BUSINESS PLANS MADE SIMPLE
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WHY WRITE A BUSINESS PLAN?
Helps you get organized!
Helps you get a loan!
Helps you not be in the 80% of small
businesses that fail within the first five
years of operation!
HOW LONG WILL IT TAKE ME TO
WRITE A BUSINESS PLAN?
Writing a business plan is often a long
process. It depends on a lot of different
factors, but writing a business plan can take
dozens of revisions. Each revision can take a
lot of time. Do not put yourself in the position
to rush yourself through the business plan
creation process because this plan is what
you are going to depend on once your
business is up and running, as well as to get
your business up and running.
There are business plans from a few pages in
length to hundreds of pages (including
appendices). Take the time to thoroughly
explain every aspect of your business. If your
business plan tells all there is to know about
your business then it is long enough. If it does
not, keep writing. The person reading your
business plan needs to know that you thought
about everything from the legal structure to
who is going to vacuum. Every detail is
important.
HOW DO I GET STARTED?
Gather all of your information pertaining to
your business including:
• Legal documents
• Starch pieces of paper with ideas written
on them
• Prototypes, mockups
• Pictures
• Plans
• ANYTHING ELSE YOU CAN THINK OF!!
The Business Plan Outline The first thing a person should do is learn about the different sections of
a business plan. Below is a generic outline. All sections may or may not pertain to you and your
business.
• Look at this outline
• Understand what each section is about.
• Figure out what sections pertain to you (It is recommended that you try to find information for every
section if possible).
• See of there are any additional sections that you need to add.
Business Plan Outline
Executive Summary.
Highlights
Objectives
Mission Statement
Keys to Success
Description of Business
Company Ownership/Legal Entity
Location
Interior
Hours of Operation
Products and Services
Suppliers
Service
Manufacturing
Management
Financial Management
Start-Up/Acquisition Summary
Marketing
Market Analysis
Market Segmentation
Competition
Pricing
Appendix
Start-Up Expenses
Determining Start-Up Capital
Cash Flow
Income Projection Statement
Profit and Loss Statement
Balance Sheet
Sales Forecast
Milestones
Break-Even Analysis
Miscellaneous Documents
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Nevada SBDC at https://nevadasbdc.org/
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The Outline (Defined):
Write this last so that you can summarize the most important points from your business plan.
Provide a concise but positive description of your company, including objectives and accomplishments.
For example, if your company is established, consider describing what it set out to do, how it has
accomplished goals to date, and what lies ahead. If new, summarize what you intend to do, how and
when you intend to do it, and how you think you can overcome major obstacles (such as competition).
You can also choose to use the following four subheadings to organize and help present the information
for your executive summary.
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Executive Summary
Highlights
Summarize key business highlights. For example, you might include a chart showing sales, expenses,
and net profit for several years.
Objectives
For example, include a timeline of the goals you hope to achieve.
Mission Statement
If you have a mission statement, include it here. Also include any essential points about your business
that are not covered elsewhere in the executive summary.
Keys to Success
Describe unique or distinguishing factors that will help your business plan succeed.
Executive Summary
Give a positive, concise, and fact-based description of your business: what it does, and what is going to
make it unique, competitive, and successful. Describe special features that will make your business
attractive to potential customers and identify your company’s primary goals and objectives.
Company Ownership/Legal Entity
Indicate whether your business is a sole proprietorship, corporation (type), or partnership. If appropriate,
define the business type (such as manufacturing, merchandising, or service).
If licenses or permits are required, describe the requirements for acquiring them and where you are in the
process.
If you have not already stated whether this is a new independent business, a takeover, a franchise or an
expansion of a former business, include that here.
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Location
If your business doesn’t require specific location considerations, that could be an advantage and you
should definitely note it here.
If you have already chosen your location, describe the highlights—you can use some of the factors
outlined in the next bullet as a guide or other factors that are essential considerations for your
business.
If you don’t yet have a location, describe the key criteria for determining a suitable location for your
business.
Remember that location is of paramount importance to some types of businesses, less so for others.
Consider the following examples (note that this is not an exhaustive list and you might have other
considerations as well):
What kind of space are you seeking and where? Is there a particular area that would be especially
desirable from a marketing viewpoint? Must you have a ground-floor location? If so, must your location be
easily accessible to public transportation?
