Business
Owner's Manual
Writing a Business Plan
This section offers some tips on the key elements of a good
business plan. You should think through these issues and jot
down your own ideas. There are many organizations that will help
you develop your notes into an effective written document. To
find one that meets your needs, search in the Services Directory.
A formal business plan is often critical to getting financing
for your business — most lenders and investors will send
you packing if you don't have one. Writing a plan is important
even if you aren't looking for money because it forces you to
think through your ideas in a careful, structured way.
A business plan is a road map for your business, explaining
where you are, where you want to go, and how you expect to get
there. Good planning is key to a successful business.
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
SOME GENERAL RULES
Here are some general
rules to keep in mind when writing a business plan. Don't forget to check
for additional library
resources, or search for a program that offers assistance in the Services Directory, if you need more help in writing your business plan.
Be Specific
For example, rather than
simply telling the reader you plan to use print ads as part of your marketing
strategy, you need to explain where the ads will be placed, how often they
will appear, etc.
The Better Your Research,
the Better Your Plan
You can find specific
information about the number of businesses like yours in the City, the demographics
of your customer base, and pricing in most business libraries. To find a
library close to you in New York, search the Services Directory.
Show Your Plan
Show your plan to others
and encourage readers to be honest. If they have questions, other readers
probably will also. You can then modify the plan to incorporate their suggestions.
A Business Plan is
not Written in Stone
You should revisit you
business plan frequently — every six months or so — to assess your
progress in meeting your goals and to adjust the road map to new business
conditions.
ADDITIONAL LIBRARY RESOURCES
The resources described
below are only some of the many items available on this topic from the Science,
Industry, and Business Library. The books listed are all available at
SIBL. Some items can be checked out at SIBL from the first floor circulating
collection. Others can be found in the reference collection on the library's
lower level. Look in the online catalogs (LEO for circulating, CATNYP for
reference) to find the exact location of these suggested resources.
Print Resources
These titles are in SIBL's
reference collection, located on the lower level of the library. They can
be used at SIBL, or you can check with your local branch to see if they own
copies. Many of these books also contain sample business plans to help guide
you in writing your own. Other business planning books focus on the actual
business plans of existing companies. Check the library's online catalog
to find the location of these books.
Anatomy of a Business Plan
Business Planning Guide (Spanish language
version available)
Business Plans Handbook, Volumes 1-4, Volumes
5- (available through Gale Virtual Reference Library)
Total Business Planning: A Step-by-step Guide
with Forms
Your First Business Plan: A Simple Question and
Answer Format Designed to Help You Write your own Plan
Electronic Resources
Search for articles about
writing effective business plans at SIBL's Electronic
Information Center. These suggested databases in the EIC contain
some of the largest collections of magazine articles:
Other Sources
Free appointments can
be made to see a SCORE counselor
in the library, who can look over your business plan while you're at SIBL.
A SCORE chapter office is located on the library's lower level, near the
McGraw Reference Desk.
