1. How to Write a Business Plan

2. What Is a Business Plan?
A business plan is any plan that works for a business to look ahead, allocate resources, focus on key points, and prepare for problems and opportunities.
Business planning is about results. You need to make the contents of your plan match your purpose. Don’t accept a standard outline just because it’s there.

3. Unfortunately, many people think of business plans only for starting a new business or applying for business loans. But they are also vital for running a business, whether or not the business needs new loans or new investments. Businesses need plans to optimize growth and development according to priorities.

4. Why Prepare A Business Plan?
Your business plan is going to be useful in a number of ways. First and foremost, it will define and focus your objective using appropriate information and analysis.
You can use it as a selling tool in dealing with important relationships including your lenders, investors and banks.
Your business plan can uncover omissions and/or weaknesses in your planning process.

5. You can use the plan to solicit opinions and advice from people, including those in your intended field of business, who will freely give you invaluable advice. Too often, entrepreneurs forge ahead without the benefit of input from experts who could save them a great deal of wear and tear. "My Way" is a great song, but in practice can result in unnecessary hardships.

6. One of the most amazing things is that regardless of the economic climate someone is always starting a new business. The entrepreneurial spirit and drive is unquenchable.

7. Sometimes the idea for a new business is like a bolt from the blue
Sometimes the idea for a new business is like a bolt from the blue. The idea for the product or service is unique, innovative, and exciting, and may be the first of its kind to enter the market.

8. And then again, for many people, opening that new business is an iteration of an already existing product or service. Another coffee shop or another convenience store or party supply/equipment rental outlet.
Either way, the best way to protect that idea is to get started.

9. Regardless of the business idea, a whole lot of work will have to be done before you can hang out that new shingle or flashing-neon OPEN sign. Before anything else, you need to find out if there is anyone out there who will want to pay hard earned cash for your product or service.  You need to do market research to determine if there is a large enough pool of customers to open, build and sustain your business.

10. Every new business has to have a name, should determine its structure, and needs to be registered with a variety of governing agencies. Your business name could simply be your own name. Many businesses also describe the type of business they are in their name.

11. There are many types of business structures, from the sole proprietorship to publicly traded corporations. Getting some legal advice to help determine the best structure for your business’ needs is always a wise investment.

12. If you will be seeking loans, investment or almost any type of financing you will need to have your business structure legally established.

13. And of course, there are the financials
And of course, there are the financials. At the bare minimum, you will need to determine your start-up costs, develop a sales forecast, make an estimate of your monthly expenses, and then look at your cash flow.

14. Your start-up costs will show you how much money you need to put into your business to get up and running. Your expense estimate should include all those costs you will need to cover every month, whether you open your doors or not.

15. The sales forecast needs to be realistic, show the affects of season, or calendar trends, or other fluctuations. If the sales aren’t covering your expenses, you need to know why and what you can do about it.

16. And lastly, the cash flow shows you what your cash balance is every month. You could be profitable, and still be broke – especially if you’re selling to other businesses. Managing your cash is crucially important.

17. Write all of this down, everything you’ve done so far
Write all of this down, everything you’ve done so far. Keep it in your computer files, both as written text and financial spreadsheets. You will use it to develop your business planning tool which you’ll use to manage your business all year long.

18. What to Avoid in Your Business Plan?
Place some reasonable limits on long-term, future projections. (Long-term means over one year.) Better to stick with short-term objectives and modify the plan as your business progresses. Too often, long-range planning becomes meaningless because the reality of your business can be different from your initial concept.

19. Avoid optimism. In fact, to offset optimism, be extremely conservative in predicting capital requirements, timelines, sales and profits. Few business plans correctly anticipate how much money and time will be required.

20. Do not ignore spelling out what your strategies will be in the event of business adversities.
Use simple language in explaining the issues. Make it easy to read and understand.

21. Don't depend entirely on the uniqueness of your business or even a patented invention. Success comes to those who start businesses with great economics and not necessarily great inventions.

22. What are the standard elements of a business plan?
If you do need a standard business plan to seek funding — as opposed to a plan-as-you-go approach for running your business, which will be described below — there are predictable contents of a standard business plan outline.

23. For example, a business plan normally starts with an Executive Summary, which should be concise and interesting. People almost always expect to see sections covering the Company, the Market, the Product, the Management Team, Strategy, Implementation, and Financial Analysis. The precise business plan format can vary.

24. Plan will depend on your specific situation
Plan will depend on your specific situation. For example, description of the management team is very important for investors while financial history is most important for banks. However, if you’re developing a plan for internal use only, you may not need to include all the background details that you already know. Make your plan match its purpose.

25. Is the order important?
If you have the main components, the order doesn’t matter that much, but here’s the sequence suggested for a business plan. There is provided two outlines, one simple and the other more detailed.

26. What is most important in a plan?
It depends on the case, but usually it’s the cash flow analysis and specific implementation details.

27. Cash flow is both vital to a company and hard to follow.
Cash is usually misunderstood as profits, and they are different. Profits don’t guarantee cash in the bank. Lots of profitable companies go under because of cash flow problems. It just isn’t intuitive.

28. Implementation details are what make things happen
Implementation details are what make things happen. Your brilliant strategies and beautifully formatted planning documents are just theory unless you assign responsibilities, with dates and budgets, follow up with those responsible, and track results. Business plans are really about getting results and improving your company.

