Expanded Business Plan General Outline

I.  Title Page  -  All contact and ownership information is included on the title page. Some entrepreneurs like to add a very brief business description, slogan or mission statement.

1. Business name, address, telephone, e-mail and web site
2. Name of owner(s)

II.  Table of Contents  -   Include a list of all sections of the business plan and the appropriate page numbers. Graphs, diagrams and other visual representations should also be identified. Items included as exhibits at the end of the plan (example: owner resume) should be clearly identified so that the reader can reference them while reviewing the plan.

III. Mission Statement  -  The mission statement should describe why your company exists in the marketplace. Some companies use this statement as a foundation for management decision-making, and publicly display it on promotional literature and in the place of business. Many entrepreneurs find it useful to make the mission statement brief and general enough to allow potential growth of product lines and services. Consider the difference between describing yourself as a company in the “automobile” business, and a company in the “transportation business.” The mission statement is usually not changed for five years or more and so it is important for it to adequately portray your firm’s identity and philosophy.

1. Description of company purpose
2. Identification of those served

IV.  Executive Summary  -  An overview of the content of your business plan allows managers, strategic partners, investors or lending agencies to quickly grasp your concept and business direction, so that as they read the pages that follow, they have a clear idea of your intentions. Because the plan encompasses so many activities, the reader could fail to extract the owner’s view of the most important information. You will find many uses for this summary as you move forward to promote your company, network in the business community and work with vendors of business products and services.      

• Brief description of the company history
• Purpose of the plan
• Goals of the business
• Description of the products and services
• Customers
• Management team experience
• Amount required from lender*
• Other sources of funds/collateral*
• Method of repayment*

V.  Industry Status  -  This is the part of your plan that discusses the business environment in which you will be operating. Entrepreneurs often wish to gloss over this section because the factors are considered external to the company and uncontrollable. Gathering this information is important, however, because it can help you determine limitations or opportunities impacting your profit. You may even discover information that changes the type of business you are starting, or the ways in which you expand operations. Be sure to study both positive and negative factors.

• National/Regional economic growth or decline
• Industry outlook
• Projected opportunities
• Regulatory environment
• Technological influences

VI.  Target Market/Customer Base  -  An error in the determination of your target market(s) will not only adversely affect all other sections of your business plan, it will most certainly increase your advertising and promotion expense. For some businesses it is the difference between success and failure. In this section of the plan describe the most likely customers for your product or service. Who are they? Where are they? When and why will they buy from you? To be thorough you must also describe the target market between you and the end user of your offerings. For example, if you are a manufacturer, you may need a retailer or distributor. Without the retailer or distributor purchasing your product, the end user will never have the opportunity to purchase. You may need promotional literature such as product and price sheets for this “middle” market and you may even need sales assistance. Overlooking this market could result in underestimated expense. Often your entire market of purchasers can be divided into segments, or groups of purchasers with common needs. Segmenting your market allows you to define and describe buyers’ needs and habits as completely as possible. Accurate information about the size of your market and expected market share helps you predict potential income.

1. Characteristics of the target market:
   1. Demographic profile (age, income, sex, education)
   2. Business customer (industry, size, purchaser)
   3. Geographic parameters
2. Size of the market/expected market share
3. Market segmentation
4. Customer buying habits (seasonality, quantity, average expenditure)

VII.  Marketing Plan  -  The marketing plan describes all activities involved in selling. It sets annual sales goals and examines the competitors’ products and services and how your offerings are unique. Marketing is not simply advertising and promotion activities. Although these communication elements are extremely important, they are ineffective if you have not chosen products and services wanted and needed by your potential customers. The marketing plan should include a complete description of all offerings. Names, colors, assortments and other details are important to customer choice. If you have multiple products for multiple target markets, this is the section where those distinctions must be made.

If you are tempted to dismiss competition, ask yourself how your potential customer currently solves the same problem your offerings are intended to solve. What are the customers’ choices when spending their financial resources? It can be helpful to develop a matrix that lists all your major competitors, their products and services, prices, methods of promotion and location. By incorporating your own marketing information on the matrix, you can identify your firm’s strengths and weaknesses. Your marketing section includes customer service policies. Small businesses often have an opportunity to compete with larger firms by offering flexible, courteous, customer-centered services. The pricing of your product must consider competition and customer expectations, but it must also consider all expenses.

It is not uncommon for early stage businesses to: (1) believe they can sell at the lowest price; (2) misunderstand the importance establishing price policies at levels other than the end user level; and (3) overlook the relationship between pricing and other elements of marketing. Few businesses exist without advertising expense. The choices of strategy and media are many, but the choice to eliminate advertising says the entrepreneur can not afford to communicate with customers. A lack of communication is directly related to a lack of customer spending and a lack of customer spending critically impairs the business’s survival. Since advertising and other elements of promotion are legitimate business expenses, they must be incorporated in the price of the products and services.

