Why do I need a business plan?
Remember, aside from the general business plan objectives, every business plan is unique. Your plan should include all the relevant information, but be customized for your business. Finally, focus on the content and not the number of pages.
Once complete, the business plan should identify the expectations you have for your new or existing business. If you plan to utilize the plan to obtain financing, the completed plan should “tell the story” of your business to a potential lender. The plan should serve as a stand-alone document in that all business issues are addressed without requiring additional verbal explanation. Review your plan regularly and make appropriate changes when your plans and strategies change.
Below is an outline of the sections and pertinent information that should be included in a business plan. Remember to contact your local Small Business Development Center for assistance in developing and completing a business plan.
Writing a Business Plan
The business plan describes an entrepreneur’s idea or a company’s past and current operations and then demonstrates how the request for an investment or loan will enhance the company goals and reward the investor. However, the most important function of the business plan is to communicate your goals and guide your company.
- Highlights major points of a business plan, including management team, market size, marketing strategy, strategic alliances, potential profits, dollar amount requested and proposed terms for repayment
- This section should be the LAST section written
- Explain the business
- Mission statement, company goals & objectives, business philosophy
- Describe industry, overview of product(s) or service(s) offered, market and competition and management experience
- Company strengths and core competencies
- Legal form of ownership
- Explain products and/or services in depth, pricing, fee structure, if applicable
- Target Market: Identify customer’s, provide demographic information explaining their characteristics
- Industry Overview: Detailed analysis of market size, growth, major trends, etc.
- Competition: Detailed analysis of top 3 – 5 competitors (review of competitor’s strengths and weaknesses)
- Explain in detail how your company will capture market share and your marketing/advertising public relations plan
- Explain the daily operations of the business: location, equipment, legal environment, personnel, processes, etc.
- Describe in detail your team’s experience, strengths, job functions, and plans to fill gaps in management team
- Cash flow, assumptions, income statement, balance sheet spreadsheets, break even analysis, sources and applications of funds.
Management & Organization
Discuss methods of production or service delivery, product or service development, quality control, inventory control.
- Personal résumés for owners and management
- Letters of reference
- Personal financial statements from all principals
- Contracts and/or letters of intent from suppliers and customers
- Copies of leases, licenses, permits, or any other legal documents
- Any document referred to within the plan but not included in body
Contact your local Kentucky SBDC for additional tips and templates for preparing an effective business plan. Your Kentucky SBDC Business Coach will provide assistance preparing and reviewing the business plan prior to meeting with lending institutions.