Every business can benefit from the preparation of a carefully written business plan

Every business can benefit from the preparation of a carefully written business plan. A

business plan allows you to develop goals and strategies for your business. Business

owners who do all or most of the work themselves are the ones who benefit most from

the planning process. Planning helps not only to identify all costs associated with the

future operations, expansion, or special projects, but also helps to keep a company

looking toward the future.

This outline is intended to serve as a guide for an operational business plan written in a

narrative format. It explores all aspects of a business operation. It will:

1. help you think through any project and ensure that you have considered all of your

options and anticipated any potential difficulties;

2. convince potential lenders and investors that you are in control of the project and

that their money will be safe with you;

3. serve as a road map for the success of your business.

The following outline lists key topics that should be included in narrative (story) form and

standard financial statement format. Start with Section IV. Sections I-III will be written

last. The final product should be tailored to fit your business circumstances and

personality. Keep your copy in a three-ring binder so you can make revisions easily. If

you provide copies of your plan to persons outside the company, give your plan a

professional appearance by printing it on high quality paper and presenting it in a

binder.

I. Cover Sheet - Your cover sheet should include the name of the business,

owner’s name, address, phone and fax numbers, and e-mail addresses for the

business. Show the date of issue of the plan and “Copy Number ____” if you

need to control the copies.

II. Executive Summary - The Executive Summary, while presented at the

beginning of the plan, is the last section written. It is a condensed version of the

entire business plan that must be able to stand on its own. It is not simply an

introduction to the rest of the business plan. Bankers or investors who review

many business plans may read only the Executive Summary. If the Executive

Summary is not successful in gaining the banker’s or investor’s confidence, the

plan may be rejected and may never be read in its entirety. The Executive

Summary should include:

Kansas Small Business Development Center at ESU

BUSINESS PLAN OUTLINE

• the purpose of the plan (operating guide, loan request, prospectus for

investors),

• the type of business you own or propose to own and the current state of

development,

• the unique aspects of your product or service,

• the business structure you have chosen (sole proprietorship, partnership,

corporation, LLC),

• the names of the principals,

• the amount of money you need to implement your plan and how it will be

used,

• the amount of money you are investing,

• if you are requesting a loan, how you will repay the funds and the collateral

that will be used to secure the loan,

• a summary of the financial projections.

III. Table of Contents - List major topics and page references.

IV. The Company

A. Company Mission and Philosophy 1. What is the mission of the company?

2. What is the company philosophy regarding relationships between the

company and its customers, suppliers, owners, regulators, employees and

other stakeholders?

3. What are the short and long term goals for the company?

B. Company Description and History

1. What is the legal structure of the business (sole proprietorship,

partnership, corporation [C or S], LLC)? Who are the principals and what

is their proportion of ownership?

2. What is the company’s history?

3. What are the company’s strengths and weaknesses, opportunities and

threats?

4. Describe the physical plant, equipment, etc.

5. Describe the product or service.

6. Explain the company’s position in the market today.

V. The Project

A. Project Description

1. What will you be doing? Start up? Purchase? Expansion? Sale?

2. Where will it happen?

3. How will it be accomplished?

4. Who will be involved?

5. When will it happen? Include a timeline for construction, equipment

installation, employee training, financing, etc.

B. Sources and Uses of Funds

1. Sources – list source and amount

a. Loan amount

b. Your investment

c. Investment of others

2. Uses – list use and cost of expenditures before opening business or using

expansion

a. Real Estate (separate land and buildings)

b. Equipment

c. Prepaid Expenses

d. Working Capital (Cash)

VI. Marketing

A. Market Research and Analysis

1. Target market (customers) and demographics

a. Who are potential customers? Define the characteristics of the

customer by sex, age, income, education, occupation, household size,

geography, lifestyle, or other relevant characteristics.

b. How many different market segments (customer groups) are included

in the customer base? Describe each market segment. What is the

basis of purchase decisions by each segment: price? quality? service?

personal contacts? political pressures? other factors?

2. Market size and trends

a. How much money is spent on the product or service within the target

market each year?

b. Describe the potential annual growth of the target market for the

product or service for each market segment.

c. Describe the major factors affecting market growth including industry

trends, socio-economic trends, government policy, population shifts,

etc.

