BUSINESS PLAN
OUTLINE
1. Executive Summary
A. Business Summary
· Give name of
business
· Provide
description and location of plant
· Describe
product(s) or service(s)
· Include market(s)
and competition
· Highlight
management expertise
B. Business History
(for established business)
· Give age of
business
· Identify prior
owners
· State when you
acquired and how long you have operated the business
· Describe image or
reputation
· Give number of
employees
· Provide last
year's sales volume and profit
· Discuss any
significant events that have affected the company's development
C. Definition of Your Business
Goals
State the company's goals and
objectives. (Example: Improve cash flow? Improve
Profit? Expand market share?)
D. Summary of Financial Needs
and Intended Use of Funds
Explain how much money you
need, why you need it, and how you will use the funds.
E. Revenue Projections and
Potential Return to Investors or Borrower
Summarize the projections that
you will describe in detail later in the plan. Highlight the
benefits of the financing to
the business's profitability and return on investment or
repayment of debt.
F. Future Plans
Describe your specific plans.
Do you plan to diversify? Will you add new products or
services? When? Will you simply maintain the status quo?
II. Products and/or Services
A. Description of Product Line
Describe the product or
service (Example: size, shape, color, packaging, computer,
hardware, machinery).
Discuss what the product does.
Explain the features and
benefits of the service.
Explain how complicated the
product is. Can the customer use it immediately? Is training
necessary?
Explain how and where buyers
obtain the product or service as it relates to identified
customer needs
III. Market Analysis
A. Target Market
Describe your potential
customers (Example: wholesalers, retailers, consumers,
government, other businesses, etc.).
Define your customer (Example:
age, income, education level, occupation, lifestyle).
Describe where your customers
are located (Example: local neighborhoods, small to
medium-size towns or regions, foreign countries).
Estimate the number of
customers you have or could have. (Be prepared to back up
your estimate with credible research information.) Will you
expand your market?
B. Environment
What environmental factors
(Example: economic, legal, social, or technological) affect
your market or product or service? Environmental factors are
those that have significant effects on your operation but
over which you have no control.
C. Competition
List major competitors.
Discuss the following: The
number of competitors you have (direct or indirect), their
products or services, quality, features, price, age of
business, location, distribution, reputation/image, market
share, size, and marketing strategy.
What percentage of the market
will be served by your competition?
Discuss how your product or
service meets market needs and how you compare with the
competition in terms of product or service, quality,
features, price, location, distribution, and other factors.
What have you learned from watching the competition?
D. Projections
State your projections in
terms of either the number of customers, items sold, or
contracts obtained.
IV. Market Strategy
A. Sales Strategy
Describe why there is a market
need for your product or service and how long this need will
last.
Estimate how much your customers
and potential customers will spend on this or similar products or
services in the next year. Cite credible sources for this
projection. Describe the combination of product, price, and
service you will use to make a fair profit and be competitive.
Why will customers pay your price?
State strategies you will use to
get the edge on competition and to attract new customers.
Describe how advertising, pricing,
distribution, and sales support will affect your sales.
B. Promotion Strategy
Describe how you will promote
your product or service.
Illustrate which media you
will use for advertising; magazines, newspapers, trade
publication, broadcast media.
Describe the public relations
and promotional techniques you will use: pricing markdowns,
"two for one" offers, educational seminars.
Explain the content of your
promotions or advertising and demonstrate how it will reflect
the sales strategy you have chosen.
C. Budget
Explain what percentage of
projected sales you will use for advertising and public
relations.
Describe how your promotional
budget compares with the competition or the industry in
general.
D. Sales, Distributions, and
Servicing Methods
Describe what distribution
channels are available and which you will use.
Explain what type of customer
service is required and how you will provide it.
State which individuals will
personally sell your product or service. Will you hire
outside salespeople? How many? How will you pay them?
Describe training and sales
materials, if any, that you intend to use to assist sales.
V. Operations/Legal
A. Operating Plans
Describe your operating plans
for the next two years.
B. Location
Describe the building and the
area where it's located.
Why is this the right building
and location for your business? How does the location affect
your operating costs?
Explain the other types of
businesses in the area. State whether the business location
is rented, leased, or owned. If it is rented, state from whom
and under what conditions.
Explain what, if any,
renovations are needed and what the costs will be. Get
written quotes from more than one contractor. Include quotes
in the Appendix.
Describe the type of access
customers will have to your location (major roads, freeways,
public transit, free parking, etc.)
