comprehensive document that contains just what a financier would look for” Jose Rochin, Account Manager,
Scotia Bank.
The suggested outline consists of 22 sections in this sequence:
. Cover Page
. Table of Contents
. Executive Summary
1. Introduction to the Business Plan
2. Description of the Enterprise
3. Description of Product or Service
4. Location
5. Customers
6. Competition
7. Pricing
8. Advertising and Promotion
9. Sales and Credit Terms
10. Other Marketing Elements
11. Key Personnel and other staff
12. Estimated Sales or Sales Forecast
13. Materials and Sources of Supplies
14. Equipment and Tools
15. Production and Technology
16. Sources and Uses of Funds
17. Projected Balance Sheet
18. Projected Profit and Loss Statement (or Income Statement)
19. Projected Cash Flow Statement
20. Break-Even Analysis
21. Major Risks and Assumptions
22. Appendices (as necessary and useful)
It is useful to have a one or two page Executive summary of the plan, especially if your plan contains many
pages. The executive summary should be placed in front of the completed plan after the cover sheet. A Table
of Content will also be useful.
1. Introduction to the Business Plan
In this section of the business plan you will lay out the basic organization, activities and goals of the business you have in
mind. By using the following guide, you will include the essential information a lending institution is looking for. Until you
have completed all your financial projections, and investigated your equipment, you may not be able to provide all the
information in this section. You may wait until you have finished your financial projections to complete this section.
2. Description of the Enterprise
In this section you will give a brief description of your background and experience related to the business, how you got the
idea, and how the business is expected to develop. For existing businesses, include a brief history of the current business.
3. Description of Products or Services
Describe your product or service in detail. Include a listing of products or services. Describe materials used and
packaging for products. Describe the services and details of how you will provide those services. Describe the use or
need for the product or services and the current competition in this area. List advantages and disadvantages of your
product or service when compared to your competitors.
4. Location
State the location of your business, describe the features of the location, and outline how this location is appropriate for
your business.
5. Customers
Describe your customers. If you have contracts with a few customers, give their names and addresses. If you are selling
to the general public, describe the type of people you expect to buy and use your product or service and estimate a
number of people you expect to be your customers. Say where your customers are currently getting the product or
service. Say why they will use your business instead of the competition. Give an estimated quantity you expect to sell to
those customers. Say how often they will be buying your product or service. If you are selling many different products or
service, you need to specify how much of each type of product or service they will buy and how often.
6. Competition
Name your competitors. Tell what you know of the size of their business, their estimated sales, and how profitable they
are. Talk about how they are marketing their business.
7. Pricing
State how you have decided to price your products or services. If you are adding a mark-up on products, say what
percentage over your cost you intend to use. If you are basing your price on something you have produced, include the
cost considerations and the percent mark-up over cost. If you are pricing a service, compare your pricing with similar
services, and consider labor involved in providing the service. Be sure to consider your overhead when setting your prices.
8. Advertising and Promotion
How will you let your customers know about the product or service you are offering? Will you continue to use advertising or
promotions to encourage sales after the initial start of the business? Include here all plans for radio or newspaper
announcements, promotional campaigns including flyers and posters. Opening events or annual events to draw attention
to your business, prices, special sales, etc.
9. Sales and Credit Terms
Describe your payment terms. Say whether you expect cash payment at the time of service. If you extend credit to your
customers, which customers will get credit, for how long, any late charges? Will you allow returns or exchanges, down
payments on orders? What is the maximum credit you will extend to any customer and the maximum credit you can afford
to extend in a month to all customers? How you will collect credit?
10. Other Marketing Elements
If you are planning to provide other services in order to make your business more attractive to your customer, describe
those services here. Examples of other marketing elements would be convenient hours of service, appearance of
employees, complimentary beverages, friendly staff, clean building, etc.
11. Key Personnel and other Staff
Name the people who will be working in your business, include the position title, a brief description of the job and the
qualifications of the person doing that job. This is particularly important for the positions that must be filled by people with
special skills. If you have not chosen people to work in minor positions, just state the job title and a brief description of the
job.
12. Estimated Sales or Sales Forecast
You will need to estimate your sales by month for the 1st year, then by quarter for the 2nd and 3rd year. Include an
explanation of your figures. Be very specific, so that the readers know exactly what assumptions you are making - # of
customers, # of products or services, prices you are charging, etc.
13. Materials and Sources of Supplies
Describe the supplies and materials (operating inventory) you need to begin your business, say whom the supplier is, how
much you will pay for the supplies how long the supply you order at the start of your business is expected to last.
