Writing a Business Plan formats

Section one
Cover Sheet:
Business Name
Address
Phone Number
Principals
Executive Summary or Statement of Purpose
Table of Contents
Section two
A. Description of Business
B. Products/Services
C. Market Analysis
D. Marketing Plan
E. Location
F. Competition
G. Management and Operations
H. Personnel
I. Application and Effect of Loan or Investment

Section Two: Financial Data

A. Projected Financial Statements
Income Statements
Cash Flow Statements
Balance Sheets
Assumptions to Projected Financial Statements
B. Break Even Analysis
C. Sources and Uses of Funds
Section Three:
Supporting Documents Historical financial statements, tax returns, resumes, reference letters,
personal financial statements, facilities diagrams, letters of intent, purchase orders, contracts, etc.
A. Description of the Business
Part A provides an overview of key information which is developed in greater detail in the
following pages. Aim for clarity and simplicity in this part. Too much detail here gets in the way of
the main ideas. The Elevator Test - Can you explain your basic business idea in the time it takes to
get from the lobby to the 5th floor?
Basic Questions:
1) What general type of business is this?
2) What is the status of the business? Start-up, expansion or take-over?
3) What is the business form? Sole Proprietorship, Partnership, Corporation or Limited
Liability Company?
4) What are your products?
5) Who are (will be) your customers?
Additional Questions for Start-Ups:
1) Why will you be successful in this business?
2) What is your experience with this type of business?
3) What will be special or unique about this business?
4) Why will your business be successful?
Additional Questions for Purchase of Existing Business:
1) When and by whom was the business founded?
2) Why is the owner selling?
3) How was the purchase price determined?
4) What are the current financial conditions and trends?
5) How will your management make the business more profitable?
B. Products/Services
In this section, describe your product offering. This will include details of product features and an
overview of unique technology or processes. But don’t stop there and don’t focus too much on
technology. You must also describe the product benefits and why customers will want to buy.
For most businesses, the products/services are not totally unique. If yours are, take advantage of
this while you can and plan for the competitive battles that will come.

If your products/services are not unique, you must find a way to position your products/services in
the mind of your customer and to differentiate them from the competition. Positioning is the
process of establishing your image with prospects or customers. (Examples include: highest quality,
lowest price, wider selection, Best customer service, faster delivery, etc.)
Basic Questions:
1) What products/services are you (will you be) selling?
2) What are the features and benefits of what you sell?
3) What Position do you have (or want to have) in the market?
4) How do your products/services differ from the competition?
5) What makes your products unique and desirable?
6) Why do (will) customers buy from you?
C. Market Analysis
For start-ups or existing businesses, market analysis is important as the basis for the marketing plan
and to help justify the sales forecast. Existing businesses will rely heavily on past performance as
an indicator of the future. Start-ups have a greater challenge - they will rely more on market
research using libraries, trade associations, government statistics, surveys, competitor observation,
etc. In all cases, make sure your market analysis is relevant to establishing the viability of the
business and the reasonableness of the sales forecast.
Questions for Existing Businesses:
1) Who are your current customers? (List largest customers or categories.)
2) What do they buy from you?
3) Why do they buy from you? (Quality, Price, Reputation, etc.?)
Basic Questions:
1) Who are the purchasers of your products or type of products? (Geographic,
Demographic and Psychographic characteristics)
2) What is the size of the market? Is it growing?
3) What is (will be) your share? How will your share change over time?
4) What is the industry outlook?
5) Are there segments of users who are under-served by competition?
6) Do any of these under-served segments present opportunities?
D. Marketing Plan
In this section, you include the highlights or your detailed marketing plan. The basic components of
a Marketing Plan are:
 What are you selling? (What benefits do you provide and what position or image do you
have?)
 Who wants the things you sell? (Identify Target Markets)
  How will you reach your Target Markets and motivate them to buy? (Develop Product,
Price, and Promotional Strategies)

Product Strategies
1) How will products be packaged?
2) How broad will your product line be?
3) What new products will you introduce?
4) What Position or Image will you try to develop or reinforce?

