Company Logo www.companywebsite.com BUSINESS PLAN OUTLINE NEW CLIENT PACKAGE Date CLIENT NAME: CLIENT ADDRESS/CONTACT: Plan Written and presented by: 3571 E Sunset Road Ste. 204-206 Las Vegas, NV 89120 702-960-2607 (mobile) TSmith@usbusinessincubator.com STATEMENT OF PURPOSE Writer s note: This is a one-page document written to gain the reader s interest and trust. It should include the purpose of the plan, a very brief business model, financial model, use of funds and a summary. The statement of purpose differs from an executive summary as it is used as a marketing tool to get parties interested in the business quickly and effectively. The information in the statement of purpose should also serve doubleduty as a cover letter to capital providers. Incubator, Inc., and may not be reproduced in any form for commercial purposes without the express written consent of US Business Incubator, Inc.
Purpose of the Business Plan What is the main purpose of writing the business plan (clarity of the business model, clarity of the financial model, organizational planning, funding, attracting a management team or a combination of these). Get to the point quickly. Business Model What niche is being filled? What problem is being solved by this company s model? How does the company plan to fulfill the issue? Financial Model How will the company make money? What is the proposed return on investment (ROI) and time by putting the model into practice? If it is for a loan, how will you pay it back? Capital Required & Use of Funds Company XXX has accomplished the following major milestones. To hit future objectives and milestones, it needs XXX to achieve these objectives. Opportunities are present for XXX Company by achieving these milestones. Summary BUSINESS DESCRIPTION Company Overview 1. Simply, what kind of business is it? 2. How did it get started (historical background) 3. What customers needs are satisfied? 4. What value will the company have to its customers? 5. What major milestones have been achieved? 6. Vision of an opportunity to make a profit. 7. Supply/Demand Factors. Mission Statement In 35 words or less, explain the business s reason for being and explain the guiding principles including who, what, when, where, how and why. Company Goals and Objectives State specific sales objectives. Business Model What is driving the market to want this product or service? (This may be government, consumer trends, popularity, necessity, wants, political, economic, etc.). Business Entity California S Corporation 2
SSIC Code (Standard Subject Identification code) SSIC codes are important for business industry searches, insurance quotes and workers compensation estimates. Ownership A percentage of ownership list all owners with 10% ownership or more, listed in order of most ownership to least. Business Address and/or Mailing Address 12324 Main Street Suite A, Any town, United States of America, 90000 Business Phone Numbers List all phone, fax, office; toll free, cell phones, etc. using this format: 888-888-8888 Tax Identification Number An Employer s tax identification Number (EIN) may be obtained by going to www.irs.gov. Search the forms section for an online EIN request. A qualified attorney or CPA can help. 99-9999999 Resale Number (When Appropriate) This number is assigned by the State Board of Equalization for the collection of sales tax. If your business is collecting sales tax, then this number is known as a reseller s permit. ARP-9999999 Industry Trends Describe your industry. What expected changes will affect your business? How is the company prepared to take advantage of the reported trends? What strengths does the company have that will best serve the trends? Ensure to use credible references. Validate all claims and quotes. Product or Service Define the product or service. PRODUCTS & SERVICES New or Improved? Is it a new Product to Market or an improvement of an existing product or service? Stage of Development? Intellectual Property owned by the company Includes trademarks, patents and/or technological advances owned by the company. Note: Intellectual property attorneys should be consulted, if they have not been already, if the company has, or intends to have, trademarks or patents filed. Pricing Strategy 3
What is the financial model of the product or service? How much are you charging the customer and how much did it cost you to produce the product or service. Why have you priced the product or service the way you have? Special Situations Does your product or service require special machining, molds or other high cost of goods? Licensing Are special licenses required to operate your business? If so, what are they? Do you already have them? Competitive Advantages - Features and Benefits What are the major competitive advantages of your product or service over your direct and indirect competition? Photos/Drawings/Examples Keep to a minimum in this section; place most in the Supporting Documents section MARKETING PLAN Marketing Overview (Situation Analysis) What niche is being filled with the product or service, what market will pay for it? Answer the "who, what, when, where, how and why" of the marketing plan. Marketing Strategy Overview of the company s marketing, advertising, promotions, methods of distribution and/or sales force. Primary Target Market Who are your customers? Is it a business-to-consumer business or business-to-business? Where do you fall in the supply chain? Are you a distributor, wholesaler or retailer? Do you sell to the end consumer and/or the middleman? Competitive Analysis A competitive analysis will provide an overview of the competition from the standpoint of the total competitive outlook. The analysis should review the total market potential, how the company s differentiation provides a competitive advantage over both direct and indirect competition based on a number of factors including: features, benefits, and price. This should only be an overview as the details of competition are further discussed in the plan. Direct Competition What products and companies will compete with you? List your major competitors (Comparison Chart) 4
