May 2011 Writing a Business Plan 2
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Writing a Business Plan (2 of 2)

 
By Steve Strauss. ARCHIVE:

Generally speaking, here is what you will find in a typical business plan, though not necessarily in this exact order:

Title Page: On the title page should be the name of the business, your logo if you have one, the owner’s name, the business address and phone number, e-mail addresses, and the business website if you have one.

Executive Summary: The executive summary is probably the single most important part of your business plan. It is the “greatest hits” of the plan, and is vital because it is what investors key-in on. The executive summary describes the highlights of the plan. Even though your entire business will be described in detail later in the plan, a crisp, three or four page introduction captures the immediate attention of the potential investor or lender.

Business Description: Here you describe exactly what your business is going to be and how you see it growing. This section includes a description of the products or services you will be selling, your market niche, and so on.

Management: It is hard to underestimate just how important your management team is to potential investors. Banks and other lenders take seriously the background and experience of the team you have assembled.

Industry Description: This section is where you include background research. You can get this information from trade associations and magazines, websites and books; interviews and meetings are also helpful. Discuss macro-economic trends and other relevant economic indicators.

Competition: Include all pertinent information about your competition, including the length of time they have been in business, where they are located and their average annual sales. How will you beat the competition? 

Marketing Strategy: How will you position your goods or services in the market? Are you going to cater to an upscale clientele, other businesses, or whom? What will your pricing strategy be? How will you promote your business? What sort of advertising and marketing do you propose?

Sales Forecast: You need to figure out how much you can expect to sell in the next few years. Your sales forecast will contain:

  • Monthly forecast for coming year, both in dollars and units sold.
  • Annual forecast for the following two-to-four years, both in dollars and units sold, and
  • The assumptions upon which you base your forecasts.

Financial Analysis: Here you explain how much it will cost to get your business up and running, and how much it will cost to keep it going. You will also explain how much money you are asking for and how it will be spent. The basis of this section are several financial spreadsheets – balance sheets, profit and loss statements, and cash-flow projections.

This financial analysis is often the most difficult part of a business plan for small businesspeople. It is easy to wax poetic about your great idea and how it will make the gang rich. But actually putting real numbers to those projections is hard work. Even so, you have to do it. You have to crunch some realistic numbers to go along with your realistic plan.

Where do you get all of this information? Check out suppliers, trade associations, chambers of commerce, websites, and trade publications.