Appendix C:

Elements of a Business Plan

Before beginning, consider four core questions:

1. What service does your business provide and what needs does it fill?
   
   
2. Who are the potential customers for your service and why will they contract with you?
   
   
3. How will you reach your potential customers?
   
   
4. Where will you get the financial resources to start your business?

Prepare by following 10 preliminary steps:

1. Ask yourself why you are writing a business plan. Is it to raise capital or as a guide for running the business?
   
   
2. List your goals for starting the business and where you see the business in three to five years.
   
   
3. Clearly define your target audience.
   
   
4. Write a table of contents so you’ll know exactly which sections you will need to research and find data to support.
   
   
5. Make a list of the data you will need to research. For example, you will need statistics on your demographic audience, your competition, the market, and so on.
   
   
6. List research sources that will be most helpful.
   
   
7. List your management team. If you are unsure of someone’s availability, this is the time to determine whether or not they are on board. Gather biographical data on each person.
   
   
8. Start compiling all of your key financial documents. You can determine later which ones you will use in the business plan.
   
   
9. Read sample business plans. Since countless business plans have preceded yours, there is no need to reinvent the wheel. Look for business plans for businesses most similar to yours as a prototype to guide you. You can also talk with other business owners who have written plans before and seek out their expertise.
   
   
10. Determine which software program you will use to write your plan. You can use anything from a basic word-processing program to business plan software. You will need to use that which best suits your needs and level of complexity.

Once you are ready, begin with the understanding that the business plan is a work in progress and there will be several to follow as well as ongoing changes as your business progresses.

Elements of a Business Plan

1. Cover sheet
2. Statement of purpose
3. Table of contents
   1. The business
      1. Description of business
      2. Marketing
      3. Competition
      4. Operating procedures
      5. Personnel
      6. Business insurance
   2. Financial Data
      1. Loan applications
      2. Capital equipment and supply list
      3. Balance sheet (costs and revenues)
      4. Break-even analysis and financial gap analysis
      5. Pro forma income projections (profit and loss statements)
         Three-year summary
         Detail by month, first year
         Detail by quarters, second and third years
         Assumptions upon which projections were based
      6. Pro forma cash flow
   3. Supporting Documents
      1. Tax returns of principals for last three years
      2. Personal financial statements
      3. For franchised businesses, a copy of franchise contract and all supporting documents provided by franchisor
      4. Copy of proposed lease or purchase agreement for building space
      5. Copy of licenses and other legal documents
      6. Copy of resumes of all principals
      7. Copies of letters of intent from all suppliers, etc.

Reference
1. Business Plan Basics. http://www.sba.gov/starting_business/planning/basic.html. U.S. Small Business Administration. U.S. Department of Commerce.