Writing a Successful Business Plan

An Overview
by Annette B. Haag, MA, RN, COHN-S/CM, FAAOHN

abstract
In creating and building a business, the entrepreneur assumes all the responsibilities for development and management,
as well as the risks and rewards. Many businesses do not survive because business owners fail to develop an effective
plan. The business plan focuses on major areas of concern and their contribution to the success of a new business. The
finished plan communicates the product or service to others and provides the basis for the financial proposal.

A
merican corporations are downsizing, outsourc- can economy. They are developing new ideas, prod-
ing, and flattening their hierarchies. As a result, ucts, and services that are on the “cutting edge” of the
advancement opportunities are shrinking. Con- economy. Their success brings profits and a competitive
versely, workers are looking for security, new opportuni- environment spawning more ideas and innovation. This
ties, and rewards from their work. In search of a more entrepreneurial spirit is evident in occupational health
rewarding lifestyle, increasing numbers of individuals are and safety including safety personnel, industrial hygien-
determined to become their own bosses or to work more ists, physicians, and occupational health nurses forming
independently by starting their own businesses and be- their own businesses.
coming entrepreneurs. About 600,000 new businesses are started each year
Entrepreneurs are considered the catalysts for in the United States, not including all the small home on-
change in today’s business world (Bangs, 1995). Most line businesses. Of these, approximately 200,000, or 1 in
businesses in the United States are small, with 20 or 5, will survive to see their fifth anniversary. Considerable
fewer employees. Yet, in total, small businesses account time, energy, and resources go into staffing a business,
for most of the new jobs created each decade. New busi- so why do so few survive the first 5 years? Most of these
ness owners are becoming the life blood of the Ameri- business owners did not have a business plan. Although
business and industry have found no simple equation for
ABOUT THE AUTHOR success, one basic rule holds true: “A business owner who
Ms. Haag is occupational health nurse, Drug Delivery Systems Division, fails to plan, plans to fail” (Covello & Hazelgren, 1995,
3M, Northridge, CA.
The author has disclosed no potential conflicts of interest, financial or oth- p. 2).
erwise. The author recently attended a meeting at her local
Address correspondence to Annette B. Haag, MA, RN, COHN-S/CM,
FAAOHN, Drug Delivery Systems Division, 3M, 19901 Nordhoff Street,
Chamber of Commerce during which the importance of
Northridge, CA 91324. E-mail: [email protected]. developing a business plan was discussed. When entre-
preneurs were asked why they did not develop a business

WORKPLACE HEALTH & SAFETY • Vol. 61, No. 1, 2013 19

plan, typical responses included, “It requires a lot of hard pay the bills. On the positive side, for many individuals
work and time,” “I am able to self-fund my business and losing a job is the impetus to start the business they had
developing a plan is not critical at this time,” and “I have wanted to start for many years.
my plan in my head.” Many felt that the rapidly chang- An effective plan may take from 50 to 100 hours to
ing economic environment invalidated their plans. The research, document, analyze, and review. Some consul-
discussion concluded that although no plan will ever be tants may accomplish the task in a shorter period. How-
100% accurate or current, an effective business plan en- ever, a poorly conceived plan can set the company back
ables an entrepreneur to quickly make necessary changes several months or years, or can result in business failure.
to meet competitive environmental changes. Building a business plan is a dynamic process; execution
Success requires hard work and careful planning. A is the primary task. Once it is formulated, the plan is fine-
business plan is the owner’s road map for a successful tuned and updated on a continuous basis. The business
enterprise—a blueprint, a statement of goals and hopes, a planning process entails a variety of steps.
compass, and a guideline to planned action. It is the cur-
rent and futuristic image of the business. Define the Business Concept
A business plan is key to securing financing, main- During this stage, business owners must determine
taining focus, communicating, and preparing for the un- the types of services and products they will provide, who
expected. “Your business plan is the heart and soul of will buy the services and products, and how these prod-
your operation and the most important set of documents ucts and services will be different from those provided
provided by you to any lending institution or potential in- by competitors. Even Thomas Edison recognized this fact
vestor” (Covello & Hazelgren, 1995, p. 2). The business when he said, “Anything that won’t sell, I don’t want to
plan is evidence of the business owner’s initiative and al- invent” (Abrams, 2010, p. 4). Questions for the business
lows the owner to communicate a step-by-step agenda for owner to ask include:
reaching goals. It enables the owner to take an objective, l Is this something new?

critical, unemotional look at the business in its entirety. l Is it something better?

Developing a business plan forces the owner to assess the l Does it have a niche in an underserved or new mar-

competition and establish competitive alternatives and ket?

advantages. l Would I buy it or use it?

