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VIP Biz Center
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Elements of a Business Plan:
 The following guidelines of
a business plan will allow you to prepare your
business plan effectively and help you to enter the necessary
information needed to present it to your banker or any other entity that
requires a business plan and will consider giving a loan for your business.
A proper Business Plan should
be written ahead of time and the following
step by step tips will be a great tool to use while entering all the details
of your current business or a business that you want to open or acquire.
I. THE CONCEPT:
A.
Future Directions:
1. Establish goals as clearly as possible
2. Describe management and employees direction toward future
goals.
B. What is the business going to do?
1. What is your company going to make, sell, distribute or do by way of service?
2. You must be specific as possible.
C. Who are the Customers?
1. Describe the total market for the products or services you intend to sell.
2. Describe the potential or targeted market.
II. THE OBJECTIVE:
A. Two Levels:
1. Describe your intentions for a long term.
2. Describe Sales goals, profit goals, market share
(In a small business these can specify personal objectives)
B. Objectives must be spelled out clearly.
1. What long term and short term (1 year) goals have you set?
2. How much are you going to re-invest in your business from
the income of net cash flow?
3. all projections must be reasonable and believable.
4. You must set perimeter of the business.
5. Write down end results of profits for 1st year, 2nd year and
3rd year.
For example: 1st year total sales projection - $10,000.00
Net profit $
2,000.00
2nd year total sales projection - $20,000.00
Net profit $
4,000.00
6. You must indicate how cash resources will be allocated to
reach objectives.
III. MARKET ANALYSIS:
A.
Prove that a market exists for your products or services and try
t o
identify who will purchase your products or services.
B. You should identify
as precisely as possible the target market.
1. General description of overall marketplace for your product or service;
2. Describe market segment to be pursued:
a. Size of target market
b. % of growth
c. Does segmentation of market allow for new entry?
d. Does it offer reasonable margins to allow profit?
e. Is product or service socially and politically acceptable to target market?
C. Competitive
influences:
1. Describe current influences on target market;
(does it run by dealers, distributors, sales reps, etc.)
2. Describe present and anticipated competition;
3. Describe Governmental influences;
4. Describe pricing conditions;
5. Give a brief descriptive history of similar businesses and products;
IV. PRODUCTION:
A. What
will it take to produce the product or services?
a. Describe cost of production, including the location of the
business and cost of shipping the product to the customer.
b. Isolate the cost factors of each product to reflect how much
each unit cost to produce or to purchase.
1. Is there a cost to assemble the product?
2. What are the sources of the raw material?
3. What are the delivery times?
4. What are the labor demands and availability?
5. What is the cost of the payroll for hired staff?
6. How much rent needs to be paid for the facility?
B. You must be very specific as to how you will mix the following variables:
1. What manufacturing processes are involved.
2. Equipment needs.
3. Facility requirements.
4. Raw materials, labor, supplies.
5. Inspection and quality controls.
6. Transportation and shipping requirements.
7. Anticipated repairs.
8. Production scheduling.
9. Budget and timing.
10. How will you handle projected growth?
a. How will you handle the unexpected?
(1) Slow sales/strong sales
(2) Equipment and labor problems.
11. How will you service the product?
GENERAL RULE FOR NEW COMPANIES:
Remain lean - do not tie up more funds than is
absolutely necessary in facilities, inventory, equipment and fixed costs.
V. MARKETING:
A. Explain
how you will create customers.
B. You must explain in detail all
facets of marketing plan:
1. Methods of selling and advertising.
2. Channels of distribution the products or services
3. How will you compare with your competitors.
4. Credit and terms of accounts receivables.
5. Credit approval procedures for customers.
6. Pricing of products procedures.
7. How you going to handle Anticipated competitive responses.
8. Price out your budget for advertising (Direct Mail, T.V. or
Internet web site)
9. Price out your sales people commissions.
10. Describe the responsibilities and duties of personnel involved in marketing.
11. Describe what will be done if growth is not as anticipated?
(For Example: Too fast or too slow)
VI. ORGANIZATION:
A. Who is your management team:
1. Provide resumes (describing qualifications and background)
of all the key people of the business.
2. Provide job description of all the key people.
3. Provide copies of the company's legal forms (Incorporation,
Sub-Chapter S, C Corp , Etc.
4. Provide a Payroll Budget showing salaries, commissions,
incentives and benefits to attract qualified staff.
5. Indicate who will be accountable to whom? Who is the
supervisor? Who handles the accounting functions? etc.
VII. FINANCIAL PROJECTIONS:
A. The purpose is to identify how much money you will need and when
you will need it.
1. Prepare a Start-Up Budget. Show the amount of money you spent
to open the doors to your business or how much you will need
if you have not started yet.
Lease/rent
Telephone company deposit
Cost of research
Insurance Cost (Liability, Equipment, Workmen Compensation)
2. Describe all sources of cash you can invest in your business.
B. Operational Budget.
1.Prepare 1st year projected budget.
(a)Start with a Balance Sheet showing your beginning
investment(as a loan to the business), any equipment that
you purchased for the business (copy machine, computer,
fax machine, or any other equipment)
Any monies in the business bank account and any
receivables that you have billed to customers so far.
(b)Prepare an Income Statement (P&L - Profit and Loss)
to show your sales less all expenses.
2.
Prepare the balance sheet and the Income Statement for the
next 12 months and do the same for 2 more years, all together
3 years period of projected budget.
Be as
precise as you can.
VII. OWNERSHIP
A. Give a list of any other loans the company has received (if any).
1. include rates of interest and terms.
B. List the owners of the company's shares.
1. How many shares were issued?
2. How many shares each officer owns?
3. How much per share each officer paid?
The owner must disclose how much he paid for
his shares.
C. Indicate form of the business organization:
1. Sole Proprietor
2. Partnership
3. Limited Partnership
4. Corporation
5. Sub-Chapter S
D. List the amount of loan requested and what terms you expect to
receive (interest
rate and length of loan).
E. Explain how the Loan will be paid back. Include the interest
payments on the
projected budget - (the P&L)
F. Do you anticipate further funding?
TIP: A book by Robert
Morris called Industrial Standard Ratios is a good source to
check on how a typical business in your industry is doing. Compare your budget
ratios to the book ratio analysis. |