Business plan due tonight at 11:30


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          Whether you plan to apply for a business loan or not, you need to have a roadmap or plan to get you from where you are to the successful operation of your business.  The pages that follow demonstrate the content of a simple business plan which has been found to be successful in obtaining startup funds from banks.  You are encouraged to use all or whatever portions of this fit your business.


          Please DO NOT write page after page of drivel or copy from someone else’s plan or one of those templates you can find on the Internet.  In most cases this will not “sound” like you, nor will it be short and to the point.  Those who read these things are busy people and will not be inclined to spend time reading irrelevant paperwork.


          Throughout this sample, there are italicized comments which are meant to guide you in preparation.  If you follow this format it is reasonable to expect a finished document with 15-20 pages plus the supporting documents in the last section.


          If you have good quality pictures of your space, products or other items, you might include them as another way to convey just what you plan to do.  A map of your location, diagram of floor space, or other illustration is also sometimes helpful.  On the other hand, do not add materials simply to “bulk-up” the report. 


          While content is critical, it is also important to make this presentation look as good as possible.  For this course, you will create the business plan in Word and submit the plan and all attachments through the Assignment drop box. That means all attachments have to be in digital form. For a bank loan or an investor, you would normally provide them with a print version. Print the pages in black ink on a high quality tinted letterhead paper.  Color is not necessary but would add some interest in headlines, etc.  Bind the document in a presentation folder or with a spiral binding.  Don’t simply punch a staple in the upper left corner. 


          If your were going to pursue a bank loan or an investor, it would be normal to take this business plan to your SCORE counselor for a review and critique.




NOTE:  Before you begin your inspection of the simple plan outline which follows, take a moment to review the Business Plan Checklist on the next page.





          By way of review, here is a concise list of the basic requirements for a Business Plan, as recommended by the MIT Enterprise Forum:


·         Appropriate Arrangement– prepare an executive summary, a table of contents and chapters in the right order.

·         Right Length– make it not too long and not too short, not too fancy and not too plain.

·         Expectations– give a sense of what founder(s) and the company expect to accomplish three to seven years in the future.

·         Benefits– explain in quantitative and qualitative terms the benefit to the consumer of the products and services.

·         Marketability– present hard evidence of the marketability of products and services.

·         Revenue Basis– justify the means chosen to sell the products and services.

·         Development Status– provide level of product development that has been achieved and describe process and associated costs.

·         Management Team– Portray founder/partners as a team of experienced managers with complementary skills.

·         Rating– suggest an overall rating of product development and team sophistication.

·         Financial Projections– provide believable financial projections with key data explained and documented.

·         Investment Return– show how investors can cash out in three to seven years with appropriate capital appreciation.

·         Financier Interviews– present to the most potentially receptive financiers to avoid wasting time as resources dwindle.

·         Oral Presentation– create an easy and concisely explainable well orchestrated oral presentation





(This is the Cover Page)








City, State, ZIP




email Address









City, State, ZIP



This is the first page if you are asking for funding.


          This can be in the form of a letter, dated and addressed to the individual from whom you are requesting the funds.  It can also be just a simple statement in paragraph form (no more than half a page).


          In this letter or statement, include this information:


                   ● This is a request for funds in order to do what?

                   ● Name the business and whether it’s a proprietorship, partnership or corporation.

                   ● Who are the principles?

                   ● How much are you requesting, on what terms, and when do you need it?

                   ● How much are you putting into the project?

                   ● What will the money be used for?

                   ● How do you expect to pay it back?


          While not absolutely necessary, you can refer to different portions of the Plan when answering the questions above.


          Sign this sheet.









Number all the pages in the Plan and key them on this page.


                             Loan Request                                   


                             Section 1 – Description of the Business                        



                                      Owners and Credentials



                                      Products and Services

                                      Business Advisors



                             Section 2 – Business Operations                                   


                                      Business Hours

                                      Equipment and Processes



                             Section 3 – Marketing                                                   




                                      Pricing Policies

                                      Advertising Strategy


                             Section 4 – Financial Data                                            


                                      Basic Assumptions

                                      Start Up Expense

                                      Profit and Loss (3 years)


                             Section 5 – Supporting Documents                               


                                      Personal Resumes

                                      Personal Financial Statement

                                      Federal Tax Returns (3 yrs)

                                      Credit Report and Score


While not absolutely necessary, tabs or divider pages would be a nice touch.


Section 1



This entire section can be accomplished in not more than 3 pages.  Keep your paragraphs short and use the sub-heads as shown to make the material easier to read.




This is the general introduction to all that will follow.  Name the owners and the type and name of the business.  Where is it located?  What products or services will be offered?  You need not go into detail; this is just a general statement of what is to come.