The plan incorporates the possibility of uncertain

outcomes and provides for contingency strategies. Bank- Gather Data on the Feasibility and Specifics of the
ers and investors expect to see negatives as well as posi- Concept
tives in the business plan. They are further impressed Before an owner can develop the body of a business
when the entrepreneur has included a plan to handle the plan, information and reliable data about all aspects of the
unexpected. business must be compiled. For example, if the concept is
to develop a self-study guide to assist individuals in pre-
THE BUSINESS PLAN PROCESS paring for an examination, the needed data might include:
Many individuals believe that a business plan is only l How many other self-study guides currently exist in

needed to raise funds and document business parameters the specialty targeted?
for investors. However, business plans are actually the l How profitable is the company’s marketing of the

road maps that enable individuals to execute excellence. self-study guide?

Many entrepreneurs establish their businesses without l In what format will the self-study guide be distributed

business plans; however, this may take more time and re- (printed manuals, online, CD-ROMs)?
sult in higher costs. Without a business plan, the owner l What type of information is presented in the self-

has no concrete foundation or direction to keep the busi- study guide?

ness focused. The owner might not even know when the If the concept is to conduct educational seminars, the
business is headed in the wrong direction. The business data needed might include:
plan should clearly and concisely define the mission, val- l What type of educational seminars currently exist in

ues, strategy, measurable objectives, and key results the the specialty area targeted?
owner expects. l Are the seminars an overview on the subject area, or

It is important to set aside enough time to formulate do they offer an in-depth program on the topics covered?
the plan. Experts recommend starting the planning pro- l Do the seminars offer continuing education credit?

cess at least 6 months before initiating a new business. l What are the length and price of the seminars?

The owner should not wait until resigning from a cur- l Where are the seminars conducted?

rent workplace. Many individuals start researching their After formulating a list of questions, the next step is
ideas and writing their business plan during evenings and to look for the answers. Most information can be found
weekends while they are employed in another position. through the Internet, local libraries, government resourc-
The employment situation today is not as secure as it es, business publications, professional organizations, and
once was. Since the 2008 stock market crash, many in- trade associations. Paid research services are also avail-
dividuals have unexpectedly lost their jobs. For many it able. Because funding is always a consideration, the own-
has taken years to find a new position, and often the new er can find some of the information and have a research
position is not the job they want. They just need a job to firm handle more complicated tasks. Research firms can

20 Copyright © American Association of Occupational Health Nurses, Inc.

be recommended by various professional and trade orga-
nizations that support the owner's market niche. Sidebar 1
It is advisable not to over-research and collect more Business Plan Components
data than needed. During this phase, it is necessary to
answer some basic questions about the business. If the
entrepreneur is creating a product or service that does not Cover letter
exist, data may not be available. To make the plan more Executive summary
compelling and persuasive to investors, the owner should
Table of contents
use the most current data and the most reliable sources.
Whenever possible, it is best to use conservative figures Business description and history
and translate data into financial units. Business structure
Focus and Refine the Concept Product or service description
At this point, the owner analyzes the information Market analysis and trends
gathered and decides whether the original idea is still vi-
able or should be revised. Does a market still exist for the Operations
products and services? Will the time, energy, and money Technology plan
invested in starting and operating the business generate
sufficient return on investment to create a venture worth Management and organization
pursuing? Will the product or service survive in both Social responsibility and sustainability
good and bad economic times? For example, it is diffi-
cult for a construction industry to make money when the Development, milestones, and exit plan
number of new homes being built is low; another revenue Financial data
source is the remodeling market. It is often tempting to
Appendix
offer too much. Focus is critical. The first phase of a busi-
ness should be narrowly defined.

Outline the Specifics of the Business insubstantial. The appendices are limited to no more than
At this point in the process, the owner crafts a con- the length of the plan. If investors are interested, they will
cise statement of the purpose of the business. A helpful ask for more information. Most plans should project 3 to
exercise is to write a mission statement outlining what 5 years into the future or until the owner has reached the
will be provided, to whom the product or service will proposed exit strategy (Abrams, 2010).
be provided, and what will differentiate the business. “A
rule of thumb: If you can’t describe your idea clearly and BUSINESS PLAN COMPONENTS
simply, you haven’t thought it through” (Bangs, 1995, At a minimum, a business plan must contain the
p. 9). This information should be included in the execu- components listed in Sidebar 1.
tive summary. If financing is needed, which has been
more difficult to secure in the recovering economy, the Cover Letter
owner must capture the interest of investors within the A cover letter should entice the reader to give care-
first few sentences of the executive summary. The owner ful consideration to the business opportunity and to read
must instill a positive impression the first 5 minutes. In- further. The cover letter should include:
vestors rarely read the entire business plan. The most im- l Why the owner has chosen this funder to receive the

portant aspects of the plan must ignite the interest of the plan.
reader to avoid being rejected and encourage the reader l The nature of the business.

to finish the plan. l The development stage of the business.

l The amount of funds sought.

Using a Compelling Form for the Plan l The type of funding sought (e.g., investment or loan).

