Return to 143 articles to start your own home based business opportunity directory BUSINESS PLAN OUTLINE THIS OUTLINE IS JUST THAT. AN OUTLINE. THIS WAS DESIGNED TO ASSIST YOU ONLY. AT NO TIME SHOULD THIS MATERIAL BE CONSIDERED COMPLETE. EACH LENDING SOURCE REQUIRES DIFFERENT INFORMATION AND QUITE OFTEN YOU SHOULD PLAN FURTHER AHEAD THAN REQUESTED IN ORDER TO BE CERTAIN THAT YOU HAVE A FIRM IDEA OF WHAT YOU EXPECT FROM YOUR BUSINESS AND WHERE YOU WANT TO SEE YOUR BUSINESS GO. THE MAJOR DIFFICULTY IN PREPARING BUSINESS PLANS IS IN PROPERLY PREPARING THEM. DO NOT JUST RANDOMLY SELECT INFORMATION FOR YOUR PLAN. CAREFULLY RESEARCH EACH SECTOR OF THE MARKET WHICH YOU ARE ABOUT TO BECOME INVOLVED IN. IT WILL NOT ONLY MAKE A DIFFERENCE TO YOUR SUCCESS AT FINANCING, IT SHOULD ALSO MAKE A DIFFERENCE IN YOUR SUCCESS IN BUSINESS. GOOD LUCK!! Wrapping your plan. Do not underestimate the power of presentation. We recommend that you use a color photo of your product, your office or if this is a real estate related project, the property in question. Use a acetate cover to cover this photograph. You will then see your plans ability to stand out in front when faced with a stack of plenty . Remember to place your company name on the cover and use GVC Binding. It is the easiest to handle. When necessary include a disclaimer that is from the legal counsel of your choice. This statement should be used especially if you have obtained material from your plan from outside sources. Non - Disclosure Agreement You should always have a signed non-disclosure agreement with anyone receiving your plan. Include a signed copy in your plan. Also, any fees that you have agreed to pay to brokers or other referrals should have agreements and be included in this part of your plan. INDEX THE INDEX PORTION OF YOUR PLAN SHOULD BE AS COMPLETE AND THOROUGH AS POSSIBLE. BE CERTAIN THAT YOUR SUBTITLES ARE LISTED HERE. REMEMBER, THAT MOST LENDERS/INVESTORS RECEIVE HUNDREDS OF PLANS A WEEK FOR REVIEW. MOST ONLY LOOK AT A PORTION OF THE PLANS THEY RECEIVE. A WELL THOUGHT OUT AND DIVIDED INDEX COULD MAKE THE DIFFERENCE BETWEEN YOUR PLAN BEING READ OR NOT. THE LOAN SUMMARY This need only be one page. This should basically be considered a "Use of Proceeds" statement. This page will include the amount of your loan, the cost of equipment, cost of financing, first years operating expenses, as well as any other costs you intend to pay from the proceeds of your financing. This page should also contain what you project your interest rate to be (remember, the lenders do set these rates and you may not get the rate you request). This will allow you to set your Debt Service Coverage Ratios. (see explanation) Also, this page should contain Loan to Value and Return on Investment figures. EXPLANATION OF TERMS Remember, you are more familiar with your subject matter than the reader will be. Any terms that are not considered public knowledge should be included in a "glossary" in this section of your plan. Explain any theories or special terminology directly related to your specific industry as clearly and concisely as possible. Explanations should be done in as basic terms as possible. It is preferable to set this up so that your definition is set apart by tabs from the word. I strongly recommend underlining your word here and if you feel it is appropriate, make note on the pages that these words appear which will designate GLOSSARY. This is a helpful feature for people who are not familiar with your industry. EXECUTIVE SUMMARY The executive summary should be a short (approximately 3 -5 page) summary describing pertinent information about your company. The summary should explain why you feel it is time to expand (if this is purpose of loan) or why you feel this is a good time to enter this particular business (if new). Other pertinent information should be included, such as when and why you started your company, your goals and a thorough explanation of your business. It is important that during this summary you do your best to be as thorough as possible. Remember, that this may be the only chance you have to attract attention. Quite often these summaries are pulled from your package and sent to the lender/investor via file, fax, modem or other means and this will be the factor that determines if more material will be requested. RESUMES Resumes are perhaps one of the most important features of a good business plan. Let the lender/investor know your background in relationship to the business you plan to pursue. The resumes of all key personnel should be included in this section. Also, include a list of the "proposed" or "existing" board of directors. A "COMPANY" resume is also a good idea to include in this section. For start up companies explain the concept and what brought you to the stage where you are now pursuing financing. INDUSTRY STANDARDS A 1 - 3 page section that should include statistics about your chosen industry. This information can be from any source you deem reliable. Always include as many statistics about your industry as possible. --------------------------------------------- FOR EXAMPLE: INDUSTRY: Loan Brokerage NUMBER OF PEOPLE: 156,000 FEES IN 1991: $445,900,000 This information was received from Dun & Bradstreet on April 16, 1992. --------------------------------------------- When available documentation should be included in your plan under "SUBSTANTIATION DOCUMENTS". DEMOGRAPHICS This section of your business plan should include as much information about the area which you intend to locate your business in as you are able to compile. Statistics are usually available at the town hall or the state house. These statistics should include average age and household income for your area, as well as the Business description of the area (i.e. professional, factories etc). Also, include in this section why you feel that the demographics of the are will support a business in the field you have chosen. Remember, any substantiation documentation that can be supplied should be included in your plan under "SUBSTANTIATION DOCUMENTS". COMPETITION This 1 - 3 page section of your business plan should include all pertinent information about your competition, including the length of time they have been in business, where they are located in comparison to your chosen location and what their average annual sales are. In addition, you should explain your company strengths and weaknesses are in comparison to the strengths and weaknesses of your competition. Explain how you intend to overcome your competition and your expectations of the impact your company will have on their business. Any available information about your competitors should