Elements of Business Plan

What the Business Plan Should Include

Whether you are starting a new business, seeking financing for an existing business, attempting to analyze a new market, or wanting to define and evaluate future growth, the following outline of a typical business plan can serve as a guide. However, you should adapt it to your specific business.

Introduction/Mission

In the introductory section of your business plan, you should:

• Give a detailed description of the business and its goals.
• Discuss the ownership of the business and its goals.
• List the skills and experience you bring to the business.
• Discuss the advantages you and your business have over your competition.

Products/Services and Markets

In this section, you must describe your products and/or services and:

• Identify the customer demand for your product/service.
• Describe how your product/service is unique.
• Identify your market, as well as its size and locations.
• Explain how your product/service will be advertised and marketed.
• Explain the pricing strategy.

Financial Management

In this section, you should:

• Explain the source and amount of initial equity capital.
• Develop a monthly operating budget for the first year.
• Develop an expected (return on investment), or ROI, and a monthly cash flow for the first year.
• Provide projected income statements and balance sheets for a two-year period.
• Discuss your break-even point.
• Explain your personal balance sheet and method of compensation.
• Discuss who will maintain your accounting records and how they will be kept.
• Provide "what if" statements that address alternative approaches to any problem that may develop.

Operations

In this section it is important to:

• Explain how the business will be managed on a day-to-day basis.
• Discuss hiring and personnel procedures.
• Discuss insurance, lease or rent agreements, and issues pertinent to your business.
• Account for the equipment necessary to produce your product or services.
• Account for production and delivery of products and services.

Concluding Statement

In the ending statement, you summarize your business goals, objectives, and express your commitment to the success of your business.

Once you have completed your business plan, review it with a friend or business associate. When you feel comfortable with the content and structure, make an appointment to review and discuss it with your banker. The business plan is a flexible document that should change as your business grows.