Elements of a Business Plan

1. Cover sheet
   
2. Executive summary (statement of the business purpose)
   
3. Table of contents
   
4. Body of the document
   
   1. Business
      
      1. Description of business
         
      2. Marketing
         
      3. Competition
         
      4. Operating procedures
         
      5. Personnel
         
      6. Business insurance
         
   2. Financial data
      
      1. Loan applications
         
      2. Capital equipment and supply list
         
      3. Balance sheet
         
      4. Breakeven analysis
         
      5. Profit and loss statements
         
      6. Three-year summary
         
      7. Detail by month, first year
         
      8. Detail by quarters, second and third year
         
      9. Assumptions upon which projections were based
         
      10. Pro-forma cash flow
          
   3. Supporting documents
      
      1. Tax returns of principals (partners in the business) for last three years, personal financial statements (all banks have these forms)
         
      2. Copy of franchise contract and all supporting documents provided by the franchisor (for franchise businesses)
         
      3. Copy of proposed lease or purchase agreement for building space
         
      4. Copy of licenses and other legal documents
         
      5. Copy of resumes of all principals
         
      6. Copies of letters of intent from suppliers, etc
      
      
       
      Writing a business plan can be an overwhelming task. These feelings often translate into immobilization or confusion as to how to start the business plan. Starting a business plan begins with the first step:
      
      

      1. Audience & Funding Type:

      When writing a business plan, you must determine who will be reading it. This decision will shape the business plan. Do you plan to go for debt or equity financing? Each form of funding for your business has pros and cons. For instance, the venture capital market can be very time consuming and competitive. Do you have the time to write the business plan for investor funding and to network within the community? Writing a business plan for investors is 15-30 pages with in-depth analysis and full details of facts and figures to support assumptions of the market. Writing a business plan for the bank is 10-15 pages and focused with the bank's concern with risk. A venture plan presents the upside and potential return on investments, whereas a bank plan reduces the risks and sells the ability to repay the loan.
      

      2. Business Plan Outline:

      A business plan outline is the second most important starting point once you've pre-determined your audience. The business plan outline should be prepared before the actual research and writing of the business plan.

      3. Research & Information Collection:

      Once you have made the decision of the type of funding your business requires, it is time for the research. Business plan research covers several key areas:
   4. Insight from your experience working and observing the industry you will enter. This data will have to be backed but by the next two sources.
   5. Published information from library, Internet, and paid database services will provide information on the market growth, overall industry perspective, and customer profiles.
   6. Field research covers interviews with customers, suppliers, competitors, and industry experts. This provides the real insight behind all the published facts.

   4. Collection Files:

   The easiest way to go about collecting all your experiences, interviews, and research is to create files for each section of the business plan. These files can be: paper-based, computer files or set-up using business planning software. As you start the research and collection phase of planning, fill your files with notes and printouts.
   

   5. General Industry Overview:

   Begin the research process with an overview of the industry; uncovering industry and association reports. By having a general understanding of the industry, you will avoid embarrassment in contacting experts with basic questions. Begin the field research once you have a good grasp of the industry fundamentals and need answers to the hard-to-find information.
   

   6. Analysis:

   Once the bulk of the data has been collected, the process of analysis begins. Look at building a competitive profile, contingency plan, risk assessment, etc.

   7. Financials:

   Start the financials when you have found some average industry ratios for your business. Work closely with your accountant to develop realistic projections. Being overly optimistic will raise eyebrows with your investors or banker.

   8. Executive Summary:

   Save the first section for last. When you have thoroughly, completed all sections of the business plan, write the summary. Highlight the key points and include the return on investment or loan payback requirements.
   

   9. Review & Editing:

   Remember, you only have one shot at making a good impression. A well-written business plan that opens doors and wins the money is a plan that has been revised and reviewed. Do not forget this important step. Ask others for feedback. Make certain to edit, proofread, proofread, and proofread. Business planning is not easy but by following these critical steps to writing a business plan, you will ensure your business has a chance at funding and success in the future.
   
   
   A business plan outline is the second most important starting point once you've pre-determined your audience. The business plan outline should be prepared before the actual research and writing of the business plan. Once your outline has been set; organize your research files around the layout of your plan.
   Every business plan follows a generic outline but not every business plan is the same. Business plan outlines differ on 2 factors:
   1. Type of Business: Details of critical success factors for businesses in your industry must be included in the plan. Technology companies will discuss R & D, intellectual property, and time to market. A retailer will feature pricing methods, inventory control, merchandising and location. Ensure that your plan is complete by addressing factors important to your industry.
   2. Type of Audience: A banker business plan will be different from an investor plan. Bankers like to see risk assessment and planning, loan amounts, repayment terms and collateral. Investors want a return on investment, an exit strategy, and planned growth with the funds.
   Business Plan Outline General
   Executive Summary: overview of most important points of business plan and selling your business.
   Company Description: mission statement, company overview, industry briefing, corporate history, legal structure.
   Products & Services: description, R & D, pricing, delivery, production.
   Marketing & Sales: market definition, customer profile, competitive & SWOT analysis, strategy, sales & promotion.
   Operations: Legal & government issues, staffing, suppliers, alliances, policies, risk assessment, facilities, location, insurance, milestones.
   Management: key job descriptions, responsibilities, management team, organizational chart, advisors.
   Financials: Profit & loss, cash flow, balance sheet, financing, debt schedule, use of funds and assumptions, break-even analysis.
   Business Plan Outline Extras
   The extras are what takes a plan from 10 pages to 20 pages. More in-depth and detailed for higher levels of funding and a greater complexity of investors. No real need for extras if your plan does not require it. Here's a brief description of some of the extras that can be added to your business plan outline:
   
5. SWOT Analysis: As part of your competitor profile, adding a Strengths, Weaknesses, Opportunities and Threats analysis can show your investors you understand the competitive landscape and your business can operate within that environment.
6. Porter's Five Forces: Michael Porter's 5 forces framework is a standard business tool used by companies to evaluate an industry's key forces. This is an important extra to add to your business plan outline especially if you are a start-up or an existing business entering a new market.
7. Glossary: If your business plan audience is not well-versed in your industry jargon, a glossary adds value to your overall plan. If you are writing a biotech business plan on gene therapy agents, determine the level of knowledge your target audience has on the subject.
8. Publishing Value-Adds: These are simply publication elements to improve the readability and presentation of your plan. This can include: a cover page with logos, graphics, charts, and table of contents.

Your business plan will require an appendix following the financials for all supporting documents. This acts as a great reference area to back up your assumptions and provide added credibility to the plan. The appendix is not part of the plan but an addition. Therefore, a 10 page business plan will be 10 pages plus the cover, table of contents, and appendix.
What to Put in Your Business Plan Appendix?

• legal documents
• market studies
• resumes
• customer testimonies
• photographs & maps
• distributor/supplier list
• articles
• owner's personal financial statements
• tax statements
• advertising materials & brochures
• credit reports
• character references
• equipment list
• glossary
• reference section/bibliography

 Boy do I have some work to do.