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Business Plan

Business Plan

A business plan defines your business goals and serves as a written road map for the businessperson to determine where the company is, where it wants to be and how it plans to get there. A comprehensive, thoughtful business plan can be essential in obtaining outside funding, credit from suppliers, finance marketing for your business, management of your operation and achievement of your goals and objectives. The information outlined below provides basic guidelines for the preparation of a Business Plan. The guidelines are very general and should be adapted to meet the specific circumstances of the business.

Executive Summary

The Executive Summary is often considered to be the most important component of the business plan. For the firm seeking financing, the summary should convince the lender or venture capitalist that it is a worthwhile investment. The summary should briefly cover at least the following:

  • Name of the business
  • Business location
  • Discussion of the product market and competition
  • Expertise of the management team
  • Summary of financial projections
  • Amount of financial assistance requested (if applicable)
  • Form of and purpose for the financial assistance (if applicable)
  • Purpose for undertaking the project (if financial assistance is sought)
  • Business goals

Business Description

This section provides background information on the company and usually includes a general description of the business, including:

  • Product or service
  • Historical development of the business
  • Name, date and place (state) of formation
  • Business structure (Sole Proprietorship, Partnership, Corporation, etc.)
  • Significant changes in ownership, structure, new products or lines, acquisitions with corresponding dates
  • Subsidiaries and degree of ownership, including minority interests
  • Principals and the roles they played in the formation of the company

Products or Services

Describe the present or planned product or service lines, including:

  • Relative importance of each product or service including sales projections
  • Product evaluation (use, quality, performance)
  • Comparison to competitors’ products or services and competitive advantages over other producers
  • Demand for product or service and factors affecting demand other than price
  • Project Financing
  • If financing is sought for a specific project, it must include the following:
  • Complete list of all items required to begin the business, undertake the expansion, buy or sell the business and associated costs
  • Written explanation of all operating costs
  • Owner’s financial requirements, including taxes

Project Financing

If financing is sought for a specific project, it must include the following:

  • Complete list of all items required to begin the business, undertake the expansion, buy or sell the business and associated costs.
  • Written explanation of all operating costs
  • Owner’s financial requirements, including taxes


  • Organizational chart with key individuals (include supervisory personnel with special value to the organization)
  • Responsibilities of key individuals
  • Personal resumes (describing skills and experience as they relate to activities of the business)
  • Present salaries (include other compensation such as stock options and bonuses)
  • Additional number of employees at year end, total payroll expenses for each of the previous five years (if applicable) broken down by wages and benefits
  • Methods of compensation
  • Departmental/divisional breakdown of workforce
  • Planned staff additions


  • Names, addresses and business affiliations of principal holders of subject’s common stock and other types of equity securities (include details on holdings)
  • Degree to which principal holders are involved in management
  • Principal non-management holders
  • Names of board of directors, areas of expertise and role of the board when business is operational
  • Amount of stock currently authorized and issued
  • Marketing strategy/market analysis
  • Current situation of industry
  • Industry outlook
  • Principal markets (commercial/industrial, consumer, government and international)
  • Current industry size and anticipated growth in the next ten years (explain sources of projections)
  • Major characteristics of the industry
  • Effects of major social, economic, technological or regulatory trends on the industry

Description of Major Customers

  • Names, locations, products or services sold to each
  • Percentage of annual sales volume for each customer over previous five years (if applicable)
  • Duration and condition of contracts in place

Description of Market

  • Principal market participants and their performance
  • Target market
  • Customer requirements and ways for filling those requirements
  • Buying habits of customers and impact on customers using the product or service

Description of Competition

Describe the companies with which the business competes and how the business compares with these companies. This section is a more detailed narrative than that contained in the description of the product or service above.

Description of Prospective Customers

  • Incorporate reaction to the firm and any of its products or services that have been seen or tested, including:
  • Description of firm’s marketing activities
  • Overall marketing strategy
  • Pricing policy
  • Methods of selling, distributing and servicing the product
  • Geographic penetration, field/product support, advertising, public relations, promotion and priorities among these activities

Description of Selling Activities

Include the method for identifying prospective customers and the method you will use to contact the relevant decision makers. Describe your sales effort by defining sales channels and terms, number of salespersons, number of sales contacts, anticipated time, initial order size, estimated sales and market share.


