FORMAT OF BUSINESS PLAN

Table of Contents

I INTRODUCTION -

II. PRODUCTS AND SERVICES

III. MANUFACTURING & OPERATIONS PLAN

A. Location -
B. Physical Facility
C. Availability of Labor
D. Floor Plan
IV. MARKET ANALYSIS
A. Industry Trends
B. Description of the Total Market
C. Target Market
D. Documentation of Need
E. Analysis of Competition
F. Product/Service Differentiation
V. SALES STRATEGY
A. Pricing Policy
B. Distribution/Hours of Operation
C. Promotional Efforts
D. Customer Conveniences
VI. MANAGEMENT PLAN
A. Personal History of Key Participants
B. Duties and Responsibilities of Key Participants
C. Compensation
D. Available Resources
VII. FINANCIAL ANALYSIS
A. Startup Costs
B. Source and Use of Funds
C. Capital Equipment List
D. Cash Flow Analysis
E. Assumptions
F. Pro Forma Income Statement
G. Pro Forma Balance Sheet
H. Personal Financial Statement
I. Personal Income Tax Returns
VIII. SUPPORTING DOCUMENTS

A. Letter of Recommendation *
B. Market Research Data *
C. Remodeling Cost Estimate
D. Equipment Bids *
E. Sales Agreement - Property at Highway 3 and Main etc
 List of Tables...............................................................................................
List of Figures ............................................................................................. .
Appendices..................................................................................................
Abbreviations and Acronyms ..................................................................
Statement of Purpose ................................................................................

EXECUTIVE SUMMARY.........................................................................
Purpose: The purpose of the executive summary is to get the reader’s attention by summarizing
the key elements of the business plan. It must be short, to the point and very well written.
This is arguably the most important part of the business plan. The Introduction must make your
reader want to keep reading. It is a good idea to write as much of the Introduction as you can at
the outset of the planning process. This initial writing will help you to focus your attention on the
goals of the plan. You should then rewrite the Introduction after you have completed the rest of
the business plan. This way the specifics of the plan, and the changes made during the planning
process are accounted for. You are addressing the issues of what you do, where you are going in
the short term and what you want from the reader of the plan. This section of the plan should be
two to three pages long.
Business Concept
 Describe what your business does in general terms.
 include your mission or vision statement, goals, objectives
 Describe what differentiates your business from others. This is important to the reader, as they
want to know how your business will be able to create new customers. What do you offer that
will take customers away from competitors?
 briefly describe your business history if applicable.
 Provide any other information that will excite the reader about your business.
Ownership and Management team
 Briefly describe the technical qualifications of each principal in this enterprise.
 Briefly describe the business qualifications of each principal in this enterprise.
 Tell the reader your business structure (i.e. proprietorship, partnership, and incorporation).
 Provide a fact sheet with contact information such as name, address, telephone, e-mail, etc.

Financial requirements
 Tell the reader what you want (e.g. a business loan for a specific amount to purchase
equipment).
 State your sales, production and profit goals. Be specific in amount and time line.
 If looking for a bank loan, comment on goals such as anticipated time to achieve a positive
cash flow and the ability to service debt. (Note you cannot complete this section until the rest
of the plan is complete.)
TABLE: SOURCES AND USES OF FUNDS

SOURCE OF FUNDS TO BE USED FOR

CHAPTER 1. I N T R O D U C T I O N
1.1 Overview of the chapter
1.1 Introduction...................................................................................
1.2 Justification of the Business ........................................................
1.3. The product /service
1.4 Legal structure of the business ...................................................
1.5 Name and business Location........................................................
1.6 Definition of business
i) Type (Manufacturing, retail, wholesale, service - or a combination)
ii) Is this a new start, expansion, or acquisition?
1.7 The Business Purpose ...................................................................
1.7.1 Business Vision ......................................................................... ..
1.7.2 Business Mission....................................................................... ..
1.7.3 Business values ………………………………………………..
1.7.4 Business Objectives and Goals....................................................
1.8 History of the business or industry …………………………….
1.9 State Why This Business Should Exist………………………….
a. Motivation of the Entrepreneur………………………………
b. Benefit to the community or industry………………………..

