Writing a Business Plan
Small Business Development Center
Georgia State University 404-651-3550
web: www.gsu.edu/sbdc
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Writing a Business Plan
Georgia State SBDC
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Why Write a Business Plan?
A Business Plan helps you appraise the achievability of a new
business abstraction in an objective, critical, and apathetic way.
• Business – Is there a market? How abundant can you sell?
• Administration – Does the administration aggregation accept the skill?
• Banking – Can the business accomplish a profit?
It provides an operating plan to abetment you in active the
business and improves your anticipation of success.
• Identify opportunities and abstain mistakes
• Advance production, administrative, and business plans
• Actualize budgets and projections to appearance banking outcomes
It communicates your abstraction to others, serves as a “selling tool,”
and provides the base for your costs proposal.
• Determine the bulk and blazon of costs needed
• Anticipation advantage and broker acknowledgment on investment
• Anticipation banknote flow, appearance clamminess and adeptness to accord debt
Who will use the plan? If you will not use the plan to accession money,
your plan will be centralized and may be beneath formal. If you are
presenting it to outsiders as a costs proposal, presentation
quality and absolute banking assay are actual important.
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Basic Business Plan Guidelines
Writing a Business Plan will apparently yield a lot of time. Up to 100 hours or
more is not aberrant for a new business that requires a lot of research.
A archetypal plan will accept three sections. Breadth one is a accounting section
describing Administration and Business aspects of the business. Breadth Two
includes banking projections. Breadth Three is added information.
A abbreviate (3-5 pages) Executive Arbitrary is generally added at the alpha of
more circuitous business plans.
• Breadth One should be thorough, but abridged and to-the-point. Use
headlines, graphs and "bullets" to advance readability. Length of this
section is usually 10 - 20 pages.
• Breadth Two describes in numbers the aftereffect of your business
strategies and plans. Your banking projections should be based on facts
and research, not “wild guesses.” Be able to absolve your numbers.
• Breadth Three contains acknowledging advice to reinforce the aboriginal two
sections. This section’s capacity will alter with your blazon of business.
Owners should be actual complex in the planning process. Hiring anyone to
do it or delegating it to anyone who is not a key affiliate of the company
will aftereffect in an inferior plan.
No plan (or a poor plan) is a arch could could cause of business failure. You can
improve your affairs of success with a adequate Business Plan.
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Georgia State SBDC
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Ten Ways to Ruin Your Business Plan
These errors in business plan alertness and presentation will attenuate the
credibility of the plan and aching your affairs to accept funding:
• Submitting a “rough copy,” (with coffee stains and typos) tells the clairvoyant that
management doesn’t yield the planning action seriously.
• Outdated actual banking advice or unrealistic industry comparisons
will leave doubts about the entrepreneur’s planning abilities.
• Unsubstantiated assumptions can aching a business plan; the business owner
must be able to explain the “why” of every point in the plan.
• Too abundant “blue sky” - a abortion to accede -to-be pitfalls - will advance the
reader to achieve that the abstraction is not realistic.
• A abridgement of compassionate of banking information. Even if anyone else
prepares the projections, the buyer accept to be able to explain them.
• Abridgement of specific, abundant strategies. A plan that includes alone general
statements of action (“We will accommodate apple chic account and the lowest
possible price.”) afterwards important abstracts will be absolved as fluff.
Especially important if the business plan is able for a lender:
• No adumbration that the buyer has annihilation at stake. The lender expects the
entrepreneur to accept some disinterestedness basal invested in the business.
• Unwillingness to alone agreement any loans. If the business buyer isn’t
willing to angle abaft his or her company, again why should the bank?
• Starting the plan with unrealistic accommodation amounts or terms. Do your
homework and adduce a astute structure.
• Too abundant focus on collateral. Even for a cash-secured loan, the broker is
looking against projected profits for claim of the loan. Banknote breeze should
be emphasized as the antecedent of repayment.
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Business Plan Outline
Cover Sheet: Business Name, Address, Phone Number, Principals
Executive Arbitrary or Account of Purpose
Table of Contents
Section One: The Business
A. Description of Business
B. Products/Services
C. Bazaar Analysis
D. Business Plan
E. Location
F. Competition
G. Administration and Operations
H. Personnel
I. Application and Effect of Accommodation or Investment
Section Two: Banking Data
A. Projected Banking Statements
Income Statements
Cash Breeze Statements
Balance Sheets
Assumptions to Projected Banking Statements
B. Break Even Analysis
C. Sources and Uses of Funds
Section Three: Acknowledging Documents Actual banking statements,
tax returns, resumes, advertence letters, claimed banking statements,
facilities diagrams, belletrist of intent, acquirement orders, contracts, etc.
