Written Business Plans

No matter what business you intend to start, where you plan to locate it, or how much you intend to invest in it, there is one thing, above all others, you must do before investing 1 nickel in your new business… Write a Business Plan!

You need to write a business plan for 3 important reasons:
  1. To prove to yourself, and others, that your business has a realistic chance to succeed
  2. To serve as a road map for various business decisions you will face from the very beginning of your enterprise
  3. As a formal document that thoroughly explains your concept to potential investors and demonstrates why their investment in your idea makes sense for them
Recommended Business Plan Format
The length of a business plan is not important. What is critical is that it:
  • Contains all of the necessary information to demonstrate that the idea makes sense
  • Fills a need in the market
  • Provides a satisfactory financial benefit for owners and investors
  • Demonstrates the business owners, managers, and employees are capable of delivering stated results
The business plan should be organized as follows:

Cover Page with Company Logo
Be careful - do not use the logo of another company! A unique logo can be important to your business (McDonald’s golden arches, Nike swoosh, etc.) Invest a little time and money having a logo developed for use in:
  • Signs
  • Letterhead
  • Invoices
  • Business cards
It will give your business a polished and professional look.

Table of Contents
List everything that is in your business plan and the order in which it will be found. It is always a good idea to number your pages for easy reference.

Executive Summary
Although it appears early in the business plan, the executive summary should be the last part written. The purpose of the executive summary is to recap everything in the entire plan, but do it in 1 page! The executive summary is the first place potential investors go for information. If you can’t get their interest in your business idea with this section, you will not likely get them interested in reading the entire plan. This part is very important.

Industry Trends
Research what is happening in the business you are starting. Read trade magazines, newspaper articles and the like.
  • How many similar businesses exist in the area you intend to serve?
    • In other words, how many competitors will you have?
  • Is the number of those businesses growing or shrinking?
  • What do you know about the level of success of the potential competitors?
  • What does that tell you about this business idea?
  • What barriers exist to you getting into this business?
Some of this info will be readily available by reading magazines and papers. However, you will probably find it necessary to also contact local Chambers of Commerce, local newspaper research departments, or examine the latest U.S. Census data to get the information necessary. What you are tying to do in this section of the business plan is to prove there is a need in the market that is not being met and that your business can capitalize on that.

Business Name
Choosing a name is more important than most small businesses realize. Naming the business after yourself might be a nice stroke to your ego, but does it help potential customers understand what your business does and therefore, what it is capable of doing for them. Try to find a name that says something about what you will be doing and allows for the future growth of your business as well.

When you settle on a name be sure to check that there are no other businesses using that name, or one that could be easily confused with it. Businesses frown on someone stealing their name, and when they do it usually leads to lawyers! Check with the Secretary of State in the state in which you will operate any name registered there is “off limits” to you.

Mission Statement
A mission statement is your Unique Reason to Exist as a business. A business without a mission is one without direction. Development of a mission for your business should not be an easy project, it should require lots of thought about what you want consumers to think about you and how you do business. Think about what you are going to do in this business that is unique, and how the mission will provide direction on the big decisions you will need to make as well as how you and your employees will approach the everyday situations you will encounter.

Organizational Chart
The most efficient way to approach this portion of the business plan is to consider all of the things that need to be done to operate the business successfully.
  • Who sells?
  • Who buys products for resale?
  • Who is responsible for housekeeping?
  • Who handles computer input?
  • Who develops marketing materials?
Once you have identified all of the things that must be done you can then determine “who” will do them. At this point the “who” does not need to be a specific individual, but should be identified on an organizational chart as a position within your business that will be responsible for performing certain specific business related activities. Knowing what things must be done to operate the business and assigning them to a specific job function before the business starts will eliminate confusion and omission of critical functions once the business is started.

Demographic Summary
This portion is about whom you intend to serve with your business. Please don’t fool yourself by saying, “Everybody is my customer.” As big as General Motors, Dell Computer, and McDonalds are they do not have “everybody” as a customer, that is why there is Ford, Gateway, and Burger King. To satisfy this part of the business plan you need to profile the consumer you want to serve - age, sex, income, home owner/renter, etc. - what are the characteristics of the person you are trying to serve with your business?

You will need to return to the U.S. Census data and other sources of demographic data to help you identify how may consumers fit into this profile in the area you are going to serve. The reference area of your local library should be able to direct you to other data sources. This is critical information since consumers will be spending money in your business you need to know how many are available and what their spending habits are.

Marketing Plan
Once you have identified where your consumers are and how many of them can be found there through your demographic summary work you should now have a better understanding of how to reach them. Marketing your business is not just about running newspaper ads. That is expensive, and not always the best way to get your message to the people most likely to spend money with you.
  • What are the marketing tools you intend to use?
    • Direct mail
    • Newspaper
    • Press releases
    • Public relations activities
    • Radio
    • Special events
    • T.V.
  • How frequently will you use them?
  • What do you plan to spend each week, month, or season to market your business?
  • What is your standard in measuring the success of marketing efforts?
You should include 3 elements in your financial plan:
  1. Start Up Costs
  2. Opening Day Balance Sheet: The costs of everything you need in order to get the business organized before you open the 1st day
  3. One year and 3 year income and expense projections