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Business Owner's Manual

Structuring Your Plan

A comprehensive business plan should include a Title Page and the following 10 sections:

1.  Executive Summary:

This is the first section the reader will see. It's important to capture his or her attention or the rest of the plan may be ignored. Logically, it's best to write this section last, after you've thought through the remaining sections.

  • Provide a brief summary of the plan and explain how it is organized.

  • Describe the business — your product or service, your purpose for borrowing, and investment opportunities.

2.  Company Description:

This section tells the reader in more detail what your business is all about — its location, function, history, size, etc.

  • Describe the nature of the business. Is it manufacturing? Retail? Service?

  • How long has it been in business? What are the business's short- and long-term goals?

  • How is the business structured? (If you haven't already made a decision or are rethinking your business structure, see Structuring a business.)

3.  Description of Product or Service:

This section provides a clear explanation of your product or service and its function.

  • Use photos and diagrams.

  • If a patent or trademark is necessary, explain what steps you are taking to secure one.

4.  Market Analysis:

This section describes the conditions and trends within the industry generally and the specific market and demand for your product.

  • Explain who will buy your product and why.

  • Identify your major competitors, their strengths and weaknesses, and how much of the market they control. Explain how your business will differ from theirs. What makes yours special?

  • Present information from independent sources to support your business' profit potential. Include any marketing research you have conducted, as well as historical, current, and projected marketing data for the industry and market niche.

5.  Marketing Strategy:

This section describes how you plan to reach your customers and sell your product or service.

  • Explain how you will package and position your product in the marketplace.

  • Describe in detail your plans for pricing, promoting, and distributing your product or service.

6.  Operating Plan:

This section offers a detailed description of how you will make your product or provide your service and how you will get it from your door to the customer. Include timelines, staffing levels, and product cycles. For example:

  • If a manufacturing business, explain where you will get your raw materials and describe the manufacturing process in detail, including the size of the factory, work force, stages of production, work flow, and volume.

  • If a retail business, give the location of your store, the reasons you selected that site, the source and size of your inventory, and where it will be warehoused.

7.  Management Team:

This section identifies the key people in your organization and explains how and why, based on their past experience, they will contribute to the success of your business. If you have an advisory team, also identify its members.

  • Outline the responsibilities of each of the key positions.

  • Provide resumes or biographies for each, including yourself.

  • If the staff will be larger than four people, prepare an organizational chart.

8.  Funds Required and Expected Uses:
      (applies only when seeking financing)

This section explains why you need a loan and what you will do with the money. You should ask for a specific amount.

Note: To begin to understand how much you need, you'll have to calculate your one-time start-up costs, your operating costs, and your projected revenues. See the Financing your business section of the Business Owner's Manual. These calculations and projections will be the basis for further planning and you should discuss them with a business counselor or other advisor.

  • Be precise about the purposes of your request. Are you looking for funds to purchase equipment? Working capital? Funds for renovation or expansion?

  • What terms are you looking for? If appropriate, include the projected potential of the business and proposed return on investment, i.e., how much the lender will get back as interest, or as an owner, if the business grows.

  • Describe your plan for repaying the loan and present a contingency plan in case things do not go as planned.

  • Make sure your projections are consistent with the written information in your narrative description. (Example: if you plan a national advertising campaign and your promotion budget is only $5,000, something might be wrong!)

9. Financial Statements:

These documents should demonstrate your understanding of basic accounting and financial concepts and how they apply to your business. You will need the following forms, which are described in more detail in getting ready for the lender and are available for printing or downloading:

  • Personal Financial Statement for each owner of the business.

  • Profit and Loss Statement for the past three years or, for a start-up, a projected profit and loss statement, called a "pro forma", for three years.

  • Cash Flow Statement for three years, actual or projected.

  • Balance Sheet, actual or projected.

  • A statement of the assumptions underlying your financial projections (explain how the figures were derived).

10. Appendices & Exhibits:

This section should document any issues that can't be included in the text:  distribution agreements, contracts for the purchase of your product, your operating licenses, any agreement by third persons to guarantee your loan, documentation of the property you will use to secure the loan, etc.

SOURCES:   Based on materials prepared by the Small Business Development Center at Baruch College and the Community Affairs Department of the Federal Reserve Bank of New York