A Business Plan is your guide to your business. It organizes, on paper, your thoughts as to why you are in business, who your customers and competitors are, what your strengths and weaknesses are, and lays out your plans for the future. Some businesses don't have a Business Plan, but those that do are in a better position to succeed.

A business plan is also your sales pitch to lenders or suppliers from which you wish to borrow money. It will tell them the complete story about your business as briefly as possible. Business Plans show potential lenders and suppliers that you have thought about the basics of business in general and your business in particular. It also shows them that you plan for the future.

The following is a summary of the information provided in a well-thought-out Business Plan. The following sections examine each of the items in the outline more thoroughly, and will provide you with guidelines on how to put together your own Business Plan.

I. Name of Firm.

II. Owner or Owner-to-Be.

III. Information on the Business.

A. Type of Business and Product or Service.

B. History.

C. Offices/Plant.

D. Personnel.

E. Economic/Accounting.

F. Inventory, Supplies, Suppliers, and Equipment.

G. Legal.

H. Future Plans.

IV. Market Analysis.

A. Customers (your Market).

B. Environment.

C Competition.

D. Competitive Advantages and Disadvantages for your business.

E. Projections.

V. Marketing Strategy

A. Sales Strategy.

B. Promotion Strategy.

VI. Management

VII. Financial

I. Name of Firm

State the business' name

II. Owner or Owner-to-Be

State owner(s) name, as well as the legal form of the business (Sole Proprietorship, Partnership, Corporation, Cooperative) and the percentage of the business each person owns.

III. Information on the business

A. Type of Business and Product or Service. State the general and specific nature of the business -- For example, if you are opening a bakery, the general nature is food, while the specific is a bakery; if you're going to manufacture wind power generators, the general nature is energy, and the specific is wind.

_ State the type of business--retail, wholesale, manufacturing, service, construction, or other.

_ State the company's goals and objectives. Elaborate upon what you plan to accomplish, what market you hope to capture.

_ Describe your products and/or services. State who buys the product/service, and who the final users are. Go into this only here, as you will be discussing your customers very thoroughly under Market Analysis.

_ Describe how the product/service is or will be sold to customers--walk-in stores, sales representatives, mail order catalogs, telephone orders, etc.

_ Describe how the customers will actually obtain the product--will it be carried out of the walk-in store, delivered, sent through the mail, etc.

_ Comment of the quality of the product/service you offer.

_ Estimate the average price of the product/service/

B. History. If the business is new, say so. If it is already existing, discuss the age of the business, the prior owners, how it was acquired by you and how long you have owned it (if you do own it already. Discuss the image and reputation of the business, the number of employees, last year's sales volume and profit, and any significant events that have affected the firms development.

C. Offices and Plant. Give the address of the business and describe the area and the building itself. State the size (square footage) of the business facility.

_ State whether the building/facilities are rented, leased, or owned. If rented or leased, state from whom and under what conditions.

_ Describe the type of access to the building--major roads, freeways, walking, parking, etc.

_ Is the location a good one which is convenient to customers.

D. Personnel. List the following information both currently and for future times: number of employees; type of labor (skilled/unskilled); how you have recruited employees in the past and plan to do so in the future; if appropriate, list any special characteristics of your employees--such as minorities, veterans, disabled, or other socially or economically disadvantaged groups; discuss any patterns that exist in your hiring and/or layoffs (due to weather, seasonal demands, etc.)

_ Comment on the quality of your workforce.

E. Economic/Accounting. Describe how your business makes or will make money.

_ State how prices are or will be determined, and by whom.

_ State what financial records will be kept and by whom.

F. Inventory, Supplies, Suppliers, and Equipment. Describe what inventory, raw materials, and/or supplies the business uses, both now and for future activity.

_ List your suppliers. Provide their names, addresses, the type and percentages of your supplies they provide, and the length of time you have been buying from each. Discuss their reliability and the frequency of your purchases.

_ How easy or difficult is it to get the necessary supplies? If it is difficult, how will you deal with potential or actual shortages?

_ Are the prices of your supplies steady or fluctuating? If fluctuating, how do you deal with the changing costs?

_ List the equipment used by the firm and comment on its condition. If the equipment has been appraised, include the values and state who did the appraisal.

G. Legal. State the legal form of the business (Sole Proprietorship, Partnership, Corporation, Cooperative) and its status--has the business been formed yet, or is it in the process of formation?

_ List licensing requirements for your business (the type of license and the source of licensing) and the status of licensing--not yet applied, applied and pending, already obtained.

