Writing Your Business Plan

"The business plan is a necessity. If the person who wants to start a small business can't put a business plan together, he or she is in trouble."

Business Plan Basics

A business plan precisely defines your business, identifies your goals and serves as your firm's resume. The basic components include a current and pro forma balance sheet, an income statement and a cash flow analysis. It helps you allocate resources properly, handle unforeseen complications and make good business decisions. As it provides specific and organized information about your company and how you will repay borrowed money, a good business plan is a crucial part of any loan application. Additionally, it informs sales personnel, suppliers and others about your operations and goals.

Plan Your Work

The importance of a comprehensive, thoughtful business plan cannot be overemphasized. Much hinges on it — outside funding, credit from suppliers, management of your operation and finances, promotion and marketing of your business and achievement of your goals and objectives.

"The business plan is a necessity. If the person who wants to start a small business can't put a business plan together, he or she is in trouble," said Robert Krummer, Jr., Chairman of First Business Bank in Los Angeles.

Despite the critical importance of a business plan, many entrepreneurs drag their feet when it comes to pre-paring a written document. They argue that their marketplace changes too fast for a business plan to be useful or that they just don't have enough time, but just as a builder won't begin construction without a blueprint, eager business owners shouldn't rush into new ventures without a plan.

Before you begin writing your business plan, consider four core questions:

  1. What service or product does your business provide and what needs does it fill?
  2. Who are the potential customers for your product or service and why will they purchase it from you?
  3. How will you reach your potential customers?
  4. Where will you get the financial resources to start your business.

Writing the Plan

What goes in a business plan? The body can be divided into four distinct sections:

  1. Description of the business
  2. Marketing
  3. Finances
  4. Management

Agenda should include an executive summary, supporting documents and financial projections. Although there is no single formula for developing a business plan, some elements are common to all business plans. They are summarized in the following outline:

Elements of a Business Plan

  1. Cover sheet
  2. Statement of purpose
  3. Table of contents

I. The Business

  • Description of business
  • Marketing
  • Competition
  • Operating procedures
  • Personnel
  • Business insurance

II. Financial Data

  • Loan applications
  • Capital equipment and supply list
  • Balance sheet
  • Breakeven analysis
  • Pro-forma income projections
  • (profit & loss statements)
  • Three-year summary
  • Detail by month, first year
  • Detail by quarters, second and
  • third years
  • Assumptions upon which projections were based
  • Pro-forma cash flow

III. Supporting Documents

  • Tax returns of principals for last three years personal financial statement (all banks have these forms)
  • For franchised businesses, a copy of franchise contract and all supporting documents provided by the franchisor
  • Copy of proposed lease or purchase agreement for building space
  • Copy of licenses and other legal documents
  • Copy of resumes of all principals
  • Copies of letters of intent from suppliers, etc.

Your Roadmap to Succes: The Business Plan Workshop

by Andrea Korogi

You know you should do it, you want to do it, but you just can't spend the time. Can you really afford not to have a business plan? Whether you are seeking financing or just planning for growth, a business plan will help ensure your success. Attending a Business Plan Workshop through the Rohnert Park Chamber of Commerce Small Business Success Center is a dynamic first step in writing your business' plan for success.

At a recent Chamber Business Plan Workshop, presented by Joe Molina, a small business consultant and MiraCosta business professor, a small group of business owners completed 3 sessions, attending 1 per week for 3 weeks, and learned how to develop their business plan.

Pam Bovaird of staffing agency TechReq started her business in 2005. She decided to take part in the three-session workshop because she wanted to get control of her financing and plan for growth over the next few years. She had already started to write a plan and wrote down some dollar and personal goals, but she wanted expert advice on what she was missing. She also wanted to know what the banks would be looking for should she decide to seek financing.

"The workshop provided the things I was looking for and gave me a map of what to do and how to organize my plan. (Molina) stressed organizing the plan in a short, concise fashion. The marketing portion helped me get down on paper how to market myself versus my competitors. He also helped me identify how to develop my Web site from a marketing perspective and how to tie all my marketing efforts together," Bovaird said. "I definitely got more out of the workshop than just how to develop a business plan. I never learned how to properly organize my finances, so the financing portion of the workshop was invaluable. I learned how to figure profit/loss, categorizing, and what a bank will look for when evaluating the viability of my business," Bovaird said.

Attendees agreed that some of the best advice came from Susan Lamping of CDC Finance, who spoke to the group about planning for business financing.

"Don't spend your own money and then try to borrow. Borrow when you have the money and use your money when you can't borrow anymore," Lamping advised. "Use other people's credit, not yours. When you buy something like a computer, have them bill you so that you can use your money. Let them wait for their money"

The Rohnert Park Chamber of Commerce Business Plan Workshops cover the basics of plan writing, as well as offering strategies for how to use the plan as a tool for everything from leveraging financing to everyday motivation. Attendees agreed that the skills covered in the workshop are creative, practical and invaluable. To find out more about Business Plan Workshops, consult the Rohnert Park Chamber of Commerce,101 Golf Course Drive, Suite C7, (707) 584-1415, http://www.rohnertparkchamber.org/.

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