CHAPTER 2. PRODUCTS AND/ OR SERVICES

Purpose: The purpose of the product/service section is to detail exactly what your business does
for the customer and what makes these offerings desirable.
Product Oriented Businesses
 Describe each product you sell. The combination of products is your product mix.
 if you cannot list each product, break the business down into logical categories.
 Describe the key product features, and how your products are different from those of your
competition. (Functionality, durability, ease of use, etc.).
 Describe product protection such as patents, copyrights and trademarks.
Service Businesses
 Describe each type of service you offer (be specific).
 Describe the service features in terms important to the customer.
 Describe any service protection such as copyrights or trademarks.
Product Risks
If there are any risks associated with your product or service such as product liability,
professional liability, or ease of duplication by competition, state them and describe how you will
mitigate these risks.

Products and services

A. Describe the product or service the company will market in a
technically accurate manner. (Include the standard industrial
classification (sic) code for financial proposals.)
B. Provide a summary of the product line or a description of the services
offered. (Include a photograph or drawing, if possible.)
C. Emphasize the difference between your competitors and your
company's offerings.

CHAPTER III. MANUFACTURING AND/ OR OPERATIONS PLAN (include picture of

plan)
3.1. Overview of chapter
This section should describe the location, physical facility, space requirements, and major equipment,
and labor force, sources of supply, layout and floor plan that are required to provide your product or
service.

For a manufacturing business, emphasis should be given to the production process, the inventory
control system, and the purchasing and production control systems.
3.2. Location of the business
i) Does the location have an impact on your ability to reach customers?
ii) What are the physical characteristics of the current or proposed location?

3.3. Physical facilities (discuss existing status and required changes)

 Vehicle access for customers and suppliers
 Inventory Storage
 Equipment, fixtures and furniture
 Electricity, heat, air conditioning, venting, Wastewater
 Merchandise display
 Customer seating
 Product preparation Space
 Compliance with current and future environmental regulations and other legislation
  Capability for expansion

3.4. Labour & Supply of raw materials (inputs ) (cost the inputs )
3.4.1. What are your sources of supply? Do you depend on a single supplier?
3.4.2. Discuss supply alternatives, pricing, or other supplier factors that could affect your
ability to manufacture your product or perform your service)
3.4.3 Labour requirements

CHAPTER IV. MARKET ANALYSIS

4.1. Introduction
4.2. Macro environmental trends (PESTEL Analysis) (Highlight the trends)
4.2.1 Political
4.2.2 Economic
4.2.3 Social
4.2.4 Technological
4.2.4 Environmental
4.2.5 Legal
4.3 Micro Economic situation analysis (Key variables would be)
4.3.1 Labor markets
4.3.2 Trade unions,
4.3.3 Customer profiles,
4.3.4 Creditors, suppliers
4.4 Industry Analysis (overview)
4.4.1 Degree of competition in the industry,
4.4.2 The dominant economic features of the industry,
4.4.3 The drivers of change in the industry, and
4.4.4 The key success factors in the industry
At what stage of the product/service life cycle will your business be entering the market?
(Introduction, growth, maturity, saturation, or decline)
4.4.5 Summary of Opportunities and threats from the macro, micro and industry variables
and strategic responses
Table 4.4.5
 Factor Opportunities Threats Business Strategic
Response
PESTEL
Political
Economic
Social
Technological
Ecological
Legal & Regulatory

MICRO FACTORS

INDUSTRY ENVIRONMENT

Market environment

4.5. Internal environment

4.5.1 Governance and management
Composition of governance /management -How is it /will it be done
Culture -
4.5.2 Internal Business processes – Use of applications / quality envisaged and how managed
4.5.3 Resources and capabilities of the business
Physical resources
Human resources
Technological resources
Financial resources
4.5.4. Summary of strengths and weaknesses from the macro, micro and industry variables and
strategic responses
Table 4.5.4.
Factor Strengths Weaknesses Strategic
Responses*
Governance and Administrative
Structures
Internal Business
Processes
Resources and Capabilities
 Physical resources
Human resources
Technological resources

Financial resources

4.5 DESCRIPTION OF TOTAL MARKET (Use pictorials)

In order to generate a consistent and increasing sales flow, the entrepreneur must become
knowledgeable about his market -- the people, businesses, or public institutions who might buy
the product or service.
One way to define the total market is to use important characteristics from the census, local
chambers of commerce, the public library, trade associations, etc.
4.5.1 Present size of the entire market (Total available market)
4.5. 2 what is your market's growth potential?