If you are considering a specific site or comparing sites, the following may be important: How is the
access/traffic flow? Are the parking facilities adequate? Is the street lighting sufficient? Is it close to other
businesses or venues that might aid in drawing the type of customers you seek? If it is a storefront, does it
attract attention or what must be done to make it attract the type of attention you need?
If signage is appropriate for your business: Are there local ordinances concerning signs that might
adversely affect you? What type of signage would best serve your needs? Have you included the cost of
signage in your start-up figures?
Interior
For some businesses, the interior of the business site is as important as the location. If that is the case for
your business, describe what makes yours work well.
How have you calculated the square footage you need? Have you done advance planning to ensure that
you will get the most of your space, such as what will go where?
Are there any special requirements/modifications to the space that you will have to construct or install? Do
you need landlord or other permission to do so?
If applicable, how will you display products? Does the layout have flow/features that contribute to the
ambience and/or potentially help to increase sales?
Describe any special features of your business interior that you feel give you a competitive edge over
similar businesses.
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Hours of Operation
Self-explanatory, but important for such businesses as retail stores or seasonal ventures.
Products and Services
If your products and/or services are more important than your location, move this topic before location
and hours of business.
If you are providing only products or only services, delete the part of this heading that is inappropriate.
Describe your products or services and why there is a demand for them. What is the potential market?
How do they benefit customers? What about your products or services gives you a competitive edge?
If you are selling several lines of products or services, describe what’s included. Why did you choose this
balance of offerings? How do you adjust this balance to respond to market demands?
For product-based businesses, do you have or need inventory controls? Do you have to consider “lead
time” when reordering any items? Do you need an audit or security system to protect inventory?
Note:
Suppliers
If information about your suppliers—including your financial arrangements with them—plays an important
part of your business, include the relevant information in this section.
Service
Whether your business products or services, use this section to address the level and means of service
that you provide to customers, before, during, and after the sale.
How do you make your service(s) stand out against the competition?
Manufacturing
Does your business manufacture any products? If so, describe your facilities and any special machinery
or equipment.
Without revealing any proprietary information, describe the manufacturing procedure.
If not already covered in the Products and Services section, describe how will you sell the products you
manufacture—Directly to the public? Through a wholesaler or distributor? Other?
How will you transport your products to market?
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Nevada SBDC at https://nevadasbdc.org/
Management
What are their qualifications and background? (Resumes can be included in an Appendix.)
What are their strengths or areas of expertise that support the success of your business?
What are their responsibilities and are those clearly defined (particularly important in partnership
agreements)?
What skills does your management team lack that must be supplied by outside sources or by
additional hiring?
How will your background or experience help you to make this business a success? How active will you
be and what areas of management will you delegate to others? Describe any other people who will be/are
managing your business, including the following:
If your business has employees, describe the chain of command. What training and support (such as a
handbook of company policies) will you provide to employees? Will you provide any incentives to
employees that will enhance the growth of your company?
If your business is a franchise, what type of assistance can you expect, and for how long? Include
information about operating procedures and related guidance that has been provided to you by the
franchiser.
Financial Management
Start-up needs should include any one-time-only purchases, such as major equipment or supplies,
down-payments, or deposits, as well as legal and professional fees, licenses/permits, insurance,
renovation/design/decoration of your location, personnel costs prior to opening; advertising or
promotion
Once you are ready to open your business, you will need an operating budget to help prioritize
expenses. It should include the money you need to survive the first three to six months of operation
and indicate how you intend to control the finances of your company. Include the following expenses:
rent, utilities, insurance, payroll (including taxes), loan payments, office supplies, travel and
entertainment, legal and accounting, advertising and promotion, repairs and maintenance,
depreciation, and any other categories specific to your business.
As you write this section, consider that the way company finances are managed can be the difference
between success and failure.
Based on the particular products or services you intend to offer, explain how you expect to make your
business profitable and within what period of time. Will your business provide you with a good cash flow or
will you have to be concerned with sizeable Accounts Receivable and possible bad debts or collections?
The full details of your start-up and operating costs should be included in the Appendix. However, you can
reference appropriate tables, charts, or page numbers as you give a brief, summary accounting of your
start-up needs and operating budget.
