Illinois Small Business Development Center

Business Plan OutlineThe importance of a business plan cannot be emphasized enough. Don't overlook this vital step in starting your business. It will save you time, money, and energy in the future. The IL SBDC can assist you through counseling or training. Use this outline to help you identify key elements of your business.

The following is an outline of a sample business plan, which would be suitable for presentation to an investor or a loan officer. You may wish to use this as a guide for drafting your own business plan. This type of plan can be expanded and can be used throughout the life of your business with changes and revisions when necessary.

1. Executive SummaryAlthough the summary is the first section of the business plan, it is typically written last. By highlighting the key elements within the business plan, a first-time reader can quickly get a feel for the proposed venture. This section should highlight the following:

A. Business Description

1. Name 2. Business Form: Sole Proprietorship, Partnership, Corporation, or Limited Liability Company 3. Retail, Service, Wholesale, Construction, Manufacturing 4. Is it an existing business or a new business? 5. When is your business open? Is it seasonal? 6. Supporting statements about your industry from outside sources.

B. Product/Service

1. Specific goods, merchandise/services produced or sold. 2. How are you going to price your product/service?

C. Market

1. Who or What is your market? 2. Where is your market?

3. How will you attract and hold your market?

D. Competition

1. Who are your competitors?a) Primaryb) Secondary

2. What have you learned from them?

E. Location and Facility

1. Area characteristics, notable demographic shifts. 2. What are your location needs? 3. What kind of building do you have or need?

F. Management/Personnel

1. How does your background/experience relate to your business? 2. Who are the key personnel, what are their duties, and are those duties clearly stated? 3. Is there a plan for training personnel for both operation and management? 4. What additional resources are available to help you and your business? 5. What are your personnel needs now and in 3-5 years?

G. Summary of Financial Needs & Use of Funds

1. What is the amount, type, and purpose of the loan? 2. What is the collateral to be offered for security? 3. How will funds injected into the business increase earnings?

H. Earnings and Projection

1. State the dollar sales projected in each of the 3 years. 2. State the estimated profit in each of the 3 years.

2. Products/Services

A. Description

1. Describe in detail the product or service the company will market. 2. Provide a summary of the product line or list of services offered (with photographs of the

product if needed). 3. Emphasize the difference between products or services that are presently on the market and

the products or services that your company will market.

B. Proprietary Position

1. Discuss any advantages that your company might have as a result of any copyrights, patents, or trade secrets.

2. Attach copies of any patents or copyrights granted.

3. Market Research and Analysis

A. Total Market One way to define the total market is to list all the important characteristics using census data, industry publications, trade associations, or government sources. Find out to what extent these characteristics are present in different areas.

1. What is the present size of the industry?a) local onlyb) regional

c) nationald) international

2. Does your industry include?a) consumersb) manufacturers

c) institutionsd) government

3. Industry Trendsa) Growth potentialb) Describe the projections and trends for the industryc) At what stage of the product or industry life cycle will your business be entering thed) Market? (introduction, growth, maturity, decline)

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B. Target Market The target market (the market you have selected to serve) must be measured similar to the total market.

1. What geographic area are you claiming as your target market? 2. Who are your target customers? 3. How many of your targeted customers are in that area? 4. What commonalties amongst your target customers can you identify? 5. How will you attract and keep this market? 6. How can you expand this market? 7. Does this market possess any characteristics: a.) Seasonal b) cyclical

C. Competition

1. Who are your primary and secondary competitors?2. What is their size compared to your business? 3. In your opinion, how is their business? (steady, increasing, or decreasing) 4. What are your competitor’s strengths/weaknesses? 5. Where do you believe you have a business advantage? Product? Price? Service? Location?

On-time delivery? 6. What have you learned by observing them?

D. Estimated Sales and Percentage of Market Share

1. What are the estimated total market sales for your target market? 2. What is your estimated percentage of market share of the target market? 3. What are your estimated/projected sales?

4. Marketing/ Sales Plan

State the methods that your company will use to create sales and to distribute the product or service.

A. Pricing Policy

1. What mark-ups, mark-downs, discounts, etc. will the business use? 2. What prices will the business charge for each type of item it sells? 3. What is the relationship between the price you will charge and the image of the business you

are trying to create?

B. Distribution Strategy

1. What is the geographic location of the potential consumer market? 2. What channels of distribution does the competition use? 3. Time utility- is the product available when the consumer wants to buy? 4. Place utility- is the product available where the consumer wants to buy? 5. Describe in full detail the distribution channel you plan to use to reach your market segment. 6. Describe your service and warranty policies.

C. Promotion Strategy Describe the approaches, frequency and cost your company will use to bring your product or service to the attention of target customers.