The format of the plan may vary according to the l The principals of the company and contact informa-

intended use and readership. However, the author must tion.

remember that readers’ time is extremely valuable. Bank- The cover letter must be simple, attractive, concise,
ers, venture capitalists, and other investors rarely have and tailored to each investor.
time to give each proposal and business plan the atten- Potential investors should be contacted again about
tion deserved. Each owner will be competing with other a week after the plan is submitted; it is acceptable to
entrepreneurs for needed support. Highlighting key areas ask when the funding source might contact the owner
and summarizing as needed will allow investors to easily for further conversation. Inquiries should be brief. Most
review the data contained in the plan. contacts will be through e-mails and voicemail messages.
Most experts suggest the business plan be no longer The owner should have a message that quickly explains
than 15 to 35 pages, not including the financials and ap- the nature of the business.
pendices; 20 pages are sufficient for nearly every busi- Sources of funding and department financing include:
ness. Anything fewer than 10 pages may be viewed as l Banks and lending institutions.

WORKPLACE HEALTH & SAFETY • Vol. 61, No. 1, 2013 21

l Loans or investment from family and friends. l What is the mission of the company?
l Cash advances and personal or company credit cards. l Where is the business located and what geographical
l Venture capitalists. areas will it serve?
l Private investors. l What hours of the day and days of the week will the

Owners must have a well-conceived financial plan to business operate?

secure the money needed to start and sustain the business. l Will the business be seasonal?

l What is the nature of the business (i.e., its products

Executive Summary and services)?

The executive summary captures the essence of the l How will the business succeed and what is its growth

business plan. This section is an abstract of the compa- potential?

ny’s present status and future direction but is prepared l What is each individual’s experience in the business

after the plan is completed. The executive summary is the and what positions will individuals hold?
most important section of the business plan. The execu- l What type of staff will be needed?

tive summary: l What makes this business special or different?

l Summarizes the basic concepts and highlights key l What is the financial status of the company (i.e.,

points. income and expenses)?

l Identifies the company's main concept, objectives, l What is the structure of the business?

and purpose. l Why will the business be profitable or continue to

l Identifies the target or niche market and competitive grow?

advantage and position. l What types of patents, trademarks, copyrights, and

l Outlines the marketing and sales strategy. licenses are needed?

l Identifies growth opportunities. For an existing business, the owner should state
l Highlights benchmarks (e.g., financial and non-finan- whether the business is expanding or if the plan is to sub-
cial targets). sume an existing business. Focus is the aim. When entre-
l Quantifies resources. preneurs are clear, concise, and knowledgeable about the
l Describes work and management experience and past business, they are able to concentrate their efforts and use
successes of the management team. resources effectively.
Investors will look for entrepreneurs who can articu- The business will need a name; naming a business
late their vision, passion, and dreams. requires a legal name search. The name of the business
If an owner is submitting a financing proposal, the should be memorable and easy to spell and include in-
executive summary is more complex and contains addi- formation about what the business does. Information on
tional information about the structure of the corporation. the purpose of the business should be provided so that
In addition, it includes the amount of money needed and potential customers and clients can find the business on-
the purpose. Finally, the owner will articulate how the line or in telephone books and directories. What the name
funds will benefit the business and be repaid. implies should be considered. The name of the company
The executive summary is targeted to the audience. is usually the first introduction investors and prospects
Current technology enables the entrepreneur to change, have to the company.
update, and tailor the business plan as needed. The im-
portance of the executive summary cannot be overstated. Business Structure
Some investors may prefer reviewing the executive sum- In this section of the plan, owners include historical
mary and financials before reviewing the plan. The ex- facts supporting any request for financing or acquisition
ecutive summary is usually no longer than 2 to 3 pages, objectives. The legal form of the business is listed (i.e.,
although a 1-page executive summary is acceptable. Bul- sole proprietorship, partnership, corporation, Subchapter-
let points are effective and make the executive summary S corporation, C-corporation, limited liability company).
more appealing to the reader. A busy funder should be Most new businesses start as sole proprietorships or part-
able to read the executive summary in 5 minutes (Abrams, nerships. Structural, management, or ownership changes
2010). are documented. Present or past successes are recorded.

Table of Contents Product or Service Description

The table of contents serves as a guide to writing and The purpose of this section of the plan is to provide
organizing the business plan. It also assists readers to un- a description of the product or services offered. Unique
derstand and easily access the information presented. features that provide a competitive advantage are high-
lighted. Products and services provided by competitors
Business Description and History are analyzed. Entrepreneurs should list the advantages
The objective of this section is to describe the busi- of the product or services provided, along with improve-
ness, how the entrepreneur will manage it, and why the ments over existing products and services. The entrepre-
business will succeed. If the business is new, the follow- neur must explain the strategy for meeting or dominating
ing questions should be answered (Bangs, 1995): the competition.
l What is the legal/corporate name of the business? A plan to introduce new products and services should
l What is the legal form of the business? be included. When completing this segment of the plan,

