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Home > Getting Started > Business Plans > Elements of the Business Plan
Statement of Purpose
Brief description of the company products or services, and location. The amount of money requested and the amount that will be invested by the owners.
How the money will be used and how it will be repaid.
The positive effect the money will have on the business.
Example:
The purpose of this document is to demonstrate the revenues and expenses associated with the ownership transfer of Loony Toons Produce. I, Bugs Bunny, wish to purchase this well established retail produce store located on Main Street, Toontown from Elmer Fudd. Mr. Fudd has owned the business for several successful years and is selling for health reasons. The business had gross sales of approximately $342,000 in 1994, $295,000 in 1995, and over $400,000 in 1996. Net income provided to the owner from the business has consistently been well over $50,000 (owner's salary, business net profit, and depreciation).
We have agreed on a price of $95,000 for the business. This includes all fixtures, supplies, leasehold improvements, and inventory. (No real estate conveys) Inventory as of this date is approximately $50,000 at cost.
I would like to request a fixed term business loan in the amount of $90,000 to be used for the purchase of the assets of Loony Toons Produce Store and for use as working capital. I will inject at least $20,000 toward the project.
The projections demonstrate that the business can generate enough income to amortize the requested finding. This transaction qualifies for a Small Business Administration Low Doc loan Guaranty and the loan will be collateralized by all business assets and equity I have in real estate and personal property.
Executive Summary
- Name
- Location and facility description
- Introduction to Owners and Management team
- Brief summary of sales and profits from last couple of years if applicable
- Brief explanation of the product or services
- Information on the market, target market, competition, and how you will promote & sell the product/service
- Summary of projections, loan requirements and time-frame for repayment of funds
- Use of Proceeds* (Sources & Application of Funds)
Indicate how much money is needed, where it is coming from, and how it will be used. Many companies require multiple stages of financing. If this is the case, the actual timing of the sources and uses of funds will also appear on the cash flow projections. Gather information for everything you will need in order to open the doors. Get written quotes when possible. These quotes will be included in the appendix section.
The specific items each source will fund can be determined later. Usually a bank will want to fund fixed assets such as building, land, and equipment and you will fund as much inventory, fees, working capital, and other soft costs as you can. This table will be reworked several times before a final version is created for the financing proposal.
Business Description
- Company Profile
- Name, Address, Phone, etc.
- Owners (Duties, Backgrounds, Percentages, Positions, etc.)
- Legal form of business (Sole Proprietorship, Partnership, Corporation, LLC)
- History and/or start date of the business
- Recent sales and profit figures
- Business location and description of the physical facilities
- Classification of business (Retail, Wholesale, Manufacturing, Service, Technology, Distribution, etc.)
- Business Advisors (Lawyer, Accountant, Banker, Insurance Agent, Industry Contracts)
- Products or Services
- Clearly Describe your product or service
- Does it posses superior quality?
- Superior customer Service?
- Uniqueness?
- Features and Benefits
- Features are the Attributes
- Benefits are what sell the product/service!
- What additional services, if any, will you provide?
- Explain any special training needed to sell or use it
- Include all relevant regulations and laws that may affect its sale or use
- Proprietary position (Patents, Copyrights, etc.)
Market Description and Analysis
Unique Selling Point (USP)
USP is the benefit, appeal, or big promise that you hold out to potential customers that no other competitor offers. However, unless it motivates your prospective customer to take action, it is worthless.
Competitive Analysis
Marketing Strategy
Operations Plan
- Logistics
- Current floor plans and expected future space plans for production and selling
- Task/time charts and schedules
- Describe the timing and sequential steps to bring the company up to full speed. Take it month by month for the first year and quarterly for the next couple of years. Make sure the cost and timing of these events are reflected in the pro forma statements
- Completion of Prototypes
- Significant contracts and orders
- When key people are to be hired
- Physical expansions or moves
- Opening of branches
- Trade show or convention dates
- Major equipment purchases, etc.
- Suppliers
- Names and locations of suppliers
- Terms and conditions of purchase
- Contact person
- Trade volume discount
- Minimum order requirements
- Product availability
- Shipping restrictions
- Exclusive rights to the product
- Operating Regulations (Federal, State, Local, Industry)
- Taxes
- Licenses Required
- Zoning
- Insurance and/or Bonding requirements
- Is there a need for Patent, Copyright or Trademark?
- Association Fees
Human Resources
- Management - The quality of the management team has a significant impact on the potential success or failure of the company. Include career highlights, accomplishments, and positions held. Why are you qualified? (See enclosed resume form.)
- Organizational structure and chart
- Job description, roles and responsibilities of employees
- Service and employee contracts
- Details on advisors and associates
- Future human resources requirements
Risks, Problems & Future Plans
- Discuss high-profile, success-threatening risks and possible solutions or strategies to address them.
- Where do you want the company to be in the future (new products or services)?
Financial Information and Analysis
For Existing Businesses:
- Income Statements, Balance Sheets, and tax returns from the last three years.
- Interim Financial Statements (Year-to-date). Must be less than 90 days old as of the application date. To be safe, try to make them less than 30 days old when you put the package together.
- Include Accounts Receivable and Accounts Payable Aging Schedules. (See attached schedules)
Make sure all the dates on the interim financial statements match
All numbers on the supporting statements must agree with the Income Statement and Balance Sheet
- List of all business obligations (See attached table)
For All Businesses:
- Personal Financial Statements for all individuals owning 20% or more of the business. (See SBA Personal Financial Statement (PDF)).
- Pro Forma Statements (projections) on a monthly basis for one year and on a quarterly basis for the next three years. Include detailed explanations for projected numbers (assumptions). Your sales forecasts must be supported by past history, industry averages, demographic evidence, statistical evidence, survey results, seasonal trends, economic indicators, and marketing events scheduled. Be as conservative as possible.
- Income Statements (PDF)
- Cash Flow Statements (PDF)
- Balance Sheets: Projected statement of assets, liabilities and equity. See blank form (PDF).
Demonstrate what the balance sheet will look like after obtaining and applying the funds. Show what it will look like on the day you open the business and 12 and 24 months after getting the loan (the first two years).
- Break-Even Analysis
- Comparisons of important financial information and key ratios to industry averages. See page _______.
Appendix (Supporting Information)
- Glossary(if pertinent)
- Equipment quotes
- Product brochures
- Customer listings
- Testimonials
- Resume(s)
- Purchase Orders
- Letters of Recommendation
- Job descriptions
- Newspaper and magazines clippings
- Special awards and achievements
- Letters of Intent from suppliers and potential customers
- Trade association information and supporting evidence
- Written construction / leasehold improvement estimates
The Hampton Roads SBDC is available to assist with the completion of your business plan. In order to have the most productive meeting possible, please compile as much information as you can before scheduling an appointment with one of the counselors.
PDFs require Acrobat Reader!
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