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Section One: The Business
The afterward pages call in detail anniversary allotment (A through I) of the previous
Business Plan Outline. Disregard any questions that do not administer to your business.
A. Description of the Business
Part A provides an overview of key advice which is developed in greater detail
in the afterward pages. Aim for accurateness and artlessness in this part. Too abundant detail
here gets in the way of the basal ideas. The Elevator Analysis - Can you explain your
basic business abstraction in the time it takes to get from the antechamber to the 5th floor?
Basic Questions:
1) What accepted blazon of business is this?
2) What is the cachet of the business? Start-up, amplification or take-over?
3) What is the business form? Sole Proprietorship, Partnership, Corporation
or Limited Liability Company?
4) What are your products?
5) Who are (will be) your customers?
Additional Questions for Start-Ups:
1) Why will you be acknowledged in this business?
2) What is your acquaintance with this blazon of business?
3) What will be adapted or different about this business?
4) Why will your business be successful?
Additional Questions for Acquirement of Absolute Business:
1) When and by whom was the business founded?
2) Why is the buyer selling?
3) How was the acquirement bulk determined?
4) What are the accepted banking altitude and trends?
5) How will your administration accomplish the business added profitable?
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B. Products/Services
In this section, call your artefact offering. This will cover abstracts of product
features and an overview of different technology or processes. But don’t stop there and
don’t focus too abundant on technology. You accept to aswell call the artefact allowances and
why barter will wish to buy.
For a lot of businesses, the products/services are not absolutely unique. If castigation are, take
advantage of this while you can and plan for the aggressive battles that will come.
If your products/services are not unique, you accept to acquisition a way to position your
products/services in the apperception of your chump and to differentiate them from the
competition. Positioning is the action of establishing your angel with affairs or
customers. (Examples include: accomplished quality, everyman price, added selection, Best
customer service, faster delivery, etc.)
Basic Questions:
1) What products/services are you (will you be) selling?
2) What are the appearance and allowances of what you sell?
3) What Position do you accept (or wish to have) in the market?
4) How do your products/services alter from the competition?
5) What makes your articles different and desirable?
6) Why do (will) barter buy from you?
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C. Bazaar Analysis
For start-ups or absolute businesses, bazaar assay is important as the base for the
marketing plan and to advice absolve the sales forecast. Absolute businesses will rely
heavily on accomplished achievement as an indicator of the future. Start-ups accept a greater
challenge - they will await added on bazaar assay application libraries, barter associations,
government statistics, surveys, adversary observation, etc. In all cases, accomplish sure
your bazaar assay is accordant to establishing the activity of the business and the
reasonableness of the sales forecast.
Questions for Absolute Businesses:
1) Who are your accepted customers? (List bigger barter or categories.)
2) What do they buy from you?
3) Why do they buy from you? (Quality, Price, Reputation, etc.?)
Basic Questions:
1) Who are the purchasers of your articles or blazon of products? (Geographic,
Demographic and Psychographic characteristics)
2) What is the admeasurement of the market? Is it growing?
3) What is (will be) your share? How will your allotment change over time?
4) What is the industry outlook?
5) Are there segments of users who are under-served by competition?
6) Do any of these under-served segments present opportunities?
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D. Business Plan
In this section, you cover the highlights or your abundant business plan. The basic
components of a Business Plan are:
· What are you selling? (What allowances do you accommodate and what position or
image do you have?)
· Who wants the things you sell? (Identify Target Markets)
· How will you adeptness your Target Markets and actuate them to buy?
(Develop Product, Price, and Promotional Strategies)
Product Strategies
1) How will articles be packaged?
2) How ample will your artefact band be?
3) What new articles will you introduce?
4) What Position or Angel will you try to advance or reinforce?
Pricing Strategies
1) What will be your appraisement strategies? (For example: Premium, Every Day
Low Price, Frequent Auction Prices, Meet Adversary Price, etc.)
2) How will you analyze with antagonism and how will they respond?
3) Why will barter pay your price?
4) What will be your acclaim policies?
5) Is there annihilation about your business which insulates you from price
competition?
6) Can you add bulk and attempt on issues added than price?