22 Copyright © American Association of Occupational Health Nurses, Inc.

a sales breakdown by product, region, and industry type sole focus (Bangs, 1995). Marketing plans and strategies
is essential. New products might include selling informa- are not valuable unless supported by accurate data. Cur-
tional material presented at a seminar, such as manuals rent technology facilitates the process of collecting need-
and audio recordings, or webinars to clients who are un- ed data. Even with historical and current data, predicting
able to attend the program. The product life cycle and the future is a challenge. The owner must be realistic and
seasonality of the product or services are noted. Profes- alert for market changes.
sional textbooks and references have a shelf life of ap- Marketing Strategy. Marketing strategy also in-
proximately 3 to 5 years; they should be updated periodi- cludes analysis of the alternative opportunities and risks
cally to remain current with trends, technology, research, to the company with informed consideration of the com-
regulations, and legislation. Discussing the duration and petition, social environment, and company’s internal pro-
impact of the product or services on competitive advan- duction capability (Arkebauer, 1994).
tage and whether the product has a limited shelf life is Entrepreneurs survey the existing market to deter-
essential. The owner provides documentation when a pat- mine size, diversity, and location. They define the com-
ent, copyright, or exclusive agency is involved. petitors and their pricing policies, promotional strategies,
The owner includes responses from clients and in- and relative share of the market. Is the market growing or
quiries from prospective clients that illustrate the demand shrinking? The owner should outline trends, implied op-
for the product or service. Relationships with leading portunities, and expectations of industry forecasters for
companies and major accounts and accomplishments the next 2 years, including projections.
are documented, substantiating the company’s fitness for Strengths and Weaknesses. Strengths and weakness-
growth. If the owner is concerned about proprietary infor- es should be listed. When discussing strengths, entrepre-
mation, a non-disclosure agreement is created. neurs should place at least as much emphasis, if not more,
on marketing as on the product. Strengths include how
Market Analysis and Trends the product or service is favorably differentiated from the
This segment describes the existing marketplace in competition in actual performance, quality, and reliabil-
which the entrepreneur will introduce the company, its ity, breadth of line and options, distribution, pricing, and
products, and services. It can be viewed as a plan within a awareness and image.
plan. At its most basic level, the marketing strategy (plan) When documenting weaknesses and barriers, the en-
sets forth the product’s or service’s marketing mix and in- trepreneur must explain how the problems or threats will
cludes product, price, promotion, and place (distribution) be overcome. The discussion also includes opportunities
for the coming year with projections for at least 5 years. to justify the potential with logical rationale. For unex-
Marketing (including sales) is the revenue-generating ploited opportunities, it is crucial to include the estimated
part of the company. cost of entry, time required, and risk.
The product is the tangible aspect of the product or Target Marketing. The business must establish tar-
service itself, such as a professional textbook or health get market segment and a strategic fit, a match, between
and safety seminar. Price and value work together. Clients the company’s abilities and resources vis-à-vis the basic
consider durability, reliability, service, and quality in ad- criteria needed to compete in a market, also known as a
dition to cost. The approach to pricing strategies should be market “niche” or “target marketing.” Strategies may in-
logical and justified and should produce ample return on clude feasibility testing and competitive analysis. A busi-
investment while leaving room for a margin of error. Pro- ness owner may consider engaging a qualified and expe-
motion, the amount and nature of the marketing activities, rienced market research firm to analyze the market, using
might include advertising online, in professional publi- techniques such as focus groups. Typically, a group of 5
cations (e.g., Workplace Health & Safety, American As- to 10 individuals (from the target industry) are gathered
sociation of Occupational Health Nurses, Inc. [AAOHN] together with a moderator. The moderator works with
News, American Board for Occupational Health Nurses, prepared questions. The findings are used to determine
Inc. Continuing Education Resource Guide), in local the viability of the product and service and enable the
constituent newsletters, or via direct mail by purchasing business owner to focus on short- and long-range market-
mailing labels from targeted groups (e.g., AAOHN, As- ing, advertising, and promotion plans.
sociation of Occupational Health Professionals in Health- Market Potential—Positioning. An additional is-
care, American Society of Safety Engineers). Distribution sue to address is the size of the market niche. Is it large
includes the convenience and decor of the location in enough to sustain business profitably? Do enough clients
which the product or service is presented. For example, and effective and economically justifiable ways exist to
are the meeting facilities comfortable, reasonably priced, reach the target market? The business owner must be sure
and near convenient air and ground transportation? that the niche is large enough for growth. Positioning
Market Research. Marketing involves research to also includes location, pricing, benefits, and testimonials.
learn what people want to purchase. Business owners Positioning may be as simple as locating the business in
should put themselves in the client’s place to determine high consumer traffic areas and away from other similar
client needs. What is the client base demographically: competitors, or concentrating on selected market seg-
age, income, gender, family, location, and occupation? ments. Will the price of the product or service be targeted
What motivates a client to purchase a product or service: to the high, middle, or low end of the market? This may
lifestyle, motives, needs, or interests? The client is the depend on the target niche.

