Fillable Printable SBA Business Plan Workbook
Fillable Printable SBA Business Plan Workbook
SBA Business Plan Workbook
WORKSHOP INTRODUCTION
THE BUSINESS PLAN
ROAD MAP TO SUCCESS
WORKBOOK
Training Module - 2
Workshop Objectives
By the end of this workshop, you should be able to:
• Understand the role of the business plan.
• List several reasons for developing a business plan.
• Identify sources where you can get help in developing a business plan.
• Identify the type of information to include in the business plan.
• Prepare an outline for a business plan.
All SBA programs are provided to the public on a nondiscriminatory basis.
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BUSINESS PLAN OUTLINE
Below is an outline for a business plan. Use this model as a guide when developing the
business plan for your business.
Elements of a Business Plan
1. Cover sheet
2. Statement of purpose
3. Table of contents
I. The Business
A. Description of business
A. Marketing
B. Competition
C. Operating procedures
D. Personnel
E. Business insurance
G. Financial data
II. Financial Data
A. Loan applications
B. Capital equipment and supply list
C. Balance sheet
D. Breakeven analysis
E. 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
F. Pro-forma cash flow
- Follow guidelines for letter E.
III. Supporting Documents
- Tax returns of principals for last three years
- Personal financial statement (all banks have these forms)
- In the case of a franchised business, a copy of franchise contract and all
supporting documents provided by the franchisor
- Copy of proposed lease of purchase agreement for building space
- Copy of licenses and other legal documents
- Copy of resumes of all principals
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- Copies of letters of intent from suppliers, etc.
THE BUSINESS PLAN - WHAT IT INCLUDES
What goes in a business plan? This is an excellent question to ask. And, one that many
new and potential small business owners should ask, but oftentimes don't ask. The body of
the business plan can be divided into four distinct sections: 1) the description of the
business, 2) the marketing plan, 3) the financial management plan and 4) the
management plan. Addenda to the business plan should include the executive summary,
supporting documents and financial projections.
Description of the business
In this section, provide a detailed description of your business. An excellent question to ask
yourself is: "What business am I in?" In answering this question include your products,
market and services as well as a thorough description of what makes your business unique.
Remember, however, that as you develop your business plan, you may have to modify or
revise your initial questions.
The business description section is divided into three primary sections. Section 1 actually
describes your business, Section 2 the product or service you will be offering and Section 3
the location of your business, and why this location is desirable (some franchisors assist in
site selection).
1. Business Description
When describing your business, generally you should explain:
1. Legalities - business form: proprietorship, partnership, corporation. What
licenses or permits you will need.
2. Business type: merchandizing, manufacturing or service.
3. What your product or service is.
4. Is it a new independent business, a takeover, an expansion, a franchise?
5. Why your business will be profitable. What are the growth opportunities? How
will franchising impact on growth opportunities?
6. When your business will be open (days, hours)?
7. What you have learned about your kind of business from outside sources
(trade suppliers, bankers, other franchise owners, franchisor, publications).
A cover sheet goes before the description. It includes the name, address and telephone
number of the business and the names of all principals. In the description of your business,
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describe the unique aspects and how or why they will appeal to consumers. Emphasize any
special features that you feel will appeal to customers and explain how and why these
features are appealing.
The description of your business should clearly identify goals and objectives and it should
clarify why you are, or why you want to be, in business.
2. Product/Service
Try to describe the benefits of your goods and services from your customers' perspective.
Successful business owners know or at least have an idea of what their customers want or
expect from them. This type of anticipation can be helpful in building customer satisfaction
and loyalty. And, it certainly is a good strategy for beating the competition or retaining your
competitiveness. Describe:
1. What you are selling.
2. How your product or service will benefit the customer.
3. Which products/services are in demand; if there will be a steady flow of cash.
4. What is different about the product or service your business is offering.
3. The Location
The location of your business can play a decisive role in its success or failure. Your location
should be built around your customers, it should be accessible and it should provide a
sense of security. Consider these questions when addressing this section of your business
plan:
1. What are your location needs?
2. What kind of space will you need?
3. Why is the area desirable? the building desirable?
4. Is it easily accessible? Is public transportation available? Is street lighting
adequate?
5. Are market shifts or demographic shifts occurring?
It may be a good idea to make a checklist of questions you identify when developing your
business plan. Categorize your questions and, as you answer each question, remove it
from your list.
The Marketing Plan
Marketing plays a vital role in successful business ventures. How well you market you
business, along with a few other considerations, will ultimately determine your degree of
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success or failure. The key element of a successful marketing plan is to know your
customers -- their likes, dislikes, expectations. By identifying these factors, you can develop
a marketing strategy that will allow you to arouse and fulfill their needs.