Complete a competitive analysis (include a chart) directly comparing the competing companies with yours. The chart should include key products, locations, customers, price, and key differentiation issues. Market Size, Market Share, Market Penetration What is the total size of your market? The objective in market share analysis is to demonstrate the market is large enough to support substantial sales growth or to demonstrate the market is not currently being satisfactorily served by competitors. Then develop an argument through research that your company can penetrate a certain percentage of the market over time through an aggressive marketing campaign. A simple example would be a market in which there are 99 competitors that have varying degrees of market share. But the top three have 90% of the market and you intend to be number 4 with a 3% share. How will you attain this goal? Advertising Budget This is another section in which a chart or spreadsheet should be utilized. It should include a three to four year plan with the years across the top and the budget line items on the left with the actual dollar figures in the cells. The line items should include: Web site expenses. Media. Newspapers. Magazines. Radio. TV (Cable). Direct Mail. Talk Fusion (email videos) Promotions Brochures Coupons Newsletters Trade shows Branding/Graphic Imagery Logo design Cards and letterhead Brochures Signage Interior design Customer Retention Management You must have a plan to retain existing customers. A system shall be developed that identifies existing customers and then systematically contacts them for repeat business. Businesses that do not harness this skill realize one of the greatest failures of business what are you doing to keep them coming back and referring their friends and associates? 5
Sales Cycle Business owners often fail to recognize the value in creating a comprehensive sales cycle. How do you get customers to investigate your business, how do you get them to purchase, what is the cycle that your business must create and maintain for constant customer flow? Things to consider include the following example: Retrieve Calls or intercepting customers at the door. Ask the customer what their needs are to determine the best way to suit their needs Show the customer how their needs may be met by the company Ask them to purchase Collect payment Deliver the product and/or service Follow-up for customer satisfaction Implement the customer retention management system as discussed previously. Grass Roots Campaign A grass-roots campaign gets your customer base excited. The word-of-mouth method of advertising is known as grass roots. How will you get the word out to customers? A grass roots campaign with 1,000 satisfied customers is quite powerful but how do you get the first 1,000? Can the media be helpful do you have a special promotion that will get you free advertising. Identify low-cost methods to get the most out of your promotional budget. Use methods other than paid advertising, such as trade shows, catalogs, dealer incentives, word of mouth and network of friends or professionals. Public Relations Press release calendar. Press kit. Media events. Implementation & Control How will you control the marketing and advertising budget, and how will you determine success or failure? Timing How does the timing of the marketing plan and the expenditure of the funds match with the operational plan and follow-though? Contingency Planning Plan for contingencies. What will happen if the market changes? What if the advertising is not working? What is the second plan to back up the first? 6
FINANCIAL PLAN Overview of the financial plan Provide an overview of the financial model, historical data, and capital required as well as forecast information and the nuts/bolts of the cash flow plan. What research was used to substantiate claims of growth? How will you finance ongoing operations? Do you need lines of credit, or accounts receivable loans or other financing methods particular to your business? This should all be discussed in the overview. Financial Performance Review (historical review) If this is for an ongoing business then a historical review of the finances should be placed here. This includes a three-year trend of revenue and profitability (Most banks will require three years if you have less, and then provide whatever is available). Tax returns are helpful. QuickBooks or other profit and loss statement software printouts pasted here are extremely helpful. A comparison of the performance to industry standards is helpful as well. For instance, if you are in the restaurant business but your cost of goods is only 22% instead of the industry standard of 35%, then that is a good argument that must be explained. Early stage companies obviously won't have much, if any, financial performance. 12-month profit and loss performance projection This is a spreadsheet which should have a series of assumptions that support the projections. The format should include revenue minus costs of goods/services which provides a gross profit. It should then be followed by fixed, variable, and payroll expenses. By subtracting the gross profit from expenses a net profit emerges. 5-Year Profit & Loss Forecast The driving force and purpose of a five-year forecast is the growth of revenue and the relationship between growth and expenses. Fixed costs should not increase in the same ratios as the variable costs to increased revenue. A key aspect of the five year forecast if the research used which predicts the growth potential. The first year should be a summary of the 12-month forecast. Subsequent years should show a reasonable, conservative growth rate based on solid data substantiating the claims. Cash Flow Forecast The point of this worksheet is to plan how much you need before start-up, for preliminary expenses, operating expenses and reserves. You should keep updating it and using it after start-up. It will enable you to foresee shortages in time to do something about them perhaps cut expenses or perhaps negotiate a loan. The cash flow projection is just a forward look at your checking account. Your cash flow will show you whether your working capital is adequate. If your projected cash balance ever goes negative, you will need more start-up capital. This plan will also predict just when and how much you will need to borrow. 7
