A well-crafted business plan is a blueprint for the success of a business. The owner of a business writes a business plan as a way to think through the design of her business and prepare to bring her concept to life. It is a way to envision what the business is, how to get started, how it will function, and what it should look like in the future. A business plan, especially for startup businesses, is a way to sort out all of the issues involved with the new venture, and develop a plan of action. Most important, it helps the owner and potential investors determine how much money is needed to start and run the business, and how much money the business could generate.

A business plan is used to communicate the goals and strategies of the business. The plan is used to raise money for the business, apply for loans, develop partnerships, and provides a communications tool (or action plan) for those who are creating the business.

How should you write your business plan?

What should the business plan tell the reader?

Outline of a business plan

• Start by reviewing the business plan outline. Click here for the Small Business Administration Web site, which provides comprehensive information on business plans.
• Determine the purpose and use of your business plan. Is it an internal document? Is it for the partners to develop a working plan? Do you need it to apply for a loan? Who will need to read your plan, and who will determine the style, formality, and to some extent the content of your document? Remember that this is one of the first communications tools about your business.
• Create an outline for your business plan, using the outline here. This outline can be general or very specific÷although the more detailed the outline, the easier it is to write the plan.
• Determine what research you will need to do. Can you use the Internet for research on your target market? What data or information do you need on your product, suppliers, or vendors? How will you determine who the competition is?
• Begin the research for your plan. Keep notes and files of information as you go through this step.
• Write a draft of the plan as you gather the information. Keep writing each section; add more information as you gather more research. Plans can be from 5 to 40 pages long, with an average of about 12 pages of narrative and 4 to 6 pages of financial information. The narrative section÷including the products, the target market, marketing strategies, and management of the business÷is usually completed before the financial section.
• Ask a few friends to read your business plan. To get a fresh view, ask people who are not familiar with your business. Correct all of the errors, clarify, and revise based on feedback from your readers.
• Prepare the cash flow projections. Click here for a sample format. Start with expenses and include all of the known items. (It is easiest to go month by month for the first year.) This is a cash flow projection, so it reflects when you will incur the expense or pay the bills. Then look at revenue and determine how many units you will sell by the day, week, or month. No business has the same revenue every month; donât forget to plan for seasons of high and low sales. Plan for growth÷these become your sales goals for the business.

• What you sell. A clear and simple description of your products and/or services.
• Who you are up against. An assessment of who your competitors are÷what you know about them, how your business is unique, and what you will need to do to make your business successful.
• Who your customers are. Who the target market is. Who will buy your products and/or services? Are there enough potential customers? Who are they? What are they buying now? How will you convince them to buy your products and/or services?
• How you will reach your customers. Your sales strategy to reach the customer. How can you generate enough sales to cover your costs, pay yourself a salary, and make a profit?
• How much money you need. The amount of financing needed. Do you need to borrow money for the startup of the business? Do need you a line of credit during the down times in the business? How much profit do you think you can make, and what will it take to make that profit?
• Why you will succeed. The experience and expertise of the owner(s). What experience and knowledge do you have that will make this business successful?

For further information on writing a business plan click on these sites:

http://www.ka-ching.com/business/starting/bizplan/
http://www.onlinewbc.org/docs/starting/basics.html

I. Summary

A. Purpose of the plan

B. History of the company

C. Summary of information from the income statement

D. Description of major customers

E. Your name, address, phone, fax number

II. Business Description

A. General description of the business

B. Industry background÷information on trends in the industry

C. Company history or background

D. Description of products and/or services

E. Goals/potential of the business

F. Uniqueness of the products and/or services

III. Marketing

A. Research and analysis

1. Target market÷who will be your customers?

2. Market size and trends÷how many customers will you reach?

3. Competition÷who are they? Compare to your business.

4. Estimated market share÷what is the potential for growth?

B. Marketing Plan

1. Marketing strategy÷sales and distribution

2. Pricing÷how will you price your product and why?

3. Advertising and promotion

IV. Management

A. Key positions and responsibilities

B. Management team: key personnel, with employment history

C. Legal structure: stock agreements, employment agreements, ownership

D. Board of directors, advisers, consultants to your business

V. Sources and uses of funds

A. List the items you need to purchase or need to borrow funds for.

B. List any current contractor and supplier estimates. Explain the estimates.

C. Identify any proposed sources of funding for the business, including your own cash, proposed bank loans, and loans from other sources.

VII. Financial information

A. Historical financial information

1. Provide a current balance sheet and income statement for the business (within the last quarter)

2. Provide historical financial information÷three years of annual balance sheets and income statements.

3. Provide an explanation of any issues presented by financial information.

B. Financial Forecast

1. Cash flow projections by month or quarter for first year and annually for next two years.

2. Provide summary of all significant assumptions in projections.

3. Break-even analysis÷how many units do you have to sell to break even in your business?

4. Personal net worth statement for any partners or owners in the business.

VII. Appendix

Resumes of key individuals

Brochures on the products and/or services offered by the business

Articles/research on industry, trends