How Should I Draw Up a Business Plan?

I've never written a business plan before. I know there are some resources online, but I'm hoping you could tell me what are the necessary sections of a good business plan, what problems may be encountered in the writing of each one and how to solve them.

Ah, the infamous business plan. Naturally, every new business needs to follow a specific [plan] so that management can set goals and measure performance over time. Yet new entrepreneurs too often fall into the trap of just getting the business started and worrying about everything else later on. Big mistake.

Before I get into the details of a business plan, the first and most important step is to identify who will be the audience reading the plan and what exactly is its purpose. Business plans can take many shapes and sizes. Depending on the audience, a complete 20-plus-page business plan may be unnecessary. For instance, I know there are some investors who will throw a lengthy business plan right out the window. So if you're trying to raise capital, it can be helpful to know that some prefer a slide-deck tailored and formatted to what they're looking for in a company. Let me repeat: Before putting the time into a business plan, know the audience who will be using it. If it is just company management, then that's okay too. Just know who it is.

Executive summary
Most business plans begin with an executive summary that follows a specific format. This part of the plan summarizes your company's mission, the market opportunity, value proposition and plans to grow in the future. I've seen summaries with more detail, but this is generally the nuts and bolts of what should be articulated in this part of the plan. Each section thereafter should flow nicely into a story and build up to an ending that recaps the the key points from the executive summary. It should also be written in such a way that the reader can easily follow along without asking questions. In addition, each section should articulate independent thoughts and not bleed into other sections. For instance, if you're discussing market opportunity in one section, don't overlap with related thoughts in the company risk section.

Company overview
Once you've developed your executive summary, you should then lead into a company overview, dealing exactly what the company does, its management team and other key information. Next, you'll want to define the market opportunity. Here you'll need to go into detail explaining how the different segments of the market add up to a total available market opportunity. Statistics and industry research will be critical in this section.

Product or service
After defining the market, you should describe the product or service you will develop to target that market. The product description should be written in such a way that the business model becomes perfectly clear to the reader. They will want to understand how you plan to make money. This will lead into the financial model highlighting growth and expense projections. Many entrepreneurs don't spend enough time identifying how they will effectively use their cash to grow their company. This is why you must have a clear strategy in going to market.

Distribution
The distribution section should include details on how you plan to acquire customers. Is it through partnerships, online/offline marketing, search engine optimization, direct email, public relations or something else?

Analysis of competitors
Up to this point, we've focused mainly on the company. However, every business plan needs to include an analysis of the competition. Unless you're creating a new market, most of the time you'll have competition in your space and usually it comes from a large, established company. This section should highlight how your company will gain share and how your product and model can be defended.

Risk assessment
Lastly, you need to define the company risks. Every company, even Google has risks. You need to understand what they are and have a plan in place to mitigate those risks.