Chapter 35—Developing a Business Plan
Business Plan—proposal describing every part of your new business to potential investors & lenders (road map for success).
The business plan helps you…
Obtain Financing —convince investors & lenders that you have a viable business venture.
Guide the opening of the business —identifies necessary procedures (steps) to legally
establishing your business.
Manage the business successfully —identifies month to month steps to ensure success.
4 Sections of a Business Plan: 1. Executive Summary
2. Description & Analysis of the Business Situation
PART 1—Executive Summary (we’ll discuss & key this last)
PART 2—Description & Analysis of the Business Situation (3 page max) A. Rationale & Marketing Research—
discuss the need for your business in the local marketplace (document/cite any
supporting research/data)
local/regional/national trends
(demographic, psychographic, economic, etc.) that create “demand” for your
products/services (document/cite any supporting research/data)
is there an “underserved” market?
how well are present providers meeting current demand?
B. Introduction—
type of business
business name
brief description of the major products/services
give business philosophy (how your
business should be run; your firm’s role in the marketplace
something unique about your business (what sets you apart from the competition) C. Self-Analysis—
personal education, training & experience
strengths, weaknesses
plan for personal development in your field (future education & training that will help you succeed in your business
venture)
D. Analysis of the Business Opportunity, Customer & Location—
geographic, demographic & economic
analysis of trading area (internet search— City of Fargo, FM Chamber of Commerce, West Acres, other)
population statistics (inc. ages, disposable income) search—US Census
competition (who, how many & where)
trends that could affect your business (i.e. increasing # of single-parent families
indicates greater need for professional day care services)
economic factors (growth, trends in pricing, interest rates, government development projects, seasonal fluctuations)
target market (typical customer—age,
gender, marital status, education, income, ethnic background, lifestyle, etc.)
proposed location of the business
E. Proposed Organization—
type of ownership (proprietorship, partnership, franchise / independent business)
steps in starting your business
personnel needs (staffing)
organization chart
The business plan is a form of persuasive writing—remember every decision you make regarding your business must be backed by logical rationale…your business plan should constantly be telling “WHY” (i.e. when
identifying your proposed location, follow by telling the REASON for your choice):
“Our shop will be located on the corner of University & 19th Avenue North. This location is ideal for 3 reasons:
(1) it is an intersection of 2 major local traffic routes; (2) it ensures tremendous exposure to travelers attending
PART 3—Proposed Marketing/Promotion Plan (3 page max)
A. Proposed Product/Service—
details about products/services you will sell
identify potential suppliers for your goods & equipment
describe how you will manage your inventory (how much or what will you
keep on hand; how will you keep track of what is sold)
if a service business—how, when & who will provide services to customers
B. Proposed Pricing Policy—
explain cost to buy your product (including setup & delivery if appropriate)
indicate your markup policy (pricing philosophy)
show prices in relation to major competitors
C. Personal Promotion—
describe how the quality of your business/ products/service will attract your
customers through word of mouth
describe the appeal of your
employees/products/store/location/image etc.
describe the quality of personal selling & service your customers can expect
D. Nonpersonal Promotion—
describe the advertising media you will use (tv, radio, newspaper, billboard, etc)
describe the participation in & benefits of participation in national advertising (if
applicable)
outline the initial promotional plan for your grand opening
explain why & how this will work for your business
E. Place—
tell HOW goods will be shipped from manufacturer/wholesaler to you
indicate procedures for receiving and storing inventory
PART 4—Proposed Financing Plan (3 page max)
A. Projected Income / Cash Flow Statement —
budget describing the income & expenses for the first year
shows money received, paid & balance for the year
income statement—financial statement showing income & expenses for a specific period of time
cash flow statement—financial statement showing the amount of cash expected to be received & paid out for the year
B. Projected 3-Year Plan—
C. Capital & Repayment Plan—
Indicate your personal investment in the business (savings, family gifts, partner’s share/investment, other earnings sources)
money borrowed from banks, SBA loans, credit unions
plan to re-pay borrowed funds
how much will you pay in interest?
how long will your loan(s) be for?
how much will your monthly loan payments be?
what will be offered as collateral for your loan?
PART VI—BIBLIOGRAPHY
Websites from which you gathered data
Booklets/brochures, describing the
community, or business (franchise info.)
Sources of information on industry
Advertising/Promotional resources (rate cards)
SBA / SBDC / any other sources of information
PART VII—APPENDIX
Letters sent / received
Transcripts of interviews & questions
Copies of surveys & questionnaires
Copies of advertising/ promotional materials:
Ad layouts for print media (newspaper, magazine, billboard, etc.)
TV storyboards or radio script sheets
Other printed/promotional items (i.e. coupons, loyalty programs, premiums, etc.)
PART 1—Executive Summary (1 page max)
may be single or double-spaced
briefly summarize the main aspects of your business, including:
name; location; description/background of
the business; major products and services; need/niche you plan to serve; competitive
advantage; start-up costs; estimated 1st
-year sales & profit; external capital