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A business plan has two main purposes. The first is that it will be required by a financial institution if you are applying for a loan or a credit. The second, and most important, is for yourself. The business plan is an important tool for any size or type of business operation. It provides you with focus and direction. Your business plan will force you to examine all aspects of your new or existing business venture.

The business plan includes information on your product or service, your competition and customers, sales projections, marketing plans, and general operation of the business. It should also include opportunities and threats of your business venture, the resources you require to operate, and projected financial statements.

The following is an outline for a sample business plan. Depending on the nature of your business idea, certain items may not be applicable.

“No one plans to fail; they fail to plan.”
-Author Unknown
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................................................Interactive Business Planner
Executive Summary

• Provide a summary of what will be included in the plan.
• Outline the goals and objectives, products or services, and how you will market the products or services.
• Provide a summary of the amount and type of funding you will require.

Background/History

• Provide some background information on how your business idea developed and the product or service you are interested in.
• Describe the structure of your business.
• When the business started.

Management

• Show and describe the ownership structure and contributions to the business.
• Who is involved — provide resumes of all partners.
• Personal financial statements of all partners may be required.

Products/Services

• Describe the product and/or service.
• What is your product/service’s strengths, growth history, potential, trends.
• What is the application and possible uses of the product/service.
• Include any copyrights/patents/trademarks etc.
• If applicable include designs or pictures.

Marketing

• Define your target market – who will buy your product/service, where are they located, and when will they buy.
• Estimate the total size of the market and your market share.
• Analyze your major competition – strengths, weaknesses, pricing, current market share.
• Describe what type of marketing and advertising you will use and the costs.
• Address service and warranty issues.
• Address credit policies.
• Discuss your pricing scheme.
• Discuss your location.
• Operation/Production Issues
• Discuss suppliers and their terms for payment.
• Hours of operation.
• Quality control issues.
• Number of employees, full time, part time, and wage schedules.

Start Up Costs

• Itemize and estimate all costs that will be associated with start up – any expense incurred prior to opening:
• Incorporation costs
• Accounting costs
• Pre-Opening advertising
• Pre-opening travel and or training
• Pre-opening supplies
• Inventory
• Insurance
• Wages
• Licenses
• Security deposits
• Equipment
• Vehicles
• Leasehold improvements
• Furniture
• Financial Forecasts
• Estimate sales and expenses for two years. Clearly state all pricing and sales assumptions.
• State your cost of goods sold if applicable.
• If you are purchasing a business include past financial data.

Other Information

• Bank Branch –
• Loans Officer Name
• Accountant’s Name
• Lawyer’s Name
• Other product information

Things to Consider When Purchasing an Existing Business

• Goodwill is the value of intangibles related to the business. This includes items such as location, reputation, customer lists, franchises, suppliers arrangements, quality of personnel, etc. Be careful not to pay too much for goodwill.
• Don't rush into the decision. Take your time and verify the information you are given. Ask for past financial statements.
• Buy a business within an industry you have knowledge of and are comfortable working in.
• Buy based on the return on investment not the price.
• Dont use all your cash for the purchase leaving nothing for working cash.
• If the asking price includes inventory/equipment get an itemized list.
• Is there a lease agreement in place? What are the conditions?
• Why is the present owner selling the business?
• Is the present owner planning to open a new business in direct competition with you?
• Have the company's sales and net profits been increasing or decreasing?
• How collectable are the accounts receivable?
• What liabilities/payables will you be responsible for?

For an online business plan tutorial, please visit our partners at the Business Link:

Interactive Business Planner