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A.
EXECUTIVE SUMMARY ....................................................... 5
B.
ORGANIZATIONAL PLAN .................................................... 6
1. Description of the Business ............................................................................................................... 6
2. Products and Services ....................................................................................................................... 6
3. Legal Structure .................................................................................................................................. 6
4. Management ..................................................................................................................................... 6
5. Personnel .......................................................................................................................................... 6
6. Record Keeping and Accounting ....................................................................................................... 6
7. Insurance ........................................................................................................................................... 7
8. Security ............................................................................................................................................. 7
C.
MARKETING PLAN ............................................................. 7
1. Target Market ................................................................................................................................... 7 a. General Customer Characteristics ................................................................................................ 7 b. Size of Market ............................................................................................................................... 7
2. Marketing/Sales ................................................................................................................................ 8
3. Competition ...................................................................................................................................... 8
4. Pricing ................................................................................................................................................ 8
5. Location/Facility ................................................................................................................................ 8
6. Timing of Market Entry ..................................................................................................................... 8
7. Industry Trends ................................................................................................................................. 9
D.
FINANCIAL PROJECTIONS ................................................. 10
1. Assumptions .................................................................................................................................... 10 a. Startup Costs ............................................................................................................................... 10 b. Revenue ...................................................................................................................................... 10 c. Cost of Goods Sold ...................................................................................................................... 10 d. Payroll/Staffing Plan .................................................................................................................... 10 e. Other Major Expenses................................................................................................................. 10
2. Financial Projections ....................................................................................................................... 10 a. Summary of Financial Need – Sources and Uses Statement ...................................................... 10 b. Cash Flow Projections ................................................................................................................. 10
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c. Three-Year Projected Profit and Loss ......................................................................................... 10 d. Balance Sheet .............................................................................................................................. 10
E.
SUPPORTING DOCUMENTATION ...................................... 11
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INTRODUCTION TO WRITING A BUSINESS PLAN
A business plan can be thought of as a story. It is your story which will be told to a specific audience.
That audience should be the focus of each and every word of your resultant planning document. It is not a one size that fits all plan, or a plan that will never change. You will need a well prepared
Business Plan for two reasons:
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First, and most important, do it for yourself to determine the feasibility of your proposed business. A business plan forces you to convert your idea into an actual blue print for a business to determine its operational, marketing and financial viability. Just as a dream house needs an architectural plan, an entrepreneurial vision needs a Business Plan. Without one, the risk is greatly increased.
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Secondly, you may need a business plan to secure financing. No bank or other financial institution will consider you without one. It is a tool used to help you and others to make a better decision about whether this business is a good use of limited resources and time.
Like all successful business models, your plan will need to address the two key requirements of volume and margin. A business plan is therefore useful for existing businesses wanting to grow, develop, expand, shrink, downsize etc. as well as for new businesses getting started.
Remember that this story must describe your business so well that it will create a picture of your business that is good enough for its reader to see themselves in your business. Begin with the end in mind, as Stephen Covey suggests. In other words, if you know what the picture will look like when it is finished, painting it will be a lot easier. We tell clients that if they do not have a plan, they have a plan- just not a very good one.
Finally, remember that your plan may be seen by many people who will not have the opportunity to hear you discuss it and be persuaded by your charisma and oral rhetoric. Therefore, we highly suggest that this should be a written plan. It would also seem to be true that written plans are more likely to be achieved than those that are not. So write this plan down. As for length, it needs to be
‘long enough’…..long enough to accomplish your objective in its use. A typical plan for a small business or project will probably be about 20-30 pages including 10 or so pages of financial projections but not inclusive of the support documentation that will augment your plan. Plan your work and then work your plan.
Use this document by writing YOUR plan in each section. When you are done, delete the
instructions and you should have a draft, formatted plan ready for review and feedback. Your counselor can assist you:
1.
Advise on content
2.
Market and Demographic information
3.
Financial benchmarks for your industry
4.
Spreadsheet templates that structure the financial projections section in a format that will be used by lenders
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This is your 3 minute elevator speech, your chance to tell your investor, vendor, supplier, potential employee, customer or other party the answer to the 9 fundamental questions a business plan is designed to answer including the following:
Core Questions
1.
Who are you?
2.
Who do you serve?
3.
What do you do?
Marketing Questions
1.
Is there a market for it; does anybody want it – who’s your target market?
2.
Can you do/provide it; do you have credibility and integrity with your market?
3.
Will your market pay for it?
Financing Questions
1.
What assets do you need?
2.
What will those assets cost?
3.
How will you pay for those assets?
This part of the plan is the short answer to the “who, what, when, where, why and how” of your business or project. It will describe your objectives; why you will be successful in this venture; and, if you will need financing help, it will explain how much you need, why you need it and how you plan to repay the loan or benefit the investor, employee, vendor or customer. This part of the plan should be no more than 1 or 2, typed, 10 or 12 point font, double-spaced pages with a 1 inch margin which is about 300 to 600 words. The ending of this section basically says to read the remainder of the plan for more detailed information about the business, your marketing plan and your financials.
This is the only place in your entire plan where you can include any puffery. Below this point in the plan you will include “just the facts.”