4.5.1 TARGET MARKET (Use pictorials)

The target market is that segment of the total market who are likely or potential customers. A
clear understanding of the demographics; geographic location, age, income, education, sex, etc.
And psychographics; likes, dislikes, and tendencies that affect purchasing patterns can help you
develop a strategy to reach the target market through your sales plan.
 What is the size of your target market?
 What percentage of the target market do you anticipate?
 How will you attract and keep this market?
 How can you expand your market?

4.5.2 DOCUMENTATION OF DEMAND FOR MARKET OR SERVICE

Although personal experience is a certainly a good basis for your assumptions, you must also
provide proof from a third party to add credibility.
 Published statistics (industry association, trade journal, news articles)
 Primary market survey (data you gathered or paid for from a professional research firm)
 Contracts, letters of commitment, letters of interest

4.5.3 ANALYSIS OF COMPETITION

 Who are they?

  Where are they located?
 How do they compare to your business?
 Sales volume
 Number of employees c. Number of locations d. Number of customers
 Is their business steady, increasing, or decreasing?
 What are your competitor's strengths and weaknesses?
 What have you learned by observing them?

Table 4.5.3
Description of Strengths Weaknesses Strategic response
competitor

4.5.6 PRODUCT/SERVICE DIFFERENTIATION (Unique Selling Proposition)

 What unique niche of the market will this business fill?
 Has anyone attempted to fill this niche? If not, why?
 Are there a patent, trademark, copyright, or trade. Secret that will give you a head-start on
the competition?
 Where do you believe you have a business advantage? (Product, price, service, delivery
time, other)

4.6: SALES STRATEGY (show projected budgets)

4.6.1 Pricing policy

 What is the relationship between the price you will charge and the image of the business
you are trying to create?
 How will you price? (Mark-ups, profit margins, discounts, labor/materials profit, etc.
 Breakeven point
4.6.2 Distribution strategy
 Describe the channel of distribution you will use to reach your target market.
 How does the competition get its product to the market?
 Describe how the product will be available when and where the customer wants it.
4.6.3 Communication Strategy
4.6.3.1 Promotional efforts
Make sure your cash flow reflects monies budgeted for these activities and the
image/position you are attempting to establish match your promotional activities.
 Advertising
 Direct mail
 Radio and television
 Magazines, newspapers, and trade journals
 Outdoor sign, poster
 Trade shows
 Novelties (calendars, pencils, magnets, etc.)
Table 4.6.3.1
Promotional activity tactic Cost

4.6.3.2 Personal Selling

Every promotional effort is an expense of time or money. The advertising tools listed above
involve substantial expenditures of money. How does this apply to you?
 Customer service
 Knowledgeable staff
 Complimentary products/services
 Community involvement
 Table 4.6.3.2
Personal Selling activity tactic Cost

4.6.3.3. Publicity or free advertising

 Press release (newspapers, radio and television news stations cover stories of interest to
their audience:
 unique offerings,
 interesting and special events,
 documentary, and
 video clips )
 Table 4.6.3.3
Publicity or free advertising tactic Cost
 activity

4.6.3.4. Sales promotions

 Temporary promotions – samples / free product
 Coupons
 Rebates
 Grand openings
Table 4.6.3.4
Sales promotions tactic Cost
activity

4.6.3.5: E-communication (Facebook, website, integral etc.)

Table 4.6.3.5
E-communication activity tactic Cost

CHAPTER V: GOVERNANCE & MANAGEMENT PLAN

This section should include the personal history of the principals, related work experience duties
& responsibilities, salaries, organization chart, & resources available to business

5.1 Personal history of key participants

Complete this section for each key participant in the business
 Business background
 Management experience
 Education (formal and informal learning experiences)
 Personal data
 Name of principal
 Present address
 Social security number
 Name of Academic & Experience Responsibility in Projected Allowances
Director & professional the business remuneration
contact qualifications
addresses

5.2 Available resources

5.2.1 Brief overview
5.2.2 Service providers
Do you have the marketing, management, and financial skills to do it all yourself? If not, then show
relationships that fill the gaps to create a fully capable business enterprise.

Even if you do, do you network with others in your industry to stay current on changes in the
marketplace?