WORKPLACE HEALTH & SAFETY • Vol. 61, No. 1, 2013 23

 It is important for the business owner to differenti- online universe virtually all the time via smartphones
ate the business from other competing businesses by pro- and mobile devices. The result is a huge number of in-
moting the benefits of the product or service. A common dividuals constantly attached to the web, their phones,
question asked is, “What’s in it for me?” It is important and each other. The consultant must determine if the
for owners to place themselves in the client’s shoes. Po- strategy is to reach consumers or businesses. Does a
sitioning strategies include testimonial letters and refer- mass-market site (e.g., Facebook, Twitter, Friendster),
ences. The owner should never hesitate to ask clients for a special interest site (e.g., Chowhound for food and
referrals and permission to place quotes and comments in Linked Musicians for music lovers), or a professional
advertising literature. networking site (e.g., LinkedIn or Nurse Linkup) better
Pricing Strategy. Lack of courage in pricing may suit the business? Once the right site (or sites) is chosen,
be the single most significant marketing error small the owner must provide relevant and interesting content
business owners make (Bangs, 1995). A common mis- to raise the company’s visibility nationally and interna-
take is thinking that offering the lowest price is the key tionally (Abrams, 2010).
to success. Some clients may be price sensitive, whereas The Internet is a global network of computers that
others may be prestige sensitive. Knowing what clients communicate using a common language. It is simply a
want is crucial to this phase of the marketing plan. The “network of networks.” Although important, the ability
nature of the market will affect the pricing strategy. to buy and sell online is not the only part of the Internet
Three types of market, monopoly, oligopoly, and com- commerce equation. Entrepreneurs and established com-
petitive, are defined by the competition operating within panies are finding more outlets for marketing “the Net.”
that market. Examples include traditional product sales, selling adver-
Monopolistic Market. This market is one in which tisements on popular websites, collecting demographics,
one business controls the vast majority of supply. It has a and selling access to target markets.
unique or protected product (e.g., a patented invention), The most obvious way to market on the Net may
or a temporary edge on the competition due to an exist- be to establish a website that showcases the company’s
ing business structure. The optimum price is that amount products and services and accepts orders. One of the best
which will allow marginal revenues to equal marginal features of the Internet is its ability to level the playing
costs. field. Every company can look as significant as the next
Oligopolistic Market. This market is characterized company. Entrepreneurs do not need a storefront opera-
by few participants with little meaningful product differ- tion to present a professional image and can target cus-
entiation. In this case, pricing is a function of competi- tomers within or beyond their geographical area. Some
tor pricing. If the business owner reduces the price of the major types of online website advertising opportunities
product, competitors reduce their price. However, if the are (Abrams, 2010):
owner increases the price, competitors may not. l Portal sites and directories—online hubs usually

Competitive Market. This type of market is charac- grouped together around a common theme, product,
terized by numerous participants with almost no product topic, or location.
differentiation and little or no economic barriers to market l Website ads (banner and interstitial ads)—a ban-

entrance. In this market, customers, as a whole, determine ner ad is similar to a newspaper ad, including graphics,
the prices. All of these markets have critical implications photographs, and text; and an interstitial advertisement
for businesses. However, to stay viable, the business must is similar to an advertisement used in a TV commer-
generate a profit (Brenner, Ewan, & Custer, 1990). cial. When an individual types in a website address, the
Distribution, Advertising, and Promotion. Busi- website changes to another advertisement instead of the
ness owners must demonstrate that the price and prof- intended website.
itability of the product or service justifies the costs of l Sponsorships—website sponsors will give an adver-

sales (e.g., presentations, advertising, website, commis- tiser visibility and recognition on their websites.
sions, telephone, travel) and the distribution channels l Online classified—text with pictures like a classified

selected. The marketing strategy must establish the opti- ad.

mum channels of distribution, including executive sell- l Affiliate auction sites—eBay has created numerous

ing, direct sales force, manufacturers’ representatives, marketing opportunities. On these sites, the owner can
distributors, retailers, national and regional chains, in- create stores and list products as “Buy It Now.”
dependents, mail order and direct response, catalogs, l Affiliate programs—advertise on other websites and

telemarketing, original equipment manufacturers, inter- arrange pay-per-sale ads for which the website is paid if
national distribution, the media (i.e., radio, television, the ad results in a sale.
print, social), and the Internet. Occupational health and A realistic budget should be allocated for an adver-
safety professionals have found successful distribution tising and promotional campaign. The owner may need
and advertising channels exhibiting at national, state, someone to advertise, as advertising can be time con-
and local conferences, placing advertisements in profes- suming. Business owners should devote the majority of
sional publications, and using direct mail (i.e., flyers, their time to running and growing the business. As the
brochures). business grows, additional sales and marketing personnel
Social media offers an enormous range of market- may be needed. Business owners must also decide if they
ing opportunities. The public is now connected to the intend to market their product and service internationally.

