As I have stated in a previous blog, my opinion is that the owner of any business, along with the employees, should develop an annual business plan. Another one of my blogs explains that in most cases, if you are applying for a loan, you will need to present a business plan to the banker.
Completing a business plan can seem overwhelming. I have many clients who tell me the operations of the business are in their head and yet cannot develop a logical, cohesive formula to put on paper. More often than not, unless you purchase a business plan template, you are going to be overwhelmed by the sources of business plan outlines on the web. All of them are good because like every business, each business plan is unique. There is no right or wrong way to do a business plan. There is no “standard” length of a business plan. But all plans should contain the same basic information.
Here is an outline that I find most useful and one that I hope can help you. Please understand that it can be used for about any business in any industry. However, you should tailor it to your needs. For instance, if you are a start up, the plan does not need a section for Age, Size, and Past Performance. Here are some useful hints:
- Include a Table of Contents.
- Number the pages.
- Write for your audience. If the plan is going to a loan officer assume the person knows nothing about your industry. Do not use technical language or if you must, explain it. Do not use industry acronyms unless they are spelled out the first time you use them in the plan.
- In the Executive Summary the plan should state what the purpose of the plan is. Is it for a SBA loan, is it to be presented to investors, or is it an annual plan for the team?
I. EXECUTIVE SUMMARY
A. What the organization is and does
B. Who will purchase the product or service
C. Why am I uniquely qualified and skilled in managing the business
D. What are the financial results expected
E. How much capital is required, what will it be used for, and the sources of capital
F. Assessment of risks
II. BUSINESS CONCEPT
A. Describe the unique qualities and value to customer of product or service provided
B. Age, size and past performance of business
C. Vision, along with short and long-term objectives with milestones
III. PRODUCTS AND SERVICES
B. Product life cycle
C. Intellectual property
D. R & D activities
IV. MARKET ANALYSIS
A. Industry Analysis
1. Future outlook and trends
2. Current business conditions – national, regional, specific market
B. Identify target market
C. Analysis of competitors
D. Market test results
E. Regulatory environment
V. MARKETING PLAN
A. Marketing philosophy/organization
B. Advertising and promotion
C. Product price and sales terms
D. Production capacity
A. Location of business and special facility equipment needs
B. Steps involved in producing product or service
D. Costs to produce product or service
E. Personnel requirements
F. Licenses and permits needed
VII. OWNERSHIP, MANAGEMENT AND ORGANIZATIONAL PLAN
A. Organizational structure
B. Key managers, functions and qualifications
C. Legal form of ownership
VIII. FINANCIAL DATA
Include a narrative of Financial Assumptions. How did you come up with the sales numbers, are there any extraordinary expenses, etc.?
A. History, if applicable
B. Income statements (projected)
C. Cash flow forecasts (if you are going to present this to a lender or investor the cash flow forecast is most critical)
D. Balance sheets (pro forma)
E. Breakeven analysis
F. Working capital analysis
G. Source and applications of capital
IX. CRITICAL RISKS
A. Potential problems that could arise and their likelihood
B. Plans to manage problems
Once again, this is not the “right” outline, but rather, one that I find useful. I hope it helps you.