 Professional (lawyer, cpa)

 Insurance
 Consultants
5.2.3 Associations (chamber of commerce, professional or trade groups

CHAPTER VI: FINANCIAL ANALYSIS

6.0 Brief overview of chapter

6.1 Start Up Costs ( append supporting documents e.g. Sales Agreement

Example

DESCRIPTION AMOUNT
Land $ 5,000
Building 40,000
Remodeling/Improvements 15,000
Inventory 15,000
Furniture 400
Fixtures & Equipment 9,300
Utility Deposits 1,000
Licenses and Permits 500
Outdoor Sign 1,400
Advertising 2,000
Association Fee 180
Office/Operating Supplies 220
 Working Capital 10,000
TOTAL STARTUP COSTS $100,000

6.2 Source and Uses for the Funds

DESCRIPTION LOAN OWNER TOTAL

INJECTION
LAND $ 5,000 $ 5,000
BUILDING 40,000 40,000
REMODELING $ 15,000 15,000
INVENTORY 15,000 15,000
MAJOR CAPITAL EQUIPMENT AND 9,700 9,700
FURNITURE (FF&E) (see break down next
page)
DEPOSITS 1,000 1,000
WORKING CAPITAL 10,000 10,000
OTHER STARTUP COSTS 300 4,000 4,300

TOTAL $ 70,000 $ 30,000 $100,000

6.3 CAPITAL EQUIPMENT LIST (Assets schedule)

MAJOR CAPITAL MODEL COST CONDITION SUPPLIER

EQUIP. & Furniture

Refrigerator - Soda AX199 $ 2,000 New Acme Equipment

Refrigerator - Beer AX199 2,000 New Acme Equipment

Refrigerator/Freeze r BX215 2,500 Rebuilt Acme Equipment

Dry-storage Aisle 300 $ 1,000 New Expert Displays

shelving

Security Camera ZZ23456 8 New Live Eye, Inc.

0
Electronic Cash BL222 1,000 New NCR
Register

Furniture 4 Used Thrifty Furniture

0
 TOTAL CAPITAL $ 9,700
EQUIPMENT

6.4: Proforma Income Statement (I&E Account ) projections

TOTAL GROSS SALES $250,000

Less Credit Card Service Charges 3,000
ADJUSTED GROSS SALES $247,000
Less Cost of Goods Sold 178,750

GROSS PROFIT ( Adj. Gross Sales - COGS) $ 68,250

OPERATING EXPENSES
Gross Wages 19,400
Payroll Expenses 2,910
Supplies 560
Repairs & Maintenance 640
Advertising and Promotion 1,000
Accounting and Legal 600
Telephone 720
Utilities 6,825
Insurance 1,500
Taxes & Licenses 1,200
Bank Charges 300
Other Expenses:
Depreciation 3,948
Amortization 864
Miscellaneous 360

TOTAL OPERATING EXPENSES $ 40,827

OPERATING PROFIT (Gross Profit – $ 27,423

Operating Expns )
INTEREST Paid on loan, ( a separate (8,304)
“Expense”)
PROFIT BEFORE TAXES $ 19,119
INCOME TAXES (2,868)

NET PROFIT AFTER TAXES $ 16,251

6.5 Proforma Balance Sheet projections

 ASSETS LIABILITIES
CURRENT ASSETS CURRENT LIABILITIES

Cash in bank 10,000 Current maturities of 1,777

long- term debt

Deposits 1,000

Inventory 15,000

TOTAL $ 26,000
CURRENT
ASSETS
FIXED ASSETS LONG-TERM
LIABILITIES
Land 5,000 Note payable to Valley Bank 68,223

Building 55,000

FF&E 9,700 TOTAL LIABILITIES $ 70,000

TOTAL FIXED ASSETS $ 69,700

OTHER ASSETS

Start-up Costs 4,300

TOTAL OTHER ASSETS $ 4,300

NET WORTH $ 30,000

(100,000 - 70,000)
TOTAL ASSETS $100,000 TOTAL $100,000
LIABILITIES AND
NET WORTH
(70,000 + 30,000)

6.6 Cash flow analysis (Most lenders require more than 3 year projection
6.7 Conclusion
CHAPTER VII ASSUMPTIONS USED & RISK ANALYSIS IN THE CASH FLOW
PROJECTIONS

