What Is the Organization and Management Section in a Business Plan?
The organization and management section of your business plan should summarize information about your business structure and team. It usually comes after the market analysis section in a business plan. It’s especially important to include this section if you have a partnership or a multi-member limited liability company (LLC). However, if you’re starting a home business or are writing a business plan for one that’s already operating, and you’re the only person involved, then you don’t need to include this section.
What To Put in the Organization and Management Section
You can separate the two terms to better understand how to write this section of the business plan. The “organization” in this section refers to how your business is structured and the people involved. “Management” refers to the responsibilities different managers have and what those individuals bring to the company. In the opening of the section, you want to give a summary of your management team, including size, composition, and a bit about each member’s experience.
Organization
The organization section sets up the hierarchy of the people involved in your business. It’s often set up in a chart form. If you have a partnership or multi-member LLC, this is where you indicate who is president or CEO, the CFO, director of marketing, and any other roles you have in your business. If you’re a single-person home business, this becomes easy as you’re the only one on the chart. Technically, this part of the plan is about owner members, but if you plan to outsource work or hire a virtual assistant, you can include them here, as well. For example, you might have a freelance webmaster, marketing assistant, and copywriter. You might even have a virtual assistant whose job it is to work with your other freelancers. These people aren’t owners but have significant duties in your business. Some common types of business structures include sole proprietorships, partnerships, LLCs, and corporations.
Sole Proprietorship
This type of business isn’t a separate entity. Instead, business assets and liabilities are entwined with your personal finances. You’re the sole person in charge, and you won’t be allowed to sell stock or bring in new owners. If you don’t register as any other kind of business, you’ll automatically be considered a sole proprietorship.
Partnership
Partnerships can be either limited (LP) or limited liability (LLP). LPs have one general partner who takes on the bulk of the liability for the company, while all other partner owners have limited liability (and limited control over the business). LLPs are like an LP without a general partner; all partners have limited liability from debts as well as the actions of other partners.
Limited Liability Company
A limited liability company (LLC) combines elements of partnership and corporate structures. Your personal liability is limited, and profits are passed through to your personal returns.
Corporation
There are many variations of corporate structure that an organization might choose. These include C corps, which allow companies to issue stock shares, pay corporate taxes (rather than passing profits through to personal returns), and offer the highest level of personal protection from business activities. There are also nonprofit corporations, which are similar to C corps, but they don’t seek profits and don’t pay state or federal income taxes.
The Management Team
This section highlights what you and the others involved in the running of your business bring to the table. This not only includes owners and managers but also your board of directors (if you have one) and support professionals. Start by indicating your business structure, and then list the team members.
Owner/Manager/Members
Provide the following information on each owner/manager/member:
NamePercentage of ownership (LLC, corporation, etc.)Extent of involvement (active or silent partner)Type of ownership (stock options, general partner, etc.)Position in the business (CEO, CFO, etc.)Duties and responsibilitiesEducational backgroundExperience or skills that are relevant to the business and the dutiesPast employmentSkills will benefit the businessAwards and recognitionCompensation (how paid)How each person’s skills and experience will complement you and each other
Board of Directors
A board of directors is another part of your management team. If you don’t have a board of directors, you don’t need this information. This section provides much of the same information as in the ownership and management team sub-section.
NameExpertisePosition (if there are positions)Involvement with the company
Support Professionals
Especially if you’re seeking funding, let potential investors know you’re on the ball with a lawyer, accountant, and other professionals that are involved in your business. This is the place to list any freelancers or contractors you’re using. Like the other sections, you’ll want to include:
NameTitle Background information such as education or certificatesServices provided to your businessRelationship information (retainer, as-needed, regular, etc.)Skills and experience making them ideal for the work you needAnything else that makes them stand out as quality professionals (awards, etc.)
Helpful Tips To Write This Section
Writing a business plan seems like an overwhelming activity, especially if you’re starting a small, one-person business. But writing a business plan can be fairly simple. Like other parts of the business plan, this is a section you’ll want to update if you have team member changes, or if you and your team members receive any additional training, awards, or other resume changes that benefit the business. Want to read more content like this? Sign up for The Balance’s newsletter for daily insights, analysis, and financial tips, all delivered straight to your inbox every morning!
