Business Plan Form
Statement of Purpose
The statement of purpose spells out the purpose of this
proposal or the reason for preparing the request. It should include a very
brief summary of the business as an introduction, then the basic points of
the financing proposal. This section is frequently written last, after the
main business plan has been prepared, and could be modified for different
presentations. The statement is sometimes called an executive summary and
What is the business? What are the objectives?
How is the business structured / organized?
Who are the principals involved?
What is the total amount of funding needed to implement
How will the funds be used and benefit the business?
How much of the funds are being requested from this
funding source? At what terms?
What other sources of funding are being considered?
How will the funds be repaid?
Why does the loan or investment make sense?
Business Plan Narrative
A. Description of Business
The description of the business should enable a reader to
become familiar with the business and gain a detailed understanding of the
product or service that will be provided. Remember to explain what the
product or service does for customers, as successful businesses are
The goals and objectives of the enterprise should be
indicated, and a summary of the history of an existing business (when, how,
who started the business, major developments or milestones) can be included.
Some of the key questions that need to be addressed are:
What type of business is this enterprise (retail or
wholesale merchandising, service, or manufacturing, etc.)? What are the
industry trends and expectations?
Is the business a start-up, an ongoing concern, or a
take-over (acquisition) of an existing business?
What is (will be) the business legal structure
(proprietorship, partnership, or corporation)? Summarize the ownership of
the business, and any previous capitalization (outstanding shares,
management's investment of cash/property).
When did (will) the business open? What is the schedule of
operation (hours/days of week store will be open, production schedule,
special seasonal considerations)?
Describe materials and supply sources, methods of
production, merchandising strategy, or how orders are received.
What will be special / unique about your business?
For a new business, or new owners of a business:
What experience do you have in this industry?
What do you know about the business, and what is the force
of your knowledge?
In a take-over situation, additional questions must be
What is the owner selling the business? How was the
purchase price set?
What have been the sales trend? How can you make sales
B. Market Information and Strategy
This section summarizes the results of your market research,
providing the basis for why you believe there is a market niche for your
enterprise. You should describe the people who need your service or product
-- which is your target market, the customers most likely to patronize your
store or purchase your products or services. This section should also deal
with how you are going to sell your product -- your marketing strategy. How
have you identified potential customers, how will you contact them and sell
your product or service?
Some of the questions that should be covered are:
Who is your market - primary and secondary customers?
Define the market area you have targeted. What is the
What share of the market is your objective?
How will you attract this market?
What is your market strategy addressing:
Project - packaging, style design
Place - channels of distribution / delivery
Promotion - media used to generate awareness
What is your advertising plan (include the costs to
produce, media placements and frequency)?
What are the planned sales methods, pricing policy, terms
of sale, methods of distribution, and customer service considerations?
Is your market seasonal or cyclical? Are there other
factors or influences affecting sales?
Are there unique market considerations, and how will you
address these concerns?
For both the MARKET and the COMPETITION sections, you should
be able to provide enough detail to convince the reader that you really know
the business and your strategy is reasonable to achieve the level of sales
you are anticipating in the related financial projections.
Competition should be recognized and analyzed to understand
their strengths and weaknesses, and how this may affect your share of the
market. Most small businesses will not create additional demand for a
particular good or service, but will obtain sales by attracting customers
from existing businesses in the same market. Be honest in your analysis, and
do not neglect consideration of indirect competition - alternative uses of
the customers' limited dollars. You should clarify why you believe "there
are compelling reasons why potential customers would choose to spend their
money at your business instead of elsewhere".
Some key questions that should be asked are:
Who are the five closest competitors?
Where are they located in relation to your business?
Are there potential new competitors?
How is their business? Steady? Increasing? Decreasing?
What are their strengths / weaknesses and resources?
What have you learned from their operation?
What are the critical competitive characteristics, and how
does your product compare with these factors: Price, Service, and Quality.
Why will customers buy from you rather than your competition?
D. Business Facilities and Operations
For a retail store, the location can be critical to the
success of the business. Other ventures may not need to be in high traffic
areas, but there are still key considerations that should be addressed in
the business plan:
What is the address (not just mailing but actual location)
of your business? Why was this location selected? What are the advantages
and recognized disadvantages? What are the zoning and deed restrictions?