C. Capital Equipment List
(Existing Equipment)
List equipment that you use (or
will use) to manufacture a product, provide a service, or sell,
store, and deliver merchandise.
Describe the equipment's
condition. If the equipment has been appraised, include values.
D. Inventory, Supplies, Suppliers
Describe what inventory, raw
materials and/or supplies the business uses.
List your suppliers' names and
addresses. Describe what you buy from each and how often, cost,
reliability, and length of the relationships. Do the prices of
your supplies fluctuate? How do you deal with changing costs?
Explain how easy or difficult it
is to get necessary supplies. How will you deal with potential or
actual shortages?
E. Legal
State form of business (sole
proprietorship, partnership, corporation) and status (already
formed or in the process of formation).
Describe partnership agreements,
buy-sell agreements, franchise agreements, or other legally
binding contracts related to the business.
List the specific licenses you
need and the status of those licenses (not yet applied, applied
and pending, obtained).
Discuss zoning requirements and
the status of any changes necessary. Can you demonstrate
compliance with zoning and building codes?
State any health code requirements
and demonstrate compliance. If not in compliance, describe
remedies being taken.
Describe any other laws and
regulations that affect the business.
List your insurance requirements
and coverage (type, source), cost, and status.
Highlight any proprietary
trademarks, patents, licenses, and copyrights held by the
business and confirm their legality.
Include the lease agreement
for your location
Describe any other
encumbrances on the assets of your company, such as
outstanding debt or filed liens against assets.
Note: You typically will
include copies of these legal documents in the Appendix of
your business plan.
VI. Personnel and Management Plan
A. Staffing Plan
State the following for the
present and future: necessary number of employees, type of
labor (skilled, unskilled, etc.), sources of labor
(especially minorities, handicapped, veterans, or other
socially or economically disadvantaged groups), and timing of
hiring (or layoffs).
Explain what kind of training,
if any, you need to provide.
Describe how you will
compensate employees (hourly, monthly, commission, etc.).
Describe how your operating
plans will affect your staff and managers during the next two
years.
B. Officers
Draw an organization chart
that breaks down responsibilities of each manager. Include
the following for key management personnel (usually owners,
partners, large equity investors):
1. Resumes, personal
financial statements, tax returns for the last three
years, and a personal family budget.
2. Related work experience
that qualifies these people to run this type of business.
3. Current or proposed
duties and responsibilities.
4. Salaries, incentives,
or other compensation.
State how much time management
will devote to this business (or to the specific project
being financed).
VII. Financial Data
A. Uses of Funds
Describe the project to be
financed and the specific amount you are requesting.
B. Capital Expenditure Budget
List the physical facilities and
equipment you plan to buy or lease, plus any improvements you
intend to make. List the cost for each. Refer to points B and C
in Section V (Operations/Legal).
C. Financial Statements
If the business is an existing
one, include the following financial statements for the last
three years;
· Balance sheet
· Income statement (profit
and loss statement)
· Debt schedule
· Cash flow statement
D. Financial Ratio Analysis
Lenders require you to demonstrate
your repayment ability. Financial ratios are the best indication
of this. You will need to supply lenders with your company's
financial ratios as well as industry averages for comparison.
Calculate the following important
ratios:
1. Working capital ratio
(current ratio)
2. Quick ratio
3. Debt to Net Worth
4. Net profit margin
5. Return on Assets
6. Return on Net Worth (return
on investment)
7. Sales to Net Worth
8. Debt coverage
9. Accounts receivable and
payable turnover
E. Three-year financial
Projections
Calculate reasonable and realistic
financial results for the next three years (first year by month;
remaining years annually). This should include:
· Income statements (P&L)
· Balance sheets
· Cash flow projections
F. Explanation of Projections
Provide an analysis of the above
projections, noting trends in the specific business and in the
industry as a whole.
Explain the assumptions behind
your projections. Do they account for inflationary increases in
labor and other cost? Do you anticipate a certain growth rate to
continue? flow do new tax laws affect income?
G. Explanation of Use and Effect
of New Funds
Summarize the impact of new ands
on the operation, noting where new funds figure significantly in
projected results and return on investment.
II. Potential return to Investors
or Borrower
Support your financial proposal
with information on expected return on invested capital. The most
common ratio used is Return on Net worth, also called Return on
Investments (ROl). Include the average industry ROl for
comparison.
Need help with your
horse business plan? Use our
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Business And Horse Tourism Resources - Phone Dr. Cross at 786-507-1555
