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Business Plan

OWNERS

Your Business NameAddress Line 1Address Line 2City, ST ZIP Code

TelephoneFa!"#ail

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i. Table of Contents

I$ Ta%le o& Contents$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$

II$ ! e'uti(e Summary$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$III$ *eneral Company +es'ription$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$

I-$ Produ'ts and Ser(i'es$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$

-$ #ar/etin0 Plan$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$

-I$ perational Plan$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$

-II$ #ana0ement and r0ani3ation$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$1

-III$ Personal Finan'ial Statement$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$14

I5$ Startup ! penses and Capitali3ation$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$16

5$ Finan'ial Plan$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$

5I$ Appendi'es$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$

5II$ 8e9nin0 the Plan$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$

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ii. Executive Summary

:rite this se'tion last$

:e su00est that you ma/e it t;o pa0es or &e;er$In'lude e(erythin0 that you ;ould 'o(er in a 9(e"minute inter(ie;$

! plain the &undamentals o& the proposed %usiness< :hat ;ill your produ't%e= :ho ;ill your 'ustomers %e= :ho are the o;ners= :hat do you thin/ the&uture holds &or your %usiness and your industry=

#a/e it pro&essional, 'omplete, and 'on'ise$

I& applyin0 &or a loan, state 'learly ho; mu'h you ;ant, pre'isely ho; youare 0oin0 to use it, and ho; the money ;ill ma/e your %usiness morepro9ta%le, there%y ensurin0 repayment$

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iii. General Company escription

:hat %usiness ;ill you %e in= :hat ;ill you do=

#ission Statemente'ti(ese't, and themore thorou0h your resear'h e orts, the less 'han'e that you ;ill lea(e outimportant e penses or underestimate them$

!(en ;ith the %est o& resear'h, ho;e(er, openin0 a ne; %usiness has a ;ayo& 'ostin0 more than you anti'ipate$ There are t;o ;ays to ma/e allo;an'es&or surprise e penses$ The 9rst is to add a little Hpaddin0 to ea'h item in the%ud0et$ The pro%lem ;ith that approa'h, ho;e(er, is that it destroys thea''ura'y o& your 'are&ully ;rou0ht plan$ The se'ond approa'h is to add aseparate line item, 'alled 'ontin0en'ies, to a''ount &or the un&oreseea%le$

This is the approa'h ;e re'ommend$

Tal/ to others ;ho ha(e started similar %usinesses to 0et a 0ood idea o& ho;mu'h to allo; &or 'ontin0en'ies$ I& you 'annot 0et 0ood in&ormation, ;ere'ommend a rule o& thum% that 'ontin0en'ies should e ual at least 2Jper'ent o& the total o& all other start"up e penses$

! plain your resear'h and ho; you arri(ed at your &ore'asts o& e penses$*i(e sour'es, amounts, and terms o& proposed loans$ Also e plain in detailho; mu'h ;ill %e 'ontri%uted %y ea'h in(estor and ;hat per'ent o;nershipea'h ;ill ha(e$

http://www.score.org/downloads/Start-up%20Expenses1.xlshttp://www.score.org/downloads/Start-up%20Expenses1.xls

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x. *inancial Plan

The 9nan'ial plan 'onsists o& a 12"month pro9t and loss pro>e'tion, a &our"year pro9t and loss pro>e'tion optionalD, a 'ash"Ko; pro>e'tion, a pro>e'ted

%alan'e sheet, and a %rea/"e(en 'al'ulation$ To0ether they 'onstitute areasona%le estimate o& your 'ompany s 9nan'ial &uture$ #ore important, thepro'ess o& thin/in0 throu0h the 9nan'ial plan ;ill impro(e your insi0ht intothe inner 9nan'ial ;or/in0s o& your 'ompany$

