How to Write a Business Plan in Four Sessions Session 1 I. Overview What is the intention of the business plan? i. Why you need a business plan ii. Make it personal, reflect your own ideas and tell your story iii. Roadmap to success (or failure if analysis is incomplete) Who is the audience for my business plan and what do they expect? i. Internal, Board of Directors, Bankers, Lenders (format may vary depending on the purpose of the business plan) ii. Not just promises, but proof that the idea is feasible (data, research, analysis) What you should avoid in your business plan i. Do not be overly optimistic, be realistic and show that you know where potential risks are. It makes your plan more believable. ii. Place reasonable limits on long-term projections; focus more on near-term projections. iii. Avoid language that is overly technical and might not be generally understood II. Executive Summary The executive summary is usually written last and is a summary of each key element in the business plan. It is the most critical part because it is first impression and needs to be interesting enough for the reader to want to know more. i. Business concept: what your business will do ii. General company overview iii. Marketing plan, industry, target market iv. Operational plan and implementation v. Financials III. General Company Overview Company description with name of the company i. Business goals and objectives ii. What the business will do: specific product and service offerings Background about the founding of the company i. History: how did you come up with the idea and what experience do you have in that industry (what qualifies you to be successful in your type of business) ii. Ownership and legal structure: sole proprietor, partnership, corporation Nature of the industry and what role the business intends to play in it. i. Describe the industry trend, specifically for the area of operation, the demand for that type of service or product ii. How your product is different from anything already available iii. Any licensing requirements or government regulations Session 2 IV. Market Analysis Product and Services: Now is the time to “sell” your product or service. Present in a factual but exciting manner. i. Physical description of the product and its uses (perfect time to emphasize uniqueness of the product, what need are you filling) ii. Show the benefits to the user. iii. Stage of development of the product or service (how you got here, where it will go in the future, what improvements would be possible) iv. What is the competitive advantage of your product? What does it do better than other similar products? Marketing and promotion: communicate the manner in which your business will be able to succeed, work from the general to the specific, from the industry as a whole to your specific product within that industry. i. Industry Analysis: Explain the industry, trends, participants, distribution patterns (http://www.trade.gov/mas/ian/ ). Cover important developments and any current or expected problems in the industry. This is the big picture analysis of the market. Make sure to show how your business fits into this industry. ii. Market Analysis: who is going to buy your product? Market needs, market trends, market growth. Clearly define the type of customer who will be interested in your product. Find a weakness in the market and take advantage of it – niche market. iii. Marketing plan: with clearly defined product and customer, how are you going to communicate the value of your product or service to the potential customer. What is the price of your product? Where or how can a customer buy it? iv. Competition: find out who your direct competitors are, what they sell at what price, how long they have been in business. Describe threats from competition, but also what customers are looking for and currently don’t get from the competition (strengths and weaknesses of your competition) Session 3 V. Operations Operational plan (varies widely with the type of business) i. How are you going to deliver your product? Explain that you know what it takes to get the product from the supplier to the customer ii. Where is the location of your business iii. Who are the suppliers iv. How are you going to distribute Management and organization: i. Management team: who are the people in key positions and do they have the qualification necessary to run a business (identify strengths and possible weakness) ii. Organization structure: show that you understand what type and how many people it will take to run the business iii. Organizational chart (possibly) Session 4 VI. Financials Cash flow statement (first year monthly, years two and three yearly): be conservative, do not paint to rosy of a picture. Income statement (first year monthly, years two and three yearly): show that your business will be profitable, if not in the first year; show how long you estimate it will take until break even. Balance Sheet Sources and uses: are loans necessary, possible investors, how will the money be used?