You can also include information (or cross-reference other sections of this business plan if covered
elsewhere) about the type of accounting and inventory control system you are using, intend to use, or,
where applicable, what the franchiser expects you to use.
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Nevada SBDC at https://nevadasbdc.org/
Start-Up/Acquisition Summary
Summarize key details concerning the starting or acquisition of your business.
(If this is not applicable to your business, delete.)
As noted in the preceding section, include your table of start-up or acquisition costs in the Appendix.
Market Analysis
What is your target market? (Who is most likely to buy your products or use your services?) What are the
demographics? What is the size of your potential customer base?
Where are they? How are you going to let them know who and where you are and what you have to offer?
If you believe that you have something new, innovative or that isn’t generally available: How do you know
that there is a market for it—that people are willing to pay for what you have to offer?
Consider the market you are trying to reach: Is it growing, shrinking or static?
What percentage of the market do you think you will be able to reach? How will you be able to grow your
market share?
Marketing
How well you market your business can play an important role in its success or failure. It is vital to know
as much about your potential customers as possible—who they are, what they want (and don’t want), and
expectations they may have.
Market Segmentation
Is your target market segmented? Are there different levels within the same type of business, each
offering a difference in quality, price, or range of products?
Is this market segmentation governed by geographic area, product lines, pricing, or other criteria?
Into which market segment will your primary business fall? What percentage of the total market is this
segment? What percentage of this segment will your business reach?
Note: A pie chart is a good way to demonstrate part-to-whole relationships, such as the percentage of the
target market that falls into each major segment.
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Nevada SBDC at https://nevadasbdc.org/
Competition
Who else is doing what you are trying to do?
Briefly describe several of your nearest and greatest competitors. What percentage of the market does
each reach? What are their strengths and weaknesses? What can you learn from the way they do
business, from their pricing, advertising, and general marketing approaches? How do you expect to
compete? How do you hope to do better?
What indirect competition will you face, such as from internet sales, department stores, or international
imports?
How will you keep abreast of technology and changing trends that may impact your business in the
future?
Pricing
How have you developed your pricing policy?
Which of the following pricing strategies might best suit your business? Retail cost and pricing,
competitive position, pricing below competition, pricing above competition, multiple pricing, price lining,
pricing based on cost-plus-markup, or other?
What are your competitors’ pricing policies and how does yours compare? Are your prices in line with
industry averages?
How will you monitor prices and overhead to ensure that your business will operate at a profit?
How do you plan to stay abreast of changes in the marketplace, to ensure that your profit margins are not
adversely affected by new innovations or competition?
Advertising and Promotion
How do you intend to advertise your business?
Which of the following advertising and promotion options offer you the best chances of successfully
growing your business? Directory services, social networking websites, media (newspaper, magazine,
television, radio), direct mail, telephone solicitation, seminars and other events, joint advertising with other
companies, sales representatives, word-of-mouth, other?
How will you determine your advertising budget?
How will you track the results of your advertising and promotion efforts?
Will you advertise on a regular basis or will you be conducting seasonal campaigns?
How will your products be packaged? Have you done research to see what type of packaging will best
appeal to your customers? Have you done a cost analysis of different forms of packaging?
If your small business needs guidance or assistance, sign-up for no-cost, confidential business advising with the
Nevada SBDC at https://nevadasbdc.org/
Strategy and Implementation
Now that you have described the important elements of your business, you may want to summarize your
strategy for their implementation. If your business is new, prioritize the steps you must take to open your
doors for business. Describe your objectives and how you intend to reach them and in what time
parameters.
Planning is one of the most overlooked but most vital parts of your business plan to ensure that you are in
control (as much as possible) of events and the direction in which your business moves. What planning
methods will you utilize?
Start-Up Expenses
Appendix
1 .Begin by filling in the figures for the various types of expenses in the cash flow table on the following
page.
2. Start your first month in the table that follows with starting cash of $0, and consolidate your “cash out”
expenses from your cash flow table under the three main headings of rent, payroll and other (including the
amount of unpaid start-up costs in “other” in month 1).
3. Continue the monthly projections in the table that follows until the ending balances are consistently
positive.
4. Find the largest negative balance—this is the amount needed for start-up capital in order for the
business to survive until the break-even point when all expenses will be covered by income.
5. Continue by inserting the amount of needed start-up capital into the cash flow table as the starting cash
for Month 1.