What form of organization is used?  Who are the principles?  Give a detailed description of each owner, complete as to marital status, education and business experience.  Remember that your lender will be impressed by your credentials so don’t skimp on this description.  Modesty here will win no points.




Describe why you are doing this.  Who will it benefit and what are your overall aims or objectives?




Give your specific location if you have one.  If not, describe the ideal location or what you are looking for and how you are going about it.  Describe your lease in respect to cost, terms, etc.  Describe the area, traffic count and other favorable factors.  What about parking, visibility, lighting, etc?  Refer the reader to an accompanying map.  If layout is important, add a drawing of the floor plan, including dimensions, fixtures, equipment, etc.     




It will be very important for the lender to understand what you intend to sell.  Describe the products or services in some detail, but avoid very technical talk, buzzwords and other “speak” that can confuse the reader.  You may find it helpful to group products or services into categories







A lender will be encouraged by knowing that you are not attempting to do this without assistance from other “experts”.  List here (names, companies and addresses and telephone numbers) those whom you are using as advisors, including your Accountant, Attorney, Insurance Broker, Banker, SCORE Advisor, etc.  If you have joined the Chamber of Commerce, a Trade Association, or another business group, list them also.


Section 2



Here you are going to describe how the business operates, perhaps in no more than two pages.  This will be particularly important if you will be manufacturing something.  If you are in the selling game, describe your basic sales technique (not to be confused with advertising which comes along later).




Be specific in order to show that you have already planned even the smallest of details.  Do you operate by appointment or by walk-ins.  If you are working out of your home, can people visit you there?  How will you monitor customer traffic?





You probably will need certain fixtures and equipment.  Do you already have this or must it be purchased?  Will it be new or used?  Is it state-of-the-art?  If you are manufacturing something, provide a brief, non-technical summation of the process.





Provide a listing (names and addresses) of your principal suppliers.  This shows that you have planned ahead and already know how you will obtain those supplies you need to run the business.


Section 3



In 2-3 pages, you can describe what might be the most critical section of your Plan because it will indicate how you intend to go about getting customers.  The lender will be very interested in how specific you are, and how well you have thought this through.




This is the introductory part of this Section and can be somewhat general.  Describe your principal and secondary markets in terms of where they are, who they are and how you will reach them.  This might be an excellent place to list the specific reasons why you will have a market advantage (don’t overestimate the value of “customer service”).




Name your competitors and show their location on a map if this is useful.  How have you researched them?  What advantages might you have over them?  Indicate your plan to deal with this competition.




What will be your overall pricing strategy – low ball, average, high?  How will you decide on the prices for your products or services?  Are the prices competitive?  If you can name a few key items (each should account for at least 10% of Sales) list them and show the prices you plan to offer.




You should be able to describe, in great detail, the first 3 months of advertising you will do, including an estimate of the costs involved, and the media used:

          Mailings               Website                Tradeshows

          Yellow Pages        Events                  Newspaper

          Personal Calls      Magazines            etc.

How will you know which media is most effective for you?  If you can include sample advertisements, do so.


Section 4



A lender will be VERY interested in how you portray your income and expense, how long it will take to break even, and how you expect to be able to pay back the loan.  This Section will be heavy on the numbers, but if they are not QUICKLY understood by a reader, you will lose him or her … and probably not get a loan.  Remember:  the lender wants a reasonable amount of assurance that he/she will get back the loan amount with interest, and if there is a lack of understanding of your Plan, or an obvious flaw in it, you will be DOA!




Every financial plan is based on certain assumptions and it will be helpful if you list some of the obvious ones.  This also shows the lender that you are a knowledgeable player and one who has thought through all the important elements of your project.  The following items are usually the basic assumptions for a new business and the funding necessary to start up:    


                   ● The start date.

                   ● The date funds will be available, the amount, debt service and payback commencement date.

                   ● The equipment and supplies needed will be in place on opening day.

                   ● The percentage increases in Sales, Cost of Sales and Expenses from year to year.

                   ● Add other important assumptions you have made, or will make.




Here you will be listing just about everything you will need in order to start the business.  In each category, list the item and how much you expect to spend on it.  Again, doing this shows the lender that you are VERY organized and knowexactly what you need in order to be successful.




These are the items you will stock for resale.  Unless you are making them yourself, you will purchase them from a supplier.  If not it might be well to describe how you will be able to respond to a customer on the very first day.


