Business Plan Guide
A Guide to Developing
A Business Plan
Business Plan Guide
Forward
“You don't have to have a business plan to survive!
But you better have deep pockets and be incredibly lucky
in your decision making if you don't have one.” Al Prosch
Who should write a business plan?
There are professional business plan writers. But while the business owner may have
never written a business plan, they have the knowledge of its substance. This booklet has
been formatted to guide the business owner through the process.
What is a business plan?
The business plan defines your business in a logical, detailed manner in both narrative
and financial terms. It describes your vision, the businesses strengths and weaknesses,
and the external factors of opportunities and threats. It methodically describes the
business, market, product, service, positions, roles, responsibilities and future direction.
Where are the common mistakes made in writing a business plan?
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Overly optimistic projections.
Under forecasting costs and cash requirements.
Expecting the market and sales to be bigger than it is.
Anticipating things to happen faster than they do.
Ignoring the impact of competition.
How is a business plan used?
A business plan is a road map for owners, employees and Boards of Directors to direct
and implement your strategy, vision and goals. It can also be used by investors, clients,
suppliers, new hires and lenders to help them make decisions on financing, talent or
purchasing.
When do I write a business plan?
Now! The business plan needs to be always current and it needs to be used. Many
people write a plan because a lender asks for it but often this is because you are seeking
money. – It is when a lot is going on and you are already feeling time pressures so to
write it then only adds even more pressure.
You read a book from beginning to end. You run a business the opposite way.
You start with the end, and then you do everything you must to reach it. Harold Geneen
Business Plan Guide
The Finished Format and Staying Organized
Your business plan should be of a style that you believe helps you uniquely stand out, but
done in a professional way. It should be “reader orientated,” meaning its font is easily
readable, there is room for handwritten notes if it seems needed, the pages are numbered,
the sections are indexed appropriately in a table of contents and separated by dividers so
information can be found.
To keep yourself organized through the process and so you can see how the final product
will look, it is often very effective to build the finished form from the beginning. For
example, if it is going to be in a three ring binder, create one by putting the index and the
tabbed dividers in place so that as you complete information, you can place it in the
binder and see how the document is coming together.
The following are sections that are common to most business plans and would be a good
starting list for you to begin with:
Executive Summary
Regulatory Issues (if applicable)
Business Description
Employees
Marketing
Operations
Pricing
Location
Competition
Financials
Management
Attachments
By having this document building it makes it easy for you to pick it up after you have
been away from it for a little while and proof read it for yourself, marking it up so you
can go back and make it even better!
(The concepts of this guide are based on your using word processor software to write the
plan.)
It is also helpful to find example business plans. There are many on the internet, you
may want to review http://www.bplans.com/sp/Businessplans.cfm for a listing of
examples.
The following sections provide guidance and an outline of topics to include in your plan.
If questions arise, identify your concern on this guide, and continue on. Complete all you
can, and then when you have established all of the questions, contact me. I am happy to
assist you.
Business Plan Guide
Index
Description
Page
A.
Executive Summary
1
B.
Business Description
1
C.
Marketing
2
D.
Pricing
3
E.
Competition
4
F.
Management
5
G.
Regulatory Considerations
6
H.
Employees
7
I.
Operations
7
J.
Location
8
K.
Financials
8
L.
Attachments
10
M.
Writing the Executive Summary
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Business Plan Guide
Note: There are 2 check boxes in front of each item. The purpose is to keep you
on track. When you are done with the plan, every item with the check boxes
needs a check, either in the first one signifying it is complete or one in the
second, signifying it is not needed.
Executive Summary
A.
Note: While the executive summary is to be the first section of your business plan, it
should not be written until the rest of the plan is complete. Therefore, the guidance for
writing it is presented in this guide on page 11.
B.
Business Description
There are basic facts that the reader needs ‘ready access to’ and so it makes sense to just
make a listing of them at the start of this section. Begin your Business Description
identifying:
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  What’s the legal name, physical and mailing address of the company
  Phone/fax and EIN (Employee Identification Number)
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E-mail and web site
Names, addresses, SSN’s, phone numbers, legal corporate title and % of ownership
for each owner.