24 Copyright © American Association of Occupational Health Nurses, Inc.

Which products and services are well suited for interna- able today, the owner may benefit greatly by using the ser-
tional sales, and which countries are the best prospects? vices of a technology consultant to assist in choosing the
Advertising and promotion strategies also include logos, best products and systems to meet business needs. Key is-
stationery, business cards, and packaging design. As men- sues when choosing technology include (Abrams, 2010):
tioned earlier, the marketing section of the business plan l Function.

is a plan within a plan. The entrepreneur can significantly l Ease of use.

impact investors and customers if a simple rule is fol- l Cost.

lowed: keep the message concise and clear. The owner l Security.

must remember that the marketing plan and sales strategy l Ability to be upgraded and expanded.

are the heart of the company’s business. l Integration with existing data and technology sys-

tems.
Operations
The operations section of a business plan explains the Management and Organization
day-to-day functions of the company. This section varies, Various studies analyzing key factors in small busi-
depending on the type of business. The differing require- ness failures have determined that 98% of failures stem
ments are best illustrated by considering retailing and from managerial weaknesses. Only 2% of the failures
manufacturing. The operation of a retail establishment is are due to factors beyond the control of those involved.
conceptually straightforward; businesses manufacturing Dun and Bradstreet grouped the failures into categories
technical products are more complex, but the mechanics (Lasher, 1994):
are easier to understand. Operations for a retail business l Poor choice of business type.

simply involve buying the product, transporting it, storing l Owner not suited to small business.

it, selling it, and delivering it. For the manufacturing busi- l Emotional selection of location.

ness, the product’s quality and reliability depend on how l Lack of knowledge of advertising or attracting clients.

it is assembled. Readers may lack the technical knowl- l Failure to obtain proper professional advice.

edge to understand the process. Being too technical in the l Insufficient planning and investigation.

plan may present a problem (Lasher, 1994). Illustrations l Poor choice of legal form.

can be extremely helpful. Areas included in the opera- l Insufficient capital.

tions section are: l Too many non-critical assets.

l Facilities (square footage, acquisition, future needs). l Poor pricing practices.

l Location (accessibility to clients, suppliers, labor l Owner living beyond income from business.

force). l No knowledge of finances and record-keeping.

l Operating costs (heat, light, phone, Internet, water, l Poor credit-granting practices.

general upkeep). l Poor inventory management.

l Manufacturing capability (equipment, materials, l Inadequate borrowing practices.

personnel, space). The majority of these factors do not involve a lack

l Processes (productivity, fabrication, assembly, test of knowledge of the product or service of the business;
inspection, inventory control). rather, they are related to operating the business (Lasher,
l Suppliers, distribution channels (includes outsourc- 1994). When preparing the management section, five ar-
ing). eas should be addressed (Bangs, 1995):
l Labor (unskilled, skilled, special requirements or 1. Personal history of the principals.
talents). 2. Related work experience.
l Research and development (creating new products 3. Duties and responsibilities.
and services or improving on an existing product). 4. Salaries.
l Quality control (Total Quality Management, Continu- 5. Resources available to the business.
ous Process Improvement philosophy). The personal history of the principals documents
l Contingency planning (problems addressed and over- their business background, education, special abilities,
come). interests, and personal financial status. Investors usually
l Customer satisfaction feedback. have two concerns. First, they do not want to see lavish
This section does not need to be thoroughly detailed; spending on living expenses. Second, they do not want to
rather, the plan should be brief and to the point. Bulleted see frugal spending on living expenses. Both could lead
points are helpful. The business owner must be cognizant to business failure.
of safety and health issues, labor regulations, protecting Work experience should explain whether the experi-
the environment, legal considerations, government regu- ence is directly related to the business venture. Unrelated
lations, adequate insurance protection, and imported or business experience can indicate a weakness in the man-
exported goods. agement structure. Investors are also looking for transfer-
able skills. Investors want to lend to individuals, not com-
Technology Plan panies. The owner must convince decision makers that
Every business needs technology; the owner will need management personnel are serious and levelheaded and
to determine what functions require or could benefit from have every intention of focusing on the business venture
technology. With the numerous technology systems avail- and repaying the loan.

