Tips on Preparing a Business Plan
According to the U.S. Small Business Administration (SBA), the final step before developing your business plan is to go through a prebusiness checklist. You should answer these questions:
- What business are you interested in starting?
- What services or products will you sell?
- Where will your business be located?
- What skills and experience do you bring to the business?
- What will be your legal structure (e.g., sole proprietorship, partnership, corporation)?
- What will you name your business?
- What equipment or supplies will you need?
- What insurance coverage will be needed? Liability, theft, life, and health?
- What financing will you need?
- What are your resources (e.g., financial resources, human resources)?
- How will you compensate yourself?
Below is an outline for a business plan. You can use this guide when developing a business plan. Be aware that each business plan must be customized; some items below may not pertain to your field.
1. Cover sheet
2. Statement of purpose
3. Table of contents:
I. The Business
A. Description of business
B. Marketing
C. Competition
D. Operating procedures
E. Personnel
F. Business insurance
G. Financial data
II. Financial Data
A. Loan applications
B. Capital equipment and supply list
C. Balance sheet
D. Breakeven analysis
E. Pro forma income projections (profit and loss statements)
- Three-year summary
- Detail by months, first year
- Detail by quarters, second and third years
- Assumptions upon which projections were based
F. Pro forma cash flow
III. Supporting Documents
A. Tax returns of principals for last three years
B. Personal financial statement (all banks have these forms)
C. In the case of a franchised business, a copy of the franchise contract and all supporting documents provided by the franchiser
- Copy of proposed lease or purchase agreement for building space
- Copies of licenses and other legal documents
- Copies of resumes of all principals
- Copies of letters of intent from suppliers and others
Please see the SBA Web site (http://www.sba.gov) for specific examples and more information on writing a business plan.
There are a few additional important issues that someone starting a business should remember:
- Always check out legal, tax, and licensing requirements before starting a business venture. Experienced entrepreneurs can help you. Seek out assistance from the Senior Corps of Retired Executives through the SBA.
- Analyze your time. Running a profitable business can take a lot of time.
- Remember that making profits is very rewarding but is never guaranteed.
- Do your homework. Research is one of the keys to success.
- Write down your business plan and refer to it regularly. Use it to guide your every decision.
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