3. Competition (direct and indirect)

a. Present a profile for each main competitor by defining the current

advantages and disadvantages of its products and services, suppliers,

and place in the market (quality leader, lowest price, etc.)

b. Assess their strengths, weaknesses, opportunities, and threats.

c. Compare competing products/services listed based on price,

performance, warranties, and other pertinent features.

d. Discuss each competitor’s share of the market, sales, distribution, and

production capabilities.

e. Discuss why any companies have entered or dropped out of the

market in recent years. Indicate any knowledge of competitors’ actions

that could lead the company to new or improved products/services and

an advantageous position.

f. Discuss the possible opportunities a competitor might have in the

market place. How easy is it to enter the market? How easy or difficult

will it be to compete?

B. The Marketing Plan

1. Promotion and advertising

a. What methods will be used for each market segment previously

identified – TV, radio, journals, magazines, direct mail, trade shows,

etc.? Are there co-op opportunities with suppliers?

b. Describe any advertising materials proposed or developed.

c. What type of promotions will you use?

d. What results do you expect from advertising and promotion efforts?

e. Include a schedule of activity by month, including costs.

2. Pricing

a. What is the pricing strategy? Why was it chosen?

b. Compare pricing strategy to competitors, and explain its advantage for

the company.

3. Place

a. Discuss the strengths and weaknesses of the location.

b. What are the sales and distribution tactics that you will use to market

the product or service? internal sales force? outside sales persons?

distributors? Discuss any selling salaries, contracts, commissions, or

other costs in the distribution channel such as margin requirements.

4. Persuasion – personal selling

a. Will you sell direct to the end customer? If not, discuss the distribution

methods that will be used.

b. Discuss the customer service philosophy.

c. What are the service and warranty policies?

VII. Management and Operations

A. Management Team

1. Describe the organizational structure including a brief job description for

each position. Include an organization chart if appropriate.

2. What personal business experience do you have? What industry

experience do you have that lends itself to the success of this new

venture?

3. Who is on the management team? Include resumes in the appendix.

4. What, if any, training will be required to address weaknesses? Describe

ongoing professional development.

5. Have you selected a Board of Directors/Advisors/Management Resource

Team? Identify them and their areas of expertise.

B. Personnel

1. Describe the labor market in terms of unemployment rates, education,

background, and experience as it relates to the business.

2. Do you anticipate difficulty in finding and recruiting employees? If so,

please discuss how you will overcome them.

3. What, if any, initial training will be required? Describe ongoing training

programs.

4. Briefly describe the personnel policies and include a copy of the personnel

manual in the appendix.

C. Operations

1. Government regulations

a. What licenses and permits are needed to operate in your city and

state?

b. Is the business affected by zoning regulations?

2. Asset protection

a. Have you protected your concept with patents, trademark registration,

and/or copyrights? If so, discuss and include supporting documents in

the appendix.

b. Describe the insurance coverage needed to protect both the company

and yourself.

c. Will you/your employees need to be bonded?

d. If the company will have credit sales, briefly describe the credit and

collections policy and include a copy of the written policy in the

appendix.

e. If the company will have inventory, describe the inventory control

system.

3. Financial management

a. Describe the record keeping system.

b. Include the name of the company's bank, accountant, and other

finance professionals who will provide assistance.

4. Describe day to day operations. Do operations need to be altered to

achieve company goals as stated in part I of the business plan? What

changes will be required?

VIII. Financial Data

This section of the business plan will be closely scrutinized by bankers and/or potential

investors. Include a minimum of a 12 month cash flow for the first year of your project,

income statements, and balance sheets for the first three years of the project. State all

underlying assumptions.

A. Project Financial Requirements

1. Monthly operating costs - Include a written explanation of all operating

costs, by line item, which appear on the projected cash flow.

2. Owner’s financial requirements including taxes.

B. Financial Statements

1. Projected Cash Flow by month for first 12 months.

2. Projected Income Statement for 3 years.

3. Projected Balance Sheet for 3 years.

a. Number of Shares/Memberships, par or stated value, amount

contributed per share

b. Subordinated debt (owner carry back, stand by loans)

IX. Appendix - The appendix should support the body of the business plan.

You may choose to include marketing reports, brochures, an

organizational chart, resumes, plant layout drawings, photos of the

product, copy of purchase agreements, vendor cost estimates for

equipment to be purchased, contractor estimates for renovation or

construction, letters of support from customers, technical reports

explaining your product, etc.

The following items should be included in the appendix for a loan proposal:

• Company financial statements and tax returns for the past three years.

• Ownership information including names of owners or stockholders (when

appropriate).

• A list of corporate officers.

• Date and domicile of incorporation, date partnership agreement was signed.

• Personal income tax returns of all owners.

• Personal financial statement.

• Insurance coverage including carrier, amount, and beneficiary, if applicable.

• Quotes for equipment, construction, etc.

• Store or production layout.