2. Writing a Business Plan
A well written business plan is an important document for any busi- ness seeking financing. However, a thorough business plan is an essential tool for all businesses, regardless of financial needs. Most lenders will not even discuss financing without a business plan. The business plan brings together all the goals, plans, strategies, and resources of a business.
Business Plan Outline
There are no hard rules in formatting your business plan; however, the following outline is effective and comparatively easy to develop.
The Executive Summary
This section is a summary of the key elements of your plan. The Executive Summary should include a description of your business and its target markets, what differentiates your com- pany’s product or service and your company’s strategy for success.
Company Summary
The purpose of this section is to explain in detail who you are, what you do, what your goals are, and how you plan to get there. This section should include a general description of your business, including: a history of the business, the concept of the company, form of legal structure and business organization, products and services offered, a description of each location and facility of your business, previous or planned renovations, what
zoning restrictions or permits are required, and transportation access for customers and shipping.
Products
This section should list the products and services your company provides including an outline of your competitive advantages, distribution methods, and unique product qualities.
Market Analysis
The purpose of this section is to provide an overall description of the market for your products / services, the customer demographics, the present and future markets, and an analysis of your major competitors and product / service cycles, including who they are, their strengths and weaknesses, and how your company compares.
Marketing Plan
The purpose of the Marketing Plan is to describe your marketing goals, how the company expects to achieve those goals, how you will sell to each market segment, and the current and future competitive strategies.
Financial Plan
The purpose of the financial plan is to provide the reader with vital financial information about your business. The financial plan should include projections for two to five years minimum. If you have not had experience in preparing financial information, you may need to obtain professional assistance with this section of your business plan. This section should include:
- Projected start-up costs that include the cost of equipment, inventory, and real estate as well as operating expenses until the business is profitable.
- A description of the type of loan / financing you desire, including the amount, the length of the loan, and desired terms.
- A list of your capital equipment, including equipment used to manufacture or deliver your product or service.
- A balance sheet of what you own and what you owe at a particular point in time. A balance sheet is in balance when Total Assets = Total Liabilities + Total Equity.
- A break-even analysis allows you to demonstrate when your business will reach its break- even point: when sales will reach a level to cover expenses.
Reviewing the Business Plan
As you complete sections of the plan, ask impartial third parties to review them and give their perspective on the quality, clarity, and thoroughness of your plan.
Finally, if you intend to use your plan to attract capital, honestly ask yourself whether you would invest in the business based on reading the plan. If you can’t honestly answer yes, then the plan needs more work.
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