Business plan format
Every business should have a business plan. Follow this simple format when writing one for your business.
FORMAT
If the business plan is just for you, it won’t matter what it looks like. But lenders and investors will expect this general outline:
Title Page
Executive Summary
Table of Contents
The Business
Marketing
Financial Analysis
Operations
Supporting Documents
Title Page
Also called the cover sheet, this page looks like the title page of a book: name of company, address, telephone number and web site; names, titles and contact information for owners and officers; date the plan was prepared; who prepared it. Some entrepreneurs number each copy of the business plan to control external circulation of proprietary information.
Executive Summary
Although placed first in the plan, this page is written last and pulls everything together. It summaries what the business does, where it’s heading, how it will get there and why it will succeed. If the plan is part of fund-raising, this summary tells how you’ll use the money so that an investor’s equity will grow or a lender’s money will be repaid.
Some plans include a mission statement in the executive summary, others put it on a page by itself.
Table of Contents
Again, like a book, this page is especially useful for mentors or potential investors to find exactly the information they want to know. Professional investors usually have a section on which they rely most heavily. One with a financial background will want to read the assumptions and profit-and-loss statements first. A marketing expert will turn to market analysis first.
The Business
Give a detailed description of the business and its goals including:
- ownership and legal structure.- necessary tasks and who (including outside advisors or contract labor) will do each,- skills and experience top officers or partners bring to the business. (Their resumes should be included in Supporting Documents.) - advantages over your competitors.- why the company will be successful and how it will protect against such dangers as theft of intellectual property.- business location and hours of operation.- distribution methods of products or services. Marketing
Describe the products or services this business will offer. Identify the customer demand for these products or services. Detail the size and location of the most likely customers and any secondary markets. Explain how the company will attract and increase market share. Describe advertising and marketing. Clarify pricing strategy.
Financial Analysis
Describe the sources and amount of your initial capital. Project monthly operating budget (income and expenses) for the first year. How does a start-up know what profits and sales will be? Public library reference sections have books that provide income statements and financial ratios by industry. One is RMA (Risk Management Association, formerly Robert Morris & Associates), which is also available for purchase online at www.rmahq.org. Bankers use this resource when evaluating the business plans of potential borrowers.
State the break-even point, expected return on investment and monthly cash flow for the first year. Include projected balance sheet of assets and liabilities. Address contingency plans if unexpected problems develop. Many experienced entrepreneurs give optimistic, expected and worst-case scenario budgets.
Name the person who will keep the company’s accounting records and how they will be kept.
Include personal finance statements of owners and how each will be compensated. (Some plans place these statements in Supporting Documents.)
Operations
Explain how the business will be managed day to day. Discuss hiring and personnel procedures. List the insurance, lease or rent agreements, but put copies of the actual documents in the next section. List the equipment necessary to produce your products or services. Describe production and delivery of products and services.
Supporting Documents
This section should contain details of the previous sections, such as partnership agreement or articles of incorporation; pro forma profit and loss statements; copies of leases for building, office, shop, equipment etc.; copies of business license and other legal documents.