1. Advertisinga) direct mail b) store sign

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c) radio and televisiond) magazine and newspapere) outdoor billboard, poster, sky writingf) trade shows

g) Advertising specialty products such as calendars, T-shirts, caps, pens, etc.

h) internet marketing

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2. Personal Selling - approach is not to sell customers but rather to help them by presenting both advantages and disadvantages of your product or service and showing it will satisfy his/her needs.

3. Publicity - Free Advertisinga) local newspaper prints stories about new businessesb) publicity releases should be sent to copy editors for possible inclusion in their paperc) new information about your product or information describing your new unique service may gain

interest of editor

4. Uses of Sales Promotiona) temporary promotion - i.e. give awaysb) stimulate sales - i.e. coupon offeringc) rebates

D. Customer Conveniences - Will the conveniences provided, influence who buys them, and the total sales volume?

1. Extend credit, or accept major credit cards. How will credit be monitored?

2. Delivery

3. Free parking 4. Accept telephone orders 5. Hours of operation

5. Operations/Manufacturing Plan

A. Location 1. Advantages and Disadvantages

2. What are the characteristics of your present location? (physical characteristics, size, cost, operating costs, zoning, and utilities)

3. How does the location affect your business in relation to:a) Proximity to markets?b) Proximity to suppliers of raw materials, labor, and capital?

4. What major changes do you anticipate in your location in the near future with respect to:a) Renovation costs?b) Additional or replacement facilities?

c) Moving to a different location?

B. Physical Facility How much space, what structural features and cost does the business require for:

1. Customer and vehicle access and/or entry parking and loading?

2. Inventory storage and movement? 3. Fixtures, furniture, machinery and

equipment?

4. Electricity, heat, air conditioning, venting, waste water disposal?

5. Merchandise display? 6. Compliance with federal, state, and local

laws and codes? 7. Expansion potential?

C. Capital Equipment (Requirements and Evaluation of machinery, Equipment needs today and future, Furniture and Fixtures)1. How do Machinery, Equipment, Furniture and Fixtures compare in size, cost, efficiency, durability,

installation, use, and repair and maintenance ease?

2. How do machinery and equipment compare based on number of employees required to operate them, skills and experience required to operate them reliability and safety?

D. Sources of Supply - How do suppliers compare in quality, order and delivery procedures, installation, maintenance, parts & replacement guarantees, and technical assistance?

E. Requirements for Layout and Flow Plan

1. Include floor plan if possible2. Does the layout and flow plan for fixtures, furniture, machinery, equipment, inventory and employees

maximize efficiency?

F. Operations/Manufacturing Process

1. Describe the Operations/Manufacturing process from start to finish

G. Availability of Labor

1. What is the availability of labor? 2. What distance can workers and supervisors be expected to travel to work? 3. What capabilities, skills and experience are available in the labor market area? 4. What is the expected productivity of the workers? 5. Training:

a) What training is required?b) Who can train?c) What training time is required?

d) Is training required before the business opens, on the job, or both?

6. What will the compensation package need to be? 7. What is expected turnover? 8. Will you be doing any sub-contracting of labor? 9. How much will workman's compensation cost?

6. Management Team

A. Organization

1. What is the legal structure of the business?a) Sole Proprietorshipb) Partnership

c) Limited Liabilityd) Corporation

2. Have you completed all necessary legal agreements:a) Partnership agreement?b) Buy/Sell agreement?

c) Succession Plan?

3. Do you have all appropriate licenses and permits?

B. Personal History of the principals

1. What is your business background? 2. What management experience have you had? 3. What education have you had (including both formal and informal learning experience)?

4. Any other personal data: address, special abilities and interests, reasons for going into business

C. What related work experience do you have?

1. Operational/Technical 2. Managerial

3. Financial 4. Marketing

D. What are the duties & responsibilities of the principals?

1. Organizational chart 2. Job descriptions

3. Who are the decision makers 4. Is there appropriate delegation?

E. Management compensation and Ownership

1. Salaries 2. Percentages of stock ownership

3. Benefits

F. Management Assistance and Training Needs

1. Continuing education

G. Supporting Professional Services

1. Accountant 2. Attorney 3. Insurance Agent 4. Banker

5. Marketing Professionals 6. Board of Advisors 7. Others who assist in decision making

7. Goals and Milestones

A. Time line of goals for the next three years 1. Timing of goals and milestones 2. Relationship of events

8. Critical Risks and Problems A. Potential Pitfalls B. Means to Overcome Problems

9. The Financial Plan (1-3 years)

A. Use of Funds - In detail

1. List any start-up or expansion expenses 2. What are your personal financial needs?

3. What are your operational expenses?

B. Source of Funds

1. Personal savings 2. Friends and family 3. Projected sales volume

4. Other: a. Banksb. Certified Development Companiesc. Venture capital