Promotional Strategies
1) Who are your Target Markets?
2) How will you adeptness your Target Markets? (What Media will you use?)
3) How will you actuate them to buy? (What Message will you stress?)
4) What is the bulk and calendar for accomplishing of the business plan?
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E. Location
Locations with greater chump cartage usually bulk added to buy or rent, but they
require beneath spending for commercial to allure customers. This is abnormally accurate of
retail businesses breadth cartage calculation and accessibility are critical.
Basic Questions:
1) What is the business address?
2) Is it endemic or leased? If leased, what are the terms?
3) Are renovations or modifications needed, and what are the costs?
4) Call the acreage and the surrounding area.
5) Why is this a adequate breadth for your business?
For Mail Order, Telemarketing, Manufacturing, Consulting, or added companies
where the chump does not acquirement while physically at the business address, less
location detail is needed. Modify the breadth breadth to fit your situation. In some
cases, a adequate breadth may be one abutting to suppliers, busline hubs or a
complementary business that will aswell allure your Target Market.
F. Competition
"Who is your competition?" is one of the aboriginal questions a broker or broker will ask.
Business by attributes is competitive, and few businesses are absolutely new. If there
are no competitors, be careful; there may be no bazaar for your products.
Expand your abstraction of competition. If you plan to accessible the aboriginal roller skating rink
in town, your antagonism includes cine theaters, malls, bowling alleys, etc.
Basic Questions:
1) Who are (will be) your bigger competitors? Account them.
2) How will your operation be bigger (and worse) than your competitors?
3) How are competitors doing? What are their sales and profits?
4) (If Start-Up) How will antagonism acknowledge to your bazaar entry?
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G. Administration and Operations
Because administration problems are the arch could could cause of business failures, it is
important to altercate administration abilities and structure. Resumes of Principals
should be included in acknowledging data. If your business will accept few advisers and
rely heavily on alfresco professionals, account these key humans and their qualifications. If
you are gluttonous financing, cover claimed banking statements for all principals in
supporting abstracts section.
Basic Questions:
1) What is the business administration acquaintance of the administration team?
2) What are the anatomic areas of the business?
3) Who will be amenable for anniversary anatomic area?
4) Who letters to whom?
5) What will salaries be?
6) What administration assets alfresco the aggregation are available?
7) How will your products/services be produced? (Describe manufacturing
processes, proprietary technology and key supplier relationships.)
H. Personnel
The success of abounding companies depends on their adeptness to recruit, alternation and retain
quality employees. The bulk of accent in your plan will depend on the number
and blazon of advisers required.
Basic Questions:
1) What are the cadre needs now? In the future?
2) What abilities accept to they have? What training will you provide?
3) Are the humans you charge available?
4) What is their compensation? What binding allowances will be provided?
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I. Application and Effect of Accommodation or Investment
This breadth is important whether you are gluttonous a loan, alfresco investment (equity)
or advance your own money. It may be all-important to complete Breadth Two,
Financial Data, afore commutual this part.
Basic Questions:
1) What is the absolute investment required?
2) How will the accommodation or investment be used?
3) How will the accommodation or investment accomplish the business added profitable?
4) When will the accommodation be repaid?
5) If you are gluttonous disinterestedness (selling allotment of the business to an investor): -
What percent of the aggregation are you accommodating to accord up?
- What bulk of acknowledgment is accessible for the investor? (Note: If your business
plan will be presented to clandestine investors, seek acknowledged admonition to be sure
you are in acquiescence with balance laws.)
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Section Two: Banking Data
A. Projected Banking Statements
The basal purposes of banking projections are:
• Establish the accumulation abeyant of the business, accustomed reasonable assumptions
• Determine how abundant basal the aggregation needs and how it will be used
• Demonstrate the business can accomplish the banknote to accomplish and re-pay loans
It is usually helpful, but not necessary, to complete at atomic a asperous abstract of Section
One (the accounting section) afore attempting the banking section. In the written
section, you will advance and call your strategies for the business. In the
financial section, you will appraisal the banking appulse of those strategies by
developing projected Assets Statements, Balance Sheets, and Banknote Breeze Statements.
It is usually recommended that these projected statements be on a account base for
at atomic the aboriginal twelve months or until the business is assisting and stable. Activity
displayed aloft the account detail may be in arbitrary anatomy (such as annual or
annually.) The anticipation aeon for a lot of business affairs is two to four years.
