The Business plan is a comprehensive and systematic explanation of all phases of the proposed business for decision-making.
The primary use of the business plan is to anticipate all eventualities of a proposed business in order to minimize the probabilities of failure and position the enterprise in such a way as to maximize success. Very often the concept of the business changes based on the realities identified through the research that builds the plan. However, in some cases, the most valuable result of the plan is a decision not to begin the business. In the light of the high probability of new business failures, knowledge that causes one to see impending is also very useful. The plan slows down the businessman forcing him/her to think carefully and objectively, thus avoiding emotional fantasy.
In the development of the business plan, special consideration is given to the need for an incubation period during the first year of a small business where the greatest danger exists. You really have two choices: either begin your business and learn as you go or anticipate the experience and make decisions based on available information in advance.
A summary from which the reader can, in a page at the very most, find out what the proposed business is all about and what may be requested of him.
A brief description of the business that answers the question: what are the principal products and market of the business; what will distinguish this business from others already in the market place so that it can be sure of obtaining a viable share of sale? This section need not exceed five or ten lines.
- The Market
- Who will be your customers?
- Approximately how big is the market?
- What are the major trends in the market?
- Why will your product be preferred over others?
- Who will be your main competitors and how will you beat them?
- How will your products reach your customers, through what distribution channels?
- How will you advertise and promote your product?
- How will you set the price?
- Who will actually sell the product?
- Which specific customers have you spoken to, how much will they buy and how confident are you with this? (most important)
- The Product or Service
- What exactly will the business be selling?
- How near to marketability is the product or service?
- Are there any legal requirement, licenses or other formalities to be covered?
- The Actual Operations
- What capacity will the business have?
- What raw materials will it require, where will they come from and how can you be confident of reliable supply?
- How will differing volumes of production affect costs?
- How long will it be before you are actually in production?
- What stock levels will you require of raw materials, work in progress and finished products?
- Ownership, Management and Staff
- What will have to done and who will do it?
- What particular technical skills are required and who has them?
- What wages will be paid and how are you confident that you can get the right sort of people for this money?
- How will the management responsibilities be divided up if more than manager is to be involved?
- How will the owner share the profits, if any, with other investors?
- Money Required
- How much capital do you need and when?
- What interest are you prepared to pay for any loans?
- What will be the financial effects of delayed payments, production breakdowns or other possible eventualities, and how do you propose they should be overcome in order to bankruptcy?
- Financial Data
- Forecast profit and loss accounts & Balance Sheet for the first year
- Forecast cash flows, showing when money will be coming and going out of the business, and thus how much coming into and going out of the business, and thus how much money will be needed, together with the effects of possible variations from what has been predicted. (most Important)
Business Plan Format (Descriptive)
This business plan format may help you in the initial stages of writing down your main ideas. It is in the form of filling in the blanks. You can use a pencil and eraser to correct and improve on your ideas. Once you have finalized your plan, you can assemble it into a more elaborate and presentable form.
Financial Forecast Format
This is a financial forecast in excel format. It consists of a Profit and Loss Forecast, Cash Flow Forecast and Balance Sheet.