Identify your customers by their age, sex, income/educational level and residence. At first,
target only those customers who are more likely to purchase your product or service. As
your customer base expands, you may need to consider modifying the marketing plan to
include other customers.
Develop a marketing plan for your business by answering these questions. (Potential
franchise owners will have to use the marketing strategy the franchisor has developed.)
Your marketing plan should be included in your business plan and contain answers to the
questions outlined below.
1. Who are your customers? Define your target market(s).
2. Are your markets growing? steady? declining?
3. Is your market share growing? steady? declining?
4. If a franchise, how is your market segmented?
5. Are your markets large enough to expand?
6. How will you attract, hold, increase your market share? If a franchise, will the
franchisor provide assistance in this area? Based on the franchisor's strategy,
how will you promote your sales?
7. What pricing strategy have you devised?
Appendix I contains a sample Marketing Plan and Marketing Tips, Tricks and Traps, a
condensed guide on how to market your product or service. Study these documents
carefully when developing the marketing portion of your business plan.
1. Competition
Competition is a way of life. We compete for jobs, promotions, scholarships to institutes of
higher learning, in sports -- and in almost every aspect of your lives. Nations compete for
the consumer in the global marketplace as do individual business owners. Advances in
technology can send the profit margins of a successful business into a tailspin causing them
to plummet overnight or within a few hours. When considering these and other factors, we
can conclude that business is a highly competitive, volatile arena. Because of this volatility
and competitiveness, it is important to know your competitors.
Questions like these can help you:
1. Who are your five nearest direct competitors?
2. Who are your indirect competitors?
3. How are their businesses: steady? increasing? decreasing?
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4. What have you learned from their operations? from their advertising?
5. What are their strengths and weaknesses?
6. How does their product or service differ from yours?
Start a file on each of your competitors. Keep manila envelopes of their advertising and
promotional materials and their pricing strategy techniques. Review these files periodically,
determining when and how often they advertise, sponsor promotions and offer sales. Study
the copy used in the advertising and promotional materials, and their sales strategy. For
example, is their copy short? descriptive? catchy? or how much do they reduce prices for
sales? Using this technique can help you to understand your competitors better and how
they operate their businesses.
2. Pricing and Sales
Your pricing strategy is another marketing technique you can use to improve your overall
competitiveness. Get a feel for the pricing strategy your competitors are using. That way you
can determine if your prices are in line with competitors in your market area and if they are
in line with industry averages.
Some of the pricing strategies are:
• retail cost and pricing
• competitive position
• pricing below competition
• pricing above competition
• price lining
• multiple pricing
• service costs and pricing (for service businesses only)
- service components
- material costs
- labor costs
- overhead costs
The key to success is to have a well-planned strategy, to establish your policies and to
constantly monitor prices and operating costs to ensure profits. Even in a franchise where
the franchisor provides operational procedures and materials, it is a good policy to keep
abreast of the changes in the marketplace because these changes can affect your
competitiveness and profit margins.
Appendix 1 contains a sample Price/Quality Matrix, review it for ideas on pricing strategies
for your competitors. Determine which of the strategies they use, if it is effective and why it is
effective.
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3. Advertising and Public Relations
How you advertise and promote your goods and services may make or break your
business. Having a good product or service and not advertising and promoting it is like not
having a business at all. Many business owners operate under the mistaken concept that
the business will promote itself, and channel money that should be used for advertising and
promotions to other areas of the business. Advertising and promotions, however, are the life
line of a business and should be treated as such.
Devise a plan that uses advertising and networking as a means to promote your business.
Develop short, descriptive copy (text material) that clearly identifies your goods or services,
its location and price. Use catchy phrases to arouse the interest of your readers, listeners or
viewers. In the case of a franchise, the franchisor will provide advertising and promotional
materials as part of the franchise package, you may need approval to use any materials
that you and your staff develop. Whether or not this is the case, as a courtesy, allow the
franchisor the opportunity to review, comment on and, if required, approve these materials
before using them. Make sure the advertisements you create are consistent with the image
the franchisor is trying to project. Remember the more care and attention you devote to
your marketing program, the more successful your business will be.
A more detailed explanation of the marketing plan and how to develop an effective
marketing program is provided in the Workshop on Marketing. See Training Module 3 -
Marketing Your Business for Success.
The Management Plan
Managing a business requires more than just the desire to be your own boss. It demands
dedication, persistence, the ability to make decisions and the ability to manage both
employees and finances. Your management plan, along with your marketing and financial
management plans, sets the foundation for and facilitates the success of your business.
Like plants and equipment, people are resources -- they are the most valuable asset a
business has. You will soon discover that employees and staff will play an important role in
the total operation of your business. Consequently, it's imperative that you know what skills
you possess and those you lack since you will have to hire personnel to supply the skills
that you lack. Additionally, it is imperative that you know how to manage and treat your
employees. Make them a part of the team. Keep them informed of, and get their feedback
regarding, changes. Employees oftentimes have excellent ideas that can lead to new
market areas, innovations to existing products or services or new product lines or services
which can improve your overall competitiveness.
