The Typical Business Plan
Your typical business plan is made up of several sections outlining each part of your business. For most businesses, these are:
- Executive Summary: this is the outline and summary of the rest of the plan.
- Management: tells about who the management are, their qualifications, and how they are assisting in the business. This includes the owner/manager as well as any consultants that are being used (accountants, business coaches, lawyers). Often for outside consultants the details are sparse, since they are not owners of the business and their roles are given no more than one paragraph or less (especially for lawyers, who are often just listed by name, phone number and firm).
- Marketing Plan: a brief plan outlining how the business is going to market to its target customers. This is often broken down by explaining who the target customers are, how they are going to be reached, and the various marketing strategies to be employed.
- Product/service Information: a complete explanation of the product(s) and/or service(s) that the company is offering, why there is a demand for them, and how the company intends to obtain the product (manufacture, wholesale, etc.) or supply the service (contract, employees, owner…).
- Financial Projections: usually a month-by-month breakdown of the cash flows and income statement for the first 12 months, as well as a three- to five-year annual projection on income statements and balance sheet. This allows one to see exactly where money is projected to be spent, what all expenses, cash outlays, capital expenses, and non-cash expenses are, as well as the timing of incomes with the required outlays in cash. Income projections should be realistic in the current market, for if they are not, then there will be problems with the expectations being too high. Expenses should also be realistically projected, and a contingency in most cases of five to ten percent of expenses should be taken in a business plan, due to unforeseen circumstances.
Can you complete these sections fully and properly? Answer the questions below as best you can, keeping in mind the above intentions with each section of the business plan.
Ask Questions about Your Business
There are several questions to ask yourself, starting with the management. Are you capable of doing all of the necessary functions? What skills are lacking? How will these be compensated for?
How will you market your products? What are their unique selling positions, benefits, etc.? What kinds of things will draw in your target market?
What is good about your product? What are its drawbacks? What kind of competition do you have? How will you overcome the competition?
What is your expected income? What does your product cost you? How much can you sell it for? How many can you realistically sell in a month? If you have a bad month, what would sales look like? Is your business cyclical? How so? What are your fixed costs (rent, salaries…)? What are your variable costs (inventory, commissions…)? Make sure to allow for business licenses, property taxes, accounting expenses, bank fees, telephone, insurance, advertising, and owners’ salaries, as well as any other expenses that you can think of.
A Good Start
This should give you a good start. No part of this is more important than any other, they are all equal. Once you’ve managed to go through all of these questions, then you can consult with an expert to help you get your business plan formatted nicely and the financial statements completed for whatever purpose you require.
