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A Practical Guide to Preparing
Your Business Plan
New York Small Business
Development Center
Funded in part through a cooperative agreement
with the U.S. Small Business Administration.
This publication may not be reproduced in whole
or in part without the express written consent of
the NY Small Business Development Center.
This is a excerpt of the planning guide.
Please visit your local SBDC for full text:
Visit www.nysbdc.org/locations.html or call 800-732-SBDC
WHY DO YOU NEED A BUSINESS PLAN?
If you want to raise money to finance a new
business, the operation or expansion of an existing
business, or to buy an existing business—you
need a business plan.
Sources of capital (investors and lenders) will not
even consider providing money to your business
unless you have a plan—and it must be a plan that
shows you have really thought through what you
are proposing.
If you want to manage and organize your business
effectively, you need a business plan. A good plan
helps you to focus on markets for your product or
service, anticipate future needs, monitor progress
and be a proactive—not reactive—manager. It’s a
very valuable management tool.
If you want to know where you are, where you're
going, and how you're going to get there, you need
a business plan. A good business plan is a road
map for your business.
If you have never prepared a business plan before,
work with a resource partner like the NY SBDC
to help you get started. They can help analyze the
strengths and weaknesses of your business
proposal, and work with you to complete your plan
so that you will have a useful tool for running your
business or raising capital.
CHOOSING THE PLAN FOR YOU
Many business planners can begin with a
Condensed Business Plan to get things started.
Section 1 will take you step by step through a
simplified planning process and will enable you
to quickly make a preliminary assessment of your
business idea. If you need assistance with
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completing your plan, please contact a resource
partner or read the comparable information in
Section 2.
Some business planners require a more detailed
plan. Section 2 provides more detailed questions,
requires more extensive research, and will take you
step by step through a careful analysis of your
business proposal and provide a clear path for your
business.
SECTION 1 -
CONDENSED BUSINESS PLAN
SUMMARY
The Summary is a brief – no more than one page –
overview of your business plan. You should write
it after completing the nine areas (described
below) and the financial sections. It should
highlight the key ideas in your plan and help the
reader to make sense of what they will be reading.
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1. BUSINESS DESCRIPTION
The Business Description is an overview of what
your business is and what it does. In a concise and
direct manner, describe your business. For
example, “New Business Enterprises is a
partnership set up to manufacture widgets. It is
located in a 2,500 sq. ft. facility in Anytown, NY
and sells through a distributor network to
customers throughout the United States. The
partners developed the widgets while working
from home and moved to the current location last
year. New Business Enterprises is seeking to
expand manufacturing with new production
equipment and a larger facility.”
2. MARKET ANALYSIS
In the Market Analysis, describe who your
customers are or will be. Are they individuals or
businesses? How many customers are out there?
If individuals, what are their characteristics in
terms of age, location or other common traits? If
businesses, how can they be identified (e.g., by
industry, by size, etc.)? If your product or service
is already available from other sources, how big is
the market - in other words, how much is currently
being spent by all possible customers? What are
the past, current and future market trends? Is the
market segmented? Is it a commodity market? Is it
unique? What is the geographic area of your
market? What part of the market will you be
selling to?
3. PRODUCT OR SERVICE ANALYSIS
Describe specifically your product or service and
why customers will purchase it. What are the
features or benefits of your product or service that
are better than the competition (e.g., better quality,
cheaper, faster, softer)? What need does your
product meet? How does it satisfy demand? Is the
product protected, perhaps by a patent or an
exclusive contract? What makes your product
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unique? Is it branded or private label? What will
your warranty policy be?
4. COMPETITION
Identify the top three or four companies that
provide the same or an alternative product or
service, and be sure not to overlook foreign
competition. Briefly describe these competitors in
terms of size, location, target market, distribution
or other characteristics. You may wish to do this
section as a chart. Remember—a good place to
start this research is by searching online and/or
industry directories. Describe also any identifiable
strengths and weaknesses, such as, competitor #1
has a large sales force, #2 has no local distribution.
Don't forget to learn from the competition—what
are they doing right and what are they doing
wrong? What are your competitors’ strategies in
markets, sales and operations?
5. MARKETING STRATEGY
This section describes how you will reach your
customers and your sales goals. Be sure to think
specifically why customers will buy from you and
not the competition. Identify and describe
how you will get sales, how you will reach specific
markets, how you will price the product or service,
and how the product or service will be distributed.
For example, will you sell through retailers, by
direct mail, sales representatives, regional
distributors, direct sales people, etc.? How will you
promote the product or service—will you develop
a brochure or data sheet, where and when will
you advertise, and (estimate) how much will this
cost? Will you build a market niche? How will
service/other policies interact with marketing?
6. OPERATIONS
Describe how you will make or obtain your
product or provide your service. Be specific in
describing how much space, special electrical
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service, and/or special plumbing may be needed
for machinery, storage, packing and handling; what
type of machinery is required; how much
warehouse and office space you need; and if there
are any zoning or regulatory [OSHA, EPA, etc.]
concerns. How many people will you need, and
when will you need them? Are special skills
required?
7. MANAGEMENT
In this section identify who will be in your
business. What experience are you bringing into
the business, and how does your background relate
to the business? Provide resumes or detailed
descriptions of the people that will be working
with you and their education and experience. If
there are several owners or partners, identify all of
them. Identify support persons and services, such
as accountants or attorneys, in this section as well.
You may want to include job descriptions that
identify specific tasks and responsibilities.
8. FINANCES
In this section describe how much your business
proposal will cost. Describe the past, current, and
future fiscal side of your business. If your business
is already operating, provide financial statements
or tax returns for the last three years. How much
business are you doing now? Are you making a
profit, and if so, how much?
Estimate how much it will cost to do the things
you propose. For example, the new machine will
cost $3,000 plus $500 for installation. If you do
what you plan, how much more will you sell or
how much more cost effectively can you produce
or provide the product or service? Will new
equipment help you keep up with the competition?
Will it give you a competitive advantage? Identify
the costs of making your product or providing your
service. Can you charge enough to make a profit?
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Estimate the operating costs you will incur by
reviewing these cost areas: rent, wages, benefits,
insurance, advertising, printing, telephone,
utilities, business travel, sales expenses, etc. See
the sample financial schedules at the back of this
booklet to help you prepare projections for the first
three years of your business. If you plan to borrow
money, don’t forget to include the proceeds of the
loan and repayment of principal and interest. As
you work on the numbers remember to write down
the assumptions behind the calculations.
9. SUPPORTING INFORMATION
Provide copies of brochures, photos, news
clippings or other relevant information that will
help the reader to better understand your proposal.
For example, a photograph can help someone to
understand your product. A copy of a competitor's
brochure can show how attractive your product is
compared to theirs. If your business is a franchise,
attach a copy of the contract, etc.
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SAMPLE INCOME STATEMENT
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SAMPLE CASH FLOW
