Business Plan Guide
Summary
This outline is intended to assist an entrepreneur in
writing a BUSINESS PLAN for the establishment, the purchase
or the expansion of an existing business.
What Is a Business Plan?
A business plan is a recognized management tool used by
successful and/or prospective businesses of all sizes to
document business objectives and to propose how these
objectives will be attained within a specific period of
time. It is a written document which describes who you are,
what you plan to achieve, where your business will be
located, when you expect to get under way, and how you will
overcome the risks involved and provide the returns
anticipated.
Why Do You Need a Business Plan?
A business plan will provide information of your proposed
venture to lenders, investors, and suppliers to demonstrate
how you plan to use their money, and to establish a basis
for credibility of your project.
When Should a Business Plan Be Prepared?
The sooner you develop your business plan, the better. You
will find that the final copy of your business plan may
differ from the original draft, as you will be updating,
revising and refining it as you go. It is important that you
examine all the relevant factors now. Therefore, you will be
able to anticipate any surprises after your business has
opened its doors.
Who Should Prepare a Business Plan?
The business plan should be prepared by those persons who
will be implementing it. Outside assistance from
consultants, accountants, bookkeepers, and experienced
business people can definitely help, but you must draft the
initial plan. After all, you are the one that is going to
run the business once it is open.
Think through each element of your business plan thoroughly
so you have a good understanding of the overall picture and
all of the details.
Present your plan to others for constructive criticism and
advice, and try to profit from their experience. Modify your
plan if necessary.
What's in this for Me?
If you have never drawn up a business plan before, you may
be curious as to what the benefits are for you. First and
most important, your plan gives you a guide to follow.
Second, it gives your lending agency insight into your
business opportunity therefore, positively affects your loan
application. Finally, your plan will help you develop as a
manager by giving you practice in thinking about competitive
conditions, promotional opportunities, sources of finance,
etc. Your goal is to put the plan into action.
1. Executive Summary/Business
Description
Briefly describe:
• if this is a new business venture, expansion of an
existing business or the purchase of an existing business;
• the type of business activity in which you are engaged
(manufacturing, wholesale, retail, food processing, service,
high technology, etc.);
• your product or service and its uniqueness;
• the market to be served;
• your advantage over the competition;
• the main objectives of your organization;
• your management background;
• the project time frames involved.
(This should be no more than a one page summary of your
business plan.)
In addition, briefly describe what form of business
structure you have chosen:
• sole proprietorship;
• partnership (enclose agreement);
• corporation (enclose shareholders agreement);
• cooperative (enclose membership agreement).
Include:
• date the business was registered/incorporated;
• the business name and address;
• the business phone number;
• the principal(s) name(s) and telephone number(s);
• the percentage of business or number of shares held by
each (in partnership or corporation);
• the Web site address and relevant E-mail addresses.
2. Project Costs and Project
Funding
Identify the costs of the proposed business
venture and the sources of the project funding.
Project Cost Summary
• Land and Buildings
• Leasehold Improvements (renovations)
• Equipment/Furniture
• Other Assets (goodwill, franchise, etc.)
• Vehicles (if used in the business)
• Inventory (opening cost)
• Other Start Up Expenses as per Cash Flow (accounting,
taxes and licenses, insurance, rent, supplies, etc.)
• Working Capital
• Total Project Cost
Project Funding
• Equity cash
• Contributed assets
• Land and Building Mortgage
• Equipment Loan
• Other Loan
• Line of Credit (L/C)
• Grant/Subsidy
Total Project Funding
*TOTAL PROJECT COSTS AND PROJECT FUNDING MUST BE EQUAL
3. Product/Service
• Describe the products to be produced or the
services/good to be provided.
• What makes your product/service unique, or, how is your
business different from others in the industry?
• What are the features/advantages that will entice
customers to buy from you (i.e.., convenience, service,
performance)?
• Will you offer any product or service
guarantees/warranties?
• Provide information on any patents, trade secrets, or
other technical advantages over the competition.
4. Marketing
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• Identify the total market for your product or service.
• To whom are you targeting your product or service?
• Identify your competition detailing their strengths and
weaknesses and your opportunities and threats relative to
them.
• How will your competition react to you entering the
market?
• What are your past sales (if applicable) and future
projections?
• What price (manufacture, wholesale, retail, etc.) do you
intend to charge for you product/service and how does it
compare to the competition?
• What are your selling terms (cash or credit)?
• Identify promotional campaigns that will be used.
5. Operating Requirements
• Identify your facility requirements as to the size,
location, and type of premises. Include drawings of the
proposed building layout. Attach the most recent real estate
appraisal, offers to purchase or lease agreement, supplier
quotations, etc. Indicate why you have selected this
location.
• Provide details relating to special requirements as to
water, power, compressed air, ventilation, heat, air
conditioning, drainage, disposal, Department of Health
requirements, etc. Attach most recent approvals from Public
Health, Liquor Licensing, City zoning, etc.
• Provide a detailed listing (including legal descriptions)
of the land and building(s), leasehold improvements,
equipment and furniture, vehicles, inventory and other
assets. The listing should include the proposed purchase
price of each asset.
• Provide a general description of the day-to-day operations
of the business (include hours of business, days open,
seasonality of business, suppliers and their credit terms,
etc.).
• Provide product/manufactured cost estimates (if
applicable).
6. Management
• What is the proposed organization chart of the company
(i.e. who does what)? Include a brief job description for
each position.
• Provide brief management biographies of the key personnel
(include their ages and backgrounds in this type of
business). State the compensation package (salary, bonus,
profit sharing, etc.) for each member of management.
7. Personnel
• List employees (not owner or manager) using the
following headings:
- Position: full-time, part-time, seasonal, temporary; and
- Method of payment: hourly, monthly, commission, etc.
• Provide a job description for each position, identifying
the responsibilities and duties involved. Include what skill
level is needed.
• If job training is required, identify the duration and the
cost of the training.
8. References
Identify your:
• Name
• Phone Number
• E-mail
• Accountant
• Banker
• Consultant
• Insurance Company
• Lawyer
9. Financial Projections
Provide a projected (pro-forma) Three Year Cash Flow,
Balance Sheet and Profit or Loss Statement.
10. Additional Information
It is common for a financial institution to request that the
principal(s) submit, with a loan application, a statement of
personal net worth. This form is usually provided by the
financial institution. If applicable, historical financial
statements on the business venture may also be
requested. Other supplementary and supporting documents for
your business plan should be included in appendices.
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