Hon. Business Management
Business Plan
I. Cover Page (1 page)
II. Table of Contents (1 page)
III. Executive Summary (1 - 2 pages)
IV. Business Description (2 - 3 pages)
a. Overview of Industry
b. Mission Statement
c. Business Description
i. Type of Business
ii. Legal Structure
iii. Name
iv. Location
v. Product Description
V. Industry Analysis (1½ - 2 pages)
a. Competition
i. *SWOT (appendix)
b. Labor
c. Estimated Sales
VI. Sales and Distribution (½ - 1 page)
a. Strategy
b. Method of Sales / Distribution
VII. Management (½ - 1 page)
a. Management Team Description
i. *Organizational chart (appendix)
b. Ownership
VIII. Financials (1 - 2 pages)
a. Risks
b. Expenses and Capital Requirements
c. Financial Statements
i. *Balance sheet (appendix)
ii. *Income statements (appendix)
IX. Appendix
X. Bibliography
XI. Presentation
*Not included in page requirements
Business Plan Details
For your small business to succeed, you need to know where you're going and how you'll get there. Creating a business plan forces you to set goals, determine the resources you will need to carry out your plan, and foresee problems that might otherwise broadside you.
12 Point Font Size
Time New Roman
Standard (or 1.15) Spacing
Part I. Cover Page
How complicated can a cover page of a business plan be? Well, you might be surprised at how many business owners leave crucial information off of cover pages. Lenders report that they have frequently lost contact and business with an entrepreneur who forgot to include a phone number or other contact information on their business plan.
The purpose of a cover page is to tell the reader what he or she is about to read and how to reach the writer. Your cover page is also a way to get your business plan noticed. Lenders see dozens, if not more, business plans a week and something as simple as printing your cover page on colored paper, may catch their eye.
Your cover page should say the words "Business Management Plan," and should include:
• Your name
• Business name
• Business location (city, state)
• Related image or company logo
• Your email address
• Date
Part II. Table of Contents
Your table of contents provides readers with a quick and easy way to find particular sections of the plan. All pages of your business plan should be numbered and the table of contents should include page numbers. After you assemble your plan and number your pages, go back to the table of contents and insert page numbers. Be sure to list headings for major sections as well as for important subsections.
Part III. Executive Summary
The executive summary is what most readers will go to first. If it is not good, it may be the last thing they read about your company. Lenders in particular read executive summaries before looking at the rest of a plan to determine whether or not they want to learn more about your business. The plan itself is a reflection of management while the executive summary is a snapshot of your business organization. This section will gauge your professionalism and the viability of your business.
Your goal in this section is to generate enough interest to make someone want to read further for more details. Remember that lenders and venture capitalists routinely have stacks of business plans to review, so make yours stand out by delivering a strong message right from the start. This section should answer briefly the basic questions an investor would ask:
o What business is your company in?
o Why should we invest in your business?
o How will you achieve the potential that you see in your business model?
o How much money is required?
The executive summary should be no more than two pages and should include highlights of the other sections of your plan. For this reason, it is often easier to write this section last.
Part IV. Business Description
Whether you're looking for money or simply creating an internal document, you must be able to present a clear portrait of what your company does. Your business description is your corporate vision (think vision and mission exercises that we did in class), and includes: who you are, what you will offer, what market needs you will address, and why your business idea is viable. It should describe exactly what you will be selling, and why people or businesses will buy it. How is your business different from similar businesses already on the market? Compare your product/service to similar ones in the market. Why is yours better?
Too many business owners make the mistake of operating without a vision, a situation that hinders their business' ability to grow and prosper. A business owner without a vision will have difficulty describing his or her business and will provide a long, rambling description, or a collection of incomprehensible jargon when asked for one. A concise, easy-to-understand description of your company will not only help your business plan, but will benefit you in any number of other day-to-day situations - from networking to making cold calls to approaching an employer for an interview. A typical business description section includes:
Overview of Industry
Begin your business description with a brief overview of the industry you will be competing in. Ultimately, you want to demonstrate that you are in a "hot" industry with an excellent long-term outlook. You're also setting the stage for your company description by showing where you fit in the marketplace.
