BUILDING A BUSINESS PLAN

Create a Business Plan as the first step on

your path to success
BUSINESS PLAN
• What?
• Roadmap
• Self-checking tool
• Funding tool
• Operating guide
• Why?
• 1,000,001 questions
• Infinite number of possibilities
• Distractions galore
• How Long?
• 15-20 pages for the narrative,
plus financials/ appendices
10 REASONS WHY YOU NEED A STRONG
BUSINESS PLAN
1. To attract investors.
2. To see if your business ideas will work.
3. To outline each area of the business.
4. To set up milestones.
5. To learn about the market.
6. To secure additional funding or loans.
7. To determine your financial needs.
8. To attract top-level people.
9. To monitor your business.
10. To devise contingency plans.
GENERAL RULES
• Make it an interesting read!
• Bullet points
• Balance creativity while still getting your point across
• Use short (1-3 sentence) paragraphs
• Be careful with using industry jargon

• Write with objectivity

• Consider using the third-person

• Focus more on initial future (1-2 years), less on later years

ASSEMBLING A BUSINESS PLAN
Every Business Plan should include some essential components:
• Overview of the Business: Describes the business, including its
products and services.
• The Marketing Plan: Describes the target market for your product and
explains how you will reach that market.
• The Financial Management Plan: Details the costs associated with
operating your business and explains how you will pay for those costs,
including the amount of financing you may need.
• The Operations and Management Plan: Describes how you will
manage the core processes of your business, including use of human
resources.
SEVEN COMMON PARTS OF A GOOD
BUSINESS PLAN
• Business plans must help investors understand and gain confidence on
how you will meet your customers’ needs.
• Seven common parts of a good Business Plan are:
1. Executive Summary
2. Business Description
3. Market Analysis
4. Management Team
5. Marketing Plan
6. Financial Plan
7. Operations and Management Plan
 COVER SHEET
• Identity information
• The words “Business Plan”
• Business name
• Members of the team
• Company logo
• Address
• Telephone number
• Fax Number
• Email Address
• Web Address (URL)
• Submission date
• Looks vs. content
 PART 1: EXECUTIVE SUMMARY
• Most important part of the plan
• 30-second test
• Concise explanation
• Venture objectives
• Market prospects
• Financial forecasts
• Sources and uses
• WRITTEN LAST
PART 1: EXECUTIVE SUMMARY
• The Executive Summary of a Business Plan is a 3-5 page introduction to your
Business Plan.
• The Executive Summary is critical, because many individuals (including
venture capitalists) only read the summary.
• The Executive Summary section includes:
• First paragraphs that introduces your business.
• Your business name and location.
• A brief explanation of customer needs and your products or services.
• The ways that the product or service meets or exceeds the customer needs.
• An introduction of the team that will execute the Business Plan.
• Subsequent paragraphs that provide key details about your business, including
projected sales and profits, unit sales, profitability, and keys to success.
• Visuals that help the reader see important information, including highlight charts,
market share projections, and customer demand charts.
PART 2: BUSINESS DESCRIPTION
• The business description shows evidence that a product or service is
viable and capable of fulfilling an organization's particular needs.
• The Business Description section:
• Articulates the vision of the company, how you plan to meet the unique
needs of your customer, and how you plan to make money doing that.
• Discusses feasibility studies that you have conducted for your products.
• Discusses diagnostics sessions you had with prospective customers for
your services.
• Captures and highlights the value proposition in your product or service
offerings.
PART 3: MARKET ANALYSIS
• A Market Analysis defines the target market so that you can position
your business to get its share of sales.
• A Market Analysis section:
• Defines your market.
• Segments your customers.
• Projects your market share.
• Positions your products and services.
• Discusses pricing and promotions.
• Identifies communication, sales, and distribution channels.
PART 3 (II): COMPETITION
Rule of Three for Competitive Study
• Why your company is superior
• Trends in competitive companies
• Similar and dissimilar
• SWOT (strengths, weaknesses, opportunities, threats)
• Lessons learned
• Advertising
• Eye on the future
PART 4: MARKETING PLAN
 The Marketing Plan section details what you propose to
accomplish, and is critical in obtaining funding to pursue new
initiatives.
 The Marketing Plan section:
– Explains (from an internal perspective) the impacts and results of past
marketing decisions.
– Explains the external market in which the business is competing.
– Sets goals to direct future marketing efforts.
– Sets clear, realistic, and measurable targets.
– Includes deadlines for meeting those targets.
– Provides a budget for all marketing activities.
– Specifies accountability and measures for all activities.
PART 5: MANAGEMENT TEAM
The Management Team section outlines:
– Organizational Structure: Highlights the hierarchy and outlines responsibilities
and decision-making powers.

