The following outline of a typical business plan can serve as a guide. You can adapt it to your specific business. Breaking down the plan into several components helps make drafting it a more manageable task.
Introduction
* Give a detailed description of the business and its goals.
* Discuss the ownership of the business and the legal structure.
* List the skills and experience you bring to the business.
* Discuss the advantages you and your business have over your competitors.
Marketing
* Discuss the products/services offered.
* Identify the customer demand for your product/service.
* Identify your market, its size and locations.
* Explain how your product/service will be advertised and marketed.
* Explain the pricing strategy.
Financial Management
* Explain your source and the amount of initial equity capital.
* Develop a monthly operating budget for the first year.
* Develop an expected return on investment and monthly cash flow for the first year
Provide projected income statements and balance sheets for a two-year period.
* Discuss your break-even point.
* Explain your personal balance sheet and method of compensation.
* Discuss who will maintain your accounting records and how they will be kept.
* Provide "what if" statements that address alternative approaches to any problem that may develop.
Operations
* Explain how the business will be managed on a day-to-day basis.
* Discuss hiring and personnel procedures.
* Discuss insurance, lease or rent agreements, and issues pertinent to your business.
* Account for the equipment necessary to produce your products or services.
* Account for production and delivery of products and services.
Concluding StatementSummarize your business goals and objectives and express your commitment to the success of your business.
* Once you have completed your business plan, review it with a friend or business associate or a Service Corps of Retired Executives (SCORE) or Small Business Development Center (SBDC) counselor.
* When you feel comfortable with the content and structure make an appointment to review and discuss it with your lender. The business plan is flexible document that should change as your business grows. A business plan precisely defines your business, identifies your goals, and serves as your firm's resume. The basic components include a current and pro forma balance sheet, an income statement, and a cash flow analysis. A business plan helps you allocate resources properly, handle unforeseen complications, and make good business decisions. Because it provides specific and organized information about your company and how you will repay borrowed money, a good business plan is a crucial part of any loan application. Additionally, it informs sales personnel, suppliers, and others about your operations and goals.
Plan Your Work
The importance of a comprehensive, thoughtful business plan cannot be overemphasized. Much hinges on it: outside funding, credit from suppliers, management of your operation and finances, promotion and marketing of your business, and achievement of your goals and objectives.
Despite the critical importance of a business plan, many entrepreneurs drag their feet when it comes to preparing a written document. They argue that their marketplace changes too fast for a business plan to be useful or that they just don't have enough time. But just as a builder won't begin construction without a blueprint, eager business owners shouldn't rush into new ventures without a business plan. Before you begin writing your business plan, consider four core questions:
1. What service or product does your business provide and what needs does it fill?
2. Who are the potential customers for your product or service and why will they purchase it from you?
3. How will you reach your potential customers?
4. Where will you get the financial resources to start your business?
Using the Plan
A business plan is a tool with three basic purposes: communication, management, and planning. As a communication tool, it is used to attract investment capital, secure loans, convince workers to hire on, and assist in attracting strategic business partners. The development of a comprehensive business plan shows whether or not a business has the potential to make a profit. It requires a realistic look at almost every phase of business and allows you to show that you have worked out all the problems and decided on potential alternatives before actually launching your business.
As a management tool, the business plan helps you track, monitor and evaluate your progress. The business plan is a living document that you will modify as you gain knowledge and experience. By using your business plan to establish timelines and milestones, you can gauge your progress and compare your projections to actual accomplishments.
As a planning tool, the business plan guides you through the various phases of your business. A thoughtful plan will help identify roadblocks and obstacles so that you can avoid them and establish alternatives. Many business owners share their business plans with their employees to foster a broader understanding of where the business is going.
A well-prepared, attractive written business plan is an essential document in the quest for either debt or equity financing, to provide a benchmark against which to compare actual company performance, and to refine strategies and develop ideas on how the business should be conducted. Although the written business plan of a start-up venture must be tailored to the particular business and industry, the essential items in a written business plan include the following:
COVER PAGE
The cover page should include the following:
A. Company Name
B. Logo
C. Contact Person
D. Address and Phone Number
E. Date and State of Incorporation
F. Confidentiality and Nondisclosure Statement
TABLE OF CONTENTS AND TABLE OF APPENDICES
The table of contents and table of appendices should refer the reader to the sections and subsections of the business plan.
EXECUTIVE SUMMARY
The executive summary is the first part of the business plan to be read by potential lenders and investors. In the case of a poorly written executive summary, the executive summary is often the only part of the business plan that gets read. Accordingly, you should take the time necessary to prepare a dynamic executive summary that describes the business, identifies the stage of the company and its strategic direction, describes the company's market and marketing plan, briefly discusses the background of management, and states the company's revenue and profit expectations. Remember, you only get one chance to make a good first impression.
BODY OF BUSINESS PLAN
The body of the business plan should include detailed discussions of the following subjects:
I. Background and Purpose . History - a brief overview of the history of the company
B. Current Status of Company
C. The Product or Service Concept
D. Business Objectives
II. Market Analysis
A. Overall Industry or Market
B. Specific Market Segment
C. Competition
D. Sales Forecasts
III. Product or Service Development
A. Research and Development
B. Production Requirements and Process
C. Proprietary Features and Protections Thereof
D. Quality Assurance Measures
E. Contingency Plans
IV. Marketing A. Survey Results
B. Marketing Strategy
C. Contingency Plans
V. Financial Data
A. Current Financial Position
B. Accounts Payable
C. Accounts Receivable
D. Cost Control Measures
E. Break-Even Analysis
F. Financial Ratios
G. Financial Projections
VI. Organization Structure and Management
A. Key Personnel -- describe the qualifications and responsibilities of management. The quality of management is often the key factor in obtaining debt or equity funding.
B. Other Personnel
C. Directors and Advisors
D. Professional Advisors. E. Key Future Personnel
F. Forecasted Labor Force
VII. Ownership
A. Business Structure
B. Current Capitalization
C. Forecasted Capitalization -- how much money will be sought, the form of the proposed investment, how the funds will be used, and the percentage of ownership to be provided in exchange for the investment
D. Exit Strategy -- how and when investors will be able to get their money out of the business
E. Royalty or Licensing Arrangements
VIII. Risk Factors
Describe the key risks facing the company, including risks presented by:
A. Cost Overruns
B. Failure to Meet Production Deadlines
C. Problems with Labor, Suppliers, or Distributors
D. Sales Projections not Met
E. Unforeseen Industry Trends
F. Competition . Unforeseen Economic, Social, or Political Developments
H. Technological Developments
I. Inadequate Capital
J. Business Cycles
K. Other Risks
IX. Conclusion. Conclusion
A. Summary
B. Timetable for Funding and Future Developments
APPENDICES
A. Photograph of Product or Service
B. Sales and Profitability Objectives
C. Market Surveys
D. Production Flowchart
E. Marketing Materials
F. Advertisements
G. Press Releases
H. Historical Financial Statements
I. Table of Current Profit and Loss Statement
J. Projected Profit and Loss Statement
K. Cashflow Projections
L. Balance Sheet
M. Projected Balance Sheet
N. Asset Acquisition Schedule
O. Break-Even Statement
P. Key Contracts