What are the physical features (including age, condition,
type of construction) of the building? Do you plan any improvements or
renovations? What will this cost (based on actual quotes from
contractors)? How does this building affect your operating costs
(insurance costs, utilities, shipping or parking costs, etc.)? Are there
opportunities to expand?
Will you own or lease the building? State the terms and
What kinds of businesses are in the area? Will they help
Retail businesses must consider -
The image of the area and how it complements or conflicts
with your business, traffic counts and demographics.
Manufacturing enterprises should address -
The production capacity of the site vs. planned sales
Safety and environmental considerations
Equipment - was leasing considered and was technology
Subcontracting - how close, what arrangements were made?
Suppliers - delivery schedules, back-ups, terms
Timing factors for material inventory build-up, sales,
delivery and payments
Shipping cost considerations / access
E. Management and Personnel
If this plan is to be used to obtain financing from a bank
or outside investors, the description of management may be the most
important section of the proposal. It is imperative to show that the people
planning to operate the business have the specific skills and competence
needed to make the business a success. You should demonstrate that you have
a clear understanding of all the skills / expertise needed to operate this
business. If you are weak in particular areas, you can show the steps taken
to acquire the necessary expertise. Areas that need to be covered in the
management section are:
Management Expertise - personal history of the principals
stressing any related work experience or training (resumes of key
personnel should be attached).
Key Personnel - duties and responsibilities - listing to
show understanding of what is involved in managing this business and who
is to be responsible.
Salaries and employment agreements for key staff to assure
that you have a team that is on hand and qualified to implement the plan.
Other resources available to the business (consultants).
Besides management staff, it is important to indicate the
personnel needed to operate the business, related to the planned level of
production or hours of operation. Questions to be addressed are:
Present and future manpower requirements (number of
employees / job titles)
What skills are needed, and are qualified workers readily
Plans for recruiting, hiring and training, if appropriate
Hours (full or part-time) and wages / compensation plan.
Careful preparation of the financial reports will provide
the lender(s) with a clear perspective of the financial feasibility of the
venture. The financial data section of the business plan should clearly
The funds needed for the planned business start-up or
the proposed expansion or new effort, and where the money will come from
(personal, bank, etc.)
The specific uses of these funds, including equipment
lists, estimates for construction and/or installation, inventory to be
purchased, or start-up or operating costs to be incurred before break
even status is achieved.
Where the money will come from to repay the loan or
satisfy the return on investment (typically shown in the cash flow
projections as Loan or Investment Repayment).
The collateral available to secure the loan.
A. Source and Application of Funds; Collateral
Summary chart of the sources of all funds required for the
start-up or expansion planned. Identify source, amount of funds from each
source, terms or conditions, and status of commitment.
Collateral (hard assets that the bank can sell in the case
of business failure to recover their investment) must be provided by the
business, or the business and the owners. Even for a corporation, owners
must provide personal financial statements (assets and liabilities) to the
bank and may have to personally guarantee the loan.
B. Capital Equipment List
A listing of the specific equipment to be purchased,
including the model or other description, cost per unit, source or
supplier, whether new or used, anticipated useful life if not common
knowledge, and other information to justify expense and need for funds.
C. Cash Flow Projections
Monthly chart of expected revenues and other cash
available (loans and investments) compared to payment of expenses.
Obviously, "Happiness is a Positive Cash Flow" and the enterprise cannot
operate long with a negative cash position.
D. Explanation of Assumptions Used in Preparing the
Explains assumptions in sufficient detail so that the
reader can understand where the numbers in the Pro Forma were derived
from, and can assess the reasonableness of the estimated revenues and
Other Supporting Documents
For existing business additional financial history (past
three years) will be needed:
- Income (P&L) Statements
- Balance Sheets - latest no more than 45 days old
The following list suggests some of the other documents that might be
included in a loan request or investor proposal:
- Resumes of key personnel
- Credit information for existing businesses
- Quotes or estimates for equipment or construction
- Letters of intent / contracts from potential customers
- Lease or purchase agreements
- Maps showing location and market information
- Photographs of products, equipment or buildings
- Charts and graphs to support marketing data
- Articles / reports to support industry trends data
- Other legal agreements (patents, license to manufacture, employment