Business Plan Preparation & Costs

The most important reason to do a Business Plan is for you to become convinced that you can turn your idea or dream into a real, functioning business. Until you have satisfied yourself that your plan "makes sense", you shouldn't even think of trying to sell anyone else. Once you're convinced you can make your idea work, then you can show it to lenders and prospective investors. A Business Plan is not a “one-time” document just for obtaining investors or financing. You should consider it to be a “living document” which you will update and upgrade from time to time, as information and circumstances change, and as appropriate as you thus make changes in your business.

A Business Plan/Financial Plan is an absolute necessity in applying for a loan for a start-up business, and is highly recommended in applying for a loan for an existing business.

How? Think about your business idea often and ask yourself these questions about every aspect of it. Who?, what?, where?, when?, why?, how?, how much?, how many?, how often? Write down the answers. Look for "holes". It's easy to list all kinds of ideas. Do you have the knowledge and resources to carry them out cost effectively? Are you "double counting" your resources, depending on them to do two different things at the same time?

Why do you want to pursue a particular part of your plan? Who will carry it out? When? Where? How much will it cost? How many sales will each marketing campaign generate? How does the cost to acquire a prospect, make a sale, or provide the product or service compare to your product or service pricing parameters?

Visualize some "typical days". What is being done? Why? Who is doing it? Ask and answer these questions over and over until you are convinced you know how your business will function day-to-day. Now capture this knowledge in your plan and show how it will work financially. Make changes until you have a plan where all the elements fit together and work from marketing, operational, and financial perspectives.

There is no single prescribed format for a Business Plan. However, we believe many of you will find the format shown below to be helpful. You should feel free to adjust it to your unique circumstances.

A SCORE Counselor will be glad to assist you by reviewing your business plan draft(s) and giving you constructive comments. This can be accomplished in face to face meetings or by follow-up E-mail exchanges of sections of the plan as you write them. Your SCORE Counselor can also suggest Internet Web Sites that you may find helpful in addition to this outline.

SCORE Template Gallery
Provides an excellent free template for use with Microsoft Word for preparation of a business plan. Also lists other templates of interest.

Business Tools
A number of excellent business links, including additional business planning tools.

Small Business Administration
There is excellent help and a tutorial on preparing a Business Plan at the SBA website/

    
    See BBBTipsTM on Small Business Start-up Costs

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Business Plan Outline

Cover Page	Name of Business, Business Address; Names, Addresses, Phone Numbers, Fax Numbers of Owners.
Executive Summary (Statement of Purpose)	An overview and summary of the plan or financing proposal as a whole. This should help a reader understand what is contained in the document. Do not expect the reader to sort through the document trying to figure out how it all fits together. TELL HER. If you are requesting financing, how much do you need and what will it be used for? Although this is at the beginning of the document, it should be written LAST, after all of your decisions have been made. The remainder of the plan provides the detail.
Business Description	Describe your product or service. Will you manufacture, distribute, service or do some combination of these? What kind of facilities will you have? What need or want does your product or service satisfy? To whom will you sell? Why will they want to buy from you? Who are your competitors? What is your competitive advantage? Where and how will you sell? How will your business grow and profit?
Marketing Plan	Describe your "target market" in detail. Where are they? How will you cost effectively reach this market? What will it cost to identify a prospect? What will it cost to make a sale? Can you price this cost into your product or service and still be competitive? What sales volumes are required? Describe your specific marketing plans, with anticpated costs and results?
Operations Plan (Organization & Mgmt)	How will you provide the product or service after the sale? Will you have employees? Managers? What kinds of skills will they need? Will they be easy to recruit, select, train, and retain? What will they cost? Can you price the costs into your product and remain competitive? Legal structure? Professional advisors? Experience of owners and managers?
Financial Plan	Summarize your sources and uses of funds. How much financing will you need? Collateral? Provide projected cash flow statements and income statements by month for the first year and by quarter for the following two years. Provide projected balance sheets at start-up and at the end of each of the next 3 years. Provide a break-even and sensitivity analysis. Provide a summary of the assumptions used to produce these projections.
Appendices	Copies of owners' resumes, tax returns and financial statements. Leases, equipment lists, inventory lists should be included here if appropriate.

Thanks to the Memphis SCORE Chapter for portions of the above material.