8.02: Your Business Plan

Table of Contents

The table of contents lists each of the sections in the business plan and tells the reader what page each section starts on.

Private Placement Disclaimer

This part of the business plan is only necessary when you are giving the business plan to private investors so they will give you money. A Private Placement Disclaimer is a complicated legal document that you will need to get your lawyer to write up for you. It includes the specific legal terms of the investment opportunity, and it should be included at the beginning of the business plan.

Goals and Strategy

This section defines your company's goals and strategy for achieving them. It includes: How you will differentiate your company and its products or services from competitors Your own company's strengths and weaknesses, in comparison to competitors and potential competitors Why this is a good business opportunity. Potential risks, threats, or challenges (such as competition or loss of an important employee) Your strategy for growth Specific long-term goals that will help you achieve your vision and mission, and shorter-term milestones for reaching them.

business plan

is a written statement of your plan for your company's future.

To keep the company focused on specific goals

A business plan also helps keep the company focused and on track toward its goals.

To identify problems in advance

A business plan helps you identify problems before they actually happen. This can save you a lot of time, money, and worry.

Funding Request

If you are using the business plan as a way to ask for money, you will need a Funding Request section that identifies how much money you will need to start or expand the company. This section includes: The amount of funding needed to start or expand the company The current funding requirement, and any future funding requirements you expect over the next five years How you will use the funding Long-term financial plans

Cover page

Include a cover page for the business plan with the following information: Name of company Names of founders or owners of company Contact information (phone number, address, e-mail) Date the business plan was presented

Cover

It looks most professional to bind the business plan and put it in a plain black, brown, or blue cover, but you can package it however you prefer. Make sure it looks professional, and it's best to distribute printed copies of the business plan.

Parts of a Business Plan

Learn

Reason 1 To get funding

Most investors and lenders will not give you money unless you have a good business plan. It is pretty much a requirement if you are starting the company with money that is not your own.

Competitive Analysis

The Competitive Analysis section is where you describe the industry your business will be in, your competitors, and your company's advantages. This section includes: A description of the industry, including any industry changes and trends that may affect your company Industry regulations and restrictions that affect your company and any possible changes to them A description of the types of direct and indirect competitors you will face A description of your main competitors, and an analysis of their strengths and weaknesses

Market Analysis

The Market Analysis section is where you discuss the market of potential customers for your business. It is written in paragraph format, with bulleted lists wherever they make sense. This section includes: A description of the market, including any market changes and trends that may affect your company A description of the target market, focused on your potential customers and their characteristics, needs, desires, and how they make buying decisions The customers needs or desires you are going to satisfy and how you will do that Specific people or companies that are your potential customers

Appendix

The material in the Appendix is not included with every copy of the business plan. This is special information that you only share with those who really need to know about it. You can decide who needs this information, or provide it on special request. The items in the Appendix can vary, but it usually includes these sorts of things: Your credit history or your company's credit history Resumes on managers Product pictures Letters of reference Details of market studies Licenses, permits, patents Legal documents Copies of leases Contracts Lists of business consultants, including lawyer and accountant

1. How you will differentiate the company from competitors 2. Your mission statement 3. Suppliers your company relies on to produce its products 4. The amount of funding needed to start the company 5. A description of your competitors 6. Your advertising plan 7. The financial history of the company 8. A description of the needs and desires of your potential customers 9. A description of the departments in the company

__9__ Organization __3__ Products and Services __8__ Market Analysis __1__ Goals and Strategy __7__ Financial Analysis __6__ Marketing and Sales __2__ Executive Summary __5__ Competitive Analysis __4__ Funding Request

To attract employees and management

People who work for your company will want to know that the company has a strong direction and solid plan for the future.

Executive Summary

The Executive Summary is a summary of the entire business plan, in a short, bullet-like format. This is always the first section in a business plan (unless there's a Private Placement Disclaimer), but you should write it last. It should only be a few pages long, at the most. It should contain: Your company's mission statement, vision statement, and values The date the business was started Names of founders and their roles in the company Number of employees Location of company and description of facilities and equipment Products and services Summary of company's growth and special highlights or accomplishments Banking relationships and information about current investors or lenders Future plans for the company

Financial Analysis

The Financial Analysis provides the information to support your Funding Request section. It also creates a plan for the money the company will have coming in going out. This section includes: The financial history of the company, including income, balance sheets, cash flow statements, and collateral (TIP: You will learn more about these things in the second semester of the course.) Starting balance sheet Profit-and-loss, cash flow, and balance sheet predictions to show what you expect over the next five years, or at least the next three years An explanation of the financial assumptions you are making Graphs and charts to illustrate the information

Marketing and Sales

The Marketing and Sales section explains how your company will get customers to find out about and buy your products and services. It includes: A description of your market penetration strategy (TIP: You will learn more about this later in the course) How you will communicate with customers and potential customers Advertising, promotion, and publicity plans Who will sell the product or service and how this will be done

Organization

The Organization section describes how the company and its people will be organized. It includes: A description of the legal structure of the company and the reasons for choosing that structure (TIP: You'll learn more about legal business structure later in the course.) A list of the company's owners and a description of their roles in the company Profiles on the people who are the leaders and managers of the company Profiles on the advisory board of directors, if the company has one An organizational chart that shows the relationships between people and departments A description of the different departments in the company and what they do Roles of employees within the departments Information on the salary and benefits available for employees Information on employee incentives and promotions A description of the company's location, facilities, and equipment

Products and Services

The Products and Services section defines the products or services your company will provide and sell. It includes: A detailed description of the products and services your company will sell (This is not necessarily a list of every single product. If there are many, a list of product or service types will be enough.) A list of the features and benefits of the products and services (TIP: You will learn more about features and benefits later in this course.) Information about the product's projected life cycle Research and development you are doing or planning to do to improve or expand your products and services Future products or services you plan to sell Lead times for products and services (the time between customer ordering the product or service and receiving it) How the manufacturing process works, if you manufacture products Materials or suppliers your company uses to produce or get its products, or to provide its services How the products or services are delivered to customers Your customer service plan