Legal structure (Sole Proprietor, LLC, S-Corp…) and state of organization
Hours of operation
Define your vision statement – it should be concise yet:
□ provide a vision for your future
□ define your team’s focus
□ identify values that shape your team’s decisions
□ provide strategies for your team’s approach
□ guide your team’s daily, weekly and monthly actions.
Now it becomes important to provide a complete narrative description for the reader. So
for most of the rest of the plan, write in paragraphs and if needed, develop tables, pictures
and charts such that sufficient detail is given to adequate description.
 Business purposes, product and service and key features
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Business history
Strategy and philosophy
Reason or rational for financing
How will the expenditure of these funds affect profitability?
Short term goals – next 12 months and any new introductory plans
Long term goals
Business Plan Guide
B.
Business Description (Continued)
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Regarding any of the changes presented in the plan, define the implementation plan
including activities need to accomplish and planned completion dates
Industry information
Market risks
Other risks that can affect the success of your business and how the business,
lenders and owners are protected from them.
If you are purchasing an existing business, there is a very good checklist to consider
at http://www.allbusiness.com/forms/buyingsellingbusiness/38.html?about=allforms
In the business plan also describe:
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C.
Why is it being sold
What changes will you institute and why
What is the purchase price, give a breakdown: by equipment, improvements,
goodwill, inventory, etc.
Marketing
“We must have effective marketing that:
 Gets ATTENTION
 Holds INTEREST
 Arouses DESIRE
 Obtains a desired ACTION”
The VT Small Business Development Center has a Marketing Plan Workbook
that we encourage you to work through before completing this section, however,
the marketing section of your business plan should include the following:
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What is your Unique Selling Proposition (USP)?
How will you optimize USP?
Describe the characteristic of you market segment (age, sex, occupation, income,
lifestyle…) and what techniques you will use to market to them
What are the present market segment’s size for your specific business and its future
expectation (trend or consistency)
Define the sources of your statistical data that your facts are based on
Describe the support or warranties, discounts or other features to promote more sales.
Business Plan Guide
C.
Marketing (Continued)
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Promotion (How will you reach your market)
Personal communications
Labeling/Signage
Mass communications
Web site
Media
Direct mail
Brochures
Branding
Define your advertising schedule with costs
What has been your market penetration to now
With this marketing plan, what is the desired change
Describe your selling process, how it is and how it will be under this plan
Pricing
Pricing is a difficult, yet very important aspect of your business. There is no one
way to price, but there are general guidelines to help.
Depending on the item and market, price techniques can include:
Positioning –
□ A discount store will always attempt to keep prices as low or lower than
competitors.
□ An exclusive luxury product’s price may need to be set higher than other
products to help make a sale.
Demand –
□ A hot selling product may prevent you from being able to get enough of
them to make the business work without increasing the price.
Cost-plus pricing –
□ Sometimes used in custom work where the scope of the work is somewhat
unknown. You would agree to share the cost information with your
customer and they would pay that plus a % more.
Cost –
□ Many businesses use a standard markup calculation. For example, if the
item costs $1.00, you sell it for $1.30.
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Business Plan Guide
D.
Pricing (Continued)
But what ever the technique, it is important to realize:
1. Your pricing dramatically impacts your business financial model.
2. Your price should almost never be lower than your costs or higher than what
most consumers consider "fair".
3. Your price must be enough higher than costs to cover reasonable possible
variations in sales volume.
4. You have to make a living. Have you figured salary for yourself in your costs?
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What is your philosophy or methodology for pricing
How sensitive is the customer to variations in pricing
How does your pricing compare to the competition
Are there industry factors that impact margin and price – do they change frequently
or are they stable
Competition
There is great detail about competition in the Marketing Plan Workbook which
needs to be summarized in this portion of the business plan.
Ignoring the impact of competition can be fatal. We need to recognize their
strengths maybe even more distinctly than we do their weaknesses!
