Business Plan Development and Financial Planning
Develop your business plan to reflect the whole of your business for
- Personal use
- Bank loan acquisition
BUSINESS PLAN OUTLINE
The following pages provide a suggested outline of the material to be included in your business plan. Your final plan may vary according to your specific needs or individual requirements of your lender or investor.
I. COVER PAGE: Serves as the title page of your business plan.
II. EXECUTIVE SUMMARY
- Name of the company.
- Title and timeframe of the business plan
- Month and year your plan was prepared.
- Name, title/designation of the author
- Draft number of the plan.
This is the explanation of your whole business plan in one page. Explaining at least the following:
- About the company and management
- Goal and objectives in numbers if possible (eg turnover, profits, expansion, new markets and share, capital, new technology objectives etc)
- Marketing briefing and the secret of your success
Note: Do not write the executive summary until you have completed your business plan! It is a summary and reflects the contents of the finished plan.
III. TABLE OF CONTENTS (Quick reference to major topics covered in your plan)
IV. PART I: COMPANY DESCRIPTION
What is included? This section should include
History, legal form, markets served, company philosophy, vision, mission, objectives, strategies, primary and secondary products or services and success factors (in SWOT analysis format) etc
Explain also on
INTELLECTUAL PROPERTY, LOCATION, MANAGEMENT, PERSONNEL, ACCOUNTING & LEGAL, INSURANCE, SECURITY,
V. PART II: THE MARKETING PLAN
What is a marketing plan? The Marketing Plan defines all of the components of your marketing strategy. You will address the details of your market analysis, sales, advertising, and public relations campaigns. The Plan should also integrate traditional (offline) programs with new media (online) strategies.
A. OVERVIEW AND GOALS OF YOUR MARKETING STRATEGY
B. MARKET ANALYSIS
- Target Market (identify with demographics, psychographics, and niche market specifics).
- Competition (describe major competitors assessing their strengths and weaknesses.
- Market Trends (identify industry trends and customer trends).
- Market Research (describe methods of research, database analysis, and results summary).
C. MARKETING STRATEGY
- General Description (budget % allocations on- and off-line with expected ROIs).
- Method of Sales and Distribution (stores, offices, kiosks, catalogs, d/mail, website).
- Packaging (quality considerations and packaging).
- Pricing (price strategy and competitive position.
- Database Marketing (Personalization).
- Sales Strategies (direct sales, direct mail, email, affiliate, reciprocal, and viral marketing).
- Sales Incentives/Promotions (samples, coupons, online promo, add-ons, rebates, etc.).
- Advertising Strategies (traditional, web/new media, long-term sponsorships).
- Public Relations (online presence, events, press releases, interviews).
- Networking (memberships and leadership positions).
D. CUSTOMER SERVICE
- Description of Customer Service Activities.
- Expected Outcomes of Achieving Excellence.
E. IMPLEMENTATION OF MARKETING STRATEGY
- In-House Responsibilities.
- Out-Sourced Functions (advertising, public relations, marketing firms, ad networks, etc.).
F. ASSESSMENT OF MARKETING EFFECTIVENESS*
- To be used by existing companies after making periodic evaluations
VI. PART III: FINANCIAL PROJECTIONS
This section of the business plan is the quantitative interpretation of everything you stated in the organizational and marketing plans. Do not do this part of your plan until you have finished those two sections.
Financial projections are the financial records used to show projected finances based on your past performance. The following are the major documents you will want to include in your Business Plan. The work is much easier if they are done in the order presented because they build on each other, utilizing information from the ones previously developed.
A. INVESTMENT NEEDS (needed only if you are seeking financing)
This is an outline giving the following information:
(1) Why do you need each stipulated capital asset?.
(2) How Much capital will you need?.
B. SOURCE OF FUNDING
Statement of Investment Usage
Describe how are you going to utilize the investment that listed above in the table format below
C. INCOME PROJECTION
A Pro Forma Income P&L (Income) Statement showing projections for your company for the next three years. Use the revenue and expense totals from the Pro Forma Cash Flow Statement for the 1st year’s figures and project for the next two years according to expected economic and industry trends.
D. PROJECTED CASH FLOW STATEMENT (BUDGET)
This document projects what your Business Plan means in terms of dollars. It shows cash inflow and outflow over a period of time and is used for internal planning. It is of prime interest to the lender and shows how you intend to repay your loan. Cash flow statements show both how much and when cash must flow in and out of your business.
E. PROJECTED BALANCE SHEET
Projection of Assets, Liabilities, and Net Worth of your company at end of next fiscal year.