Your management plan should answer questions such as:
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• How does your background/business experience help you in this business?
• What are your weaknesses and how can you compensate for them?
• Who will be on the management team?
• What are their strengths/weaknesses?
• What are their duties?
• Are these duties clearly defined?
• If a franchise, what type of assistance can you expect from the franchisor?
• Will this assistance be ongoing?
• What are your current personnel needs?
• What are your plans for hiring and training personnel?
• What salaries, benefits, vacations, holidays will you offer? Are these issues
covered in the management package the franchisor will provide?
• What benefits, if any, can you afford at this point?
If a franchise, the operating procedures, manuals and materials devised by the franchisor
should be included in this section of the business plan. Study these documents carefully
when writing your business plan, and be sure to incorporate this material. The franchisor
should assist you with managing your franchise. Take advantage of their expertise and
develop a management plan that will ensure the success for your franchise and satisfy the
needs and expectations of employees, as well as the franchisor.
The Financial Management Plan
Sound financial management is one of the best ways for your business to remain profitable
and solvent. How well you manage the finances of your business is the cornerstone of
every successful business venture. Each year thousands of potentially successful
businesses fail because of poor financial management. As a business owner, you will need
to identify and implement policies that will lead to and ensure that you will meet your
financial obligations.
To effectively manage your finances, plan a sound, realistic budget by determining the
actual amount of money needed to open your business (start-up costs) and the amount
needed to keep it open (operating costs). The first step to building a sound financial plan is
to devise a start-up budget. Your start-up budget will usually include such one-time-only
costs as major equipment, utility deposits, down payments, etc.
The start-up budget should allow for these expenses.
Start-up Budget
• personnel (costs prior to opening) • legal/professional fees
• occupancy • licenses/permits
• equipment • insurance
• supplies • advertising/promotions
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• salaries/wages • accounting
• income
• utilities
• payroll expenses
An operating budget is prepared when you are actually ready to open for business. The
operating budget will reflect your priorities in terms of how your spend your money, the
expenses you will incur and how you will meet those expenses (income). Your operating
budget also should include money to cover the first three to six months of operation. It
should allow for the following expenses.
Operating Budget
• personnel • insurance
• rent • depreciation
• loan payments • advertising/promotions
• legal/accounting • miscellaneous expenses
• supplies • payroll expenses
• salaries/wages • utilities
• dues/subscriptions/fees • taxes
• repairs/maintenance
The financial section of your business plan should include any loan applications you've filed,
a capital equipment and supply list, balance sheet, breakeven analysis, pro-forma income
projections (profit and loss statement) and pro-forma cash flow. The income statement and
cash flow projections should include a three-year summary, detail by month for the first
year, and detail by quarter for the second and third years.
The accounting system and the inventory control system that you will be using is generally
addressed in this section of the business plan also. If a franchise, the franchisor may
stipulate in the franchise contract the type of accounting and inventory systems you may
use. If this is the case, he or she should have a system already intact and you will be
required to adopt this system. Whether you develop the accounting and inventory systems
yourself, have an outside financial advisor develop the systems or the franchisor provides
these systems, you will need to acquire a thorough understanding of each and how it
operates. Your financial advisor can assist you in developing this section of your business
plan.
The following questions should help you determine the amount of start-up capital you will
need to purchase and open your franchise.
• How much money do you have?
• How much money will you need to purchase the franchise?
• How much money will you need for start-up?
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• How much money will you need to stay in business?
Other questions that you will need to consider are:
• What type of accounting system will your use? Is it a single entry or dual entry
system?
• What will your sales goals and profit goals for the coming year be? Will the
franchisor set your sales and profit goals? Or, will he or she expect you to
reach and retain a certain sales level and profit margin?
• What financial projections will you need to include in your business plan?
• What kind of inventory control system will you use?
Your plan should include an explanation of all projections. Unless you are thoroughly
familiar with financial statements, get help in preparing your cash flow and income
statements and your balance sheet. Your aim is not to become a financial wizard, but to
understand the financial tools well enough to gain their benefits. Your accountant or
financial advisor can help you accomplish this goal.
Sample balance sheets, income projections (profit and loss statements) and cash flow
statements are included in Appendix 2, Financial Management. For a detailed explanation
of these and other more complex financial concepts, contact your local SBA Office. Look
under the U.S. Government section of the local telephone directory.
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SELF-PACED ACTIVITY
During this activity you will:
• Briefly describe what goes into a business plan.
• Identify advantages of developing the marketing, management and financial
management plans.
• List financial projections included in the financial management plan.
• Sketch an outline for a business plan.