_ List zoning requirements and the status of the business in relation to those requirements. Are you verified as in conformance? Is a variance required--has one been requested/granted? Is the area being rezoned

_ List insurance requirements for your business, the source of those requirements, and whether or not you have obtained the necessary insurance. If not, what is the status?

_ Have you complied with the building codes?

_ List any health code requirements, and state whether or not you have complied with them. If not, what is the status?

_ Describe any other laws and regulations that affect the business.

_ Describe your lease or rental agreement, emphasizing any legal conditions.

_ Trademarks, patents, licenses, and copyrights should be checked for legality.

H. Future Plans. Discuss your plans for the future of your business. Do you intend to maintain operations at the current level? Expand? Diversify? Sell the business?

IV. Market Analysis

A. Customers (Market). What is your market, or who are your customers (wholesalers, retailers, consumers, government, etc.)?

_ Why does this market need your product/service? Is your product/service a fad or a continuing need? Is this a new field affected by technology, or an old field which is affected or will be affected by technology?

_ List the characteristics of your average customers: age, location (market area), average income, sex, lifestyle (family, single), working, or other important information. The more you understand about your market, the more you will understand their needs and desires, thus the more you can sell.

_ What do customers like and dislike about your product/services or business?

_ Estimate the size of the market in terms of the number of customers.

_ Estimate how much the total market will spend on your product or similar products/services in the next year.

B. Environment. Discuss any environmental factors (economic, legal, social, or technological) that affect or could potentially affect your either your market or your product/service. Environmental factors are those which affect your market, but over which you have little or no control. Some examples might include population growth or decrease, rising energy prices, scarcity of materials you use in your product, or County's High unemployment rate.

C. Competition. Discuss your competition. List the number of competitor's, the types of firms, locations, how long they have been in existence, their reputations, size (both in terms of sales and numbers of customers), and their market share.

_ List your major competitors by names and addresses, and discuss the specific businesses in terms of the features offered by their product or service, their prices, location/distribution, reputation/image, their size, age, market share, the quality of their products, and the marketing strategy each follows (i.e., what is the nature of their promotion or sales strategy).

_ Estimate how much of your type of product/service will be provided by all the competition in the next year.

D. Competitive Advantages and Disadvantages. Discuss how your product/service meets market needs, and how you compare with the competition in terms of product features, location, distribution, price, or other features.

_ Compare your estimates of the market's demand and the competitions' supply. Does the competition meet the demand?

_ The relationship of supply and demand will affect your marketing and sales strategy. High demand with low supply usually means less competition, less advertising, and the ability to charge a higher price for your product. Low demand with a high supply indicates a very competitive situation, and the need for extensive promotion/marketing.

E. Projections. Give your projections in terms of the number of customers or items sold, contracts obtained, etc.

VII. Financial (If you are seeking outside financing)

A. Sources and Uses. Describe the project to be financed.

_ State where the money to pay for the project will come from (sources) and how it will be used (uses). The most common uses are equipment, leasehold improvements, inventory, and working capital.

B. Statements--Historical and Projected. If the business is an existing one, include business tax returns and financial statements for the last three years. Financial statements should include the following:

_ Balance Sheet, Income Statement, Accounts Receivable and Aging, Accounts Payable and Aging, Debt Schedule, Reconciliation of Net Worth.

_ For both existing and new businesses, project the following statements for the next three years. Project the first and second years on a monthly basis, and the third on an annual basis. For the third year, indicate any anticipated changes, such as "sales to increase by 5%", which affect the statements.

_ Operating (or Income) Statement with explanations for Sales, Expenses, and Profits; Balance Sheet; Reconciliation of Net Worth; Cash Flow with explanation; and Break-even Analysis.

Checklists: The following checklists are included to assist you in reviewing the components of your "Business Plan/Prospectus." Check completed items off the lists. Cross off items that do not apply to your situation.

1. Introduction

* A brief statement describing what the reader is about to read, i.e., "The following information has been compiled to describe the proposed.........."

2. Summary of Business Plan and Strategy

This is a brief definition of the business in clear, non-technical Language. It should include:

(a) Summary of product or service.

* Description of product or service

* Diagrams, illustrations, or pictures (if practicable)

(b) Summary of marketing approach

* Segment of market aimed for

* Channels through which to be sold: retail, wholesale, distributors, brokers, mail-order, or other

(c) Summary of financial estimates

* Approximate annual dollar sales aimed for

* Anticipated profit on this volume

* Estimated starting capital required

3. The Company and its Industry

(a) The Company

* Summary of company objectives

* Statement of desirability of product or service

* Advantages, improvements over existing products or services

* Long-range business objectives

* Short-range goals of business

* Brief description of your qualifications to run the business

* Statement of character of business and image to be projected.