– Management Team: Highlights the track record of the company’s managers. You
may also offer details about key employees including qualifications, experiences,
or outstanding skills, which could add a competitive edge to the image of the
business.

– Working Structure: Highlights how your management team will operate within
your defined organizational structure.

– Expertise: Highlights the business expertise of your management and senior

team. You may also include special knowledge of budget control, personnel
management, public relations, and strategic planning.

– Skills Gap: Highlights plans to improve your company’s overall skills or

expertise. In this section, you should discuss opportunities and plans to acquire
new information and knowledge that will add value.

– Personnel Plan: Highlights current and future staffing requirements and related
costs.
PART 6: FINANCIAL PLAN
• The Financial Plan is the most essential part of your Business Plan. It
shows investors the timeframes you have scheduled to make profits.
• Some elements of the Financial Plan include:
• Important Assumptions
• Key Financial Indicators
• Break-even Analysis
• Projected Profit and Loss
• Projected Cash Flow
• Projected Balance Sheet
• Business Ratios
• Long-term Plan
SOURCES & USES OF FUNDS
SOURCES OF FUNDS

INVESTMENT CAPITAL
Cash on Hand
Investment by Founder
Investment by Others
Incentives and Grants

DEBT CAPITAL
Bank Business Loan
Bank Personal Loan
SBA Guaranteed Loan
Other Loans

TOTAL

APPLICATION OF FUNDS
Rent & Security Deposits
Equipment/ Fixtures
Leasehold Improvements
Initial Inventory
Working Capital
Insurance
Professional Fees
Advertising
Signage
Contingency Reserve

TOTAL
CASH FLOW PROJECTION Year One
Month 1 2 3 4 5 6 7 8 9 10 11 12 Total
Cash In-Flows
Sales
Other Income

Total In-Flows

Cash Out-Flows
Cost of Goods Sold
Rent/ Mortgage
Owner's Salary
Other Salaries
Advertising/ Promotion
Utilities
Loan Payments (current)
Loan Payments (previous)
Telephone
Office Expense
Dues/ Subscriptions
Accounting
Insurance
Professional Fees
Internet
Repairs/ Maintenance
Licenses/ Permits
Travel/ Entertainment
Legal Fees
Bank Charges
Miscellaneous

Total Out-Flows

Beginning Cash Balance

Ending Cash Balance

Pro-Forma Income Statement
Year 1 2 3

Sales
Less: Cost of Goods Sold

Gross Profit

Operating Expenses
Rent/ Mortgage
Owner's Salary
Other Salaries
Payroll Taxes
Advertising & Promotion
Telephone
Office Expense
Dues and Subscriptions
Accounting
Insurance
Professional Fees
Internet
Repairs & Maintenance
Licenses & Permits
Travel & Entertainment
Legal Fees
Bank Charges
Miscellaneous
Depreciation
Amortization
Interest

Total Operating Expenses

Net Profit Before Taxes

Pro-Forma Balance Sheet
(Opening Day of Business)

CURRENT ASSETS
Cash
Accounts Receivable
Inventories
Prepaid Expenses
Other Current Assets

TOTAL CURRENT ASSETS

FIXED ASSETS
Land
Leasehold Improvements
Equipment
Vehicles
Other Fixed Assets

Subtotal Fixed Assets

Less: Accumulated Depreciation

TOTAL FIXED ASSETS

TOTAL ASSETS

CURRENT LIABILITIES
Accounts Payable
Short-Term Debt
Accrued Expenses
Other Current Liabilities

TOTAL CURRENT LIABILITIES

LONG-TERM DEBT

OWNER'S EQUITY
Paid-In Capital
Retained Earnings

TOTAL OWNER'S EQUITY

TOTAL LIABILITIES & OWNER'S EQUITY

PART 7: OPERATIONS AND MANAGEMENT
• The Operations and Management section outlines how your company
will operate.
• The Operations and Management section includes:
• Organizational structure of the company. Provides a basis for
projected operating expenses and financial statements. Because these
statements are heavily scrutinized by investors, the organizational
structure has to be well-defined and realistic within the parameters of the
business.
• Expense and capital requirements to support the organizational
structure. Provides a basis to identify personnel expenses, overhead
expenses, and costs of products/services sold. These expenses/costs can
then be matched with capital requirements.
APPENDICES
• Supplemental materials
• Resumes of management team
• Current bank statements if any
• Copies of existing loans or notes if any
• Interim income statement and balance sheet
• Copies of legal documents
• Copies of potential contracts
• Letters of reference