Pricing Strategies
1) What will be your pricing strategies? (For example: Premium, Every Day Low Price,
Frequent Sale Prices, Meet Competitor Price, etc.)
2) How will you compare with competition and how will they respond?
3) Why will customers pay your price?
4) What will be your credit policies?
5) Is there anything about your business which insulates you from price competition?
6) Can you add value and compete on issues other than price?

Promotional Strategies
1) Who are your Target Markets?
2) How will you reach your Target Markets? (What Media will you use?)
3) How will you motivate them to buy? (What Message will you stress?)
4) What is the cost and timetable for implementation of the marketing plan?
E. Location
Locations with greater customer traffic usually cost more to buy or rent, but they require less
spending for advertising to attract customers. This is especially true of retail businesses where
traffic count and accessibility are critical.
Basic Questions:
1) What is the business address?
2) Is it owned or leased? If leased, what are the terms?
3) Are renovations or modifications needed, and what are the costs?
4) Describe the property and the surrounding area.
5) Why is this a good location for your business?
 For Mail Order, Telemarketing, Manufacturing, Consulting, or other companies where the
customer does not purchase while physically at the business address, less location detail is needed.
Modify the location section to fit your situation. In some cases, a good location may be one close
to suppliers, transportation hubs or a complementary business that will also attract your Target
Market.
F. Competition
"Who is your competition?" is one of the first questions a banker or investor will ask. Business by
nature is competitive, and few businesses are completely new. If there are no competitors, be
careful; there may be no market for your products.
Expand your concept of competition. If you plan to open the first roller skating rink in town, your
competition includes movie theaters, malls, bowling alleys, etc.
Basic Questions:
1) Who are (will be) your largest competitors? List them.
2) How will your operation be better (and worse) than your competitors?
3) How are competitors doing? What are their sales and profits?
4) (If Start-Up) How will competition respond to your market entry?
G. Management and Operations
Because management problems are the leading cause of business failures, it is important to discuss
management qualifications and structure. Resumes of Principals should be included in supporting
data. If your business will have few employees and rely heavily on outside professionals, list these
key people and their qualifications. If you are seeking financing, include personal financial
statements for all principals in supporting data section.
Basic Questions:
1) What is the business management experience of the management team?
2) What are the functional areas of the business?
3) Who will be responsible for each functional area?
4) Who reports to whom?
5) What will salaries be?
6) What management resources outside the company are available?
7) How will your products/services be produced? (Describe manufacturing processes,
proprietary technology and key supplier relationships.)
H. Personnel
The success of many companies depends on their ability to recruit, train and retain
quality employees. The amount of emphasis in your plan will depend on the number and type of
employees required.
Basic Questions:
1) What are the personnel needs now? In the future?
2) What skills must they have? What training will you provide?
3) Are the people you need available?
4) What is their compensation? What fringe benefits will be provided?
I. Application and Effect of Loan or Investment
This section is important whether you are seeking a loan, outside investment (equity) or investing
your own money. It may be necessary to complete Section Two, Financial Data, before completing
this part.
Basic Questions:
1) What is the total investment required?
2) How will the loan or investment be used?
3) How will the loan or investment make the business more profitable?
4) When will the loan be repaid?
5) If you are seeking equity (selling part of the business to an investor): - What percent of
the company are you willing to give up?
 What rate of return is possible for the investor? (Note: If your business plan will
be presented to private investors, seek legal counsel to be sure you are in
compliance with securities laws.)