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Nevada SBDC at https://nevadasbdc.org/
Determining Start-Up Capital
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Nevada SBDC at https://nevadasbdc.org/
Income Projection Statement
The Income Projection Statement is another management tool to preview the amount of income
generated each month based on reasonable predictions of the monthly level of sales and costs/expenses.
As the monthly projections are developed and entered, these figures serve as goals to control operating
expenses. As actual results occur, a comparison with the predicted amounts should produce warning bells
if costs are getting out of line so that steps can be taken to correct problems.
The Industrial Percentage (Ind. %) is calculated by multiplying costs/expenses by 100% and dividing the
result by total net sales. It indicates the total sales that are standard for a particular industry. You may be
able to get this information from trade associations, accountants, banks, or reference libraries. Industry
figures are a useful benchmark against which to compare the costs/expenses of your own business.
Compare your annual percentage with the figure indicated in the industry percentage column.
The following is an explanation for some of the terms used in the table that follows:
Total Net Sales (Revenue): This figure is your total estimated sales per month. Be as realistic as possible,
taking into consideration seasonal trends, returns, allowances, and markdowns.
Cost of Sales: To be realistic, this figure must include all the costs involved in making a sale. For example,
where inventory is concerned, include the cost of transportation and shipping. Any direct labor cost should
also be included.
Gross Profit: Subtract the cost of sales from the total net sales.
Gross Profit Margin: This is calculated by dividing gross profits by total net sales.
Controllable Expenses: Salaries (base plus overtime), payroll expenses (including paid vacations, sick
leave, health insurance, unemployment insurance and social security taxes), cost of outside services
(including subcontracts, overflow work and special or one-time services), supplies (including all items and
services purchased for use in the business), utilities (water, heat, light, trash collection, etc.), repair and
maintenance (including both regular and periodic expenses, such as painting), advertising, travel and auto
(including business use of personal car, parking, and business trips), accounting and legal (the cost of
outside professional services).
Fixed Expenses: Rent (only for real estate used in business), depreciation (the amortization of capital
assets), insurance (fire, liability on property or products, workers’ compensation, theft, etc.), loan
repayments (include the interest and principal payments on outstanding loans to the business),
miscellaneous (unspecified, small expenditures not included under other accounts or headings).
Net Profit/Loss (Before Taxes): Subtract total expenses from gross profit.
Taxes: Inventory, sales, excise, real estate, federal, state, etc.
Net Profit/Loss (After Taxes): Subtract taxes from net profit before taxes.
Annual Total: Add all monthly figures across the table for each sales and expense item.
Annual Percentage: Multiply the annual total by 100% and divide the result by the total net sales figure.
Compare to industry percentage in first column.
This table essentially contains
the same basic information as
the income projection statement.
Established businesses use this
form of statement to give
comparisons from one period to
another. Many lenders may
require profit and loss statements
for the past three years of
operations.
Instead of comparing actual
income and expenses to an
industrial average, this form of
the profit and loss statement
compares each income and
expense item to the amount that
was budgeted for it. Most
computerized bookkeeping
systems can generate a profit
and loss statement for the
period(s) required, with or
without budget comparison.
If your small business needs guidance or assistance, sign-up for no-cost, confidential business advising with the
Nevada SBDC at https://nevadasbdc.org/
Income Projection Statement
Profit and Loss Statement
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Nevada SBDC at https://nevadasbdc.org/
Balance Sheet
Following are guidelines for what to include in the balance sheet: (For use in established businesses)
Assets: Anything of value that is owned or is legally due to a business. Total assets include all net values;
the amounts that result from subtracting depreciation and amortization from the original cost when the
asset was first acquired.
Current Assets:
Cash: Money in the bank or resources that can be converted into cash within 12 months of the date of the
balance sheet.
Petty Cash: A fund of cash for small, miscellaneous expenditures.
Accounts Receivable: Amounts due from clients for merchandise or services.
Inventory: Raw materials on hand, work-in-progress, and all finished goods (either manufactured or
purchased for resale).
Short-term Investments: Interest or dividend-yielding holdings expected to be converted to cash within a
year; stocks, bonds, certificates of deposit and time-deposit savings accounts. These should be shown at
either their cost or current market value, whichever is less. Short-term investments may also be called
“temporary investments” or “marketable securities.”