Before you alpha developing projected banking statements, accumulate the suggested
information on the afterward pages. The claimed computer is an accomplished apparatus for
financial projections; and those with a adequate accomplishments in accounting and personal
computer spreadsheets may wish to actualize their own banking anticipation model. (There
are aswell some specialized software programs which accept basal templates to advice with
your banking forecast.)
The superior of your bump depends on the accurateness of the assumptions. (Garbage
in - Garbage out.) Absolute businesses will await heavily on accomplished banking after-effects as the
basis for their forecasts. Start-ups accept greater challenges. They accept to do extensive
research to prove the acumen of their numbers. Examples of sources include:
Industry abstracts from accessible sources and barter associations, claimed interviews with
potential barter and humans in the business, aggressive ascertainment and analysis,
etc.
If you would like assistance, accumulate the adapted advice on the afterward pages
and acquaintance the Small Business Development Center. The SBDC will assay the
information from your assay and advice you advance your projection.
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Steps in Banking Projections
For items 1 and 2, use the afterward “Fixed Asset/Start-up Expense List.”
1) Appraisal anchored asset requirements for the aboriginal year. Cover Land, Buildings,
Leasehold Improvements, Equipment, and Vehicles.
2) Appraisal any start-up or ancient expenses. Cover any costs bare to begin
operation such as acknowledged fees, licenses, and antecedent business costs.
For account 3, use the afterward “Unit Affairs Bulk and Bulk Analysis” sheet.
3) Define anniversary “unit” of your artefact or account and appraisal the affairs bulk and
direct bulk per unit. In the adapted places on the form, appraisal Bulk of Sales and
calculate Gross Accumulation as a allotment of the affairs price.
For items 4 through 6, use the afterward “Projected Assets Statement”.
4) Appraisal sales by ages for at atomic one year. (Unit sales bulk times the bulk of
units.) Accede how start-up, marketing, and melancholia factors affect sales.
5) Appraisal account Bulk of Sales and Gross Accumulation based on the percentages of sales
calculated in #3 above. Use a abounding boilerplate if assorted artefact lines.
6) Appraisal and catalog anchored costs by ages for at atomic one year. Cover things
like rent, insurance, utilities, salaries, marketing, legal/accounting, etc. Determine all
categories which administer to your business, but don’t cover costs actuality that are in
“cost of appurtenances (services) sold.”
Research items 7 through 10, and accommodate a abbreviate narrative.
7) Call the bulk of account (if any) adapted to abutment the sales forecast.
Express in bulk of canicule sales or about-face if possible.
8) Call your credit, sales, and collections policies. If you will accomplish sales on credit,
estimate the bulk of canicule afterwards the auction afore the boilerplate chump pays.
9) Call how fast you accept to pay your vendors for any items you will purchase.
10) Also: - Appraisal obligations for Assets Taxes.
- Businesses already in operation will charge the latest Balance Sheet.
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Fixed Asset/Start-up Expense List
Fixed Asset Description:
Cost:
Land/Building
____________________________________
Equipment and/or Vehicles
____________________________________
Leasehold Improvements
____________________________________
(Other)_____________________________
____________________________________
___________________________________
____________________________________
___________________________________
____________________________________
Start-up Expense Description:
Legal/Organization Costs
____________________________________
Initial Business & Promotion
____________________________________
Licenses and Permits
____________________________________
Beginning Inventory
____________________________________
(Other)_____________________________
____________________________________
___________________________________
____________________________________
___________________________________
____________________________________
___________________________________
____________________________________
Total Anchored Asset and Start-up Expenses: _______________________________
Note: Account above items individually. You may accumulation other, abate items (like appointment equipment)
into a individual band item.
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Unit Affairs Bulk and Bulk Analysis
(Make added copies of this area if necessary.)