(b) Discussion of Industry

* Brief discussion of present state of the Art and industry of which you are/will be a part.

* Basic status of industry

* Where and how product or service is now being used.

* Explanation of your place in the state of the Art.

* Statement of trends and predictions for industry

* General statement of competition to be met

* Uniqueness (and/or patentability) if your product or service that will ensure its use, identity and leadership in the industry.

(c) Statement of your plan of strategy to meet competition

*

4. Products or Services

(a) Description

* Full technical description of product or service

* Summary of tests conducted

* Summary of tests planned

* Statement of test purposes

* Summary of test results/data

* Technical description (in lay language) of how product or service will be used

* Sample, mock-up, or sample brochure

* Detail on your proprietary position

* Detail on potential of product or service

* Analysis of technologies and skills unique to your product or service

* Brief statement of your "next generation" of products of services (if applicable)

5. Market Research and Evaluation

(a) Customers

* Detailed description of potential users (age, sex, location, income levels, etc.)

(b) Market Size, Trends, and Segments

* Size

* Trends

* Segments (such as private sector v. public, retail/wholesale, male/female, national/international).

(c) Competition

Detailed statement of:

* Who, what, where, when and how

* Size of competitors

* Size of their market share

* Areas of Strength

* Areas of weakness

(d) Market share

* Total estimated market size

* Your estimated market share

* Your estimated sales

(e) Market Share

* Proposed methods of continuing market evaluation

(f) Economics - as applicable

* Margins

* Costs

6. Marketing Plan

Statement of your overall strategy:

* Basic sales approach (i.e., retail, wholesale, door-to-door, etc.)

* Statement of methods to be used in meeting sales goals: direct calling, telephone, advertising, or other

 

7. Management Team

* Organizational Chart

* Key management Personnel (resumes) (Detailed Statement of skills, education, experience, ages, and expertise)

* Management compensation

* Management ownership

* Composition of Board of Directors (complete background information on all members)

* Board of Directors' compensation

* Outside expertise to be employed

* Management strengths, weaknesses and training needs

8. Monthly Schedule of Operation (if applicable)

*

9. Risks, Assumptions and Problems (State significant areas of concern)

*

10. Community Impact

* Economic Impact

* Human Development Impact

* Community Development Impact

* Environmental impact

11. Financial Plan (monthly for first year; quarterly for next 2 to 3 years)

* Profit and loss forecast

* Proforma cash flow analysis

* Proforma balance sheet

* Break-even charts

12. Proposed Company Offering and Summary

* Brief statement of financing approach proposed to meet needs

* Total Capital needed and safety factor used

* Profit expected and expected times of receipt

* Ownership interest reserved for self and partners

* Total capital required

* Entrepreneur's share of initial capital investment

* Additional capital sought

* Share to be given for investment or loan of additional capital required

* Anticipated time schedule for starting the business

* Explanation of use of funds

FEASIBILITY ANALYSIS ACTIVITIES

1. Crucial technical specifications

_ Design

_ Durability

_ Reliability

_ Product safety

_ Standardization

2. Engineering requirements

_ Machines

_ Tools

_ Instruments

_ Work flow

3. Product development

_ Blueprints

_ Models

_ Prototypes

4. Product testing

_ Lab testing, field testing

5. Plant location issues

_ Desirable characteristic of plant site (proximity to suppliers, customers, environmental regulations)

6. Plant layout studies

1. Market potential

_ Identification of potential customers and their dominant characteristics (e.g., age income level, buying habits)

_ Potential market share (as affected by competitive situation)

_ Potential sales volume

_ Sales price projections

2. Market testing

_ Selection of test markets

_ Actual market test

_ Analysis of market test results

3. Marketing planning issues

_ Preferred channels of distribution, impact of promotional efforts, required distribution points packaging considerations price differentiation

1. Required financial resources for:

_ Fixed assets, current assets, necessary working capital

_ Available financial resources

2. Required borrowing

_ Potential sources of funds

_ Cost of borrowing

_ Repayment conditions

3. Operating cost analysis

_ Fixed costs

_ Variable costs

_ Projected cash flow

_ Projected profitability

1. Personnel requirements

_ Required skills levels and other personal characteristics of potential employees

_ Managerial requirements

_ Determination of individual responsibilities

_ Determination of required organizational relationships

2. Potential organization development

1. Existing competitors

_ Size, financial resources, market entrenchment

_ Potential reaction of competitors to newcomer

_ Price cutting, aggressive advertising, introduction of new products, etc.

2. Potential new competitors

Last Revised: September 5, 2001

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