Section Two: Financial Data

A. Projected Financial Statements
The basic purposes of financial projections are:
 Establish the profit potential of the business, given reasonable assumptions
 Determine how much capital the company needs and how it will be used
 Demonstrate the business can generate the cash to operate and re-pay loans
It is usually helpful, but not necessary, to complete at least a rough draft of Section One (the
written section) before attempting the financial section. In the written section, you will develop and
describe your strategies for the business. In the financial section, you will estimate the financial
impact of those strategies by developing projected Income Statements, Balance Sheets, and Cash
Flow Statements.
It is usually recommended that these projected statements be on a monthly basis for at least the first
twelve months or until the business is profitable and stable. Activity displayed beyond the monthly
detail may be in summary form (such as quarterly or annually.) The forecast period for most
business plans is two to four years.
Before you start developing projected financial statements, gather the suggested information on the
following pages. The personal computer is an excellent tool for financial projections; and those
with a good background in accounting and personal computer spread sheets may want to create
their own financial forecast model. (There are also some specialized software programs which have
basic templates to help with your financial forecast.)
The quality of your projection depends on the accuracy of the assumptions. (Garbage in - Garbage
out.) Existing businesses will rely heavily on past financial results as the basis for their forecasts.
Start-ups have greater challenges. They must do extensive research to prove the reasonableness of
their numbers. Examples of sources include:
Industry data from public sources and trade associations, personal interviews with potential
customers and people in the business, competitive observation and analysif, etc.
If you would like assistance, gather the suggested information on the following pages and contact
the Small Business Development Centre. The SBDC will review the information from your
research and help you develop your projection.

Steps in Financial Projections For items 1 and 2, use the following “Fixed Asset/Start-up Expense
List.”
1) Estimate fixed asset requirements for the first year. Include Land, Buildings, Leasehold
Improvements, Equipment, and Vehicles.
2) Estimate any start-up or one-time expenses. Include any expenses needed to begin operation
such as legal fees, licenses, and initial marketing costs. For item 3, use the following “Unit
Selling Price and Cost Analysis” sheet.
3) Define each “unit” of your product or service and estimate the selling price and direct cost per
unit. In the appropriate places on the form, estimate Cost of Sales and calculate Gross Profit as a
percentage of the selling price. For items 4 through 6, use the following “Projected Income
Statement”.
4) Estimate sales by month for at least one year. (Unit sales price times the number of units.)
Consider how start-up, marketing, and seasonal factors affect sales.
5) Estimate monthly Cost of Sales and Gross Profit based on the percentages of sales calculated in
#3 above. Use a weighted average if multiple product lines.
6) Estimate and itemize fixed expenses by month for at least one year. Include things like rent,
insurance, utilities, salaries, marketing, legal/accounting, etc. Determine all categories which
apply to your business, but don’t include expenses here that are in “cost of goods (services)
sold.” Research items 7 through 10, and provide a short narrative.
7) Describe the amount of inventory (if any) required to support the sales forecast.
Express in number of days sales or turnover if possible.
8) Describe your credit, sales, and collections policies. If you will make sales on credit, estimate the
number of days after the sale before the average customer pays.
9) Describe how fast you must pay your vendors for any items you will purchase.
10) Also: - Estimate obligations for Income Taxes.
- Businesses already in operation will need the latest Balance Sheet.

Fixed Asset Description: Cost:

Land/Building

Equipment and/or Vehicles

Leasehold Improvements

(Other)_____________________________

Start-up Expense Description:

Legal/Organization Costs

Initial Marketing & Promotion

Licenses and Permits

Beginning Inventory

(Other)_____________________________
Total Fixed Asset and Start-up Expenses:

Note: List major items individually. You may group other, smaller items (like
office equipment)
into a single line item.

Unit Selling Price and Cost Analysis

(Make additional copies of this sheet if necessary.)

