The ABCs of Business: With a Pull-Out PLAN as Easy as 1, 2, 3

LCT Staff
Posted on December 1, 2004

A business plan is an essential tool for managing your operation, marketing your company and achieving your goals. It’s a living document that is modified as you gain knowledge and experience, and is divided into four sections: business description, marketing, finances and management.

Writing a business plan requires a realistic look at nearly every area of your business. An honest assessment, with timelines and milestones, can be useful for comparing your projections to actual accomplishments.

It helps you allocate resources, handle unforeseen complications, make educated business decisions and avoid obstacles by establishing alternatives ahead of time. Remember that a well-crafted plan sloppily thrown together will send a strong message about your professionalism and standards.

By defining the purpose of your company, a business plan can also assist sales personnel in reaching their goals. And, a business plan is often used when trying to obtain outside funding.

As part of developing a useful business plan, Larry Willwerth, director of system standards for Carey International, recommends developing a budget, establishing achievable objectives, building a sales strategy – and revising all of this every six months. “There are plenty of companies that provide quality service, run new equipment and have dedicated and trained employees, yet they feel caught in the grind of the day-to-day,” Willwerth says.

“They are overworked because they only focus on what is in front of them now.” A business plan would give them more vacation time and an exit strategy out of the business so they can reap the benefits of their hard work, Willwerth adds.

The Common Elements

Although there is no single formula for developing a business plan, there are common elements. Included in this pull-out is an outline of a business plan provided by Clark University in Worcester, Mass. You can review actual samples of business plans and other useful tools at www.bplans.com/sp. Additional information can also be found at www.sba.gov.

I.Business Plan/Loan Proposal


Cover Sheet
This should include a title, company name and contact information, the date and names of the principals.

Table of Contents

Executive Summary – Plan Objective
In 1-2 pages, summarize your business plan. Give a brief description of the business. If it’s for a loan, include the amount of the loan being requested and what it will be used for.

Business Profile
a. Description of business. What you do, who you serve, etc.

b. Explain how your product or service fills a demand in the marketplace.

c. What is the business structure of your business? Sole proprietorship, partnership, corporation, S-corporation, LLC?

d. Is your business a start-up, an expansion of an existing business or are you purchasing an ongoing business?

e. When will/did the business open?

Management Team Profile
a. Who manages (or will manage) the business? What business experience/skills does this person possess?

b. List the name and address of the company accountant, lawyer and insurance adviser.

c. Include the current resume’s of the owner and managers.

Personnel Profile
a. What are your current personnel requirements? Future needs? What skills are required of employees? What level of training?

b. What level of education is necessary? Technical or business background?

c. Will employees be full time or part time?

d. Hourly or salaried?

e. What benefits will you provide? Vacation, holidays, health benefits, etc.?

f. Will you have a personnel policy handbook?

g. Do you have Workers’ Compensation in place? You must have this by law before you hire any employees. If you are a proprietorship with no employees, you are not required to have Workers’ Comp or tax identification numbers. If your company is a partnership or a corporation, you are required to have them.

Market Profile
a. Is there a real need for the services that your business provides?

b. Who and where is the target market?

c. What is the potential size of the market – your market share?

d. Is the market stable? Growing? Declining?

a. How will you reach your target audience? Have you developed a marketing plan? (For a marketing plan, see our PR story on pg. 76.)

b. How will you market to your customer base: Newspapers, TV, trade journals, radio, magazines, signs?

c. What is your advertising budget? (Note: Advertising must be consistent to be effective.)

Competitor Profile
a. Who are your direct competitors?

b. List their strengths and weaknesses.

c. Discuss how you will capitalize on their weaknesses and how you can use their strengths.

d. Name current sales trends.

e. What percent of the competition’s market will you be able to take?

f. Are you price competitive?

g. How do you compare in location, price, quality and service?

Location of Business and Facilities
a. Have you checked zoning laws for your type of business?

b. Will you own or lease?

c. Will renovations be needed? If so, how much will they cost?

d. What are some other positive factors about your location? Is there a good labor pool in the local area? Good quality of life in the community? Is it a high-traffic area with potential buyers?

e. What is the area’s economic, demographic, political climate?

Getting the Loan

If you are using your business plan to get a loan, the following information will help you answer questions the lender will likely have even before there’s a chance to ask. This often has a positive impact on the outcome of your loan request.


A. Source and Applicationof Funds/Loan
a. How much money do you need to accomplish your purpose?

b. List why you need the money: purchasing a business, renovations, inventory, other start-ups costs, working capital, etc.

c. List the terms of the loan: number of years for payback, etc.

d. What collateral do you offer?

B. Financial Statements
a. Provide financial statements, balance sheets and income tax returns for the previous two years.

b. Provide an interim statement no older than 90 days.

C. Capital Equipment List
a. List the cost and current value of equipment in use or that will be needed.

b. Indicate the equipment you own and what may need to be purchased.

D. Pro Formas
(Income Projections) a. Profit and loss projections for two years. This is an estimate of what you expect will occur with the business on a monthly basis for the next two years. Show the seasonality of your business – the high and low points – that occur during the year.

b. Notes and explanations of profit and loss projection. Explain how you arrived at your figures, what they represent, the timing of increases or decreases, and any other information that clarifies your statement.

c. Cash flow projections for two years. This should be done after you develop your profit and loss statements. Cash flow is one of the most important areas of running your business. It shows you have enough cash to be in business.

d. Notes and explanations for the cash flow statement.

e. Balance sheet. This lists the assets and liabilities of your business. The business plan should include a beginning balance sheet and projected balance sheet after one year of business.

E. Supporting Documents
a. Tax returns of principals for last three years.

b. Personal financial statement (all banks have these forms).

c. For franchised businesses, a copy of the franchise contract and all supporting documents provided by the franchiser.

d. Copy of the proposed lease or purchase agreement for building space.

e. Copy of licenses and other legal documents.

f. Copy of resume’s of all principals.

g. Copies of letters of intent from suppliers, etc.

h. Marketing studies, articles, etc.

LCT Staff LCT Staff
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