WORKPLACE HEALTH & SAFETY • Vol. 61, No. 1, 2013 25

 Investors want to see balance and the ability to pro-
Sidebar 2 vide the four essential elements of management: plan-
Start-up Costs ning, organization, control, and leadership. It is nec-
essary to designate who will be in charge of particular
responsibilities and tasks and have a plan outlining the
List the specific details of the initial cash require-
formal structure of the organization. When developing a
ments. These are expenses incurred before busi-
management team, the owner must determine the types
ness launch. Post-launch expenditures should be
of managers and employees needed (e.g., top decision
entered in the income statement.
makers—president, chief executive officer, chief operat-
Cost ing officer, chief financial officer, division presidents),
Facilities key production personnel, plant managers, key technol-
ogy personnel, management information systems direc-
Land purchase tor, systems administrator, principal marketing and sales
Building purchase staff, human resource staff, training directors, and head of
Initial rent research and development. In smaller businesses, respon-
sibilities are shared by many individuals. Each business
Deposits (security, utilities, etc.) is unique in the type of personnel needed and will depend
Improvements/remodeling on the products and services being provided.
Support professionals and resources outside the com-
Other
pany such as researchers, technical advisers, accountants,
Other and attorneys are also included on the management team
Equipment (Covello & Hazelgren, 1995). An organizational chart is
one way to describe the management structure, along with
Furniture
job descriptions detailing job duties and responsibilities.
Production machines/equipment Proposed salaries, including bonuses, profit sharing
Computers/software plans, and other compensation arrangements for each
member of the management team, should be listed. In
Cash registers general, salaries should be based on industry averages.
Telephone/telecommunications However, deferred compensation (e.g., stock options)
Vehicles is desirable, as it demonstrates long-term commitment.
When issuing stock, it is advisable to make it available to
Other key executives over a period of several years. This strat-
Other egy encourages executives to think strategically and en-
hances the likelihood of the employees remaining with
Materials/supplies
the company for an extended period (Schilit, 1990). A
Office supplies simple statement of management compensation is suffi-
Stationery—business cards cient. Being realistic and factual is crucial. Because of
its importance to the success of the company, investors
Brochures/pamphlets, other descriptive
may review management expertise and structure before
material
reviewing any other section of the plan.
Other
Other Social Responsibility and Sustainability
Abrams (2010) stated, “Increasingly, companies
Fees and other costs judge their performance not merely on profit, but on the
Licenses/permits concept of the ‘triple bottom line’—or people, planet,
Trade or professional memberships profile” (p. 240).
l People. How do you affect other people (employees,
Attorneys community, specific groups like the disadvantaged, or
Accountants society as a whole)?
l Planet. How do individuals’ actions affect the envi-
Insurance
ronment, not just now but in the future?
Marketing/management consultants l Profit. How do owners achieve financial sustain-

Design/technical consultants ability, as the company must be profitable to remain in

business? Without focusing on profits, no company can
Advertising/promotional activities
long meet any of its other goals.
Other As the business and business plan are constructed,
Total the owner must consider the triple bottom line and not
just the financial bottom line. Being socially responsible
Note. Adapted with permission from Abrams (2010, p. 293).
brings many benefits to a company. It will attract employ-
ees and gain visibility for the company.

26 Copyright © American Association of Occupational Health Nurses, Inc.

 Sidebar 3
Income Statement: Annual by Quarter
For Year: ____ 1st Quarter 2nd Quarter 3rd Quarter 4th Quarter Total
Income
Gross sales
(Commissions)
(Returns and allowances)
Net sales
(Cost of goods)
Gross profit
Expenses—general and administrative
Salaries and wages
Employee benefits
Payroll taxes
Professional services
Marketing and advertising
Rent
Equipment rental
Maintenance
Depreciation
Insurance
Telecommunications
Utilities
Office supplies
Postage and shipping
Travel

Entertainment
Interest on loans
Other
Other
Total expenses
Net income before taxes
Provision for taxes on income
Net profit
Note. Adapted with permission from Abrams (2010, p. 296).

Financial Data and Projections To the financial backer, the heart of the plan lies in
This section contains a set of financials, including its financial projections. The rest of the plan is material
income and expense statements (i.e., profit and loss), that makes the financial backer believe that the financial
balance sheet, and cash flow statement. These reports projections will come true (Lasher, 1994). Financial fore-
are standard for most companies. The business owner casts in the business plan should be conservative, realis-
must understand how each of these documents is devel- tic, and supported with actual orders, client demographic
oped. The new business owner can learn about finan- information, and accurate production costs. A fundamen-
cial statements through workbooks, courses, and con- tal truth of financial planning is that dollar projections
sultants. Computerized spreadsheets permit changes in should follow projections of physical activity (Lasher,
financials. 1994).

WORKPLACE HEALTH & SAFETY • Vol. 61, No. 1, 2013 27

 of creating a ratio lessens the importance of individual
IN SUMMARY numbers and allows the owner to evaluate trends, indus-
try standards, and acquisitions. The ratio analysis allows
Writing a Successful the owner to project asset needs based on historical ra-
Business Plan tios. Seeking assistance from a certified public accoun-
tant simplifies the task. Investors will review financial
An Overview projections carefully to determine if they are realistic and
Haag, A. B. attainable. Other financial measures used to evaluate suc-
cess include market share, sales, inventory management,
Workplace Health & Safety 2013; 61(1), 19-29. and profit margin.
Another aspect of the business for which an ac-
1 In creating and building a business, the en-
trepreneur assumes all the responsibilities for
development and management, as well as the
countant is valuable is deciding whether to create fi-
nancial records on an accrual or cash basis. Most small
companies are advised to conduct business on a cash
risks and rewards. Many businesses do not basis, meaning that income and expenses are entered
survive because business owners fail to develop in the books at the time money actually changes hands.
an effective plan. In accrual-based accounting, income and expenses are
counted at the time of the transaction. The latter is often

2 The business plan focuses on major areas of

concern and their contribution to the success of
a new business. The finished plan communicates
used by larger businesses. Even if business owners are
not responsible for preparing the financials, it is criti-
cal that they have an understanding of financial state-
the product or service to others and provides the ments so they have better control of their companies.
basis for the financial proposal. Financial statements provide the information needed to
make informed decisions and assess the condition of

3 The plan identifies customers, target markets,

pricing strategy, and competitive conditions.
It aids in decision making and is an essential
the business.

