That isn't harsh; it's
how it is in the real world. A company's business plan is what lenders such as banks and
the Small Business Administration use in deciding to lend you money. It's the main company
document that your employees and you use to gauge your company's success and
to make decisions about what you should do first, second, or not at all.
If you're starting a home-based
business on a shoestring, some of these suggestions probably aren't necessary, but you
still should create a plan that outlines your goals, expected costs, marketing plan and
exit strategy. A business plan is your road map for how you expect to succeed and how
you'll measure success.
Here is a quick guide to what you will need in your
company's business plan:
An executive summary outlining goals and
The executive summary introduces your business strategy and probably is the most important
section for lending institutions. If you can't persuade a loan officer in the first two or
three pages that you've got a viable business proposal, you're going to leave
This summary is also important as a communication
tool for employees and potential customers who need to understand and get behind
A brief account of how the company began.
Clearly explain the origins behind the company's creation and how you or your business
associate came up with the idea to start your business.
Your company's goals.
Explain in a few paragraphs your short- and long-term goals for the company. How fast do
you think it will grow? Who will be your primary customers?
Biographies of the management team.
The management section should include the names and backgrounds of lead members of the
management team and their respective responsibilities.
The service or product you plan to offer.
A key aspect of this section will be a discussion of how your product or service differs
from everything else on the market.
The market potential for your service or product.
Remember that you've got to convince lenders, employees and others that the market you're
after is relatively large and growing. You'll need to do some research for this section.
If it's a locally-based business, you need to assess the demand for your offering within
an xx-mile radius, based on what you determine is a reasonable distance from your
business. If it's a Web-based business or a business that relies on both the Internet and
local traffic for revenues, you'll need to evaluate demand on a local and/or a national
basis. A research report from sites such as Forrester Research can cost hundreds to
thousands of dollars. But you may be able to get some basic information simply by using
the Web and its many search engines and directories.
A marketing strategy
How do you plan to tell the world you're open for business? Will you rely exclusively on
word of mouth (not a good plan unless you've already got a reputation)? Will you advertise
in print, television or on the Web (or all three)? Will you use online marketing tools
to get your company listed on search engines and advertised on other Web sites?
You'll also need to include how much you plan to spend on marketing.
A three- to five-year financial projection.
This section should include a summary of your financial forecasts, with spreadsheets
showing the formula you used to reach your projections. You'll need balance sheets, income
statements and cash-flow projections for the entire forecast period. The summary in this
section is also where you would tell prospective lenders how much money you'd like to
borrow to cover your startup costs. The assumptions that you make in this section will
make or break your company's success. If you're unsure about using this kind of financial
modeling, find a professional. It's worth the money.
An exit strategy.
All good business plans include a section that lays out the benchmarks you'll use in
deciding to call it quits. The strategy could be based on a dollar figure, revenue growth,
the market's reception to your idea, or a consensus among top officers.