Sections included in a business plan.
What is the single most important piece of starting a small business? The one thing you need to make sure you have done correctly! Writing a business plan is too often left until the last minute, done without proper research, or turned in incomplete, and single-handedly the reason financial institutions turn down most business applications.
When done correctly a business plan can do so much more than secure financing. It forces people to take a look at their strengths and weaknesses. While this is great for allowing them the opportunities to promote those strengths and develop ways to overcome the weaknesses, it may also force them to face the fact that their business is not a viable option. For many people caught up in the passion and excitement of their ‘great’ idea the negatives fail to register. Having to physically put information down on paper in a logical manner allows them to consider all of the variables. This is called proving feasibility. Realizing a business is probably not a viable option before proceeding is much better than blindly going along and reaching that same conclusion after investing your life savings. Another little realized purpose to the business plan is to provide direction. It is like a map into the future, including alternative routes.
While every business plan is different, each one tailored to an individual business/owner some things are consistent. Here is a short overview of the most often included areas:
A cover page that looks neat and orderly and gives a hint of what is to come gives that all important first impression.
A Table of Contents makes the business plan easy to read. A quick look can send the reader to exactly the page he needs.
An executive summary may be all the reader reads; therefore it becomes the most important section of the whole plan. It has to interest the reader enough to encourage them to read further.
Company Information includes things like a history, the legal business form, and reason for establishment.
The Environmental and Industry Analysis is the section where the attention to research and detail shows. Does the business fit recent trends? Are there any legal or political issues that may affect the business? Is the industry in demand of what your business will offer?
What Products and Services is the business going to provide? Here is where you describe how the business will stand apart. Is there the potential for growth?
Market Research is another area where details are important. Target markets, market trends and the competition need to be identified. Developing a marketing plan that includes the pricing, promotion, and placing takes some time.
Manufacturing and/or Operations plans outlines needs in production. Location, facilities, and labor force needs must be addressed.
Who is the Management Team? A look at knowledge and skills required, compensation, training required helps get a business off to a great start.
Timelines are important because lenders want to know when you will be able to pay them back.
Are there Critical Risks that could hurt the business? What are they? How will the business handle them?
Exit Strategies are often over looked in a business plan. Lenders want to know if the business has potential beyond the original owners time invested, especially if the capital hasn’t all been repaid in that time.
Financial Plans show the numbers. Usually including three years worth of projections the following statements need to be included: Sources and uses of capitol, cash-flow projections, balance sheets, profit-and-loss statements, and a breakeven analysis.
Include an Appendix of supplemental information such as resumes brochures, advertising samples, website information, etc.
While gathering all this information is a big task, prospective business owners shouldn’t let a business plan intimidate them. Numerous templates and samples can be found online. Assistance is available through the Small Business Association, often through your local extension service, and community colleges. If taking the class isn’t an option buying the textbook is.
If you have an entrepreneur spirit, a great business idea, and a passion for the idea, do not let a poor business plan or no business plan put you out of business before you even start.