Describe technical status of the product (idea stage, development stage, prototype) and the relevant activities, milestones and other steps necessary to bring the product into production including:

  • Present patent or copyright position (if applicable), include how much is patented and how much can be patented (how comprehensive and effective the patents or copyrights will be). Include a list of patents, copyrights, licenses or statements of proprietary interest in the product or product line
  • Describe new technologies that may become practical in the next five years that may affect the product
  • Describe new products (derived from initial products) the firm plans to develop to meet changing needs
  • Describe regulatory or approval requirements and status, and discuss any other technical and legal considerations that may be relevant to the technological development of the product
  • Describe research and development efforts both current and future
  • Describe production/operating plan

Explain how the firm will perform production and/or delivery of service. Describe in terms of:

  • Physical facilities: owned or leased, size and location, expansion capabilities and types and quantities of equipment needed (include a facilities plan and description of planned capital improvements and timetable for those improvements)
  • Suppliers: name and location, length of lead time required, usual terms of purchase, contracts (amounts, duration and conditions) and subcontractors
  • Labor supply (current and planned): number of employees, unionization, stability (seasonal or cyclical) and fringe benefits
  • Technologies/skills required to develop and manufacture products
  • Cost breakdown for materials, labor and manufacturing overhead for each product, plus cost versus volume curves for each product or service

Manufacturing Process

  • Describe production or operating advantages of the firm; discuss whether they are expected to continue
  • Specify standard product costs at different volume levels
  • Present a schedule of work for the next one to two years

Financial Information

  • Auditor: name, address
  • Legal counsel: name, address
  • Banker: name, location and contact officer
  • Controls: cost system used and budgets used
  • Describe cash requirements, now and over next five years, as well as how these funds will be used
  • Amount to be raised from both debt and equity
  • Plans to “go public”—relate this to future value and liquidity of investments
  • Financial statements and projections for next five years
  • Profit and loss or income statements, by month until break even and then by quarter
  • Balance sheets as of the end of each year
  • Cash budgets and cash flow projections
  • Capital budgets for equipment and other capital acquisitions
  • Manufacturing/shipping plan

If financing is sought, most lenders and venture capitalists will require:

  • A funding request indicating the desired financing, capitalization, use of funds and future financing
  • Financial statements for the past three years, if applicable
  • Current financial statements
  • Monthly cash flow financial projection, including the proposed financing for two years
  • Projected balance sheets, income statement and statement of changes in financial position for two years, including the proposed financing

Description of Competition

Describe the companies with which the business competes and how the business compares with these companies. This section is a more detailed narrative than that contained in the description of the product or service above.

Site Selection

The physical location of a business is key. When determining the site for a particular business, identify those factors that are most important to that business, including both current and future needs. The determining factors involved with site selection may vary depending on the type of business. A manufacturing business may choose a site based on proximity to customers and suppliers, a good transportation network, available labor and access to utilities. On the other hand, a retail business will place greater emphasis on access to customers, parking and visibility. In some cases, it may be appropriate to start the business in the home. When starting a home-based business, the city or county clerk’s office should be contacted to determine what local licenses and zoning requirements are needed. Be sure to ask both the city and county about taxes, fees and any specific requirements that might affect the proposed business. Also check with the local fire department regarding fire safety regulations. Listed below are some criteria to consider.

Criteria for a Manufacturing, Warehousing, Industrial Business:

  • Allow for future expansion
  • Convenient for employees
  • Accessibility
  • Available labor force
  • Appropriate utilities
  • Convenient to freight and express delivery systems

Criteria for a Retail Business:

  • Select the appropriate type of center (mall, strip, mini)
  • Review demographic data to gain information about the neighborhood/location
  • Walk and talk the area. Talk to customers, employees and owners of businesses located nearby
  • Ask for a traffic count from the local traffic department
  • Visibility and signage
  • Accessibility/convenient parking for your customers
  • Know where your competitors are located, what they are doing and how they are doing it
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