Elements of a Good Business Plan
||Your business plan is important for a number of reasons. It is what lenders such as banks and the Small Business Administration use in deciding to lend you money. It's the main company document that you will use to gauge your company's success and to make decisions about what you should do first, second, or not at all. It is also a document for showing your employees the big picture and their role in it.|
Your plan outlines your goals, expected costs, marketing plan and exit strategy and serves as a road map for how you expect to succeed and how you'll measure your success.
Below is a quick overview of the components of a good business plan. You can obtain free, professional help from Montgomery County Economic Development and with the Maryland Small Business Administration (more information at the end of the article):
An Executive Summary
The executive summary introduces your business strategy and gives an overview of your goals and objectives. This is the most important section for banks and the SBA because it summarizes what you are about, and encourages the reader to continue if it is exciting and inviting. It also acts as an important communication tool for employees need to understand and support your ideas and plans. Here is where you share your objectives, (keep food costs under 32% of revenue, open 2 stores by 2009); your mission and your keys to success (product quality, cost containment, etc.)
A Statement on the Origins of your Business
Here is where you explain the origins behind the creation of your business and how you came up with the idea to start your business. Tell of your concept (theme, distinctive design features, merchandising); ownership (a profile of the owner(s); history (when was the company established, what has it accomplished and hen [perhaps using a table]; location(s); and facility(ies).
Biographies of You and Your Managers
This is where you share information on your management team such as names, education/training, backgrounds and responsibilities.
A Statement of Your Businesses' Goals
Here is where you share the short and long term goals for your business. What clientele are you serving? (Wine connoisseurs looking for that special, hard-to-get bottle; folks wanting a good sub and six-pack to take home; families who enjoy a great meal at a reasonable cost; people looking for that ultimate dining experience, etc.); How fast do you think your business will grow? (Where do you expect to be at the end of the first year; after five years; after ten?) Do you intend to extend to other areas as you progress or start to specialize? (Are gift baskets the thing of the future; will you add entertainment?) Be as specific as possible.
An Explanation of What You Are Offering
What exactly do you intend to do? Here is where you let define your strategy including a discussion of how your idea differs from everything else out there.
An Analysis of the Market Potential for What You Are Offering
Here is where you show, in no uncertain terms, that you have a viable plan that is destined for success. Is your target market large and growing? This is where you will need to either do some research or pay to have it done for you. Look at your location and assess demand. Are you in a high class neighborhood? Is your area middle-class and near a supermarket. Is there a lot of building or is the area established? Where are your customers coming from and what do they want? What is the radius of your customer base? Are you on a well-traveled route for people on their way home from work? You may be able to get some basic information simply by using the Web and referring to the census.
Details of Your Marketing Strategy
How do you plan to tell the world (or your world) that you are here for them? Will you advertise in the local paper(s) and if so which ones and how often? Will you use television, radio, flyers, the web? Will you rely on word of mouth? You'll need to identify your strategy in some detail, such as advertising weekly in the local paper, and also how much you plan to spend. Define your objectives.
A Three- to Five-year Financial Analysis
This section should include a summary of your financial forecasts with reasons why you think these things will happen. You'll want projected income statements, balance sheets and cash-flow projections for the entire forecast period. The summary in this section is also where you would tell prospective lenders how much money you'd like to borrow and why. This area merits a great deal of thought as the assumptions that you make here will guide the success of your business.
An Exit Strategy
No one wants to think about failure, but you must know when to call it quits. All good business plans include this section, which lays out the benchmarks you'll use. Your strategy could be based on a sales figure, net income figure, growth, market reception or just agreement among the owners. If there is more than one owner, this section should detail how it will work if one wants to quit and the other wants to keep going.
Where to Find Help
- The Maryland Small Business Development Center Network, a statewide network of Small Business Development Centers sponsored by the State of Maryland and the U.S. Small Business Administration will review your plan for free. Call 1-301-403-0501 to make an appointment. The web address is /redirect.asp?redirect=http://wwwnew.towson.edu/sbdc/. (No dot between www and new.) Other confidential counseling topics at no cost include:
- Business Structuring
- Market Planning
- Market Development
- Financial Analysis
- Strategic Planning
- Financial Projections
- Accounting Systems
- Business Valuation
- Management Techniques
- Debt and Equity Funding Opportunities
- Cash Flow Analysis
- Montgomery County Department of Economic Development offers a small business tool box and can be accessed by clicking on: /content/ded/sbs/toolbox.asp Their information includes:
- How to Start a Business in Montgomery County
- How to Move an Existing Business into Montgomery County
- Assistance with Hiring/Training & Retaining Employees
- Resources for High Tech Industries
- Procurement (Contracting) Resource Center
- Where to Find Help with Business Plan Preparation
- Finding a Location for Your Business
- Developing Your Business Skills - Business Education Opportunities