Discuss both the present situation in the industry, as well as future possibilities (think innovation and characteristics of the business environment). Be sure to include any new products or other developments that will benefit or possibly hurt your business. Are there new markets and/or customers for a business such as yours? What about national trends or economic trends and factors that will impact your venture?
o Feel free to be dramatic. You can describe your industry like you're telling a story. Grab the reader's attention with strong, exciting language that will get them interested in your industry and your business.
o Answering "why" makes any description stronger. Saying "the market will grow at 25% annually" may sound impressive. But what caused that rate of growth? Adding "...because a growing number of baby boomers now entertain at home instead of going out" makes it stand out.
o This is not a discussion of your competition. That information will come later in the competitive analysis portion. Instead, you are providing an overview of the industry where you and other companies will compete.
o Many business plans make the mistake of basing their market observations on conjecture. Instead, you will want to research your industry and back up your observations with facts. Be sure to note all sources. Trade associations are excellent sources of information about trends in your industry. To find the trade association for your industry, consult Trade.gov. General business newspapers and magazines like the Wall Street Journal (WSJ.com is available on-line as a school resource) and trade newspapers and magazines (those covering a specific industry) often report industry-wide trends as well. Don't be afraid to include negative information about your industry. Discussing the possible roadblocks your company might face shows you have a realistic view of the market.
o If you cite information from specific websites or research reports, you need to include a copy in your appendix or citation information/link in the bibliography to your plan.
Mission Statement
The discussion of your company should first begin with your mission statement - a two or three sentence description of the purpose of your business and to whom your product or service is targeted. Not being clear in your mission statement indicates that you are not clear about the purpose of your company.
A well-thought out, well-articulated mission statement can help you become a success with customers or anyone else. It will elicit additional questions and comments and get the ball rolling with prospects. It will show that you understand your business, are clear with its purpose, and know who your customers and employees are.
Description of Business
Once you have your mission statement, you can then discuss the more "technical" aspects of your company. Remember that you're telling your company's story, so even though there are specific areas you will need to cover, you will want to keep it lively and interesting. This section of the plan should include:
i. The Type of Business - Your business should fall in one of several categories. Is your business retail, wholesale, service, manufacturing, construction, professional, or import and export? Which part of the industry chain are you?
ii. The Legal Structure of the Business and Why - There is no one legal structure that's best for all small businesses. Whether you're better off starting as a sole proprietor or choosing one of the more complicated organizational structures such as a partnership or a corporation usually depends on several factors, including the size and profitability of your business, how many people will own it and whether it will entail liability risks not covered by insurance. Use class notes to make this decision.
iii. The Business Name
o Your name should be appealing and easy to use. Choose a name that's easy to spell and pronounce, and that is appealing to both eye and ear. Try to pick a catchy name that people will like to repeat. Make sure that any images or associations it evokes will suit your customer base.
o Don't limit expanded product lines. Similarly, don't choose a name that might not be representative of future product or service lines. For instance, if you start a business selling and installing canvas awnings using the name Sturdy Canvas Awnings, your name might be a burden if you decide to also start making other products such as canvas signs or vinyl awnings.
iv. The Business Location - Choose the Location of Your Business Wisely - Whether you have a service, manufacturing, or retail business, selecting the location for your business will be one of the most important decisions you make. A good location can offset other errors in judgment, but a poor location will destroy even the best business idea. Therefore, the real reason to analyze the location of your business thoroughly is not for the business plan but for the success of your business.
****************Select an Appropriate Site****************
The important considerations that should go into the selection of an appropriate site for your business are traffic patterns and flow, competition, costs, barriers and access, and expansion potential.
o Traffic Patterns and Flow:
It is extremely important to pay close attention to traffic flow and the patterns of the flow, particularly for retail establishments. We cannot use traffic count information as the sole indicator of whether a location is a good one. It is important to look at how and when the traffic goes by. Is it flying by at 60 miles per hour or is it stopping? Is traffic flowing constantly during your business hours or only during rush hours? Does traffic pass by every day or only Monday through Friday? Is the flow of the traffic going in the right direction? If your business needs foot traffic, are people actually walking near the location or are they at the other end of the strip center? Are they browsing or simply darting in and out?
