Business plans are good for entrepreneurs starting a business who want to attract funding and established firms looking to expand into a new venture or grow their business. A business plan is a road map to the success of a business, many businesses fail every year because of improper planning. A good business plan eliminates this dilemma.
Purpose: The purpose of a business plan is to help determine the course of the business; where it should be in the future and where to place the resources in order to achieve that goal. It is a document that provides future lenders and investors with proof of the entrepreneurs’ credibility. Thus, making them better candidates for funding.
Length: A Business plan wording and formatting should be straight forward and simple. The business plan should not be more than 40 pages. Summary tables and business charts should be used to make the numbers easy to read and grasp. No more than two fonts should be used. Font size should be at least 11 or 12 point size. Page breaks should be used to separate pages and charts.
Objectives: The main objective of a business plan is to establish revenue projections for the business and provide details on how the business will acquire the revenue.
BUSINESS PLAN FORMAT
A) Executive Summary
This is the first section of a business plan. This section is a brief overall summary of the business. It will define the nature of the business. The executive summary should be the last thing written. Once the rest of the components of a business plan have be written, entrepreneurs will have a clearer sense of what to write as their executive summary. The executive summary contains the following:
Mission Statement- This is where the business plan states how the customer will benefit from what the business has to offer. The business plan needs to state what products and services the company will be providing.
Objective – This is what entrepreneurs expect the business to accomplish, basically setting goals for the company.
B) Company Description
In this section, the business plan will go over a detail description of the business. The company description section contains the following:
Ownership – What type of ownership will the company be: sole proprietary, partnership, or corporation.
Location – This states where the business will be located. Office’s, retail shop and any other type of facility that is associated with the business should be mentioned. A website address should be listed if the business has one.
Product & Services – What will the business be providing, will it be a service or a product?
Funding – This is where it is stated how the small business will get funded. Funding is broken down into two parts, start-up expenses and start-up assets. Start-up expenses is legal bills, renovation and leased equipment. Start-up Assets are items that the business owners will be using for the business operation. For example, cash, purchased equipment and inventory.
C) Management & Operation Plan
This section of the business plan details how the business will function on a day to day basis. It contains the following:
Management – This will be a list of the personnel that will have a managerial position and the definition of their role in the business.
Operation – This describe the process that it takes for the business to deliver the products or services to the consumer.
D) Marketing Plan
It details the small business effort’s to sell the products or services to the customer base. A marketing plan will contain a list of the following items:
Industry – This lists all the players in the market; the competition, the type of products and service that they have, the strengths that they have and how they attract customers.
Potential customers – This section provides information about the individuals who will be purchasing from the business. The customer demographics will be based on the industry of the company.
Advertising- It involves promoting the products or services to the customer base. It lists the different ways in which the business will do this. For example, newspaper, radio, television, magazines, direct mail, Internet or telemarketing.
E) Finance Plan
Cash is the lifeline of a business. Without it, the business will be in jeopardy. This section will contain the following items:
Profit and Loss statement – A statement that lists the business’ estimated revenue and expenses over a specific period of time.
Balance sheet – Measures the business resources (assets) and obligation (liabilities) and projected balance sheets for the first three years. The first year projections will be on a monthly basis and the second and third year projections are on a quarterly basis.
Cash-flow projections – The amount of cash that passes through the business. It lists income and expenses. Cash flow pays the bills.