Financial Model (Break-even Calculation) The financial model should take into account the revenue, minus cost of goods, expenses with a forecasted profit based on a best-case scenario that gives the reader a good indication of how the financial model of the business works. It should be simple and to the point without all the details. It should show 0 at the bottom for profit. A breakeven analysis predicts the sales volume, at a given price, required to recover total costs. Assumptions used are a key in this report and should be provided immediately following the report. Assumptions Assumptions are explanations with supporting data and research (not guessing). It should be outlined as a bullet-point explanation of relevant assumptions for receivables, sales, average day s outstanding, inventory levels, debt levels, assets, reserves and amortization schedules. Capital Requirements Every reader of the business plan will review this section. It is vitally important that the use of funds is as accurate as possible, without providing pages of individual costs. However, any single item over $1,000 should have its own line-item. Items under $1,000 should be lumped together. Assets to be acquired are important as well as non-asset single purchases, consumables, equipment, marketing expenses, and other working capital requirements. For most businesses, contingencies should equal at least 20 percent of the total of all other start-up expenses. It is likely you will need what is known as owner equity the amount of cash you already have in the project. In the 2008 economy, this is often 30% of the starting operating budget be prepared. Ensure to include the owner equity and the source of such funds. They may be savings, family seed money, gifts, inheritance, money market accounts, certificates of deposits, or other short term loans against assets. Last, most often benchmarks and milestones with stages of cash expenditures should be outlined as well. The best course of action is to develop sixmonth benchmarks for cash expenditures. MANAGEMENT & OPERATIONS Ownership A list of the owners and a brief resume (one paragraph) which substantiates their qualifications and position in the company. It should also include their percentage and relationship to the others (maybe they have worked together in the past). If there will be changes in ownership under this plan, it should be explained as well. There should also be a summary of major stockholders, boards of directors, or other ownership charts provided. Management Team Brief description of Senior Management. This is one of the most important paragraphs in the plan. Resumes shall be provided in the supporting documents but a brief summary shall be presented here. The SBA and the bankers that are SBA lenders are currently 8
seeking clients with five years minimum experience in their chosen business sector. Staffing This should provide the number of employees and divisions. Company's staffing and labor as it is now and as in the future. An organizational chart is helpful in this section. It should include: Type of labor (skilled, unskilled and professional) Where are the employees going to be recruited from? Pay structure. Training. Job descriptions. Independent contractors. Outsourcing. The production process How is the product or service produced and/or distributed? Explain your methods of: o Production techniques o Quality control o Customer service Supply Chain Management What levels of supply chain management are keys to your business? A vertically integrated business has multiple aspects of the supply chain. These are the eleven major supply chains: 1 Raw material acquisition 2 Product Development, Design, Multi-phase pre-fabrication, etc. 3 Manufacturing 4 Packaging for authorized distributors and brokers 5 Tracking systems (RFID tags or other technology solutions implemented) 6 Shipping 7 Brokerage/Jobber 8 Warehousing 9 Shipping to Wholesalers 10 Retail Broker 11 Retail Sales Other supply chain issues to discuss include: Names and addresses of suppliers Type and amount of inventory furnished Credit and delivery policies History and reliability Back-Up suppliers 9
Location/Facilities The location choice should be made with the help of a qualified commercial real estate agent. A professional in the industry can assist in creating the best location for the business and its customers. Key issues to consider include: Square Footage and other location needs Type of building Zoning (commercial, industrial, manufacturing, retail, office, etc.) Power and other utilities access issues do you have the correct power structure? Parking and accessibility to the freeway, airports, railroads, or shipping centers. Consider including a drawing or layout of your proposed facility. If new construction is planned, then a summary of it should be provided here and drawings shall be in the supporting documents. o Do you need a conditional use permit (CUP) o Will engineering, planning, and safety in city hall approve your business? Hours of operation What is the justification? Who is being served by being open these hours? Legal Issues Explain the risks inherent in the business and how you will overcome them. 10