An entrepreneur opened a donut shop on what is probably one of the busiest streets I can think of. Traffic goes by at a nice slow pace giving drivers ample time to pull off for their morning donut and cup of coffee. At first glance, it would appear the donut shop was in an ideal location. What this entrepreneur had not considered however, was the side of the street. The donut shop was on the ‘going home’ side of the street rather than the ‘going to work’ side. No one was willing to cut across traffic in this congested area to get donuts on their way to work and the store soon closed.
It is recommended that you select a location that you are familiar with and believe will meet the needs of your business. You may use sites such as to assist with credible information.
o Competition:
By now, you should have determined who your competitors are in a previous section of your business plan. Plot your competitors on a map around your potential location. Beware of the lack of competition. Lack of competitors can be good news or bad news. Ask yourself - Is there a reason why no other business like mine is here? Conversely, if there are already several businesses like yours, can this area support another?
A while back bagel shops were very popular. One particular area had several that were thriving nicely. Another bagel shop opened in the same area. Despite the high customer demand for bagels that the existing shops were experiencing, the market simply was not large enough for another store. The new shop lasted only a short time.
o Costs:
Most business owners think of the cost of their location in terms of the monthly rent. While rent is certainly a cost of your site, it is by no means the only one. Look for hidden costs. One hidden cost is common area fees. Are there monthly maintenance fees? Who is responsible for building repairs or maintenance? Signage represents another cost. Must you conform to particular business standards? Utilities costs can often be surprising. Some areas have higher phone or electric costs than others. Do you know what yours will be? Labor is an often overlooked cost of a location. Are you located in an area where labor is scarce or expensive? Who pays for the cost of specialized employee training? Take the time to learn about regulations and ordinances that affect your business. Do you know if the local or state government places special requirements on your business such as the installation of water sprinklers? Is the space ADA compliant?
There was an entrepreneur who used all of his savings and credit as well as money from his family and friends to open a restaurant. Despite the significant startup costs, there was every reason to believe he would succeed. He had experience, the restaurant was conveniently located in a densely populated high-traffic area, the cuisine was perfectly matched to the area population, and the food was excellent. Word-of-mouth spread fast and it seemed as if his restaurant would be a success until the air conditioner died. According to the lease agreement, all repairs, including the air conditioner, were the responsibility of the renter. The entrepreneur had used all of his cash, credit, and the good will of his friends and family to open his restaurant. Not being able to raise additional funds to replace the air conditioner, he was forced to close.
o Barriers and Access:
Identify any barriers to your potential location that will affect your business. Even if you locate very close to your customers, certain barriers may discourage them from frequenting your business. The necessity for your customer to cross a major intersection or railroad tracks, the lack of a crossover in the median, a one way street, too many stoplights clustered in a short distance, inconvenient parking, or even a school zone can all be barriers to your location. Consider visibility too. Is your location visible? More importantly, can customers see your business in time to slow down and enter your parking lot? Is it easy to access your location? Conversely for a service business, can you easily access your customers from your proposed location? For a wholesale or manufacturing business, the issue may be access to main roads or railroad facilities.
o Expansion Potential:
Envision your site with an eye toward expansion. Is the space large enough to fit you if your business grows? Describe your site and the flexibility or room for future expansion. It takes time for a business to become established in a location. Do not waste your time investment by growing out of your location too soon. Your customers may follow you, or they may not.
One last note on selecting your site. If you are a startup business and are planning to borrow money, lenders are generally more apt to lend you money if you plan to lease rather than buy your site. Buying real estate increases startup and maintenance costs and can significantly increase the loan amount. Purchasing your site outright adds to the risk of your endeavor.
