|
Quick Links
The Business Plan l Building the Business Team l Hiring Employees
Health Insurance l Networking l Advertising Advice
Business Planning Worksheets l Government Regulations l Launching a Food Venture
Writing a business plan helps you to understand every component of your business from communicating your ideas and building a framework for decision-making and management. It serves as a reminder of your goals and for tracking the business’s performance. The plan is a tool to articulate investment needs, capital assets, business partnerships, and customer loyalty. If you take the time and energy to create a comprehensive business plan then you will be on the road to minimizing your risks while directed toward success.
Business plan outlines are basically all the same. There are different ways to complete a business plan from using self-guided books, working with a professional consultant or participating in a business plan class. You need to be realistic about how you work best, your time and the quality of results you want.
Planning shows where you are and
where you are going (click image to enlarge)
|
Business Plan Sections
1. Executive Summary
2. Mission Statement
3. Background Information
4. Organizational Structure
5. The Marketing Plan
6. Operating Controls
7. The Financial Plan
8. Feasibility Action Statement
9. Supporting Documents
The quality of the information is more important that the quantity
(This section is written last)
Write a brief description of the business including Mission Statement and overview of the Market Analysis, Competition, Organizational Structure, short and long term goals and the feasibility of the business.
• Write a Mission Statement that will guide your work. A mission statement is only a few sentences long describing the purpose of the business, who you are, what you do, what’s important, and why you do it.
Example for a restaurant: XXXX is a great place to eat, combining an intriguing atmosphere with excellent, interesting food that is also very good for the people who eat there. We want fair profit for the owners, and a rewarding place to work for the employees.
• List short and long term goals followed by measurable objectives that describe what needs to be accomplished in the next few years. A goal describes the activity to be accomplished. The objectives outline the steps needed to be completed before reaching the goal. Make sure to include deadlines.
Example: A START-UP BUSINESS
GOAL 1: TO COMPLETE BUSINESS PLAN BY DEC 15
Objectives for Goal 1:
Read business plan book by Sept 15.
Meet with business counselor by Sept 30.
Develop & Complete Market Survey by Oct 15
Research and Compile Information by Nov 15
Write Plan by Dec 1
Share plan with business counselor for feedback by Dec 10
Make corrections to plan Dec 13
GOAL 2: OBTAIN FINANCING BY MARCH
Objectives for Goal 2:
Research Financial Institutions to determine best fit by Jan 15
Presentations to Lenders by Jan 20
Projected acceptance by Lender by Feb 20
Compilation of additional materials for lenders by Feb 28
Develop alternative plan if denied March 15 (see FCCDC Loan Program)
GOAL 3: BEGIN START-UP PHASE OF BUSINESS JULY 1
Objectives for Goal 3:
Find location, renovate and move in by May 15
Finalize Marketing Plan & Materials by May 20
Purchase Materials & Supplies by June 1
Target opening for June 20
Provide background information on the Industry
• Describe current and future industry trends
Is the industry stagnant, growing or mature? Are there new people entering the field? Are people in the industry specialists or generalist? How has legislation affected the industry?
• Describe how this business fits into the industry
What makes this business special or unique to the industry and competition?
Example for Cutting Edge Drapery Fabricator:
According to the U.S. Department of Commerce, the entire window treatment category reached $7.8 billion in 1996. The Paint and Decorating Retailers Association states that 30%, or $2.34 billion, was made up of soft window treatments. The population of the 17 communities in close proximity to Cutting Edge Drapery Fabricator is estimated at 277,253. Roughly, this would mean that this area comprises a total soft window treatment market in excess of $2.7 million annually. All of these treatments must be produced in decorator workrooms. There are various levels of workrooms which are discussed in more detail in this chapter. The company’s share of this nearby market is approximately 7.5%.
(from sample business plans website http://www.bplans.com/samples/sba.cfm)
Business Structure, Management, and Personnel
• Describe the Business’s Legal Structure
SOLE PROPRIETOR, all business assets and debts, profits and losses is your individual responsibility.
PARTNERSHIP, two or more people share capital, earnings, and losses. If one partner should die, the partnership is void.
LIMITED PARTNERSHIP, similar to partnership except one person is a general partner with more control and the other is a limited partner with less control.