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Develop a table describing each competitor. Consider their strengths,
weaknesses, the opportunities you have to compete against them and the
possible treats they may have on the success of your plan. The following
is an example format:
Competitor
Category
Customer Loyalty
Marketing Effectiveness
Public Relations
Employees
Facility/Location
Financial
Reputation
Price
Product
Service
Market objective
Customer Loyalty
Marketing Effectiveness
Public Relations
Employees
Facility/Location
Page 4
Financial
Reputation
Price
Product
Strength
Weakness
Opportunities
Threat
Business Plan Guide
E.
Competition (Continued)
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As you develop this table, include indirect competitors (ie: for a coffee shop, a
service station who sells coffee), box stores and internet competition
What have you learned about your competitors? How does this affect your plans
Why are the competitors having success
Why will a customer choose you over the competition
Describe the research you have done regarding competition and what will continue
Management
Write about you, the Owner(s)
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What is your education and business experience?
How does this relate to the business?
Why are you the right person to run this company?
If there are more than one owner, describe the highlights (responsibilities, authorities
and the exit plan for each partner’s) of your “Partnership Agreement” and
include it in the attachments. Attach the job descriptions for each.
Describe the Management Structure (how the company will be run)
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What is the definitive description of responsibilities for each manager (include a Org
Chart if needed)
Briefly describe each existing person, role, experience, expertise, and salary
including benefits and the associated costs. Identify how these individuals fill
the organizational roles of the company, including - Management, marketing,
financial, operations and human resource.
Additional management planned – description as above and include labor market for
addition (are there such people available to fit your needs…)
Establish Job descriptions and resumes and include them in appendix
Backup management plans (should a key person get hurt, leave...)
Define your External Professional Team (For each list company name, contact,
address, phone/fax/E-mail)
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CPA
Attorney
SBDC Business Advisor
Business Plan Guide
F.
Management (Continued)
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Insurance Agent
Other professionals
Board of Directors or Advisory Board
Identify your Risk Management plan – “Risk” is the possibility of a loss,
disappearance or decrease in value. The insurance programs that you hold are to
offset the risks you are concerned with cannot absorb.
For example we know statistically
□ Sometime during their working years 50% of the people will have at least one
event where they are out of work for 90 days or more
□ 10% will be permanently disabled before age 65
In such an event, how will the family be cared for? If this happens to an owner or
a critical employee, how does the business continue?
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Identify the insurance programs you have or will have in place, including
Health
Workers Compensation
Owner’s Disability
Disability Buy-Sell Funding
Retirement
Key Person Life
Other
Regulatory Considerations
The VT Small Business Development Center has a Environmental and Permit
Specialist, Peter Crawford, (802) 728-1423, [email protected] who is
knowledgeable and able to provide confidential, one-on-one guidance if needed.
Identify all pertinent:
 Are your product protected by patents, copyrights or trademarks
 Licenses required and status or actions needed
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Page 6
Permits required and status or actions needed (if many, make a table)
Any other regulatory issues affecting your business (industry regulations)
Business Plan Guide
H.
Employees
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I.
Describe each position, their qualifications or skill, salaries, benefits
Identify key personnel already in place or having agreements to hire. Describe how
they are uniquely suited for the position
How do you train employees
Does this geographical area have a pool of qualified people? If not where and how
do you resolve this
How many employees do you have now? – Full and part time
How many jobs will be created, their title and salary? – Full and part time
Describe the hiring process and any forms utilized, such as, non-compete agreements,
confidentiality agreements, employment application and include copies in the
attachments
Operations
Describe how the operation works, including:
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Sales distribution channels
The process of producing or rendering the product or service (Paint a picture in
words to insure the reader understands)
Unique quality or capabilities of your operation
What flexibility does the operation have to handle business fluctuation
Describe facilities in place or required
Define all existing and needed equipment to achieve the plan
Process capacity
Waste factors
Shelf life issues
Material storage, inventory control and tracking
Seasonal factors of product or operation
Shipping and delivery
- Suppliers/Subcontractors
 Company names, contact, addresses, phone numbers
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What do they supply?
Purchasing terms
What % of your products do they supply?
Business Plan Guide
J.
