What is in a business plan?
What is in a business plan?
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I get asked all the time “what do I need to put into my business plan”. There is no simple answer to this question. Each business plan is written differently. I’ve personally written plans that are less then five pages and I have written plans that are well over 100 pages.
The first step in writing a plan is to consider your audience or who are you writing the plan for?
Personal planning guide
Proposal to current employer
Proposal to potential investors
Basic business outline
Franchise licensing proposal
*There are many more
Once you have chosen your audience you need to know what needs to be included in the plan. This again reflects an understanding of who you are writing the proposal for and what they are hoping to see. I think the SBA has an excellent guide for this section so I’m not going to try and reinvent the wheel. I always recommend that anyone considering stating their own business visit the SBA SCORE Counselors. Their service is completely free so you can not go wrong here. Take a look at what they say you should put in your business plan.
This is from the SBA’s site
What goes in a business plan? The body can be divided into four distinct sections:
1) Description of the business
Agenda should include an executive summary, supporting documents, and financial projections. Although there is no single formula for developing a business plan, some elements are common to all business plans. They are summarized in the following outline:
Elements of a Business Plan
1. Cover sheet
2. Statement of purpose
3. Table of contents
I. The Business
A. Description of business
D. Operating procedures
F. Business insurance
II. Financial Data
A. Loan applications
B. Capital equipment and supply list
C. Balance sheet
D. Breakeven analysis
E. Pro-forma income projections (profit & loss statements)
F. Three-year summary
G. Detail by month, first year
H. Detail by quarters, second and third years
I. Assumptions upon which projections were based
J. Pro-forma cash flow
III. Supporting Documents
A. Tax returns of principals for last three years Personal financial
statement (all banks have these forms)
B. For franchised businesses, a copy of franchise contract and all
supporting documents provided by the franchisor
C. Copy of proposed lease or purchase agreement for building space
D. Copy of licenses and other legal documents
E. Copy of resumes of all principals
F. Copies of letters of intent from suppliers, etc.
Now you do not need to use each and every part of the above outline. You need to gauge what you write to the expectations of those that will read the plan. I usually tell my clients that the more funding you are looking for the more complex your plan needs to be. If you are trying to get a $5000 loan from the bank you may only need a few of the above sections. If you are seeking $1M from a Venture Capital Fund then you may need even more then what is listed above. Your proposal needs to be relative to what you are trying to do.