Each business has its own set of criteria for selecting a location. An excellent location for one type of business might be a poor location for another. Please be sure the location you are selecting is ideal for you. Invest your money and time up front by finding the right site. This cost will be small compared to the cost of opening the business, and keeping it open despite poor sales, until an eventual closing.
v. Description of Product or Service
o The product description statement should be complete enough to give the reader a clear idea of your intentions. You may want to emphasize any unique features or variations from concepts that can typically be found in the industry.
o Be specific in showing how you will give your business a competitive edge. For example, your business will be better because you will supply a full line of products; competitor A doesn't have a full line. You're going to provide service after the sale; competitor B doesn't support anything he sells. Your merchandise will be of higher quality. You'll give a money-back guarantee. Competitor C has the reputation for selling the best French fries in town; you're going to sell the best Thousand Island dressing.
Part V. Industry Analysis
This section is designed to provide enough facts to convince an investor, potential partner or other reader that your business has enough customers in a growing industry, and can earn sales DESPITE the competition. It is one of the most important parts of the plan, taking into account trends, and may require extensive research. Many of the sections that follow - from manufacturing to the amount of money you need - will be based on the sales estimates you create here. You must make a number of assumptions when completing this section. For example, the price of a share of your company’s stock, divided by the company's earnings-per-share, called the price-to-earnings ratio, is key in helping investors determine whether the stock of your company is overvalued or undervalued compared to others. No one expects you to know how many sales you will make during the first year or two, but you can provide fairly accurate estimates by making some educated assumptions based on your research (source statements of similar companies/industries).
Competition
The competition section indicates where your business fits in the competitive environment. Presenting your business in the landscape of its competitors proves that you understand your industry and may be prepared to cope with some of the barriers to your company's success.
Present a short discussion of two of your primary competitors. Each assessment should include why these companies do or do not meet their customers' needs. You should then explain why you think you can capture a share of their business.
Strengths and weaknesses can fall into a number of different categories. Sales, quality, distribution, price, production capabilities, image, and breadth of products/services are all ways companies differentiate themselves. Ask yourself: Who is the price leader? Who is the quality leader? Who has the largest market share? Why have certain companies recently entered or withdrawn from the market? These factors are critical to a successful competitive analysis.
o Never say, "We have no competition." Lenders won't believe you. Even if your product or service is truly innovative, you need to look at what else your customers could buy instead. Remember, the first personal computer competed with calculators and typewriters; the first calculator competed with slide rules.
o Your competitors won't always be immediately evident, since they don't necessarily provide the exact same product or service as you do. If you sell gourmet salsas, you will be competing with other salsa makers, and you also might compete with makers of gourmet ketchup, mustards, and other condiments.These are "indirect competitors."
o Many business plans fail to give a realistic view of their true competitive universe by defining the competitive field too narrowly. Think as broadly as possible when devising a list of competitors by characterizing competitors as any business customers may patronize for similar products or services. A local florist obviously competes with other flower shops, but must also contend with delivery services such as 1-800-FLOWERS, edible arrangements and supermarkets that carry flowers and plants.
o To determine your competitors' strengths and weaknesses, evaluate why customers buy from them. Is it price? Value? Service? Convenience? Reputation? Very often, it's "perceived" strengths rather than "actual" strengths that you will be evaluating.
i. SWOT
o Include a table that can aid your competitive analysis (think SWOT chart or create a spreadsheet), since it will allow your competition to be evaluated at a glance. Columns should include the name of your competitor, market share or position, annual sales (if available), strengths, weaknesses, opportunities and other comments. This is to be included in your appendix.
Labor Requirements
Your management team is outlined in the management section. This section provides details of other labor you will need to start up and run your business. Address how many people you require and what skills they need to possess. Be sure to cover the following issues:
o Is there sufficient local labor? If not, how will you recruit?
o Is labor trained? If not, how will you train them?
o Cost of labor.
Estimated Sales
Estimated sales for your business are based on your assessment of: the advantages of your product or service, your customers, the size of your market, and your competition. This should include sales in units and dollars for the next three years.