Product or Account #1: _______________________________________________
A. Affairs Price:
__________________
less
Direct Costs:
Materials
___________
Labor
___________
Sub-contractors
___________
(Other)_______________
___________
_____________________
___________
_____________________
___________
_____________________
___________
B. Absolute Bulk per Unit
__________________
C. Assemblage Gross Accumulation (A bare B)
__________________
D. Gross Accumulation % (C disconnected by A)
____________
Product or Service: #2: ______________________________________________
A. Affairs Price:
__________________
less
Direct Costs:
Materials
___________
Labor
___________
Sub-contractors
___________
(Other)_______________
___________
_____________________
___________
_____________________
___________
_____________________
___________
B. Absolute Bulk per Unit
__________________
C. Assemblage Gross Accumulation (A bare B)
__________________
D. Gross Accumulation % (C disconnected by A)
____________
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Projected Assets Statement
For the 12 Months Alpha __________
Total
Month 1
Month 2
Month 3
Month 4
Month 5
Month 6
Month 7
Month 8
Month 9
Month 10
Month 11
Month 12
Year 1
Total Revenue
Cost of Appurtenances Sold
Gross Profit
Accounting & Legal
Admini Salaries
Autos & Vehicles
Depreciation
Dues & Subscriptions
Entertainment
Equipment Rental
Insurance-Business
Insurance-Health
Interest
Contract Labor
Licenses
Marketing
Miscellaneous
Office Supplies
Postage
Rent
Repairs & Maintenance
Telephone
Taxes-Payroll
Taxes-Other
Travel
Utilities
Other:
Total Expenses
Pre-Tax Accumulation (Loss)
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A. (Cont.) Optional Method to Calculate Bare Capital
Many businesses can get a reasonable account of their banking approaching by application the following
formula. If the business will alpha authoritative sales actual anon afterwards opening, you may adjudge to multiply
monthly anchored costs by a bulk abate than six.
Total Adapted Basal =
Six Months of Anchored Costs + Asset Purchases + Start-up Expenses
Column 1
Column 2
Monthly Anchored Expenses
Salaries (include owner)
__________
Payroll Taxes at 12%
__________
Rent
__________
Marketing and Advertising
__________
Supplies
__________
Telephone & Utilities
__________
Insurance
__________
Maintenance
__________
Legal and Accounting
__________
Miscellaneous
__________
(Other)_________________
__________
Monthly Anchored Expense Sub-total
_________ x 6 =
_________
Asset Purchases
Purchase of Land and Building
___________
Decorating and Remodeling
___________
Fixtures and Accessories (plus installation)
___________
Deposits on Rental Acreage and Utilities
___________
Beginning Inventory
___________
Asset Acquirement Sub-Total
__________
Start-up Expense You Pay Once
Legal and Accounting Organization Costs
___________
Licenses and Permits
___________
Initial Commercial and Promotion
___________
(Other)______________________________
___________
Start-up Expense Sub-total
__________
Total Estimated Banknote Bare to Start
(Add Column 2)
__________
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B. Break Even Analysis
Break even (B/E) assay is a simple, but actual able banking achievability test. B/E is acclimated to find
the bulk of sales all-important to pay all anchored costs (and accept aught income.) In your business plan, it
represents a minimum adequate performance. Follow these accomplish to calculate:
1) Determine Contribution Margin Percent. Contribution Margin (CM) equals Sales minus
Variable Expenses. CM% equals CM dollars disconnected by Sales. Note: The better variable
expense is usually Bulk of Appurtenances Awash (CGS), which is the absolute actual and activity necessary
to accomplish a artefact or account accessible for sale.
2) Account and absolute all Anchored Costs for a specific time aeon (usually one month.) Fixed
expenses do not acceleration or abatement with sales volume. Examples: rent, insurance, utilities, etc.
3) Break Even Sales is Anchored Costs disconnected by Contribution Margin %. (See Example)
Example:
Unit sales price:
$10
Monthly Anchored Expenses:
Rent
2,000
less Bulk of Appurtenances Sold:
Utilities 1,000
Material & Labor
3
Salary
3,000
less Added Variable Exp:
Other
4,000
Commissions
1
Total Anchored Exp. $10,000
Unit Contribution Margin = $6
($10 - $3 - $1)
CM % ($6 ÷ $10) =
60%
B/E = Anchored Expense ÷ CM %
B/E = $10,000 ÷ .6
Monthly B/E Sales = $16,667
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C. Sources and Uses of Funds
The Sources and Uses of Funds is a account of how abundant money you charge (and breadth it will
come from) and how that money will be used. This account should be included if your business
plan is getting presented to a lender or investor. By definition, sources accept to according uses. The
following is an archetype of a archetypal format.
Sources:
Term Loan
__________
Line of Credit
__________
Personal Equity
__________
Outside Equity
__________
Other
__________
Total Sources
__________
Uses:
Purchase Building
__________
Purchase Accessories __________
Renovations
__________
Inventory
__________
Working Capital
__________
Cash Reserve
__________
Other
__________
Total Uses:
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