be included as "SUBSTANTIATION DOCUMENTATION". MARKETING This 5 - 8 page section of your plan should include all information you have obtained in seeking out a viable marketing plan for your company. In addition it would be useful to compare your marketing ideas with the methods that are used by your competitors in this industry. Comprehensive data about pricing strategies, specials to be offered to clients etc. should be included in this section. If you have designed a logo, your stationary and / or advertising materials they should be included in your plan under "SUBSTANTIATION DOCUMENTATION". EQUIPMENT This section of your plan should describe all equipment that you have (or intend to use) for your business. As minor as you may feel it is even your office typewriters and word processors should be included here. An explanation of specialized equipment should also be included. Obtain a current market price for all equipment as well as a "fire sale" price for your equipment. Include cost projections in your "SUBSTANTIATION DOCUMENTATION" section. GOALS This will be the most critical part of your business plan. Explain where you see your company in one year, in two years and so on up until approximately the fifth year. Further explain the methods you feel will assist you in obtaining these goals. Included in this section should be data that will explain what will happen in different economic environments. That is if we have a strong environment, what will your goals be and if we have a weak environment how will this affect your goals. CONTRACTS WITH CLIENTS If you have contracts that you have developed with clients they should be included in this section of your plan. Complete contracts with names, addresses and telephone numbers as well as expiration dates should be included. Any caveats in your contract which forbids potential lenders from contacting should also be noted in this section as an addendum. EMPLOYMENT CONTRACTS If you have signed any employment contracts with projected employees they should be included in this section of your plan. This material will remain confidential. EMPLOYEE CONSIDERATIONS This section of your plan should include information about the projected staff for your company. Include the projected salaries, benefits as well as the minimum requirements for employment (i.e. experience). Please include all positions you forsee necessary and what each positions responsibilities are to be. INSURANCE CONSIDERATIONS This section should include all health, life and disability insurance information you intend to offer employees. It should further include any special insurance you are required to carry in your geographic location and/or in your industry. Quotes should be included as "SUBSTANTIATION DOCUMENTATION". FINANCIAL INFORMATION - PERSONAL This section of your plan should include the last three years income tax returns, both federal and state for all of the principals in your corporation. It should also include a financial statement dated within 60 days for each of these principals. If available also include a current credit report for each principal. We strongly recommend you include your social security number as well as banking references. FINANCIAL INFORMATION - CORPORATE The same information as requested above should be included. In addition you should include a copy of all outstanding debts within the business. PRO FORMA PROJECTIONS The proforma section of your business plan will be read and reread. Although the normally acceptable way to prepare pro forma projections is to prepare them annually and on a "sideways" printout, we suggest printing them in the same format as the rest of your plan. It does take more room to do this however it makes your plan much easier to read. We use regular spreadsheets to do our pro forma projections and print only the months that can be fit across an 8 1/2 X 11 page. This does make easier reading without having to tip your volume to the side. EXAMPLE: INCOME FOR 1992 -------------------------------------------- | DESCRIPTION | January | February | March | -------------------------------------------- | SALES | 75,000 | 82,000 | 66,000| SOURCE SOFTWARE 27,000 32,000 12,000 EQUIPMENT 48,000 50,000 54,000 | INTEREST | 1,200 | 895 | 1,400| SOURCE FSNB 700 600 800 NEB 500 295 600 -------------------------------------------- | TOTAL INCOME| 76,200 | 82,895 | 67,400| ============================================ etc. This format makes your projections easy to follow and calculations simple to do. These projections should be done as follows: YEAR ONE: by Month YEAR TWO: by Month YEAR THREE: by Quarter YEAR FOUR: by Quarter YEAR FIVE: Annual This formula should be used by all new businesses. For existing business you should use the following: Include your cash flow (actuals) for the previous 2 fiscal years by month. Include the current year monthly actual as well as the remainder of the year in monthly projections. The first year projected should be done by months and thereafter use quarterly projections up through year 5. SUBSTANTIATION DOCUMENTATION At several points through the plan you have been advised to obtain information for this section of your plan. In addition to the materials suggested you should also include an amortization schedule as well as a depreciation schedule. Any documentation that you feel would be appropriate for a lender or investor to review would be suitable for this section of your plan. TERMS: Earlier I used the following terms. The calculations are included here for your use and benefit: DEBT SERVICE COVERAGE RATIO: Annual Net Income / Annual Debt RETURN ON INVESTMENT: Total Investment / number of years = ___ [per year] Annual Net Income / Investment per year LOAN TO VALUE: Loan Amount / Value of Business (or property) I hope that this document assists you in more successfully creating your business plan. There are many, many more hints and tips that could be supplied to you, however I feel that the ones contained in this document shall give you a ground to stand on and a basis for preparing your plan. Remember, there is no "right" way to prepare a business plan. Also remember that only you know your business. It is nearly impossible to ask someone to prepare a plan for you. While we have prepared many plans over many years we first advise the client to prepare as much as he is capable of doing and simply restructure their plans for them. Lenders and investors use your plan as a way of judging who you are. They know who we are. Good luck in preparing your plan. Should you need additional information feel free to leave me a message. Doreen Martel

Work at home opportunities - Tools and Resources