What you need in your business plan
Monday, March 29, 1999
Here is a sample of what a typical business plan should include:
- Use the first few pages of your business plan to summarize what your company is all about, your goals, objectives and your mission. For example, if your business is a clothing retailer, are you establishing an upscale boutique or a children's apparel store? Articulate what you hope to accomplish. Are you looking to be a fashion trend setter? Will you provide low-priced functional clothing for kids as a counterpoint to more expensive stores? If you are planning to borrow money, include the amount you will be seeking.
- Provide basic information on your company's ownership, history, location, products, services and key strengths.
Products and Services
- Provide even more detailed information on products or services, including prices, quality, unique characteristics and your major competitors.
- Analyze the industry in which you are competing. If it's the restaurant industry, research dining trends and your target customers. Are people eating out more? Are they looking for convenience and fast service? Is your targeted customer interested in ethnic cuisines? Identify your customers and competitors.
- Explain how you plan to differentiate your company from your competitors.
- Explain your strategy when it comes to price, advertising and distribution to customers. Why would customers be loyal to your product or service?
- Include a detailed sales forecast. For example, include a detailed estimate of sales, by department within the company on a month-by-month basis for the coming year.
- Detail how your company's products are produced and checked for quality.
- Decide whether you will sell products on credit. Include your collection policies, such as bill-payment deadlines.
- List major suppliers and licensing, bonding, permitting and other legal requirements.
- Include the resumes of key managers, descriptions of their positions and a breakdown of your work force by department.
- Detail how much you plan to pay employees and other advisers important to the company.
Start-Up Expenses and Working Capital
- Include sources of funding, as well a description of expenses divided into such categories as real estate, capital equipment, administrative expenses, advertising, working capital and other major areas.
- If you own an existing business, include financial statements for at least the previous three years.
- If yours is a start-up business, include an analysis of when and how your company will break even. What are your monthly costs, and how will you need to sell to cover those expenses?
- Include a year-end forecast for your company's assets, liabilities and the difference between the two: your equity. If the business is just starting up, the balance sheet should be the snapshot of the company on its opening day.
- Include a 12-month projection that details how your company will make a profit or loss.
- Break down monthly sales into specific categories such as how much each department or product will bring in.
- Include monthly estimates of how much you will spend to make each product and how much you expect to spend on nonmanufacturing costs such as rent.
- Include a cash-flow projection that estimates how much cash you might generate through sales each month vs. how much you will spend. This is a key indicator of whether or not your company will have enough cash on hand to stay in business.