Business Plan Guidelines

Every business can benefit from the preparation of a carefully written business plan. The purpose of the business plan is to:

1. Help you think through the venture and ensure you have considered all your options and anticipated any potential difficulties.
2. Convince lenders and investors that you are in control of the project, and that their money will be safe with you.
3. Serve as an operating guide as you turn your idea into a viable business.

The following pages provide a suggested outline of the material that should be included in your business plan. The final product should be tailored to fit the circumstances and personality of you and your business.

BUSINESS PLAN OUTLINE

1. Cover

• Name, address and phone number of business.
• Give your plan a businesslike appearance by typing on high-quality paper and putting it in a vinyl, cardstock or a three-ring binder.

2. Title Page

• Repeat the business name, address and phone number.
• Add the name and addresses of the principal owners.
• Also show the dates of issue of the plan, and type "copy number ___" so that you can number and control the copies.

3. Executive Summary

• A brief (one page) statement of the business plan objectives. Address the following questions and add additional information that will help you achieve your goals. (You may choose to write this page last.)
• What is the purpose of this plan? Will it be used as an operating guide? Will it be used as a financing proposal?
• What business structure have you chosen (i.e., sole proprietorship, partnership, corporation, s-corporation)?
• Who are the principals, and what are their proportions of ownership?
• Why will the venture be successful?

  For a financing proposal:

• Who is requesting the funds, and how much is needed?
• For what will the money be used?
• How will the funds be repaid?
• What collateral will be offered to secure the loan?
• Why does a loan or an investment make sense (i.e., impact on local economy, job creation, increased tax base, investment in the future of the community)?

4. Table of Contents

• A single page showing major topics and page references.

5. Description of the Business

• Answer as many of the following questions as are appropriate:
• What business are you in (i.e., primarily merchandising, manufacturing, or service)? What is the nature of the product(s) or service(s)? What will be special about your business?
• What market do you intend to serve? What is the total market, and what is your expected share?
• How can you serve the market better than your competition?
• Present status of the business (i.e., start-up, expansion of a going concern or take over of an existing business?
• If you will be doing any contract work, what are the terms? Reference any firm contracts and include them as supporting documents.
• Do you have any letters of intent from prospective suppliers?

  For existing business:

• What is the history of the business?
• Why does the owner wish to sell at this time?
• If the business is going downhill, why? How can you turn it around?
• How will your management make the business profitable?
• What is the purchase price formula? Give breakdown for building, improvements, equipment, inventory and goodwill.

Note: If yours will be a seasonal business, make sure seasonality is reflected in your narrative and financial projections with appropriate footnotes.

6. Business Location

• What is your business address, and why did you choose this location?
• Will the building be leased or owned?
• What are the terms and length of the lease contract?
• What renovations will be needed and at what cost?
• Describe the neighborhood (e.g., stable, changing, improving, deteriorating).
• What other kinds of businesses are in the neighborhood?
• How much can your business expand before you will be forced to move or add on to the present building?

7. Licenses and Permits

• Is your business name registered with the Secretary of State?
• State how you will be affected by local zoning regulations.
• What other licenses or permits will you be required to obtain?

8. Management

• What is your business and management experience?
• What education have you had, including both formal and informal courses, that contributes to your management abilities?
• Are you physically suited to the job?
• Do you have direct operational and/or management experience in this type of business?
• Describe your organizational structure and include a brief description of who does what. (Include an organizational chart if necessary.)
• List proposed salaries and wages.
• What other management resources will be available (e.g., accountant, lawyer, SBDC)?

9. Personnel

• Write a paragraph or two about your personnel needs.
• What are your anticipated personnel needs?
• What skills must your employees have?
• Can you use part-time help to meet changing business volume?
• Will you have to train people and at what cost?

10. Insurance

• Describe your potential business risks and tell what insurance coverage you will purchase to protect yourself.

11. The Market

• Generally explain who needs your product or service and how you plan to reach them.
• What is the present size and growth potential of the market?
• What percentage of the market will you have now and in the future?
• Describe age, sex, occupation, lifestyle, income, etc., of your various market segments.
• How will you attract and keep your segment of the market (i.e., product quality, price, public relations, personal selling).
• What features or services will you offer that will justify your price?
• How will you handle credit sales (i.e., extend your own credit, accept major credit cards)?

12. Competition

• Briefly describe your competition and tell how their operations are similar and dissimilar to yours.
• What is your unique selling proposition, and how will you use it to control your market?

13. Financial Data

• Source and application of funds statement.
• Capital equipment list.
• Current balance sheet and income statement (less than 90 days old).
• Break-even analysis.
• Projected income statement (detail by month, first year detail by quarter, second year notes of explanation and assumptions).
• Cash flow projections (detail by month, first year detail by quarter, second year notes of explanation and assumptions).
• Projected balance sheet (notes of explanation and assumptions).
• For an existing business include income statement, balance sheets and/or tax returns from the past three years.

14. Supporting Documents:

• Personal resumes for all principals.
• Personal financial statements for al principals.
• Letters of reference.
• Letters of intent from prospective suppliers or customers.
• Copies of all leases, contracts, agreements, deeds or other legal documents.
• Any other information that might help your case or answer potential questions.

Author: Kansas State University Business Development Center
Source: Kansas State University Small Business Development Center
Description: Suggested format and content of a business plan

This article is reprinted from the Small Business Forum, the journal of the Association of Small Business Development Centers, which is published by the University of Wisconsin-Extension Small Business Development Center. For information about subscriptions, reprints or submissions, please write 432 North Lake Street, Room 425, Madison, WI 53706, or call (608) 263-7843.

Developed by the University of Arkansas at Little Rock Small Business Development Center For further assistance, contact a consultant at a Small Business DevelopmentCenter.