Prepaid Expense: Goods, benefits or services that a business pays or rents in advance, such as office
supplies, insurance or workspace.
Long-term Investments: Holdings that a business intends to retain for at least a year. Also known as
long-term assets, these are usually interest or dividend paying stocks, bonds or savings accounts.
Fixed Assets: This term includes all resources that a business owns or acquires for use in its operations
that are not intended for resale. They may be leased rather than owned and, depending upon the leasing
arrangements, may have to be included both as an asset for the value and as a liability. Fixed assets
include land (the original purchase price should be listed, without allowance for market value), buildings,
improvements, equipment, furniture, vehicles.
Liabilities:
Current Liabilities: Include all debts, monetary obligations, and claims payable within 12 months.
Accounts Payable: Amounts due to suppliers for goods and services purchased for the business.
Notes Payable: The balance of the principal due on short-term debt, funds borrowed for the business.
Also includes the current amount due on notes whose terms exceed 12 months.
Interest Payable: Accrued amounts due on both short and long-term borrowed capital and credit
extended to the business.
Taxes Payable: Amounts incurred during the accounting period covered by the balance sheet.
Payroll Accrual: Salaries and wages owed during the period covered by the balance sheet.
Long-term Liabilities: Notes, contract payments, or mortgage payments due over a period exceeding 12
months. These should be listed by outstanding balance less the current position due.
Net Worth: Also called owner’s equity. This is the amount of the claim of the owner(s) on the assets of
the business. In a proprietorship or partnership, this equity is each owner’s original investment plus any
earnings after withdrawals.
Most computerized bookkeeping systems can generate a balance sheet for the period(s) required.
Note: Total assets will always equal total liabilities plus total net worth. That is, the bottom-line figures for
total assets and total liabilities will always be the same.
If your small business needs guidance or assistance, sign-up for no-cost, confidential business advising with the
Nevada SBDC at https://nevadasbdc.org/
Balance Sheet
Sales Forecast
This information can be shown in chart or table form, either by months, quarters or years, to illustrate
the anticipated growth of sales and the accompanying cost of sales.
Milestones
This is a list of objectives that your business may be striving to reach, by start and completion dates,
and by budget. It can also be presented in a table or chart.
If your small business needs guidance or assistance, sign-up for no-cost, confidential business advising with the
Nevada SBDC at https://nevadasbdc.org/
Break-Even Analysis
Use this section to evaluate your business profitability. You can measure how close you are to achieving
that break-even point when your expenses are covered by the amount of your sales and are on the brink
of profitability.
A break-even analysis can tell you what sales volume you are going to need in order to generate a profit.
It can also be used as a guide in setting prices.
There are three basic ways to increase the profits of your business: generate more sales, raise prices,
and/or lower costs. All can impact your business: if you raise prices, you may no longer be competitive; if
you generate more sales, you may need added personnel to service those sales which would increase
your costs. Lowering the fixed costs your business must pay each month will have a greater impact on the
profit margin than changing variable costs.
Fixed costs: Rent, insurance, salaries, etc.
Variable costs: The cost at which you buy products, supplies, etc.
Contribution Margin: This is the selling price minus the variable costs. It measures the dollars available
to pay the fixed costs and make a profit.
Contribution Margin Ratio: This is the amount of total sales minus the variable costs, divided by the total
sales. It measures the percentage of each sales dollar to pay fixed costs and make a profit.
Break-even Point: This is the amount when the total sales equals the total expenses. It represents the
minimum sales dollar you need to reach before you make a profit.
Break-even Point in Units: For applicable businesses, this is the total of fixes costs divided by the unit
selling price minus the variable costs per unit. It tells you how many units you need to sell before you
make a profit.
Break-even Point in Dollars: This is the total amount of fixed costs divided by the contribution margin
ratio. It is a method of calculating the minimum sales dollar to reach before you make a profit.
Note: If the sales dollars are below the break-even point, your business is losing money.
Miscellaneous Documents
Personal resumes
Personal financial statements
Credit reports, business and personal
Copies of leases
Letter of reference
Contracts
Legal documents
Personal and business tax returns
Miscellaneous relevant documents.
Photographs
In order to back up the statements you may have made in your business plan, you may need to include
any or all of the following documents in your appendix:
