A Business Plan helps you evaluate the feasibility of a new business idea in an objective, critical, and unemotional way.
• Marketing – Is there a market? How much can you sell?
• Management – Does the management team have the skill?
• Financial – Can the business make a profit?
It provides an operating plan to assist you in running the business and improves your probability of success.
• Identify opportunities and avoid mistakes
• Develop production, administrative, and marketing plans
• Create budgets and projections to show financial outcomes
It communicates your idea to others, serves as a “selling tool,” and provides the basis for your financing proposal.
• Determine the amount and type of financing needed
• Forecast profitability and investor return on investment
• Forecast cash flow, show liquidity and ability to repay debt
Who will use the plan?
If you won't use the plan to raise money, your plan will be internal and may be less formal. If you are presenting it to outsiders as a financing proposal, presentation quality and thorough financial analysis are very important.
Writing a Business Plan will probably take a lot of time. Up to 100 hours or more is not uncommon for a new business that requires a lot of research. A typical plan will have three sections
. Section one is a written section describing Management and Marketing aspects of the business.
Section Two includes financial projections.
Section Three is supplemental information.
A short (3-5 pages) Executive Summary is often added at the beginning of more complex business plans.
•Section One should be thorough, but concise and to-the-point. Use headlines, graphs and "bullets" to improve readability. Length of this section is usually 10 - 20 pages.
•Section Two describes in numbers the outcome of your business strategies and plans. Your financial projections should be based on facts and research, not “wild guesses.” Be prepared to justify your numbers.
•Section Three contains supporting information to reinforce the first two sections. This section’s contents will vary with your type of business. Owners should be very involved in the planning process. Hiring someone to do it or delegating it to someone who is not a key member of the company will result in an inferior plan.
No plan (or a poor plan) is a leading cause of business failure. You can improve your chances of success with a good Business Plan.
Business Plan Outline
Cover Sheet: Business Name, Address, Phone Number, Principals
Executive Summary or Statement of Purpose
Table of Contents
Section One: The Business
A. Description of Business
C. Market Analysis
D. Marketing Plan
G. Management and Operations
I. Application and Effect of Loan or Investment
Section Two: Financial Data
A. Projected Financial Statements
Cash Flow Statements
Assumptions to Projected Financial Statements
B. Break Even Analysis
C. Sources and Uses of Funds
Section Three: Supporting Documents Historical financial statements, tax returns, resumes, reference letters, personal financial statements, facilities diagrams, letters of intent, purchase orders, contracts, etc.
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