Plan a Business
Create a Business Plan
Executive Summary|Business Description|Management & Organization|Operational Plan|Marketing Plan & Analysis|Personal Finance|Startup Expense & Capitalization|Financial Plan|Appendix or Supporting Documents|Resources
1. Executive Summary
This section should be written last and no longer than two pages. What's included can differ based on the stage of your business, but provide anything that you would in a five-minute interview, including:
- Mission Statement
- Company Information
- Growth Highlights
- Product/Service Description
- Financial Information
- Summarized Future Plans
2. Business Description
This section provides a high-level overview of the different elements of your business. Similar to an extended elevator pitch, it can help readers (and potential investors) quickly understand the goal of your business and its unique proposition.
Things to consider:
- Describe the nature of your business and list the marketplace needs that you are trying to satisfy.
- What business will you be in? What will you do?
- Explain how your products and services meet these needs.
- List the specific consumers, organizations, or businesses that your company serves or will serve.
- Explain the competitive advantages that you believe that will make your business a success, such as your location, expert personnel, efficient operations, or ability to bring value to your customers.
- What goals or objective have you set for your company?
- What form of ownership will your business be? Why?
3. Management & Organization
- If you’ll have more than 10 employees, create an organizational chart showing the management hierarchy and who is responsible for key functions. This will prove that you're leaving nothing to chance, you've thought out exactly who is doing what, and there is someone in charge of every function of your company.
- Include position descriptions for key employees. If you are seeking loans or investors, include resumes of owners and key employees.
- What kind of salary and benefits package do you have for your people? What incentives are you offering? How about promotions? Reassure your reader that the people you have on staff are more than just names on a letterhead.
- List your professional or advisory support team, including:
- Board of Directors
- Management advisory board
- Insurance Agent
- Mentors and key advisors
4. Operational Plan
- Explain the daily operation of the business, its location, equipment, people, processes, and the surrounding environment.
- How and where are your products or services produced?
- What is your method for:
- Production techniques and costs
- Quality control
- Customer Service
- Inventory Control
- Product Development
- What qualities do you need in a location? Describe the type of location you’ll have.
- Is it important that your location is convenient to transportation or to suppliers? Do you need easy walk‐in access? What are your requirements for parking and proximity to freeway, airports, railroads, and shipping centers?
5. Marketing Plan & Analysis
No matter how good your product and your service, the venture cannot succeed without effective marketing. And this begins with careful, systematic research. Do not assume you already know about your intended market.
- There are two kinds of market research:
- Primary - means gathering your own data. For example, you could do your own traffic count at a proposed location, use the yellow pages to identify competitors and do surveys or focus‐group interviews to learn about consumer preferences.
- Secondary - means using published information such as industry profiles, trade journals, newspapers, magazines, census data, and demographic profiles. This type of information is available in public libraries, industry associations, chambers of commerce, from vendors who sell to your industry, and from government agencies.
- Also include information on your:
- Marketing & Promotion Strategy
- Promotional Budget
- Pricing Strategy
- Proposed Location
- Distribution Channels
- In your marketing plan, be as specific as possible; give statistics, numbers, and sources. The marketing plan will be the basis, later on, of the all‐important sales projection.
6. Personal Finance
Include personal financial statements for each owner and major stockholder, showing assets and liabilities held outside the business and personal net worth. (Owners will often have to draw on personal assets to finance the business, and these statements will show what is available. Bankers and investors usually want this information as well.)
7. Startup Expenses & Capitalization
You will have many startup expenses before you even begin operating your business. It’s important to estimate these expenses accurately and then to plan where you will get sufficient capital. It may be useful to add a separate line item to your budget, called contingencies, to account for those unforeseeable expenses.
Talk to others who have started similar businesses to get a good idea of how much to allow for contingencies. If you cannot get good information, we recommend a rule of thumb that contingencies should equal at least 20 percent of the total of all other start‐up expenses.
8. Financial Plan
The financial plan consists of a 12‐month profit and loss projection, a four‐year profit and loss projection (optional), a cash‐flow projection, a projected balance sheet, and a break‐even calculation. Together they constitute a reasonable estimate of your companyʹs financial future. More important, the process of thinking through the financial plan will improve your insight into the inner financial workings of your company.
9. Appendix of Supporting Documents
The Appendix should be provided to readers on an as-needed basis. In other words, it should not be included with the main body of your business plan. Your plan is your communication tool; as such, it will be seen by a lot of people. Some of the information in the business section you will not want everyone to see, but specific individuals (such as creditors) may want access to this information to make lending decisions. Therefore, it is important to have the appendix within easy reach.
The appendix would include:
- Credit history (personal & business)
- Resumes of key managers
- Product pictures
- Letters of reference
- Details of market studies
- Relevant magazine articles or book references
- Licenses, permits or patents
- Legal documents
- Copies of leases
- Building permits
- List of business consultants, including attorney and accountant
Any copies of your business plan should be controlled; keep a distribution record. This will allow you to update and maintain your business plan on an as-needed basis. Remember, too, that you should include a private placement disclaimer with your business plan if you plan to use it to raise capital.
Find additional business plan guides and resources below:
Do you need additional advice or guidance? These organizations may be able to assist you: