How To Write A Business Plan (With Samples!)

Guide to creating business proposals, including examples of successful models.

In order to prepare your business plan, you must know the following:

THE IDEA

You need a business idea. The idea cannot be some generic vague idea. You have to think about what exactly you want to do. The more original the better since you'll be closer to it and work harder to make it work.

TIME FRAME

Determine the time frame to begin (start) your business. You need time to research your business, get the appropriate licenses, etc. If you decide to incorporate, you need time to discuss, create, and sign the papers, send them to the state and be returned to you. This may take a month or more. The other forms of business take less time to set up but they do take time.

BUSINESS NAME

Check your state's regulations about this. If you incorporate, the words, corporation or inc. must appear in your company name. Your name as your business name is simplest. Or your name plus a word or two (Johnson's Travel) is also good. If you make up a name, it's considered assumed or fictitious and you must register it with your state.

PURPOSE AND GOALS

The most important step in writing a business plan is to write your mission statement. Also vital is your first year goals. When you sit down to write these be concise and clear. Don't be too optimistic; it is not good in a business plan.

LIST COMPANY OFFICIERS AND THEIR DUTIES

For a corporation, you usually have a list of board officers. List them and their duties. Again be clear and concise.

BUSINESS OFFICE AND AGENT

The address of a business is usually an office but it can be your home if your area is zoned for business or commercial use. Make sure you check this out before you list your home address as your business address.

The agent is usually the person who incorporates for you (usually a lawyer but not always). You can be the agent, called the Resident Agent. Whoever the agent is, their address must be put on your business plan.

CAPITAL REQUIREMENTS

This is where you plan your capital (money) requirements. Undercapitalization is a major problem of small business. Make sure you think out and plan all your capital needs before you start your business.

START-UP EQUIPMENT NEEDS

Think about your business and what equipment you will need to get it up and running for a year plus. If you need $75,000 to get your business up and running and only have $20,000, don't try and make do. It won't work.

LOCATION

Location, location, location!

WRITING YOUR BUSINESS PLAN

After you've completed the above steps, you can begin to outline your business plan. A lot goes into your plan, in addition to these facts. Your research, your objectives and your goals help create the plan.

You'll have to pick and choose. The plan must not be unrealistic. Your goals must be obtainable.



Your business plan will include the following parts:

1. Cover Sheet

2. Introduction

3. Mission Statement

4. Overview

5. Economic Analysis

6. Financial Analysis

7. Marketing Analysis

8. Summary

9. Indexes and Supporting Documents

Before I explain each part, I want to remind you that you must be thorough, realistic, concise and to the point. The time it takes to write a good business plan depends on the size of your business, what kind of business you're starting, your goals and your business entity type. It may take a month or a year to get it right but it's worth the time and effort involved. If the analysis section of your business is unfamiliar to you, contact the Small business Administration. They have experts in these fields available to help with no fee involved.

COVER SHEET

This contains the name of your company, the officers (if any), the business address, phone number, fax number, e-mail address and web site (if you have one).

INTRODUCTION

This section is considered the icebreaker. Keep it short. State the general purpose of your business and a brief summary of the plan that follows.

MISSION STATEMENT

Your mission statement should identify the kind of business you will run, how the public will perceive it, your overall philosophy, your company's direction and what makes your company unique.

OVERVIEW

This is the broad description of your business, broken down into specific parts. You'll need to identify the following:

1. Your start-up objectives

2. Requirements

3. Location

4. Personnel needs (if that applies)

5. Product/service description (identification)

ECONOMIC ANALYSIS

This is where you report on the national and state economy as it relates to your business field. The data is easily obtained at the Economic Analysis web site of the Department of Commerce.

FINANCIAL ANALYSIS

This part of your business plan will help you project income and will give your current financial state and future financial goals. The following data must be included; start-up costs, capital requirements and any source of current capital or financing.

Also included is a detailed cash flow section, which will tie into your sales projections. Remember to be accurate with your estimates and be able to back up your estimates with evidence and statistics. For example, if you were a travel agency, one item under one year projections would read like this; a 3,000-piece direct mailer should give us a 2% response; this equals 60 travelers. 60 travelers equal 3 trips. Average trip = $2500 per traveler. Gross profit margin = 25%per sale = $625 gross profit margin per traveler.

A one-year budget is also included (all of your figures in this plan are for one-year). Include your fixed costs, overhead, salaries (if any), taxes, advertising, rent, etc.

Now, prepare a balance sheet that shows your net worth on a specific date. The balance sheet lists your assets (cash, account receivables, etc.), liabilities (debts and account payables) and equity (stock values (if you have any).

Now you need a break-even analysis. This shows what sales you will need to break even by projecting sales versus expenses. Using the figures in the above example, if your total fixed costs for a year were $62,500 divided by $625 (per traveler gross profit margin) = 100 travelers. Breakeven for the first year will occur after the 100th customer has paid for their trip.

Finally, state your method of accounting and your credit policy. Your credit policy contains the kind of credit you will extend to your customers, how you handle bad debts, etc.

MARKET ANALYSIS

In this section you discuss who your competitors are and what market exists (locally) for your product/service. The research you did in these areas will help you address these topics. You should also include advertising, pricing methods, selling and make sure you show how unique your product/service will be and how you'll use this to generate sales.

SUMMARY

Use this section to wrap up your business plan. Remember to keep it short and to the point, no rambling. Again don't be too optimistic.

INDEXES AND SUPPORTING DOCUMENTS

This is not necessary part of a business plan. Only include it if you have any documents or charts you want to include.

After you have completed the final draft of your business plan, put it away for four to seven days and then reread it. If it says everything about your business, then you have succeeded.

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