Business Plans – The Essential Elements

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The following outline has been adapted from materials Franz von Bradsky has presented at numerous seminars and workshops.  It is not meant to be all inclusive but rather to provide a point of departure.

A business plan is a blueprint for the future of a business.  Many refer to it as the roadmap to success. Its primary purpose is to provide management with a tool to successfully build a business.  There is no single business plan formula and each plan will be built to suit the needs of a particular business.

If the principal purpose of the business plan is to obtain financing from outside sources, be sure and tailor the document to fit the requirements/needs of the financing source.

The following are the essential elements of a business plan:

A. Executive Summary – a one page document summarizing the plans’s key points

B. Business Overview

  1. How and when was the business started
  2. What are the products or services provided
  3. What type of business structure (legal) is the company using

C. Ownership, Management and Key Employees

  1. Who are the principal owners and what is their % of ownership
  2. Provide a detailed resume of each principal owner
  3. Who are the other key employees and what is their relevant business experience

D. Market

  1. What is the size of the market and who are the industry leaders
  2. Describe key industry trends – expanding or contracting
  3. Who are the customers – include market demographics
  4. How is the product or service sold, marketed and distributed
  5. Is the market local, regional, national, international
  6. What are the critical factors required to achieve success
  7. What are the impediments to achieving success

E. Competition

  1. Who are the principal competitors in your market – strengths and weaknesses
  2. How big  are the principal competitors – what is their financial strength
  3. Is the market fragmented or consolidated
  4. What is the company’s competitive advantage

F. Products and Services

  1. Describe the products or services offered – list principal features
  2. Do the products or services offer specific benefits over the competition – explain product or service differentiation

G. Facilities

  1. Does the company own or rent its facilities
  2. What is the size of the facility, can it accommodate expansion
  3. If the premises are leased provide key terms of the lease

H. Business Operations

  1. Who are the key suppliers and what are their terms
  2. How many people are employed – are they union or non-union
  3. Provide compensation details – salaries and benefits
  4. Are salaries and benefits commensurate with the industry, local market conditions
  5. What regulatory issue does the company face – provide a list of licenses/permits

I. Financial Information

  1. Provide financial statements for the prior five years including footnotes – are they audited, reviewed or compiled by an independent CPA firm
  2. Provide a three year forecast – balance sheet, income statement, cash flow statement – the forecast must include all relevant assumptions
  3. Describe the company’s system of internal controls
  4. Describe the principal terms and conditions of any existing financing
  5. What capital expenditure requirements will there be in the next three years
  6. What are the overhead costs and how are they allocated
  7. What method is used to cost inventory
  8. If the business plan is primarily to obtain financing, provide a schedule outlining how the proceeds will be used

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