Appendix
guide for operating a business successfully and The appendix is used to reinforce the content of the
measuring progress. business plan. The appendix includes the conclusions
outlined in the plan. Information that can be provided in

4 The business plan not only serves as a mecha-

nism for obtaining any needed financial resourc-
es, but also indicates the future direction of the
this section includes:
l Letters of intent.

l Key contacts.

company. l Endorsements and testimonials.

l Definitions of technical words.

l Client listings.

l Photographs.

It is important to produce a complete fiscal plan of l News articles.

what is expected to happen in the future (i.e., products l Résumés of key management personnel and consul-

to be sold, personnel, materials, equipment, and services tants.

needed by the company). Financial considerations in- l Contracts.

clude origination costs (Sidebar 2) and the use of funding l Trademarks or copyrights.

proceeds (i.e., marketing and advertising, salaries, facili- l Marketing materials (e.g., brochures).

ties, capital equipment, research and development, oper-

ating expenses, and capital). A FINAL THOUGHT ON PLANNING
The income and expense forecast statement (e.g., To avoid problems, delays, or rejection from inves-
profit and loss) is described as the operating statement ex- tors, it is best to present the business plan to impartial
pected for the business at the end of the period for which outsiders for review. An accountant should review the
the forecast is prepared (Sidebar 3). The balance sheet financial statements and assess business and personal
is a position statement, not a historical record. It shows tax considerations. An attorney can evaluate those areas
what is owned and owed on a given date. The cash flow that may have legal implications. The business plan is
statement measures the flow of money, both expenses and typed neatly and placed in a folder or spiral binder for
revenue, for the business (Gray, 1995). Projected finan- presentation or e-mailed to the investor as needed.
cials are an estimation of future financial earnings and The business plan components listed above are the
expenses. Projections are usually divided into monthly main core elements commonly included in most plans.
projections for the first 2 years, and annually thereafter, However, no single way of preparing a business plan
up to and including year 5. is required. Alternative formats can be found in various
Financial ratio analysis is also used to provide a references and in computer programs specifically de-
formalized system of relating elements of the balance signed to take the business owner step by step through
sheet to the income statement. The mathematical effort the process.

28 Copyright © American Association of Occupational Health Nurses, Inc.

 The importance of planning cannot be overempha- As the number of new businesses increases each
sized. Well prepared and executed, the business plan is year, competition for funding is greater than ever. Own-
the entrepreneur’s most crucial business document. In- ers who provide business plans with a clear definition of
vestors expect a higher level of expertise and prepara- the business, evidence of strong management, thought-
tion from entrepreneurs they choose to fund. The suc- ful marketing capabilities, and an attractive financial
cessful business plan is convincing because it not only structure have the competitive advantage and are more
discusses the business idea but also demonstrates the au- successful in obtaining necessary funding. However, the
thor’s business competence through a thorough, detailed greatest beneficiary of this project is not the investor, but
discussion of what must be done to implement the idea. rather the business owner. A well-conceived business
The business plan is not merely a report prepared plan is still the most effective tool for reaching long-term
and then forgotten. It is used by the entrepreneur to goals and achieving success.
make daily decisions. It enables the entrepreneur to fo-
cus on the tasks at hand. The business plan is reviewed REFERENCES
monthly, quarterly, or, at a minimum, semi-annually. Abrams, R. M. (2010). The successful business plan: Secrets & strate-
gies (5th ed.). Palo Alto, CA: The Planning Shop.
Entrepreneurs without a business plan often react intui- Arkebauer, J. B. (1994). The McGraw-Hill guide to writing a high-im-
tively to business conditions without properly thinking pact business plan: A proven blueprint for entrepreneurs. New York,
through all appropriate alternatives. Consequently, they NY: McGraw-Hill.
may find it difficult to make appropriate choices that are Bangs, D. H., Jr. (1995). The business planning guide: Creating a plan
strategically important to the business. A sound busi- for success in your own business. Chicago, IL: Upstart Publishing.
Brenner, G., Ewan, J., & Custer, H. (1990). The complete handbook for
ness plan gives the entrepreneur the ability to maneu- the entrepreneur. Englewood Cliffs, NJ: Prentice-Hall.
ver more efficiently and change course when needed. Covello, J., & Hazelgren, B. (1995). Your first business plan. Naper-
A well-composed business plan offers a true strategic ville, IL: Sourcebooks.
advantage. Gray, D. A. (1995). Start and run a profitable consulting business: A
step-by-step plan. Bellingham, WA: Self Counsel Press.
A business plan does not have to be perfect. The Lasher, W. (1994). The perfect business plan made simple. New York,
owner is not able to anticipate every situation. Endless NY: Doubleday Dell.
revisions waste time. No business plan is ever finished— Schilit, W. K. (1990). The entrepreneur’s guide to preparing a winning
it is a work in progress. As mentioned earlier, the owner business plan and raising venture capital. Englewood Cliffs, NJ:
will need to update the plan on an ongoing basis. Prentice-Hall.

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