Updated: 17 May 2015 06:35. By, Melkisedeck Shine.

Business plan should consist of the following;

1. Name of Firm

State the business’s legal name

2. Owner or Owner-to-be

State owner(s) name, as well as the form ownership and percent of ownership

3. Information on the Business

A. Type of Business and Product or Service

• State the general and specific nature of the business, (i.e., restaurant, catering, farming, ice cream parlor, day care, craft - birdhouses). State the type of business (manufacturing, service, construction, wholesale, retail, other).
• State the company’s goals and objectives
• Describe your product and/or services. Briefly state who buys the product/service and who the final users are (you will discuss your customers very thoroughly under Market Analysis).
• Describe how the product/service is sold to customers (walk-in stores, sales, representatives, mail order catalogs, telephone orders, etc.).
• Describe how and where buyers get the product/service (walk-in stores, mail delivery, etc.).
• Comment on the quality of the product/service.
• Estimate average price of product/service.

B. History

• If new, say so. If existing, discuss age of business, prior owners, how acquired and length of time operated by you, image or reputation; number of employees, last year’s sales volume and profit and any significant events that have affected the company’s development.

C. Office/Plant

• Give addresses and description of area and building.
• State whether rented, leased or owned. If rented or leased, state from whom and under what conditions. State size (square footage).
• Describe type of access to building (major roads, freeways, walking, parking, etc.).
• Is the location a good one that is convenient to customers? State business hours.

D. Personnel

• For the present and future, state number of employees, type of labor (skilled and unskilled, etc.), sources of labor (especially minorities, handicapped veterans or other socially or economically disadvantaged grouped), timing of hiring (or layoffs).
• Comment on the quality of the staff.

E. Economic/Accounting

• Describe how this business makes money.
• State how prices are or will be determined and by whom.

F. Inventory, Supplies, Suppliers, and Equipment

• Describe what inventory, raw materials and/or supplies the business uses (initial and continuing).
• List your suppliers: name, address, type and percent of supplies furnished and length of time you have been buying from each, reliability and frequency of purchase.
• How easy or difficult is it to get necessary supplies? If it is difficult, how will you deal with potential or actual shortages?
• Are the prices of your supplies steady or fluctuating? If fluctuating, how do you deal with changing costs?
• List the equipment used by the business and comment on its condition. If the equipment has been appraised, include values and state who did the appraisal.

G. Legal

• State form of business (sole proprietorship, partnership, LLC, corporation) and status (already formed or in process of formation).
• State licensing requirements (type and licensing sources) and status (not yet applied, applied and pending, obtained).
• State zoning requirements and status.
• State insurance requirements (type, source) and status.
• Have building codes been complied with?
• State any health code requirements.
• Describe any other laws and regulations that affect the business.
• Describe lease, if any.
• Trademarks, patents, licenses and copyrights should be checked for legality.

H. Future Plans

• What are your plans for the future (maintain, expand, diversify, sell, etc.)?

4. Market Analysis

A. Customers (market)

• What is your market, or, who are your customers (wholesalers, retailers, consumers, government, etc.).
• Why does this market NEED your product/service? (All markets are created on the basis of need). One product/service often satisfies several needs.
• How long will this market need your product/service? If your product/service a fad or continuing need; being phased out or created by new technology?
• List the characteristics of your average customers: age, location (market area), average income/sales, sex, life style (family or single), working and other important information. The more you understand about your market, the better your can see to it.
• What do customers like and dislike about your product/service or business?
• Estimate how much the total market will spend on this or similar products/services in the next year.

B. Environment

• Discuss any environmental factors (economic, legal, social or technological) which affect your market or product/service. Environmental factors are those which have significant effects on your operation, but over which you have no control (i.e., county growth, rising energy costs, prices, etc.).

C. Competition

• Discuss your competition; number of competitors (direct or indirect), type of company (i.e., product or service), location, age, reputation, size (sales or customers), market share.
• Estimate how much of your product/service ALL the competitors will provide in the next year.
• List major competitors (names and addresses). Discuss their product/service, features, age of business, price, location/distribution, reputation/image, market share, size, product/service quality and marketing strategy.

D. Competitive Advantages and Disadvantages

• Discuss how your product/service meets market needs and how you can compare with the competition in terms of product/service features, location, distribution, price, other.
• Compare your estimates of the market’s demand and the competition’s supply.
• The relationship of supply and demand will affect your marketing and sales strategy. High demand with low supply usually means less competition and less advertising. Low demand and high supply indicates a very competitive situation and a need for extensive marketing.

E. Projections

• Give your projections in terms of either the number of customers, items sold, or contracts obtained, etc.

5. Market Strategy

A. Sales Strategy

• Present your marketing strategy. In other words, tell how you will get the edge on your competition and get customers. This is your action plan to get business.
• Your product/service will sell because one or more of the following is attractive: advertising, pricing (high/medium/low), distribution system (limited, widespread, etc.) and promotion.

B. Promoting Strategy

• Describe how you plan to promote your product/service. State how you will promote: advertising, direct mail, personal contacts, sponsoring events or other word of mouth, trade associations, etc.).
• If you plan to advertise what media you will use: radio, television, newspaper, magazines, telephone book yellow pages, Internet, and/or other (billboard, etc.). State why you consider the media you have chosen to be the most effective.
• State the content of your promotion or advertising: what your product/service is, why it is attractive, business location, business hours, business phone number, web site, and other.

When you are designing your advertising, remember you are selling to satisfy someone’s needs. Refer back to your Market Analysis on need.

6. Management

• Why have you chosen this type of business?
• For key management personnel (e.g., the owners), include the following: resumes, personal financial statements, tax returns for the last three years and personal family budget.
• Describe prior experience that qualifies management to run this type of business. State why you can run this business. State how much time management will devote to running this business. Discuss local contacts that may assist you in your business.

7. Financial

A. Source and Uses

• Describe the project to be financed.
• State where the money to pay for the project will come from (sources) and show in detail how it will be used (uses). The most common uses are equipment, leasehold improvements, inventory and working capital.

B. Statement

• If business is an existing one, include business tax returns and financial statements for the last three years. Financial statements should include:
◘ Balance Sheet
◘ Income Statement
◘ Accounts Receivable and Aging
◘ Accounts Payable and Aging
◘ Debt Schedule
◘ Reconciliation of Net Worth
• For both existing and new businesses, project the following financial statements for the next three years (monthly for the 1st year, annually for 2nd and 3rd years).
• Operating (or Income) Statement with explanation (sales, expenses, profit):
◘ Balance Sheet
◘ Reconciliation of Net Worth
◘ Cash Flow with Explanation
◘ Break-even Analysis

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