14. Equipment and Tools
List the equipment and the tools and accessories you need to start the business. Name the supplier and the price you will
pay. Include shipping costs and tax. You will also be asked to provide depreciation figures for the tools and equipment in
your Profit and Loss Statement, so you should have an idea of how long the equipment will last and how much you could
sell it for at the end of it’s life.
15. Production and Technology
Provide the information on your production process and the technology used if you are manufacturing or assembling a
product. You should describe the process step by step, including information about any equipment or machinery used.
16. Sources and Uses of Funds
In addition to money you need for your equipment and opening inventory, you may also have expenses for other start-up
items. These may include: Business License, Building or Improvements, Operating Cash, Advertising or Promotional
Expenses, Insurance, or other items specific to your business. You should plan carefully for all the expenses you will incur
in the opening of your business. All of these expenses will be listed as your Uses of Funds. You will also need to identify
where you expect to get the money. This may include a financing institution, your personal savings, credit from your
suppliers for the equipment or inventory, your own or your family’s donated labor for building or land improvements or
assistance from other sources.
17. Projected Balance Sheet
All of the items listed on your Uses and Sources of Funds will become part of your balance sheet. The working capital will
be listed as cash, inventory, and prepaid license or insurance. The equipment, building or improvements, tools and
accessories will be your fixed assets. The supplier’s credit and the loan will be your liabilities. The personal savings and
donated labor will be your owner’s equity. If you are donating land, equipment you already own or an existing building to
the project the value of those items will be part of your fixed assets and part of your owner’s equity.
18. Projected Profit and Loss Statement (or Income Statement)
This statement should have the same Sales Income as your sales forecast. If you are earning other income not related to
sales, such as dividends and interest on investments, those will be listed as Other Income. Cost of Goods Sold will show
the direct expense related to your sales. Only those items included in making the sales are reflected here. Include items
such as your cost for the goods or materials you are selling, or the amount you pay for direct labor to create a product or
to provide a specific service for which you are charging the customer. The Expenses you record should all be overhead
expenses and will reflect the actual cost of your operation for the period, whether monthly, quarterly or yearly. Be sure to
include depreciation expense and the interest you pay for loans. Profit and Loss Statements are not concerned with the
collection or the disbursement of cash, but with the real costs of operating your business. Explain how you arrived at your
critical or unusual expense figures.
19. Projected Cash Flow Statement
The Cash Flow Statement is different than the Profit and Loss Statement because it is only concerned with the receipt and
disbursement of cash. This statement is a cash planning tool to tell you when you are going to get money and when you
are going to need money. You will record only the Cash sales. You will record the amount paid toward credit sales later,
when the cash is collected. You should plan when you will be paying for insurance and business licenses. You should
show the when you will spend money for inventory purchases. Be sure to include your full loan payments on this statement.
20. Break-Even Analysis
Determine how large your sales must be so that you do not lose money. The theory of a break-even analysis is that some
of your expenses will be directly associated with a sale. This is obvious when you are reselling imported products such as
food, merchandise, or gasoline. These are called Variable Expenses. But some of your expenses are the same every
month no matter how much you sell, as is true with expense items such as rent, management staff, clerks, etc. These are
called Fixed Expenses. Some expenses may change with sales volume. These are called Semi-Variable Expenses and
may include items such as customer service staff or utilities. If you are selling more, the Variable Expenses will go up in
direct proportion to the sales, the Semi-Variable Expenses will increase to a smaller extent and Fixed Expenses will not go
up at all. There is a point at which you will just break-even, no profit, no loss. If you are doing a mass production business,
you can calculate exactly how much you must produce, all other businesses can calculate how high their sales must be in
order to break-even. To calculate that exact level of sales, you must first decide which of your expenses are Fixed,
Variable and Semi-Variable. When you have determined which expenses are Semi-variable, you must decide how much of
each item is Fixed and how much is Variable. Add all the Fixed Expenses together with the Fixed portion of the Semi-
Variable expenses. Add all the Variable Expenses together with the Variable portion of the Semi-Variable expenses.
Subtract Variable Expenses from Total Sales. Divide that figure by the Total Sales. Divide the Fixed Costs by that figure
and you will know your break-even point. You can calculate the break-even point for a month or for a year.
21. Major Risks and Assumptions
There are risks with any business and there are assumptions that everyone makes when planning a business. With each
assumption there is a risk that you have made a mistake. With each risk, you risk your money, the money of a lender and
the future of your business. However, you can reduce your risks through research, planning, and safeguards. Explain the
risk and assumptions you have made and explain how you have minimised your risks.
 |
 |
 |
 |
 |
 |
 |
 |
 |
 |
 |
 |
 |
 |
 |
 |