Product or Service #1:

_______________________________________________

A. Selling Price:
less
Direct Costs:
Materials
Labor
Sub-contractors
(Other)_______________

B. Total Cost per Unit

C. Unit Gross Profit (A minus B)

D. Gross Profit % (C divided by A) ____________

Product or Service: #2:

______________________________________________

A. Selling Price:
less
Direct Costs:
Materials
Labor
Sub-contractors
(Other)_______________
B. Total Cost per Unit

C. Unit Gross Profit (A minus B)

D. Gross Profit % (C divided by A) ____________

Projected Income Statement
For the 12 Months Beginning __________
Total
Month 1 Month 2 Month 3 Month 4 Month 5 Month 6 Month 7 Month 8 Month 9
Month 10 Month 11 Month 12 Year 1

Total Revenue

Cost of Goods Sold

Gross Profit
Accounting & Legal
Admini Salaries
Autos & Vehicles
Depreciation
Dues & Subscriptions
Entertainment
Equipment Rental
Insurance-Business
Insurance-Health
Interest
Contract Labor
Licenses
Marketing
Miscellaneous
Office Supplies
Postage
Rent
Repairs & Maintenance
Telephone
Taxes-Payroll
Taxes-Other
Travel
Utilities
Other:

Total Expenses

Pre-Tax Profit (Loss)

A. (Cont.) Optional Method to Calculate Needed Capital
Many businesses can get a reasonable picture of their financial future by using the following
formula. If the business will start making sales very soon after opening, you may decide to multiply
monthly fixed expenses by a number smaller than six.
Total Required Capital = Six Months of Fixed Expenses + Asset Purchases + Start-up Expenses

Column 1 Column 2
Monthly Fixed Expenses
Salaries (include owner)
Payroll Taxes at 12%
Rent
Marketing and Advertising
Supplies
Telephone & Utilities
Insurance
Maintenance
Legal and Accounting
Miscellaneous
(Other)________________
Monthly Fixed Expense Sub-total = x6
Asset Purchases
Purchase of Land and Building
Decorating and Remodeling
Fixtures and Equipment (plus installation)
Deposits on Rental Property and Utilities
Beginning Inventory
Asset Purchase Sub-Total
Start-up Expense You Pay Once
Legal and Accounting Organization Costs
Licenses and Permits
Initial Advertising and Promotion
(Other)______________________________
Start-up Expense Sub-total
Total Estimated Cash Needed to Start (Add Column 2)
B. Break Even Analysis
Break even (B/E) analysis is a simple, but very effective financial feasibility test. B/E is used to
find the amount of sales necessary to pay all fixed costs (and have zero income.) In your business
plan, it represents a minimum acceptable performance. Follow these steps to calculate:
1) Determine Contribution Margin Percent. Contribution Margin (CM) equals Sales minus
Variable Expenses. CM% equals CM dollars divided by Sales. Note: The biggest variable expense
is usually Cost of Goods Sold (CGS), which is the direct material and labor necessary to make a
product or service ready for sale.

2) List and total all Fixed Expenses for a specific time period (usually one month.) Fixed
expenses do not rise or fall with sales volume. Examples: rent, insurance, utilities, etc.
3) Break Even Sales is Fixed Expenses divided by Contribution Margin %. (See Example)

Example
Unit sales price: $10 Monthly Fixed Expenses:
Rent 2,000
less Cost of Goods Sold: Utilities 1,000
Material & Labor 3 Salary 3,000
less Other Variable Exp: Other 4,000
Commissions 1
Total Fixed Exp. $10,000
Unit Contribution Margin = $6
($10 - $3 - $1)
CM % ($6 ÷ $10) = 60
B/E = Fixed Expense ÷ CM %
B/E = $10,000 ÷ .6
Monthly B/E Sales = $16,667
C. Sources and Uses of Funds
The Sources and Uses of Funds is a statement of how much money you need (and where it will
come from) and how that money will be used. This statement should be included if your business
plan is being presented to a lender or investor. By definition, sources must equal uses. The
following is an example of a typical format.
Sources:
Term Loan
Line of Credit
Personal Equity
Outside Equity
Other
Total Sources
Uses:
Purchase Building
Purchase Equipment
Renovations
Inventory
Working Capital
Cash Reserve
Other
Total Uses: