Elements a business
plan
What goes in a business plan? The body can be divided into four distinct sections:
1) Description of the business
2) Marketing
3) Finances
4) Management
In developing your business plan, your addenda should include an executive summary, supporting documents, and financial projections.
Although there is no single
business plan formula, some elements are common to all business plans.
These elements would include:
Elements of a Business Plan
1. Cover sheet
2. Introduction
3. Table of contents
The Business
A. Description of business - Products, Services, and
Markets
B. Marketing
C. Competition
D. Operating procedures
E. Personnel
F. Business insurance
Financial Data
A. Loan applications
B. Capital equipment and supply list
C. Balance sheet
D. Breakeven analysis
E. Pro-forma income projections (profit & loss
statements)
Three-year summary
Detail by month, first year
Detail by quarters, second and third years
Assumptions upon which projections were based
F. Pro-forma cash flow
Business Plan
Introduction/Mission
The introductory section of your
business plan should include:
- A detailed description of the
business and its goals.
- The ownership of the business
and its goals.
- Your professional skills and
experience
- Your advantages in the
marketplace
Products/Services and Markets
In this section, you must
describe your products and/or services and:
- Identify the consumer demand
for your service
- How your service is different
- differentiation between you and your competitors. If
you are not different, this also needs to be stated.
- Market demographics - Identify
your market, as well as its size and locations.
- Where and how you plan to
market your services
- Pricing and price strategy
Financial Management
The financial management section
should include:
- The source and amount of your
initial capital as well as identify obligations of the capital
(loan repayments or equity stake)
- Develop a monthly operations
budget for the first year.
- Predict and back up your
expected ROI (return on investment and a monthly cash flow
statement for the first year.
- Income statements and balance
sheets for the first 3 years
- Identify your break-even point
- How and how much will you and
other owners be compensated
- Bookkeeping methods
- Develop financial risk
analysis. What happens if various anticipated events do
not occur?
Operations
The operations section will
explain:
- How business is managed on a
day to day basis.
- Personnel procedures
- Contracts and significant
agreements such as suppliers, rent, etc.
- Detail information about
equipment costs such as vehicles
- Detail information about how
services will be delivered
Concluding Statement
Summarize your business goals and
business plan, and also discuss your commitment to the business
and following the business plan that you have laid out.
Discuss how and what events might trigger changes in the business
plan.
Now that you have a completed
business plan, review it and take criticism from friends. It
is not important for you to defend yourself. If an honest
friend sees a problem, then they see a problem. Consider
whether it is a fault of the the business plan itself, or if there
could be a problem in the way that you may have explained
yourself.
Supporting Documents
- Tax returns of principals for last three years Personal financial statement (all banks have these forms)
- For franchised businesses, a copy of franchise contract and all supporting documents provided by the franchisor
- Copy of proposed lease or purchase agreement for building space
- Copy of licenses and other legal documents
- Copy of resumes of all principals
- Copies of letters of intent from suppliers, etc.
