Business Plan for a Startup Business

The business plan consists of a narrative and several financial worksheets.

The narrative template is the body
of the business plan. It contains more than 150 questions divided into
several sections. Work through the
sections in any order that you want, except for the Executive Summary, which
should be done last. Skip any
questions that do not apply to your type of business. When you are finished
writing your first draft, you’ll
have a collection of small essays on the various topics of the business plan.
Then you’ll want to edit them into
a smooth-flowing narrative.
The real value of creating a business plan is not in having the finished
product in hand; rather, the value lies
in the process of researching and thinking about your business in a
systematic way. The act of planning helps
you to think things through thoroughly, study and research if you are not
sure of the facts, and look at your
ideas critically. It takes time now, but avoids costly, perhaps disastrous,
mistakes later.
This business plan is a generic model suitable for all types of businesses.
However, you should modify it to
suit your particular circumstances. Before you begin, review the section
titled Refining the Plan, found at the end.
It suggests emphasizing certain areas depending upon your type of business
(manufacturing, retail, service,
etc.). It also has tips for fine-tuning your plan to make an effective
presentation to investors or bankers. If
this is why you’re creating your plan, pay particular attention to your writing
style. You will be judged by the
quality and appearance of your work as well as by your ideas.
It typically takes several weeks to complete a good plan. Most of that time is
spent in research and re-thinking
your ideas and assumptions. But then, that’s the value of the process. So
make time to do the job properly.
Those who do never regret the effort. And finally, be sure to keep detailed
notes on your sources of
information and on the assumptions underlying your financial data.
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Business Plan
OWNERS
Your Business Name
Street Address
Address 2
City, ST ZIP Code
Telephone
Fax
E-Mail
Page 3 of 28
I. Table of Contents
I. Table of
Contents.............................................................................................................
....................... 3
II. Executive
Summary ...........................................................................................................
..................... 4
III. General Company
Description .......................................................................................................
...... 5
IV. Products and
Services.............................................................................................................
................ 6
V. Marketing
Plan....................................................................................................................
..................... 7
VI. Operational
Plan....................................................................................................................
................15
VII. Management and
Organization......................................................................................................
.....19
VIII. Personal Financial
Statement..........................................................................................................
.....20
IX. Startup Expenses and
Capitalization..................................................................................................2
1
X. Financial
Plan....................................................................................................................
.....................22
XI.
Appendices ........................................................................................................
.....................................25
XII. Refining the
Plan ...................................................................................................................
................26
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II. Executive Summary
Write this section last.
We suggest that you make it two pages or fewer.
Include everything that you would cover in a five-minute interview.
Explain the fundamentals of the proposed business: What will your product
be? Who will your customers
be? Who are the owners? What do you think the future holds for your
business and your industry?
Make it enthusiastic, professional, complete, and concise.
If applying for a loan, state clearly how much you want, precisely how you
are going to use it, and how the
money will make your business more profitable, thereby ensuring
repayment.
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III. General Company Description
What business will you be in? What will you do?
Mission Statement: Many companies have a brief mission statement, usually
in 30 words or fewer, explaining
their reason for being and their guiding principles. If you want to draft a
mission statement, this is a good
place to put it in the plan, followed by:
Company Goals and Objectives: Goals are destinations—where you want
your business to be. Objectives are
progress markers along the way to goal achievement. For example, a goal
might be to have a healthy,
successful company that is a leader in customer service and that has a loyal
customer following. Objectives
might be annual sales targets and some specific measures of customer
satisfaction.
Business Philosophy: What is important to you in business?
To whom will you market your products? (State it briefly here—you will do a
more thorough explanation in
the Marketing Plan section).
Describe your industry. Is it a growth industry? What changes do you foresee
in the industry, short term and
long term? How will your company be poised to take advantage of them?
Describe your most important company strengths and core competencies.
What factors will make the
company succeed? What do you think your major competitive strengths will
be? What background
experience, skills, and strengths do you personally bring to this new
venture?
Legal form of ownership: Sole proprietor, Partnership, Corporation, Limited
liability corporation (LLC)?
Why have you selected this form?
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IV. Products and Services
Describe in depth your products or services (technical specifications,
drawings, photos, sales brochures, and
other bulky items belong in Appendices).
What factors will give you competitive advantages or disadvantages?
Examples include level of quality or
unique or proprietary features.
What are the pricing, fee, or leasing structures of your products or services?
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V. Marketing Plan
Market research - Why?
No matter how good your product and your service, the venture cannot
succeed without effective marketing.