F. BREAK-EVEN ANALYSIS
The break-even point is the point at which a company’s expenses exactly match the sales or service volume. It can be expressed in: (1) Total dollars or revenue exactly offset by total expenses -or- (2) Total units of production (cost of which exactly equals the income derived by their sales). This analysis can be done either mathematically or graphically. Revenue and expense figures are drawn from the three-year income projection.
Note: The following (G-J) are Actual Performance (Historical) Statements. They reflect the activity of your business in the past.
- If your business is new and has not yet begun operations: the financial section will end here and you will add a Personal Financial History.
- If yours is an established business: you will include the following actual performance statements:
G. PROJECTED PROFIT AND LOSS STATEMENT (INCOME STATEMENT)
Shows your business financial activity over a period of time (monthly, annually). It is a moving picture showing what has happened in your business and is an excellent tool for assessing your business. Your ledger is closed and balanced and the revenue and expense totals transferred to this statement.
H. BUSINESS RATIOS
In this section you will use your income statements and balance sheets to develop a study of relationships and comparisons of: (1) Items in a single year’s financial statement, (2) comparative financial statements for a period of time, or (3) your statements with those of other businesses. Measures are expressed as ratios or percentages that can be used to compare your business with industry standards.
If you are seeking a lender or investor, ratio analysis as compared to industry standards will be especially critical in determining whether or not the loan or venture funds are justified.
- Liquidity Analysis (net working capital, current ratio, quick ratio).
- Profitability Analysis (gross profit margin, operating profit margin, net profit margin).
- Debt Ratios (debt to assets, debt to equity).
- Measures of Investment (return on investment).
- Vertical financial statement analysis (shows relationship of components in a single financial statement).
- Horizontal financial statement analysis (percentage analysis of the increases and decreases in the items on comparative financial statement).
J. PAST BUSINESS FINANCIAL PERFORMANCE
The past 3/2/1 years (if applicable business financial performance) to last financial year including any loans taken. Explain these past financial records using P&L, Cash flow and balance sheet.
VII. PART IV: ANNEXES (EXTRA/SUPPORTING DOCUMENTS)
This section of your plan will contain all of the records that back up the statements and decisions made in the three main parts of your business plan. The most common supporting documents are:
A. PERSONAL RESUMES
Include resumes for owners and management. A resume should be a one-page document. Include: work history, educational background, professional affiliations and honors, and a focus on special skills relating to the company position.
B. OWNERS’ FINANCIAL STATEMENTS
A statement of personal assets and liabilities. For a new business owner, this will be part of your financial section.
C. CREDIT REPORTS
Business and personal from suppliers or wholesalers, credit bureaus, and banks.
D. COPIES OF LEASES, MORTGAGES, PURCHASE AGREEMENTS, ETC.
All agreements currently in force between your company and a leasing agency, mortgage company or other agency.
E. LETTERS OF REFERENCE
Letters recommending you as being a reputable and reliable business person worthy of being considered a good risk. (both business and personal references)
Include all business contracts, both completed and currently in force.
G. OTHER LEGAL DOCUMENTS
All legal papers pertaining to your legal structure, proprietary rights, insurance, etc. Limited partnership agreements, shipping contracts, etc.
H. MISCELLANEOUS DOCUMENTS
All other documents which have been referred to, but not included in the main body of the plan. (for example, location plans, demographics, competition analysis, advertising rate sheets, cost analysis, etc.).
When You Are Finished: Your Business Plan should look professional, must be done by you. A business plan will be the best indicator that can be used to judge your potential for success. It should be between 15 to 40 pages in length, excluding supporting documents. If you are seeking a lender or investor: Include only the supporting documents that will be of immediate interest to the person examining your plan eg a bank will inquire some specific documents, investor also will give you what to include in your business plan.
If the business plan is for investor and or a bank, ensure that you crated first a comprehensive business plan for personal use and reproduce the plan narrating only areas of interest to the BP end consumer.
For this case you can have 2 or 3 or even more copies of different Business plans for bank A, Bank B, Bank C, Investor A, Investor B etc.
Have your plan neatly bound at your local print shop or in blue, black or brown covers purchased from the stationery store. Make copies for each lender or investor you wish to approach. Do not give out too many copies at once, and keep track of each copy. If you are turned down for financing, be sure to retrieve your business plan.
UPDATING YOUR BUSINESS PLAN
The business plan is a living being, it change over time to reflect your real life situation of your business. Make sure these changes are frequently reflected in your business plan