• Sales goals
• Description of all products and services
• Direct and indirect competition
• Pricing objectives/methods
  1. Wholesale and retail
  2. Discounts and special allowances
  3. Seasonality in pricing
  4. Credit terms
• Location
  1. Where products/services will be sold
  2. Analysis of advantages/disadvantages
  3. Plant/store atmosphere
  4. Transportation
• Promotion activities
  1. Advertising
  2. Public relations
  3. Publicity
  4. Trade or business shows Web site
• Packaging
• Customer service policies
• Sales training, management and methods
• Growth strategies

VIII.  Production and Operations Plan  -   A lack of production and operations planning causes entrepreneurs to underestimate start-up, maintenance and growth expenses. The decisions in this section of the plan consider the “physical” health of the business. If the business is started at home, the entrepreneur should set criteria such as income, number of employees or product expansion that will necessitate moving to a business site. Decisions made in this section affect the extent of company indebtedness, as well as the collateral of the business when it seeks out loans or investments.

• Facility
  1. Lease or purchase
  2. Size and floor plan
  3. Zoning, local regulations, taxes
  4. Renovation/expansion plans
• Equipment
  1. Machines/tools owned/needed
  2. Lease or purchase
  3. Maintenance procedures and costs
  4. Vehicles Telecommunications and data
• Production process and costs
• Suppliers/credit terms
• Transportation and shipping access and equipment
• Scheduling for completion of research and development

IX.  Insurance  -  By definition, entrepreneurs are risk takers. They launch a new enterprise in a competitive environment with less than adequate capital and work more hours in the day than their corporate employee counterparts. Once the decision has been made to become an entrepreneur, risk management becomes a part of the job description. As a firm grows, the wise entrepreneur develops a risk management program with advice from an attorney, accountant and insurance agent. Young firms are vulnerable and protection comes from evaluating and prioritizing risks and insuring against them. You can start by making a list of the perils your business faces. Identify which are most catastrophic, such as loss of life, damage to property, employee or customer injury resulting from a faulty piece of equipment or product. Take action to protect your business against these catastrophes first. Risks differ related to your industry and specific offerings, and gaps in coverage can occur as the business grows. Your risk management program should be evaluated annually.

• Product liability
• Personal/business liability
• Business interruption
• Vehicle
• Disability
• Workers’ compensation
• Unemployment
• Fire
• Theft

X.  Management and Human Resources Plan  -  The people in any business are an important and expensive resource. Before developing this section of the plan, the entrepreneur must identify how the business will grow and what skills will be needed for that growth. If additional locations are planned, new managers will need to be hired or trained. If growth comes from development of new products, researchers and engineers may be needed. If growth will result from selling intensively to a small number of clients who buy on multiple occasions, employees that are capable of developing good relationships and delivering excellent customer service are needed. The obvious expense of human resources is salary and benefits. Less obvious is the cost of recruitment, selection and training when turnover occurs. This section requires knowledge of state and federal regulations governing employer and employee relationships.

• Key managers
  1. Responsibilities
  2. Training
  3. Reporting procedures
• Personnel
  1. Number of full- and part-time employees
  2. Special skills/education required/continuing education
  3. Job descriptions and evaluation methods benefits
  4. Wages, commissions, bonus plans
  5. Use of subcontracted personnel
  6. Policies
• Organizational chart
• Lists of stockholders and board members
• Amount of authorized stock and issued stock
• Professional assistance (attorney, accountant, banker, insurance representative, etc.)

XI.  Financial Plan  -  Books and software packages can be purchased with formatted worksheets to produce the documents you need for your financial plan. The numbers used for each expense should be as accurate as possible based on current research. Identify any fluctuations that can be predicted such as increases in raw materials, lease or utilities in year two or three of your business. Estimate the month and year when additional employees will be hired and what they will be paid. A break-even analysis helps you understand at what point the business becomes profitable and allows you to set goals realistically. Without a financial plan you will find it nearly impossible to interest lenders or investors in helping you start and grow, because you have no facts to back up your enthusiasm and commitment to your venture.

• Start-up costs (all one-time expenses such as equipment, deposits, fees, etc.)
• Monthly expenses (ongoing expenses for lease, insurance, utilities, etc.)
• Sources and uses of funds*
• Balance sheets (opening day and projected three years)
• Projected cash flow (monthly first year, quarterly year two and three)
• Profit and loss forecast or statement (annual for three years)
• Break-even analysis
• Existing business (historical statements for three years*)
• Personal financial statement of owner(s)*
• Assumptions used in preparation of financial projections

XII.  Attached Exhibits

• Managers’ resumes
• Advertisements, news articles and other promotional documents
• Contracts, leases, and filing documents (Fictitious Name, Employer Identification Number, Articles of Incorporation)
• Letters of support
• Pictures of the product or service
• Marketing research
• Patents, trademarks, copyrights, license agreements
• Income tax returns (three years)*
• Invoices or estimates for facility or equipment purchases*

(*) Items marked with an asterisk are added to the business plans being used to secure financing.
 

• Business Plan Outline
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