Example
i) Total sales volume
First year sales are conservatively projected at $250,000. Sales are expected to increase 10%
annually in years two and three as the business becomes better established. This estimate is
based on Mr. Smith’s personal experience and confirmed by using industry data. In Mr. Smith's
extensive industry experience he has found gross revenues of South Texas convenience stores in
rural communities of this size, range from $250,000 to approximately $500,000. Robert Morris
and Associates Sales/Total Assets ratios indicate that nationally, convenience stores of this size
average $630,000 in total sales. Management believes $250,000 is an easily attainable level of
sales for the first year. The following seasonality indices will be assigned their respective
months to indicate expected monthly sales and related expense

ii) Seasonality index table

Year 1

Year 2 & 3

Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Total
Index 1.60 1.40 1.00 .80 .60 .50 .50 .60 1.00 1.20 1.40 1.40 12.0

iii) CASH SALES

60% of total sales volume

iv) CREDIT CARD SALES

40% of total sales volume

v) CREDIT CARD SERVICE CHARGES

3% of Credit Card Sales volume

vi) COST OF GOODS SOLD/MARKUP

A 71.5% Cost of Goods Sold is used for these projections. This is based on an average 40%
markup for Quick Mart’s various product types. The percentage of Cost of Goods Sold will
vary depending on sales levels in each product category, but Mr. Smith is accustomed to
seeing 71.5% as the typical average. A mark-up of 15% will be placed on gasoline sales, 35%
on all staple items and 45% on taxable products, while pharmaceutical items will have a 60%
markup A detailed cash flow projection by product category is available upon request.

vii) GROSS WAGES:

Owners will receive a modest management salary of $1,000 monthly through August and
$1,250 per month through the end of the first year. In year two it will increase to $1,500 and
year three to $2,500. Two part-time employees will be hired for 20 hours each during the
peak tourist season of September-April at $5.00/hr.

viii) PAYROLL EXPENSE:

 Is estimated at 15 % of Payroll.

ix) SUPPLIES
Consists of supplies used in the business and is assumed to remain constant at $40 each
month for the off season (May-August) and $50 per month during the peak season
(September-April

x) REPAIRS AND MAINTENANCE

Estimated at $60 during peak season and $40 for off season. Consists of brooms, mops, and other
cleaning materials and janitorial supplies. Equipment repair costs are covered by service agreements
included in the purchase price.

xi) ADVERTISING EXPENSE

Flyers, newspaper ads, and other materials will be needed at regular intervals. Estimated cost is
$110 per month during the peak season, dropping to $30 per month during the off season. The $2,000
startup cost includes two billboards along Highway 3.

xii) ACCOUNTING AND LEGAL

Estimated at $600 per year for accounting services for compilation of financial statements and income
tax. Legal fees totaling $575 for consultation have already been paid using the personal account of
Mr. and Mrs. Smith.

xiii) TELEPHONE
The business phone line to be installed in the store is estimated at $60 per month. No long distance
calls are expected to be made, as calls to Boulder are still within the general call area.

xiv) UTILITIES
Includes electricity, water, and garbage pick-up and are estimated at 500/month.

xv) INSURANCE
The store will have liability, fire, and theft insurance. Life insurance on the owners, as required by the
loan will also be paid by the store. Monthly insurance is $125 with no down payment.

xvi) TAXES AND LICENSES

This Property Taxes estimated at $1,200 annually and Corporate Franchise Tax of 4.5% of net profit.
Both will be paid in January of each year beginning in year two.

xvii) INTEREST
Monthly interest expense is based on a $70,000, 15 year loan at 9%
interest.

xviii) BANK CHARGES

Bank service charges are estimated at $25 per month.

xix) DEPRECIATION
Quick Mart’s building, leasehold improvements, and
furniture, fixtures, & equipment will be depreciated at
$329 per month as follows:

Building & Improvements $55,000 330 months = $167

Furniture, Fixtures, & Equipment $9,700 60 months = $162
TOTAL MONTHLY DEPRECIATION $329

xx) AMORTIZATION
Non-depreciable start-up costs are amortized over 5 years at $71.67 per month.
 xxi) MISCELLANEOUS
Is expected to average $100 per month during peak
season and $50 per month during the off season.