Elements of Business Plan
“If You Fail To Plan, You Plan To Fail”

Many business owners believe a business plan is needed only when attempting to secure financing for the business. But the business plan is first and foremost a plan for you, the business leader. Secondarily, it is a plan for potential lenders. A business plan should serve as a management tool to help establish production goals and measure actual performance. Anything you have thought about the business should be captured in the business plan.

Cover Page:
Should identify the company, the executive, and the contact information including address, telephone, fax, email and website.

Table of Contents:
List the sections of the business plan and corresponding page numbers. Readers will be interested only in their particular “hot-button” sections, so make them easy to find quickly.

Executive Summary:
Is the last section written. The summary does just that: summarizes the content of all other sections, explaining the highlights and answering the key questions: who, what, when, where, why, how, and how much.

Company Description:
In this section you will describe all aspects of your business including (but not limited to) its mission and goals, the type of business and industry, list some of the products produced or services offered, location, operating hours, and all other pertinent facts of the business. Indicate how the business is structured and name any partners and how much of the company they own, how they became principals and what their return on investment is. Explain the company’s history.

Product or Service:
Detailed information regarding the products or services should be explained in this section. Not only should you describe the production process, and product features, and explain the product benefits – what makes your widget different (better) than the competition? Identify which products are rising stars, which are cash cows, and which are declining. Address the potential impact that changing landscapes ie. technology, policies, legislation, workforce issues, energy costs, and others, may have on the product or procedures.

Market Analysis:
Present research and discuss conditions and trends within the industry. Describe the major competitors, how much of the market each controls and a strategy for gaining a share of the market or developing a new niche.

Operations:
Explain how the product is made, or the service is provided, what the method of distribution to the end user is, where the raw materials or inventory comes from. If applicable, include size of factory, stages of production, and work flow, or warehousing plans. Detailed cost estimates needed to get the business started or product created, including equipment and facility costs.

Marketing and Sales Plan:
Define and quantify the company’s target market, specify product/service benefits that differentiate it from the competition, including media tools, budget and media promotion calendar. Describe what the business is forecasted to achieve in the first year and in the subsequent three to five years.

Management and Personnel:
Introduce the management team including roles and responsibilities, skills and experience. Include details about the staff positions including job descriptions and how the positions fit into the organizational chart.

Finances and Capitalization Plan:
Include start-up budget, operations budget and projections for three years. Include detailed information on company ownership, loans made to the corporation including rates and terms, the amount of capital needed and how it would be utilized and terms for investment.

Application and Expected Effect of the Loan: (if applicable)
A lender wants to know three things when deciding to make the loan:
1. How much money do you need?
2. How are you going to spend it?
3. How are you going to pay it back?
The purpose of these inquiries is to determine how the loan will benefit the business by increasing revenue and profit, rather than burdening the business with debt.

Financial Documents:
Of the three major financial documents for a business, the balance sheet, income statement, and cash flow projection, the cash flow projection is considered the most important to the life of the business. A cash flow projection shows:
1. how much cash your business needs
2. when it will be needed
3. where the cash will come from

Supporting Documents:
Resumes of principals
Quotes or estimates
Letters of intent
Letters of support/ reference
Leases or buy/ sell agreements
Legal documents relevant to the business
Market research statistics

Other Links for information on business planning and sample business plans:
U.S. Small Business Administration
http://www.sba.gov/smallbusinessplanner/plan/index.html
U.S. Small Business Administration – business plan template
http://web.sba.gov/busplantemplate/BizPlanStart.cfm
SCORE – business plan template
http://www.score.org/template_gallery.html
Sample Business plans
http://www.bplans.com/sample_business_plans.cfm
My Own Business – How to Write a Business Plan
http://www.myownbusiness.org/s2/
Business Plan outline
http://www.business-plan.com/outline.html
Beginner’s Guide to Financial Statements – Securities and Exchange Commission
http://www.sec.gov/investor/pubs/begfinstmtguide.htm
Business Owner’s Toolkit – Financial Statements
http://www.toolkit.com/small_business_guide/sbg.aspx?nid=P06_7001


For more information, e-mail Danette Richards or call 431-8652.