The following is a brief explanation about the sections of a good Business Plan. A workbook is available for sale through the SBDC that takes you through these sections for your business.
A business plan is critical in that it communicates the important facts about your business. As its name implies, this section is a summary, generally no more than two pages in length. It will include the critical factors from all the sections of the business plan which follow in more detail; it does not include financial statements or projections. Because this summary is based on the information which follows, it is usually easier to write this section last, simply picking up the key points from the more detailed sections.
Description of Business
Overview of product or service offered
Legal structure of company
Names and positions of principals
In this section, you describe what you will sell, to whom you will sell it and how you will sell it.
- Detailed description of product or service offered
- Discussion of need(s) filled by product or service
- Detailed description of potential customers, including information on how they make their decisions, (i.e. whether it is based purely on price, based on convenience, because of perceived prestige value, and so on). It should also identify how potential customers become aware of your type of product or service (by driving by your store? by looking in the telephone directory or seeing advertising? by word of mouth?).
- Total market potential, based on your customer profile
- Competitors, including an analysis of their strengths and weaknesses relative to your product or service
- Action plan for how you will market your product or service to your potential customers, including a timeline and list of costs for promotions
This section highlights those skills which are necessary to successfully run your business, and demonstrates that those skills are present in the business itself. If outside resources are used to supplement your skills, this is also outlined.
- Brief personal and work history of the principals (detailed resumes may appear in the supporting documents later in the plan)
- Salaries, duties and responsibilities of key personnel
- Outside resources to be used by the business for critical functions, including cost of resources
This information may or may not be combined with the section on management. It is a detailed discussion of how you will produce your goods or deliver your services, including:
- Human resources necessary for the production of goods or delivery of services
- Production methods and flow charts (if applicable)
- How the goods or services are made available to potential customers (such as method of delivery)
Use of Funds
If the plan is being used to obtain financing, this section includes specific information on how the funds will be used and why and how this use of funds will benefit the business.
This is the only section not included in the Executive Summary, so the information here must be as specific and complete as possible, but presented in an easily readable form. Financial statements are most effective in obtaining financing when they follow certain generally accepted formats, which are available from your local Small Business Development Center or any basic accounting textbook. Financial information presented should include:
- The amount, source and use of capital being invested in the business
- A personal financial statement listing all personal assets and liabilities from all principals (these forms can be obtained from most lending institutions)
- Two years of personal tax returns (only when applying for a loan)
- Beginning balance sheet, projected balance sheets and income statements for two years
- Break-even analysis
- Cash flow projections for at least one year (also called a “proforma” cash flow analysis)
Many types of information can be included in this section. There are only two unbreakable rules: information must be relevant and it should communicate something worthwhile about your business. Topics which might be in this section include:
- Brief resumes of the principals
- Letters of intent from potential customers
- Letters of recommendation (relevant to your product or service or the operation of your business)
- Franchise agreements
- Special awards or recognition (relevant to your business itself or your business skills)