          LEASEHOLD IMPROVEMENTS:                  


It is likely that you will require certain renovations or improvements to the property you are using as the location for your business (even if it is home-based).  Whether you do these things yourself, or hire others to do so, there will be costs involved.  Include such things as Electrical Renovations, Carpet, Counters, Signs, Walls, etc.                                                                   




Most businesses will require certain equipment, and if you are planning to manufacture something, you will require tools and equipment.  At the very least, a business will need a computer, telephone, desk and chair, and may also need vehicles, cash register, counters, etc.  This can be a VERY long list sometimes.                                          



You will probable incur initial expenses for Rent and Security Deposit, Licenses, Fictitious Name or Incorporation, Insurance, Utility & Telephone, Business Stationery, Forms, Operating Funds (at least 3 months), and Contingencies (often 10% of your total Other).  Don’t overlook all the expenses you incur just in investigating the business (travel, seminars, etc.).                                                       




This is the spreadsheet that details each category of income and expense for each of the first 12 months of business.  It is not important whether this exercise be called a Pro Forma, Estimate, or Projection; spending the time thinking about the details is, however, critical.  The final form is a spreadsheet that can be accomplished by using Microsoft Excel, a template at, or by hand with pencil and a columnar pad.  A handy form is on the next page which you can use with a pencil (not a pen, since you’ll be doing plenty of erasing).  Since it shows only 6 months, copy and paste it together  so that you can portray a complete first year.


In the left hand column will be listed your estimated Sales, Cost of Sales and Expenses.  Across the top of the form are 13 columns, one per month plus a yearly total.


          SALES or REVENUE. 

This is the monthly income or sales you expect in each business category.  Note that lumping all sales into one category IS NOT ACCEPTABLE!  Every successful business earns revenue in several categories and these must be detailed.


Generally speaking, every sale has a direct, or variable cost, attached to it.  If, for example, you retail a sweater for $50, which cost you $25 from the manufacturer, your Cost of Sales is $25.  There are, of course, some Sales that might not have a direct cost; repairing a flat tire might be an example (since it is all manpower and no parts or replacements).

          GROSS PROFIT. 

Sometimes called Gross Margin, this is Sales minus Costs.  This number tells you how efficient your sales, costs, prices, etc. are.


Sometimes referred to as “Fixed” or “Overhead”, these items are the General and Administrative Expenses that go on, whether or not you make a sale.  The most common include:

Payroll                                                   Insurance – Business/Personal

Payroll Taxes                                         Leased Equipment

Contract or Temporary Labor                  Postage or Mailing Cost

Office or Operating Supplies                            Debt Service (Loan Repayment)

Maintenance & Repair                            Taxes

Advertising                                             Utilities

Vehicles or Delivery                               Telephone                     

Accounting & Legal                                Other/Miscellaneous

Rent or Mortgage


At the time you are making this Estimate, you may not know the exact amount of an expense, but you must include a reasonable guess (and this may require some research).

Notice that the words Amortization or Depreciation do not appear in the above list.  These are accounting numbers that may or may not appear in your statements, once you have actually conducted the business.  Your accountant will advise you on these matters.

          NET PROFIT. 

This is the bottom line and indicates your success, at least insofar as a P&L Statement is concerned.  Keep in mind, of course, that as the business owner you can pay yourself a salary, buy insurance, pay your auto expenses, and receive a host of other “perks”.  It is very important for you to know what your own personal ACTUAL compensation is.  The P&L may say one thing, but what you really receive can be quite different (and all quite legal, so long as it is all accounted for in your bookkeeping).  If the bottom line does not show your actual compensation, add a short footnote explaining what it really is.

All the columns and appropriate lines must be completed and totaled to show what you project for your first year of activity.  It is then useful to expand this to a yearly total for a Second Year and the Third Year.  Most lenders will not necessarily expect a huge profit to show in the first year, but will be interested to see growth as well as an upward trend.




        Account Name

Month 1     

Month 2

Month 3

Month 4

Month 5

Month 6
























































































































































Payroll – Owner







Payroll Taxes – Owner







Payroll – Employees







Payroll Taxes – Employees







Temporary Labor







Operating Supplies







Repairs and Maintenance




























Accounting and Legal

































































After completing a detailed estimate of Income and Expense for the first twelve months of your business activity, you will want to take all the individual totals for Year 1, and estimate how each will increase or decrease in Year 2 and Year 3.  This can be portrayed on a second spreadsheet in this way, using the same detailed Account Names as you did for Year 1.


Account Name                          Year 1                   Year 2                   Year 3




Cost of Sales




Net Profit (Loss)


It might be well to show some footnotes to this chart, indicating the percent increases from year to year, for Total Sales, Total Cost of Sales, Total Expenses and Total Net Profit.  If you add product lines, add employees or make other significant changes, it might be helpful to explain these actions in footnotes.


For your own benefit (and perhaps also for a lender’s) you may want to display a “best case” and a “worst case” estimate for each year in addition to what you have above, which might be the “most likely” estimate.



Section 5



Insert in this section, copies (not Originals) of the following personal documents.


                   Personal Financial Statement

                   Federal Income Tax Returns (3 yrs)

                   Credit Report and Score

                   Other Relevant Documents