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Give an overview of the nature of the business. Tell when and why the company was formed, describe the nature and uniqueness of the services and/or products provided, and review the general development of the company- why you want to start this particular business. Project a sense of where you see your company going in the next few years. Do not exceed one page and do not make broad, general statements. Be specific.
If you are a manufacturer and /or wholesale distributor of a product, describe your products. Tell about your manufacturing process. Include information on suppliers and availability of materials/ products.
If you are a retailer, describe the products you will sell. Include information about your sources including primary suppliers and alternate sources of inventory.
If you provide a service, describe the initial services and any you plan to offer in the future. Tell about your background in the industry and why you are qualified to offer the service. List special certifications, licenses, etc.
Tell what legal structure you have selected and why this is best for you and your company. List the owners or corporate officers together with short biographies.
Describe who are (or will be) actually running the business (those responsible for operation).
Describe their responsibilities and why they are qualified (experience and expertise). List projected salaries and include resumes in Supporting Documentation section.
Describe what tasks will be done on a day-to-day basis and who will be doing the work. What skills and educational level will be required of personnel? Include the number of hours each person will work and how they will be compensated-hourly wages, commissions, bonuses, etc.
This section should answer the following questions. What system will you set up for maintenance of financial records? Who will be responsible for tax accounting? What plan do you have for periodic financial analysis? Project costs associated with accounting services.
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Describe the kinds of insurance your business has (or will have) to protect you and your business from loss. Consider Property, General Liability, Life & Health, Auto, Disability, Business Interruption, etc. What will be the cost and whom will you use for a carrier? A table similar to that below can be used here:
Type of Insurance Carrier Coverage Levels Annual Premium
Describe what security issues need to be addressed with regards to inventory control, theft, vandalism, break-ins, customer identity theft, etc. and how they will be handled. For example, are you going to use security cameras or monitoring services? Project associated costs.
This part of your Business Plan covers research and reaching the customer. It includes information about the total market or industry, with emphasis on your specific target market. It will identify your customers and tell about the means you will utilize to make your products or services available to them. Who is your target market, how many of them are there, who’s your competition, and how are you going to market to them.
a.
General Customer Characteristics
First, it is important to understand who your customer is. It is typically whoever pays you. Your customer may be a consumer, but in some cases it may be another business, as in the case of a wholesale business. Both are important but you will need to have a plan that addresses both.
Identify the characteristics of your customers. Describe the typical type of customer that uses your products or services. Tell how you arrived at your results. Back up statements with demographics, questionnaires or surveys. Examples of demographics includes age, income levels, geographic areas, homeowners vs. renters, common interests.
If you have identified specific target customers that you plan to pursue, list them. b.
Size of Market
Project the size of your market. There are many sources of market and demographic data; you can work with your counselor to identify and/or get access to these sources.
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Now that you’ve identified your target market, explain how you are going to market or sell to them.
How will you get your message to your customers? Your goal is to create a positive image, so be sure to include samples of promotional materials, advertisements and timelines for ad campaigns.
Discuss paid advertising (newspapers, radio, television, outdoor and specialty), publicity (media features, reviews), direct mail (discuss costs vs. return) and other activities specific to the industry
(trade show, markets, etc.)
List your competitors, say something nice about them, and then explain your competitive advantage. Profile and evaluate your competitors with regard to products, pricing, location and business history. Explain how you plan to compete. A sample table like the one below can also be used to summarize this section.
Company
Your
Company
Competitor 1
Products Price Quality Selection Service Reliability Stability Location Appearance Expertise
Competitor 2
Basically there are three ways to price a product: 1) cost plus; 2) comparative pricing; and, 3) guessing. We recommend using all three in concert with each other. Also, NEVER compete on the basis of price - everyone loses. Discuss the results of your market research, the cost of your product or service and how you arrived at your pricing structure. Be sure to back this up with materials from research.
Many business failures can be attributed to a poor location decision. Discuss in detail the location of the business. Tell why this particular location is favorable. Is the facility adequate for the type and volume of business? Discuss such issues as traffic counts, accessibility, parking, other businesses in the immediate area, etc. If there are repairs or improvements that need to be made to the building, be sure to discuss in detail the needed repairs and the costs.
Why now? Check trade press for info and arguments. Tell when you plan to enter the market and why this decision has been made.
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Why this industry? Check trade press for info and arguments. Discuss current trends in the industry, how the market has changed in the past and/or how it may change in the future. Tell how you will adjust the way you do business in order to remain competitive.
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In this section, explain the major assumptions of your projections. You may include backup tables from the financial projections spreadsheets here to help explain. Typical assumption sections include: a.
Startup Costs b.
Revenue c.
Cost of Goods Sold d.
Payroll/Staffing Plan e.
Other Major Expenses
You will include the following spreadsheets. You may work with your counselor who has templates that structure these estimates into the format lenders will use. a.
Summary of Financial Need – Sources and Uses Statement
What assets are needed? How much do those assets cost? And how much of the assets’ cost will you contribute? This includes what funds are needed to start the business. All sources (personal, loans and investors) are included. Details of how the money will be appropriated are included. b.
Cash Flow Projections
Monthly projections for three years of revenue cost of goods and expenses as a minimum. This will become your budget from which variances will be calculated in the future. This projects what your business plan means in terms of actual dollars and how the money will flow through the business once you are operating. It is of prime interest to the lender or investment investor because it shows your ability to repay loans and the investors’ potential for ROI or return on investment. c.
Three-Year Projected Profit and Loss
Summary of profits/losses expected for each of the next three years as a minimum. This statement shows projected revenues and costs associated with doing business on a yearly basis. Costs are projected not only in dollars but also in percentage of gross receipts for comparison to similar businesses in the same type markets. d.
Balance Sheet
Summary of the assets' liabilities and net worth of the business expected for each of the next three years as a minimum. It shows the condition of the business as of a fixed date. It is a picture of your company's financial condition at a particular moment and will show whether your financial position is strong or weak. It is also done at the close of an accounting period and contains assets, liabilities and net worth. New businesses are usually required by the lender to furnish a projected balance sheet with their loan application.
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This section of your Business Plan will contain all of the records that back up the statements and decisions made in the main sections of your plan. Include only items that are relevant to your plan.
Do not add "fluff' - it is not necessary and considered a big mistake. Some suggested items to include follow but do not limit yourself to this list.

