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How to Write Your Business Plan

A few years ago I tried my hand at opening a small business.  I had a good product, I had people who wanted the product, but it did not last.  You see I was so excited to get my own business going I forgot to do something; I forgot to write a business plan.  I had no guidelines for my business, so I had no idea for what I should do when things like a client not paying on time came up.

If you are getting ready to start a business, you should strongly consider writing a business plan.

A business plan is usually separated into seven parts(not including a front/title page and possibly a table of contents). We'll walk you through each section and help you execute the strongest business plan possible.

Executive Summary
The Executive Summary is a basic outline of what is in the rest of the Business Plan. Think back to essays you wrote when you were younger, this is the introduction, where you describe what you are going to go over through the rest of the document. You want to clearly state what you are going to ask for in the summary.

In the Summary you will need to cover what the business is, this includes the products, who your market is and what you have over your rivals and also the type of business entity it is. Where is your business currently at, who works with you, any current financial backers, or current developments. You will than want to go over the basics of the finances; how much capital you need to start/or grow your business, projected cash flow, sales and profits. If you are using the business plan in part for a loan, include the collateral you are looking to use.  Finally, cover the important factors/hurdles your company needs to cover to achieve the success you are looking for, do you need to get new locations, hire a set number of employees, produce prototypes and then manufacture new products.

A few things to keep in mind for your summary:
  • Keep it short
  • Keep it business like
  • Be concise / avoid being verbose

Some people write the summary last so they can reference the rest of the Business Plan.

Your summary should be between half a page and a page ( suggest half a page), but the important factor is that it is a quick read, a business plan is already going to be anywhere from 15 to 50 pages depending on your business and who you ask, so the Executive Summary is meant to wet the whistle of the people reading it so they know the basics of your business before getting into details, speaking of which.

Business Description
When you describe the business, this is more than just describing your company, but also describing the industry in which your business falls into

Start by going over the industry your business is part of, make sure to include notes and references to your research. You will also want to include where the industry is currently at and where it is going in the future. If there is potential for something in the future to cause good or harm to your business add that in as well.

After you have gone into details about the field your business belongs to, than you will want to speak to specifics of your business. Here is where you tell people what kind of entity your business is:
If it is not a Sole Proprietorship, tell the reader who the principals are (including yourself) and what they bring to the table for the business.

By the time the reader is done with this section they should know in details about the type of business you plan to run and the industry it fits into.

After you have told your readers about the type of business you are going to run, you will want to let them know about the products and /or services your are going to provide to your customers.

Start by describing what your products and/or services are. Provide your reader with details about the product, if you want to include images of the product that is fine, anything to better allow the reader to visualize what you are selling.

Next, describe your target market, who you will sell to. Include details, you can do this with charts/graphs, or just include footnotes with references to your research. Explain how you are going to deliver your product to your target audience. How you distribute your product is as important as what your product is, if you distribute in a unique way for your business explain that.

Finally, end this section by talking about your competition. Explain who your big rivals are and what your business has over them, or what you do different that will bring customers to your doors/website. If your business is in an unfilled niche, explain why it has not been filled and the advantages and disadvantages of filling that niche.

For the Operations plan you will want to explain how your business will run on a day-to-day basis. Tell the reader which days and hours your business will be open, and why those days and hours were chosen.

If you have a brick and mortar shop, how many employees will you need for each day. If one day needs less employees explain why that is, and also explain what you will do if that changes, how will you fill the need for new employees if your business booms.

You will also want to explain how you will pay your employees, hourly or salary. What kind of benefits do you plan to provide to your employees. What about turn-over? Some businesses would like to think that they will not lose employees, but you might, do you see your business as the kind that will have a high turn over? If so, how is that a benefit to your business?

If you are looking at having multiple locations, how will you manage the day-to-day business? Will you be going between the different locations, or setting up a manager at each location who reports to you.

Management and Organization
The previous entry, Operations, leads into this and in some Business Plans can be combined into a single section.

For this section describe how you view the overall organization of your business. How many employees are you going to have and how are they laid out within the business? If you are running restaurant, you will have your host/hostess, waitstaff, cooks, bussers, dishwashers, and maybe bartenders and a separate cleaning staff. So think about how many different groups you need for your business and how they will fit together in the organization of the business. In most restaurants a single manager will look over the host/hostess, waitstaff and bartenders, while a second kitchen manager will work above cooks, bussers and dishwashers. Beyond that there is also usually a general manager as well.

Market Plan
For this section you will want to go into how you plan to market your products to your buyers. Are you marketing online or in the real world?

But the marketing portion is more than just how you will advertise your products/services. Explain how you plan to package your products, once again you can include images. Also, how does the packaging that you are using add value to your marketing. Consider if your product's packaging is going to cause people to look away, laugh, be intrigued, people may purchase and try an item based on the label or packaging.

How about how you plan to interact with the public. Let the reader know how your employees will act with the public, how they will answer the phone or e-mails. How will your employees act when making a sale? How do you handle returns? This information should be laid out at this time, do not leave this until it happens. Include events you want to be at. Does it make sense to get a booth at a comic convention, or at a food festival. If so, explain how it will help your business with its interaction with the public.

Finally in this section tell the reader about major sales you plan to have, and how they will help your business. If you have a liquor store, then having a sell on January 17th, the anniversary of the start of prohibition, does not make sense.

The last section of your Business Plan is going to be about the finances of your business. In the Summary you will include some basic numbers, and if you want in each of the above section you can include the financial aspects of each portion of your business. But in this section you will need to bring it all together.

Your budget should be laid out in this section, itemized for each portion. List what your start up cost is going to be by section:
  • Materials & Equipment
    • What are the cost of the tools you need for your business?
    • Also, what are the cost of the Raw materials?
  • Employee Cost
    • This is the total cost for all of your employees
    • How many employees you need?
      • How many are managers?
      • What are their wages?
    • The cost of benefits
    • The cost of employees taxes.
  • Marketing
    • How much are you going to spend on promoting your business?
      • Itemize this section for each type of promotion you are going to use.
    • If you going to have employees wear matching outfits, what are the cost?
    • What is the cost of your packaging?
  • Overhead
    • Rent
    • Utilities (Phone, Electric, Gas)
    • Company taxes
  • Professional Services
    • These are any services beyond what your employees fulfill
      • Carpet cleaning, lawyers and so forth.

Figure how much money you will be spending each month, week, day.

Next you will want to lay out the what you products will sale for, what you think you will make from each potential buyer. Compare the projected profit and loss. If during this time, you notice that the scales lean more towards loss, then you will want to go back over your plan and see where you can change things to change that.

For the section on Finances you should use charts, tables and so forth to better show how money moves in your business. You may want to include a balance sheet, income statement or a cash flow statement.

There is no reason to having a closing statement in your Business Plan, however, you may want to include one.  If you are using your Business Plan to find financial backing, you may decide to include one, to re-summarize your business.

Note: has a useful guide to help you write a business plan. And if you are in the United States you can get help from the Small Business Administration's Business Plan page.

Good Luck and Good Sales.