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A Guide to Preparing a Business Plan
A business plan is the foundation of a business.
Introduction
Launching a new business venture involves inherent risks. Success can yield significant rewards, while failure can result in substantial losses of resources and reputation. The risk level is often mitigated by the management team's capabilities and the thoroughness of planning before initiating the venture.
Business plans is a roadmap for how to structure, run, and grown your businesses; and it will help find new partners and get funding. From an investor's perspective, a complete and objective business plan is crucial for understanding how resources will be utilized and managed.
Business Plan Definition
A business plan is a detailed document outlining the why, how, and when an enterprise aims to achieve profitability. It serves as an operational blueprint, aligning the management team's actions with predetermined objectives. Additionally, it provides investors and stakeholders with a clear understanding of the business's intentions and strategies.
A condensed version of the business plan, often called an investment memorandum or lean startup plan, may be distributed to potential investors. However, it should always be supported by a comprehensive business plan to ensure credibility and clarity.
Business Plan Contents
The structure and content of a business plan vary based on the complexity of the venture. However, certain key elements are essential to articulate why, how, and when economic success will be attained. Use the sections below that make the most sense for your business and your needs.
Executive Summary
Briefly tell your reader what your company is and why it will be successful. Include your mission statement, your product or service, and basic information about your company’s leadership team, employees, and location. You should also include financial information and high-level growth plans if you plan to ask for financing.
Company Description
Use your company description to provide detailed information about your company. Go into detail about the problems your business solves. Be specific, and list out the consumers, organization, or businesses your company plans to serve.
Explain the competitive advantages that will make your business a success. Are there experts on your team? Have you found the perfect location for your store? Your company description is the place to boast about your strengths.
Market Analysis
You'll need a good understanding of your industry outlook and target market. Competitive research will show you what other businesses are doing and what their strengths are. In your market research, look for trends and themes. What do successful competitors do? Why does it work? Can you do it better? Now's the time to answer these questions.
Organization and Management
Tell your reader how your company will be structured and who will run it.
Describe the legal structure of your business. State whether you have or intend to incorporate your business as a C or an S corporation, form a general or limited partnership, or if you're a sole proprietor or limited liability company (LLC).
Use an organizational chart to lay out who's in charge of what in your company. Show how each person's unique experience will contribute to the success of your venture. Consider including resumes and CVs of key members of your team.
Service or Product Line
Describe what you sell or what service you offer. Explain how it benefits your customers and what the product lifecycle looks like. Share your plans for intellectual property, like copyright or patent filings. If you're doing research and development for your service or product, explain it in detail.
Marketing and Sales
There's no single way to approach a marketing strategy. Your strategy should evolve and change to fit your unique needs.
Your goal in this section is to describe how you'll attract and retain customers. You'll also describe how a sale will actually happen. You'll refer to this section later when you make financial projections, so make sure to thoroughly describe your complete marketing and sales strategies.
Funding Request
If you're asking for funding, this is where you'll outline your funding requirements. Your goal is to clearly explain how much funding you’ll need over the next five years and what you'll use it for.
Specify whether you want debt or equity, the terms you'd like applied, and the length of time your request will cover. Give a detailed description of how you'll use your funds. Specify if you need funds to buy equipment or materials, pay salaries, or cover specific bills until revenue increases. Always include a description of your future strategic financial plans, like paying off debt or selling your business.
Financial Projections
Supplement your funding request with financial projections. Your goal is to convince the reader that your business is stable and will be a financial success.
If your business is already established, include income statements, balance sheets, and cash flow statements for the last three to five years. If you have other collateral you could put against a loan, make sure to list it now.
Provide a prospective financial outlook for the next five years. Include forecasted income statements, balance sheets, cash flow statements, and capital expenditure budgets. For the first year, be even more specific and use quarterly — or even monthly — projections. Make sure to clearly explain your projections, and match them to your funding requests.
This is a great place to use graphs and charts to tell the financial story of your business.
Appendix
Use your appendix to provide supporting documents or other materials were specially requested. Common items to include are credit histories, resumes, product pictures, letters of reference, licenses, permits, patents, legal documents, and other contracts.
Business Plan Outline
Download and fill out the Business Plan Outline and bring it to the RBDO when for further assistance with starting your business.