And this begins with careful, systematic research. It is very dangerous to
assume that you already know about
your intended market. You need to do market research to make sure you’re
on track. Use the business
planning process as your opportunity to uncover data and to question your
marketing efforts. Your time will
be well spent.
Market research - How?
There are two kinds of market research: primary and secondary.
Secondary research means using published information such as industry
profiles, trade journals, newspapers,
magazines, census data, and demographic profiles. This type of information
is available in public libraries,
industry associations, chambers of commerce, from vendors who sell to your
industry, and from government
agencies.
Start with your local library. Most librarians are pleased to guide you
through their business data collection.
You will be amazed at what is there. There are more online sources than you
could possibly use. Your
chamber of commerce has good information on the local area. Trade
associations and trade publications
often have excellent industry-specific data.
Primary research means gathering your own data. For example, you could
do your own traffic count at a
proposed location, use the yellow pages to identify competitors, and do
surveys or focus-group interviews to
learn about consumer preferences. Professional market research can be very
costly, but there are many books
that show small business owners how to do effective research themselves.
In your marketing plan, be as specific as possible; give statistics, numbers,
and sources. The marketing plan
will be the basis, later on, of the all-important sales projection.
Economics
Facts about your industry:
• What is the total size of your market?
• What percent share of the market will you have? (This is important only if
you think you will be a
major factor in the market.)
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• Current demand in target market.
• Trends in target market—growth trends, trends in consumer preferences,
and trends in product
development.
• Growth potential and opportunity for a business of your size.
• What barriers to entry do you face in entering this market with your new
company? Some typical
barriers are:
o High capital costs
o High production costs
o High marketing costs
o Consumer acceptance and brand recognition
o Training and skills
o Unique technology and patents
o Unions
o Shipping costs
o Tariff barriers and quotas
• And of course, how will you overcome the barriers?
• How could the following affect your company?
o Change in technology
o Change in government regulations
o Change in the economy
o Change in your industry
Product
In the Products and Services section, you described your products and services
as you see them. Now describe them
from your customers’ point of view.
Features and Benefits
List all of your major products or services.
For each product or service:
• Describe the most important features. What is special about it?
• Describe the benefits. That is, what will the product do for the customer?
Note the difference between features and benefits, and think about them.
For example, a house that gives
shelter and lasts a long time is made with certain materials and to a certain
design; those are its features. Its
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benefits include pride of ownership, financial security, providing for the
family, and inclusion in a
neighborhood. You build features into your product so that you can sell the
benefits.
What after-sale services will you give? Some examples are delivery,
warranty, service contracts, support,
follow-up, and refund policy.
Customers
Identify your targeted customers, their characteristics, and their geographic
locations, otherwise known as
their demographics.
The description will be completely different depending on whether you plan
to sell to other businesses or
directly to consumers. If you sell a consumer product, but sell it through a
channel of distributors,
wholesalers, and retailers, you must carefully analyze both the end
consumer and the middleman businesses
to which you sell.
You may have more than one customer group. Identify the most important
groups. Then, for each customer
group, construct what is called a demographic profile:
• Age
• Gender
• Location
• Income level
• Social class and occupation
• Education
• Other (specific to your industry)
• Other (specific to your industry)
For business customers, the demographic factors might be:
• Industry (or portion of an industry)
• Location
• Size of firm
• Quality, technology, and price preferences
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• Other (specific to your industry)
• Other (specific to your industry)
Competition
What products and companies will compete with you?
List your major competitors:
(Names and addresses)
Will they compete with you across the board, or just for certain products,
certain customers, or in certain
locations?
Will you have important indirect competitors? (For example, video rental
stores compete with theaters,
although they are different types of businesses.)
How will your products or services compare with the competition?
Use the Competitive Analysis table below to compare your company with
your two most important
competitors. In the first column are key competitive factors. Since these
vary from one industry to another,
you may want to customize the list of factors.
In the column labeled Me, state how you honestly think you will stack up in
customers' minds. Then check
whether you think this factor will be a strength or a weakness for you.
Sometimes it is hard to analyze our
own weaknesses. Try to be very honest here. Better yet, get some
disinterested strangers to assess you. This
can be a real eye-opener. And remember that you cannot be all things to all
people. In fact, trying to be
causes many business failures because efforts become scattered and diluted.
You want an honest assessment
of your firm's strong and weak points.
Now analyze each major competitor. In a few words, state how you think
they compare.
In the final column, estimate the importance of each competitive factor to
the customer. 1 = critical; 5 = not
very important.
Table 1: Competitive Analysis