Use a one-paragraph summary to justify your projections (i.e. use research and industry statements). Be sure to use a succinct statement of what sets apart your business from other companies in the marketplace. Include a brief discussion of any customer commitments. Also state why you envision your customer base growing, and indicate how you will acquire this business.
Part VI. Sales and Distribution
This section of your business plan describes both the strategy and tactics you will use to get customers to buy your products or services again and again. Sales and distribution can be the weak link in many business plans, so take your time with this section. A strong sales and distribution section can serve as a roadmap for you, or as assurance to potential investors that you have a workable plan and the resources for promoting and selling your products and services. The two components of your sales and distribution section include:
o Strategy
o Method of Sales
Strategy
In previous sections, you've been asked to define your product, positioning, market, and competition. Now you need to wrap up all those assumptions into a cogent sales and distribution strategy. Think of this statement as an action plan for how you will get your products or services to customers. It will support the tactics you describe later on in this section.
Your strategy may be only a few sentences in length, or it can be a couple of paragraphs. Important elements for a sales and distribution strategy include who you are targeting with your initial push and what viable transportation or designed distribution channel is available. Other elements of a sales and distribution strategy are:
o How will you find your prospects, and once you find them, how you plan to safely deliver your product. For instance, if you are using direct email for an NFT exchange company, you might want to talk about what kinds of software is necessary for a safe download.
o Any sort of innovative distribution or sales techniques you will employ. For example, you may sell your product by online order when your competitors use only traditional retail channels. Or you may be the first in your industry to offer leasing.
o Will you focus your efforts locally, regionally, nationally or internationally? Do you plan to extend your efforts beyond your initial region? Why?
Method of Sales/Distribution
Describe available distribution channels and how you plan to use them. Many entrepreneurs fail to give adequate thought to the method of sales. How you get the products to the end user - your method of distribution and sales - is one of the most important elements of your plan. In this section you demonstrate the ability and knowledge to get your products into the hands of your customers.
You must also explain your plan for reaching your distribution channels. Will you be selling directly to your customers? Will you be using sales representatives, distributors, or brokers? Do you plan to have a direct sales force in place? Refer to class notes or ask Mr. Singer for some help in determining what method of sales to use. Will you use a "ground service" like UPS? Will you use a next-day delivery service? A trucking company? Make sure to include these costs when you calculate your finances later in the plan.
o Don't make the mistake of confusing sales with marketing. Sales focuses on how you get your products into the hands of your customers. Marketing is concerned with how you educate your potential customers about your product.
o If you're using an outside or indirect sales force - like sales reps or distributors - be sure to describe the companies that will be carrying your product. What are the benefits of using these specific partners? What unique talents do they bring to the table?
Part VII. Management
Management Team Description
A good management team can take even a mediocre idea and make it work. In fact, strong entrepreneurial teams have been known to move from business idea to business idea, repeatedly creating and running thriving companies. Conversely, weak management often cannot build a strong business out of even the best idea. For this reason, the management section of your business plan must demonstrate that the team you have assembled, or will assemble, is a winner. Each member of management must of course be talented and have experience relevant to your business, but it is also important that the people on your team have complementary skills.
Create a short description of the manager’s contribution to the venture including the responsibilities and expertise of the manager. Many investors base their investment decisions on the strength of the company's principals. Demonstrate and describe your management style and leadership to help convince investors that your business is under the right guidance.
Detail who you will need to hire to achieve the goals set out in the business development phase. Describe the talents these people need to possess and how the addition of a person will help the company meet its objectives.
i. Organizational Chart
o Be sure to have major categories of business management covered such as marketing, sales (including customer relations and service), production and quality assurance, research, and administration. You don't need to have personnel devoted to each of these areas, but you should have people who will be able to assume these responsibilities as needed.
o Expressed lines of authority/managerial levels should be evident. Include in the appendix.
Ownership
A short section on who owns and controls your company will help readers derive a better understanding of who will be making decisions for the future of the business. Potential lenders, many of whom will require a significant stake in the company in exchange for funds, will also be interested in what portion of the company's equity is available.