Location
Often, a business performance can be dramatically affected by its location. It is
an important consideration that must be considered carefully and the reasoning
described in the business plan. Here are some of the typical considerations in
selecting a locations: Cost; Credibility; Facility requirements; Safety; Traffic
Pattern; and Zoning.
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Why was the specific location chosen
Describe the property and facilities, include the unique and necessary features and
atmosphere you intend to provide
Neighborhood description
Describe why you plan to own or lease
Does this plan include Construction? Renovations? – Describe, include who the
contractor is (if known) and the costs.
Zoning requirements of property, any variances
Describe the signage you have or are planning.
Describe the traffic patterns
Identify other businesses in the area
Is the location close or convenient to your customers
How does the community benefit from business
Financials
The financial plan defines the viability of the business plan. If investment or
financing is needed, it is a key consideration. This section consists of history,
current data and future projections along with a brief explanation/analysis of this
presentation. The financial reports are most commonly presented with the income
statement (also known as profit and loss), the balance sheet and the cash flow
projections
There can be a number of documents in this section and it may do well to provide
an index identifying all that is included and in what order.
History (if it is an existing business, even if purchased)
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Page 8
The last three years of income tax returns
The internal reporting for last three years of profit and loss statements and year end
balance sheets or audited financial statements if they exist
Business Plan Guide
K.
Financials (Continued)
Current
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Current partial year’s profit and loss statements and current balance sheet
Detailed description of startup costs
Sources of funds – identifying all investment and lending to complete project
Use of proceeds if funding is part of the plan accurately detailing expenditures with
quotations and agreements with contractors, etc. to complete the project,
including
Land
Buildings
Renovations
Equipment & machinery
Furniture, fixtures
Closing costs and loan fees
Working capital
Inventory
Identification of equity to be used to support lending
Current personal financial statements and last three years of tax returns for all who
have 20% or more ownership
Future
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Page 9
A “Critical Assumptions” page which provide clarification of reasons projections are
shown as they are.
VT SBDC’s Fin5.1 proforma financial projections
Provide a what-if scenario showing how you compensate for
Unexpected seasonal weather
Fluctuations in cost of materials
Larger than expected development costs
Time delays due to supply
Price cuts from competition
Other critical external events
Business Plan Guide
L.
Attachments
Attachments are provided to help establish the credibility and support of the business
plan. It includes all documents that can help explain and demonstrate the information
provided in the body of the plan and the financials.
It is typically lengthy and so it is helpful that the attachments section has its own index
and divider tabs
Beyond the items identified throughout the sections of this guide, you may also include:
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 - Copies of proposed and existing advertising and brochures
 - Pictures of the business inside & out
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- LLC Agreement
- Partnership Agreement
- Resumes for all principals, managers & owners
- Industry information
 - Purchase and Sales Agreement
 - List of machinery, equipment, furniture, fixtures with descriptions, Fair Market Value,
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cost, age, make and model.
- Insurance summaries &/or proposals
- Certified copies of required licenses, permits, approvals & agreements
- Plot plan of real estate (and if available Real estate summary sheets)
- Legal descriptions & copies of deeds
- Old appraisals or environmental studies done on the plan
- Zoning statements
 - Contracts to be performed
 - Proposals for work on be done on contractor’s letterhead
 - Sub contractor contracts (what is & what’s an employee)
 - Demographics of the area around land
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Business Plan Guide
M.
Executive Summary
This is a brief, 1 to 2 page summary of everything that follows in the plan. Being
a summary, it makes sense to be written last but be sure to place it in the front of
the business plan.
The executive summary should be in a personalized letter form, written to the
reader and begin immediately with why you have given it to this specific reader.
For example, if it is for a lender, provide the following:
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How much is requested of this lender
Are there additional lenders involved, what is their participation
How much are you putting down
What’s the collateral and value? Any other leans?
For what purpose – (summarize the plan, describing the company, product or
service, how the monies will be used and why)
If there are more than one owner, who should the lender contact and how
Finalizing the business plan:
 Review it in its printed form, studying the entire contents. It is likely that you will find
some changes needed so they will need to be made.
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Have a advisor read and comment on the plan – make final revisions.
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