Writing A Successful Business Plan[1]
I. Introduction
The
foundation of every profitable business is a carefully written business plan.
The process of writing the plan and the final product:
1. Helps
you think through the business, ensures that you have considered all your
options, and that you have identified and anticipated most of the potential
difficulties you think your business will encounter;
2. Convinces
potential lenders and investors that you are in control of your business, that
you can accomplish your goals, that their money will be safe with you, and that
you can and will pay it back on schedule;
3. Serves
as an operating guide as you turn your ideas into a real operating business.
This
guide provides a road map for writing a successful business plan. It identifies
and describes subjects that should be included in your business planning
process. The final product should be
tailored to fit your specific circumstances, your personality, and your
business.
II. What is in a Successful Business
Plan?
1. Cover
Business name, address, and telephone number.
2. Title
Page Repeat the business name, address, and telephone number, and
add the names and addresses of the principal owners. Include the date that the
plan is issued, and type copy number:____ so you can number and control the
copies.
3. Executive
Summary A one- or two-page statement of the business plan
objectives. Address the following
questions and add additional information that will help you achieve your
goals. (It may be best to write the
executive summary last.)
A. What
is the purpose of this plan? Will it be used as:
an
operating guide?
a
financing proposal?
B. Who
are the principals of the company and what proportion of the company does each
of them own?
C. Describe
your company and its products: past, current, and future plans for development
D. What
market(s) do you serve: currently and in the future?
E. What
are your competitive advantages: why are able to serve these markets better
than the competition can?
F. What
is your companys profit potential:
current and in the future?
G. Describe
your management and personnel team:
strengths, capabilities, and experience
H. Why
will this business be successful?
For
a financing proposal add:
I. Who
is requesting the money, and how much is needed?
J. What
will the money be needed for?
K. How
will the money be repaid including a specific repayment schedule?
L. What
collateral will be offered to secure the loan?
M. Why does a loan or an investment in
the company make sense?
leads
to a successful business venture
impact
on local economy
creates
jobs
increases
the tax base for local government
is
an investment in the future of the community
4. Table
of Contents One page showing the major topics and pages on which
they begin.
5. Description
of the Business Answer all of the following questions that are
appropriate to your business:
For new businesses or new enterprises being added to an
existing business you already own/operate:
A. What
business are you in? Or what business are you diversifying into?
type
of business: primarily merchandising,
manufacturing, or service?
what
is the nature of the product(s) or service(s)?
what
will be special or unique about your business?
B. What
market do you intend to serve? How big
is the total market (sales, customers, geographical area), and what is your
expected share of that market?
C. How
can you serve the market better than your competition does?
D. Present
status of business: start-up, expansion of a going concern, or take-over of an
existing business?
E. If
you will be doing any contract work, what are the terms under which the work
will be performed?
F. Have
you established contracts and prices, or other special conditions from your
suppliers?
For
an existing business that you are buying:
G. What
is the history of the business?
H. Why
does the owner wish to sell at this time?
I. If
the business is going down hill, why? How do you plan to turn it around and
make it successful?
J. How
will your management make the business more profitable?
K. What
changes do you plan to make in the business?
L. How
is the purchase price formulated? Give a breakdown for the buildings,
technology, machinery, inventories, and good will.
6. Business Location:
A. What
is your business address and why did you choose that location?
B. Is
a building involved in the business? Will it be rented (leased) or owned by the
business?
C. What
are the terms and length of the lease contract?
D. What
renovations will be needed, how long will they take, and what will they cost?
E. Describe
the neighborhood or area in which the business will be located (e.g., stable,
changing, improving, deteriorating)
F. What
other kinds of businesses are in the same area?
G. How
much can your business expand before you will be forced to move or add on the
present building?
7. Management:
A. What is the business and management
experience of each of the business principal owners?
B. What
education have you and they had, including both formal and informal courses,
which contributes to your managerial abilities?
C. Are
you physically suited for the job?
D. How
much direct operational and/or managerial experience do you have in this
type of business?
E. Describe
the companys organizational structure, including a brief description of what
each manager does. (Include an organizational chart if possible.)
F. List
proposed salaries and wages of management and workers.
8. Personnel:
Write a paragraph or two about your personnel requirements.
A. How
many workers of various types do you anticipated needing?
B. What
skills must your employees have?
C. Can
you use part-time help to meet changing levels of sales and production during
the year?
D. Will
you have to train people? If so, how long will this training take, where can it
be given, and how much will it cost?
9. The
Market: Who needs your product or service, and how do you plan to
reach them?
A. Who
exactly is your market? Describe the age, sex, occupations, lifestyles,
incomes, and other characteristics of the people you hope will become your
customers
B. What
is the present size (sales in litas) and the growth potential of the market?
C. What
percent of the market do you hope to win now and in the future?
D. How
will you attract and keep your customers in this market?
product
quality
price
public
relations, marketing, and advertising
personal
selling
E. What
features or services will you offer that will justify your price?
F. How
will you handle credit sales?
extend
your own credit?
try
to work with a bank or other lending agency?
10. Competition: Briefly describe your
competition and tell how their operations and products are similar to and
different from yours. What is your unique selling proposition, and how will you use this advantage to
capture and hold your share of the market?
11. Financial Data:
A. Statement presenting the sources and
uses of funds in detail.
B. Capital
equipment needs list.
C. Current
balance sheet and operating statement (less than 90 days old).
D. Break-even
analysis.
E. Profit
and loss statement
detail
by month for the first year
detail
by quarter for the second year
notes
providing explanations and assumptions (with justifications)
F. Cash
flow projections
detail
by month for the first year
detail
by quarter for the second year
notes
providing explanations and assumptions (with justifications)
G. Projected
balance sheet by the end of the first year
notes
providing explanations and assumptions (with justifications)
H. For
an existing business being purchased
profit
and loss statements for past three years
balance
sheets and for past three years
cash
flow statements for past three years
12. Insurance: Describe your potential
business risks and tell what insurance coverage you will purchase to protect
the owners and the business.
13. Licenses and Permits:
A. Is
your business name registered with the government?
B. Are
there local zoning or other government regulations which will affect your
business? If so, how will they affect the business, and how will you deal with
these impacts?
C. What
licenses or permits will you be required to obtain before you can begin
operating your business?
14. Supporting Documents:
A. Personal
resumes for all principals of the business
B. Personal
financial statements for all principals
C. Letters
of reference
D. Letters
of intent from prospective suppliers and customers
E. Copies
of all leases, contracts, or agreements, deeds or other legal documents
F. Any
other information that might help your cause or answer potential questions