29. Simple business plan outline
Executive Summary: Write this last. It’s just a page or two of highlights.
Company Description: Legal establishment, history, start-up plans, etc.
Product or Service: Describe what you’re selling. Focus on customer benefits.
Market Analysis: You need to know your market, customer needs, where they are, how to reach them, etc.

30. Simple business plan outline
Strategy and Implementation: Be specific. Include management responsibilities with dates and budgets. Make sure you can track results.
Web Plan Summary: For e-commerce, include discussion of website, development costs, operations, sales and marketing strategies.
Management Team: Describe the organization and the key management team members.
Financial Analysis: Make sure to include at the very least your projected Profit and Loss and Cash Flow tables.

31. Build your plan, then organize it.
It is not recommended developing the plan in the same order you present it as a finished document. For example, although the Executive Summary obviously comes as the first section of a business plan, I recommend writing it after everything else is done. It will appear first, but you write it last.

32. There are also some business tables and charts that are normally expected in a standard business plan.

33. Cash flow is the single most important numerical analysis in a plan, and should never be missing.
Most plans will also have Sales Forecast and Profit and Loss statements. There also have to apeare separate Personnel listings, projected Balance Sheet, projected Business Ratios, and Market Analysis tables.

34. Expanded business plan outline
Here’s an expanded full business plan outline, with details you might want to include in your own business plan.

35. 1.0 Executive Summary
1.1 Objectives 1.2 Mission 1.3 Keys to Success

36. 2.0 Company Summary
2.1 Company Ownership 2.2 Company History (for ongoing companies) or Start-up Plan (for new companies) 2.3 Company Locations and Facilities

37. 3.0 Products and Services
3.1 Product and Service Description 3.2 Competitive Comparison 3.3 Sales Literature 3.4 Sourcing and Fulfillment 3.5 Technology 3.6 Future Products and Services

38. 4.0 Market Analysis Summary
4.1 Market Segmentation 4.2 Target Market Segment Strategy Market Needs Market Trends Market Growth 4.3 Industry Analysis Industry Participants Distribution Patterns Competition and Buying Patterns Main Competitors

39. 5.0 Strategy and Implementation Summary
5.1 Strategy Pyramids 5.2 Value Proposition 5.3 Competitive Edge 5.4 Marketing Strategy Positioning Statements Pricing Strategy Promotion Strategy Distribution Patterns Marketing Programs

40. 5.0 Strategy and Implementation Summary
5.5 Sales Strategy Sales Forecast Sales Programs 5.6 Strategic Alliances 5.7 Milestones

41. 6.0 Web Plan Summary
6.1 Website Marketing Strategy 6.2 Development Requirements

42. 7.0 Management Summary
7.1 Organizational Structure 7.2 Management Team 7.3 Management Team Gaps 7.4 Personnel Plan

43. 8.0 Financial Plan
8.1 Important Assumptions 8.2 Key Financial Indicators 8.3 Break-even Analysis 8.4 Projected Profit and Loss 8.5 Projected Cash Flow 8.6 Projected Balance Sheet 8.7 Business Ratios 8.8 Long-term Plan

44. Size your business plan to fit your business.
Remember that your business plan should be only as big as what you need to run your business. While everybody should have planning to help run a business, not everyone needs to develop a complete formal business plan suitable for submitting to a potential investor, or bank, or venture contest.

45. So don’t include outline points just because they are on a big list somewhere, or on this list, unless you’re developing a standard business plan that you’ll be showing to somebody else who expects a standard business plan.

46. The Financials
Expert opinions may vary, but in general there are some standard analyses that a business plan ought to have, regardless of specifics.

47. Cash flow
is the most important. Businesses run on cash. No business plan is complete without a cash flow plan!!!

48. Profit and loss statement
incorporating sales, cost of sales, operating expenses, and profits. This of course is also a pro forma income statement. In most cases it should show sales less cost of sales as gross margin, and gross margin less operating expenses as profit before interest and taxes (also called gross profit, and contribution to overhead). Normally there is also a projection of interest, taxes, and net profits.

49. Balance sheet
Aside from cash and income, there is the balance of assets, liabilities, subsidies and capital.

50. Sales forecast
The form may vary to suit the business, but it is hard to imagine a plan without a sales forecast. Some plans forecast in excruciating detail, some summarize, but the forecast should be there. In the simplest of plans, the sales forecast might be a single line in the pro-forma income statement.

51. Personnel plan
Personnel costs are so intimately related to fixed costs that they should often be set aside and discussed. In some simple plans, they too, like the sales forecast, can be just a line or two in the income statement.

52. Business ratios
The numbers are there, when there is pro-forma income, cash, and balance sheet, so the ratios can be calculated. This isn’t as necessary for an internal plan as for one for bankers and investors, but some key ratios are almost always a good idea. They should probably include some profitability ratios like gross margin, return on sales, return on assets, and return on investment; plus some liquidity ratios such as debt to equity, current ratio, and working capital. You already know which ratios you like to use, and how to calculate them. A banker will have a similar view.

53. Break-even analysis
Most of the break-even analyses included with business plans have little value, but most bankers and analysts like to see them.

54. Market forecast
Aside from the sales forecast, which is essential, a market forecast is also a good idea. How many potential customers are there?
How does market growth stand to impact this business?