Resume(s) of owners and/or principal managing employees

Owners Personal Financial Statement(s) – required from each owner who has at least
20% ownership

3 Years Tax Returns – Personal and Business, if business is existing

Draft Lease Agreement

Mortgage(s)

Purchase Agreement(s)

Letter(s) of Reference

Contract(s)

Photograph(s)

Other Legal Document(s)
FINAL NOTE
Your Business Plan should look professional, but the potential lender or investor needs know that you prepared it. A Business plan will be the best indicator that can be used to judge your potential for success. It will probably be 20 -- 30 pages in length, excluding supporting documentation. Have your plan typed in black ink and bound neatly together. Make copies for each lender or investor you plan to approach. Keep track of each copy you distribute.
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Complete this questionnaire and bring to your one-on-one counseling session with your counselor to help when preparing the financial projections for your business plan.
Will monthly Sales/Rental Revenue remain consistent or fluctuate during the year?
If fluctuate, attach monthly schedule.

If consistent, what will Sales Revenue be the first month of business? What will be the average Dollar increase each month over next 2 years?
THIS QUESTION MUST BE ANSWERED FOR THE SBDC TO PREPARE PROFORMA
STATEMENTS
Average Material Cost stated as a Percentage of Sales Revenue (Attach a list if many products, with widely varying costs, are offered)
What will be your Monthly Labor Cost (not including yourself)?
How much will be spent on Advertising each month?
Will the business require you to use your automobile for errands, deliveries? If sot how many Miles will be driven each month?
How much will you pay for Insurance (business, auto, etc) each month?
How much will you pay for Office Supplies (paper, stamps, etc.) each month?
How much will you pay for Shop Supplies (cleaning, maintenance, etc) each month?
How much will you pay for Telephone charges each month?
How much will you pay for Utilities each month?
How much will be your monthly Rent/Lease ?
How much will you pay for Freight charges each month?
How much will you pay for Repairs each month?
How much will you pay for Employee Benefits (other than FICA) monthly?
How much will your Charitable Contributions be each month?
Average dollar amount of Credit Card Sales each month?
What will be the Processing Fee as a percentage of sales?
How much will you pay for Professional Dues & Subscriptions monthly
How much will you pay for Business Travel each month?
How much will your bank service charges be each month?
?
How much will you pay for Equipment Leases each month?
How much will you pay for Legal & Accounting Fees each year?
How much will you pay for Property, Other Taxes, and Business Licenses each year?
How much will Other Expenses be each month? Attach List.
______________________________________________ ______________________
Signature Date
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