations.
According to the United States Small Business Administration (n.d.), some of the most common are sole proprietorship, partnership, limited liability company (LLC), and corporation. Startups are commonly sole proprietorships or partnerships.
As a sole proprietor of a business, the entrepreneur can have complete control, responsibility, and liability. Meanwhile, a partnership, which is a business owned by two or more people, can come in two types, namely limited partnerships (LPs) and limited liability partnerships (LLPs). In LPs, only one owner is given unlimited liability, while others have limited. LLPs provide limited liability to all owners.
Identify Essential Management Positions
Startups are typically small businesses. Sole proprietorships are owned by one founder and are bound to have a small management team. It may only be composed of the owner or founder (who is also the boss), some managers, and a human resource manager.
In partnerships, the team would be bigger as most or all partners are bound to have management roles. Co-owners can be managing partners, and junior or senior partners, for example. Depending on the scale of the business, the organization will need team leads, a human resource manager, and others. Partnerships may also choose to establish a management committee.
Make sure to take note of these positions in relation to the organizational structure when writing the business plan.
Look for People Who Fit the Job
This section of the plan is not supposed to be written in general terms. It needs to include particulars including names of people, their positions, and their qualifications. If used for external purposes, potential funders and allies will see the strengths and weaknesses of the team based on the people in it.
It is important to find human resources who are qualified and competent to perform the job of managing a team, hiring new people, and such. For partnerships, it is important to assign roles to partners who have experience and skills to fill them.
Document Assignments
Finally, it is essential to document these assignments in detail. This does not only mean including names, positions, and synopses. A more informational description of the person and their position is required.
In fact, Deloitte and Touche advises entrepreneurs to include resumes of the management team in the appendix, complete with their employment info, schools, and educational degrees. Compensation for the role is also important, especially for business plans which will be presented to investors.
The compensation includes salary, profit sharing, stock ownership opportunities, bonuses, and benefits. Investors need to know these details to see if the current plan is in line with their own financial capacity and goals.
Final Thoughts
The Management Team section is vital to the business plan no matter what the purpose is. With these writing tips, entrepreneurs and their partners can put together a section that is solid and fully informational in order to help them achieve their strategic goals.
References:
- Deloitte & Touche. (2003). Writing an effective business plan. Retrieved from https://www.academia.edu/7094242/Fourth_Edition_Writing_an_Effective_Business_Plan.
- Small Business Administration. (n.d.) Choose a business structure. Retrieved from https://www.sba.gov/business-guide/launch-your-business/choose-business-structure