CORPORATIONS are owned by shareholders with board of directors and officers.
SUBCHAPTER S CORPORATION is a corporation but taxed as a partnership or sole proprietor.
LIMITED LIABILITY COMPANY (LLC) is a blending of the corporate and partnership structures providing owners with limited risk to personal assets and tax advantages.
• Describe Government regulations, taxes, contracts, and leases
Personal Income Tax
Business Income Tax
Sales Tax
Property Tax
Business License Fees
Employee Payroll Tax /Withholding
Hiring Regulations
OSHA
Consumer Protection Regulations: Warranties
Commerce Regulations
— Professional Licenses
— Business Registrations
— Uniform Commercial Code
Zoning Regulations
Environmental Regulations
Other Regulations Specific to your business
For more specific information on government regulations, click here.
• Describe the responsibilities of the management team including owners and staff. Include an organizational chart listing roles and responsibilities
• Describe the Advisory Team you rely on for support. Possible members include an attorney, accountant, insurance agent, financial & business counselor, and associates in the field.
• Describe the services you outsource. Possible services include a payroll service, bookkeeper and independent
• Explain the personnel plan for employees: recruiting, hiring, retaining, firing, employee benefits and organizational chart.
• Describe the risk management strategies related to liability, property, health, and life insurance.
Would you take a long trip without an itinerary? Make a cake without a recipe? A Marketing plan, part of a business plan, explains what you want to accomplish, and how you plan to do it. As a small business owner your resources and time are limited so you need to make more good decisions that are beneficial. A marketing plan will clarify your thinking and prevent you from spending on the wrong items.
The Marketing plan is your strategy to capture a select market. A typical way of describing a strategy is found in the marketing mix composed of the 5 P’s, the product/service, placement, promotion, positioning, and people. The objective is to organize this mix to accomplish the goals of the marketing plan.
Allen Kronick, Senior Management Counselor, Massachusetts Small Business Development Center Network frequently advises, “Know who your customer
is, aim your efforts at your target market, stay focused. You can’t be everything to everyone!”
• Describe the P’s of Marketing by seasonality andgrowth potential: Product/Service, Placement, Promotion, Positioning, People.
Product/Service: Describe what you are selling emphasizing the features, benefits and seasonality of the product. Know what you are selling. You should be able to talk about the product or service with style and confidence.
Placement: Describe the surroundings that highlight the product or service. You don’t want to place the candy next to the toothbrushes or wedding rings next to books on divorce.
Promotion: Describe and/or include samples of promotional materials (Logo, product descriptions, labels...)
Positioning: Describe the image you are creating for your product or business in relation to your target market. Make sure the image fits with the target market.
People: Determining the characteristics of your customers will help you with pricing, packaging, labeling, and product placement. The more products/services you offer, the larger the market potential. Profile characteristics may include income level, education, marital status, household type, location, or occupation. Defining purchasing influences of your customers
is another way to profile potential customers.
Other customer traits to examine:
– Basic need for love, good heath, beauty
– Buying patterns reflected in quality, price, trends,
and convenience
– Cultural orientations liberal, conservative, religious,
– Interests in gardening, cooking, athletics, reading,
environment, arts
• Competition
Describe each competitor by identifying their features and benefits. One way to compare the competition is to create a chart as follows: Plot each competitor comparing their price and quality to each other. Then select where you think your product belongs. The main competitors will begin to stand out.
• Environmental Sustainability
Determine how your business impacts the environment and society by considering the community, local-ness of materials and supplies, social capital, transportation, energy, toxins, water, air quality, and marketing.
Explain specific ways you will improve the impact of your business.
See The Environmental Sustainability Business Checklist for helpful information for the marketing strategy.
• Finding Information for your Plan
Collect descriptive information to evaluate the market potential. There are many resources available for collecting information. Check out the Franklin Regional Council of Governments where you can get traffic counts and statistics. Ask the reference librarians to direct you to specific information. Check our Business Resources for many other organizations that have useful information.
• Describe cash management procedures such as cash or accrual basis tracking.
• Describe the systems used to track accounts receivable and accounts payables.
• Describe who will be responsible for handling sales receipts, reconciliations of bank accounts and petty cash.
• Describe person responsible and internal management procedures related to purchasing, inventory control, customer service, pricing and quality control.
• Describe pricing strategy and relation to competition. How retail price was determined, cost per unit and how changes will be incorporated into strategy.
Describe quality control procedures.
An essential component in business planning details your financial needs and resources. The following worksheets will assist you in identifying your personal financial picture, business start-up expenses, repeating monthly business expenses, monthly profit and loss statement, and a yearly cash flow income & expense projection. Complete the financial worksheets as realistically as possible. Clarify your assumptions at the bottom of each page. Information explained in the previous parts of the business plan need to relate to the Financial Plan.
Example: If the Marketing Strategy refers to monthly advertising in the newspaper and radio there must be a corresponding amount for that expense.
Alan Singer, Business Lending Program Manager, often says, “Part of what makes a business plan work is really understanding your business. Finances and financial planning are just two of the tools in managing your businesses resources.”
Personal Credit History
If you’re planning to approach a lender you will want to make sure your credit report is accurate. If your credit report is wrong it may take a few months to make a correction.
Credit Reporting Agencies
Get a free credit report yearly www.annualcreditreport.com
As a Massachusetts resident you are entitled to a free credit report yearly from:
EXPERIAN
PO Box 2002, Allen, Texas 75013-0036
Request Phone: (888) 397-3742
www.experian.com
TRANSUNION
Consumer Relations
2 Baldwin Place, Crum Lynne, PA 19022
Request Phone: (800) 888-4213
Dispute Line: (800) 916-8800
www.transunion.com
EQUIFAX
5505 Peachtree Dunwoody Road, Suite 600
Atlanta, Georgia 30374 - 0241
Request Phone: (800) 997-2493
Dispute Line: (800) 944-1122
www.equifax.com
For personal credit problems:
Consumer Credit Counseling Services
1-866-515-2227
www.moneymanagement.org
Credit counseling (24/7 by phone and internet) debt
management plans, credit score tools and resources.
Sources of Financing
- Family or Friends
- Credit Cards (Personal or Business)
- Banks
- Community Development Corporations (see the FCCDC's Lending section)
- Alternative Lenders (see Business Resources section)
- Loan Guarantor
- Loan Brokers
- Suppliers
- Customer Deposits
- Franchising
- Insurance Companies
- Grants
How to Borrow Money from People You Know
Friends and Family can be a source of financing. There are several parts to borrowing money starting with setting up a loan documentation, payment processing, and payment tracking and accounting. If you are seeking an outside service to mediate a private loan, consider Circle Lending, who can assist you in everything needed to make a private business loan work.
Circle Lending – 800-805-2472
Two Canal Park, Cambridge, MA 02141
www.circlelending.com/sbb
TIP – Be aware of the following:
- The dollar value of assets that have been accumulated
in your business can be used as business equity and
potential collateral for a lender.
- Good personal financial health lays the foundation
for good business financial health.
- Include Health Insurance as an expense or explain
how your coverage is being paid.
- Business Planning classes at the FCCDC provide
support for completing the business plan.
LOAN TYPES:
Short-Term Loan: Generally used to meet short-term needs, such as inventory purchase or short-term liquidity problems; repayments made within one year.
Intermediate Loan: Repayment made within three to five years. Generally used for permanent expansion or to acquire equipment.
Long-Term Loan: Used for real-estate purchases or for business start-up.
The C’s of Credit – Criteria used by lenders to determine whether to grant credit and credit terms
Credit History: What is the credit rating of the business
and the individual?
Character: Does the owner have the ability and intent
to manage the business?
Capacity: What is the ability of the business to repay
the loan?
Collateral: What is the equity contribution for the loan?
Conditions: Is the business sustainable?
Capital: What is the loan amount and purpose?
What you need to know before approaching a lender:
1. Know how much money you need to borrow.
2. Identify how you plan to use the money.
3. How will the money be repaid by the business.
This section describes and prioritizes the actions needed to move forward to implement the plan for year one. Set up a calendar that itemizes the actions, time and who is responsible. Integrate the objectives from Part 2.
Example:
- Resumes of key people
- Personal Financial Statements
- Photographs of product, equipment, marketing materials
- Market survey results
|
