When I started my business one of the first pieces of advice I was given was to write a business plan – my initial reaction was really? Then it was why? I am not seeking outside financing, I know in my mind how I want my business to flow and grow and I am a sole proprietor with no co-owners or partners. My own reactions prompted me to investigate if everyone in business needs to develop a business plan. The conclusion, yes, everyone in business needs to have a business plan in place.
A well thought out business plan is a detailed written statement that states “why”, “how”, and “when” your company will achieve specific goals. The plan helps you define your conception of your business, evaluate the competition, determine risks, and estimate costs. Think of your business plan as a systematic guide, an outline as to how you want your business to function and grow. By following the formal format below your business plan will be one you can submit to banks or investors. Remember there is no wrong or right when writing your business plan but it needs the following elements.
- 1. Cover Sheet
- 2. Summary Statement (this summarizes the major points of the entire business plan so it has to be wrote after the plan is completed)
- 3. Table of contents
- 4. Body of the document
- Business description
- Marketing analysis
- Competition analysis
- Operating procedures
- Business Insurance
- Loan application
- Capital Equipment
- Supply list
- Balance Sheet
- Breakeven analysis
- Profit and loss statements
- Three-year summary
- Detail by month, first year
- Detail by quarters, second and third year
- Assumptions upon with projections were based
- Pro-forma cash flow
Part 3 – Supporting Documents
- Tax returns of principals (partners in the business) for the last three years
- Personal financial statements (form available from any bank)
- Copy of franchise contract and all supporting documents provided by the franchisor (for franchise business)
- Copy of proposed lease or purchase agreement for building space
- Copy of licenses and other legal documents
- Copy of resumes of all principals (partners in the business)
- Copies of letter of intent from suppliers, etc
There are many publications available to guide you in more detail on writing your business plan. A well-structured and thought out business plan will give you an edge in obtaining outside financing from a bank or private investor. The time you invest in the beginning on developing your business plan can mean the difference between success and failure.
In my next article, I will answer the questions – What is business assistance and how do you find it? Until then, here is to your success.
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