Part VIII. Financials
Financials are used to document, justify, and convince. This is the section in which you make your case in words and back up what you say with financial statements and forms that document the viability of your business and its soundness as an investment. It's also where you indicate that you have evaluated the risks associated with your venture. You must include the following sections:
Risks
No business is without risks. Your ability to identify and discuss them demonstrates your skills as a manager and increases your credibility with potential investors. You will show that you've taken the initiative to confront these issues and are capable of handling them. The opposite is also true. Should a potential investor discover any unstated negative factors, it will undermine the credibility of your plan and endanger your chances of gaining financing or other support.
The following list of problems is by no means complete, but should give you an idea of some possibilities:
o Your competitors cut their prices
o A key customer cancels a large order
o The industry's growth rate drops
o Operating costs exceed your projections
o Your sales estimates are not achieved
o An important ad campaign doesn’t achieve desired results
o Important suppliers fail to make deliveries
o Your competitors release a new, better product or service
o Public opinion of your product or service changes
o You can't find trained labor
Evaluate your risks honestly. Put yourself in a "what if" situation. What if my competition increases?...what sets my business apart? What if I can't find the right employees?
Consider and write about one commonly made small business mistake as a potential risk. Some of the biggies include: paying employees too much; hiring friends rather than the most qualified candidates to fill positions; underestimating costs; underestimating the product cycle; overlooking competition; trying to be all things to all customers.
This section may also include details of development costs, location and labor requirements. After furnishing this information, you will be asked to generate financial statements.
Expenses and Capital Requirements
You must describe the financial budget that will build a foundation for the financial statements of your plan. Give specifics on the operating expenses, capital requirements, and cost of goods for the year in which you plan your business. The purpose of this is to determine your start-up costs and to have evidence for investors or bankers that your new venture is financially viable.
Operating Expenses
These are the costs that are necessary to operate the business (does not include cost of goods sold). By describing potential operating expenses, you pull together the expenses incurred in running your business. Expense categories include: marketing, sales, and overhead. Overhead includes fixed expenses such as administrative costs, rent, and other expenses that remain constant regardless of how much business your company does. Overhead also includes variable expenses, such as travel, equipment leases, and supplies, and labor, which fluctuate based on how much business your company does.
Capital Requirements
This piece details the amount of money you will need to procure the equipment used to start up and continue operations of your business. To determine your capital requirements, think about anything in your business that will require capital. For a diaper delivery service this might be a van, sanitation station, trash compactor, and supplies. A restaurant may require stoves, tables, chairs, silverware, pans, etc.
Cost of Goods
For a manufacturing company, the cost of goods is the cost incurred in the manufacturing of the product. For a retail or wholesale business, the cost of goods (sometimes called the cost of sales) is the purchase of inventory. In other words, how much did it cost you to buy or make the product you are selling? To generate COGS, you need to know the total number of units you will sell for the year as well as what other inventory you have on hand, and at what stage of production those units exist. For a manufacturing company, the cost of goods table will include materials, labor, and overhead related specifically to product manufacturing.
Once the research on all start-up costs, estimated future expenses and sales has been completed you will create the financial statements including:
Income and Balance Sheet Statements
Mimicking statements of similar companies in your industry may prove beneficial but should include any adjustments particular to your specific business.
Each statement will be on a separate sheet and included in your plan appendix.
Traditional/Basic line items for your industry are required
Use this to create a business plan for a black own brand called Afrolight, merch and production. The production part is for a film production companythat is based on telling stories from the black point of view worldwide. The merchandise part is a Afrocentric clothing brand is that is around black famous people in the past and black famous people in the present.
The clothing brand has a lot to do with graphic T-shirts and it also is to be combined with a retail store that is two presents itself as a show room . A little backstory on me. I am a Nigerian American woman. And I’ve always wanted to tell stories from a black point have you historically, and I’ve always wanted to create representation to celebrate the uniqueness of the black community worldwide. Please cite all sources