,8&"ont% Pro+t an! 1oss Pro9ection#any %usiness o;ners thin/ o& the 12"month pro9t and loss pro>e'tion as the'enterpie'e o& their plan$ This is ;here you put it all to0ether in num%ers and0et an idea o& ;hat it ;ill ta/e to ma/e a pro9t and %e su''ess&ul$

Your sales pro>e'tions ;ill 'ome &rom a sales &ore'ast in ;hi'h you &ore'astsales, 'ost o& 0oods sold, e penses, and pro9t month"%y"month &or one year$

Pro9t pro>e'tions should %e a''ompanied %y a narrati(e e plainin0 the ma>orassumptions used to estimate 'ompany in'ome and e penses$

8esear'h Notes< Meep 'are&ul notes on your resear'h and assumptions, sothat you 'an e plain them later i& ne'essary, and also so that you 'an 0o%a'/ to your sour'es ;hen it s time to re(ise your plan$

*our&2ear Pro+t Pro9ection :Optional; The 12"month pro>e'tion is the heart o& your 9nan'ial plan$ The Four"YearPro9t pro>e'tion is &or those ;ho ;ant to 'arry their &ore'asts %eyond the 9rstyear$

& 'ourse, /eep notes o& your /ey assumptions, espe'ially a%out thin0s thatyou e pe't ;ill 'han0e dramati'ally a&ter the 9rst year$

Pro9ecte! Cas% *lo)I& the pro9t pro>e'tion is the heart o& your %usiness plan, 'ash Ko; is the%lood$ Businesses &ail %e'ause they 'annot pay their %ills$ !(ery part o& your%usiness plan is important, %ut none o& it means a thin0 i& you run out o&

'ash$ The point o& this ;or/sheet is to plan ho; mu'h you need %e&ore startup, &orpreliminary e penses, operatin0 e penses, and reser(es$ You should /eepupdatin0 it and usin0 it a&ter;ard$ It ;ill ena%le you to &oresee shorta0es intime to do somethin0 a%out them?perhaps 'ut e penses, or perhapsne0otiate a loan$ But &oremost, you shouldn t %e ta/en %y surprise$

http://www.score.org/downloads/12%20Month%20Profit%20and%20Loss%20Projection1.xlshttp://www.score.org/downloads/Four-Year%20Profit%20Projection1.xlshttp://www.score.org/downloads/Four-Year%20Profit%20Projection1.xlshttp://www.score.org/downloads/12%20Month%20Profit%20and%20Loss%20Projection1.xlshttp://www.score.org/downloads/Four-Year%20Profit%20Projection1.xlshttp://www.score.org/downloads/Four-Year%20Profit%20Projection1.xls

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There is no 0reat tri'/ to preparin0 it< The 'ash"Ko; pro>e'tion is >ust aard loo/ at your 'he'/in0 a''ount$

For ea'h item, determine ;hen you a'tually e pe't to re'ei(e 'ash &orsalesD or ;hen you ;ill a'tually ha(e to ;rite a 'he'/ &or e pense itemsD$

You should tra'/ essential operatin0 data, ;hi'h is not ne'essarily part o&'ash Ko; %ut allo;s you to tra'/ items that ha(e a hea(y impa't on 'ashKo;, su'h as sales and in(entory pur'hases$

You should also tra'/ 'ash outlays prior to openin0 in a pre"startup 'olumn$ You should ha(e already resear'hed those &or your startup e penses plan$

Your 'ash Ko; ;ill sho; you ;hether your ;or/in0 'apital is ade uate$Clearly, i& your pro>e'ted 'ash %alan'e e(er 0oes ne0ati(e, you ;ill needmore start"up 'apital$ This plan ;ill also predi't >ust ;hen and ho; mu'h you;ill need to %orro;$

! plain your ma>or assumptions, espe'ially those that ma/e the 'ash Ko;di er &rom the Proft and Loss Projection $ For e ample, i& you ma/e a sale inmonth one, ;hen do you a'tually 'olle't the 'ash= :hen you %uy in(entoryor materials, do you pay in ad(an'e, upon deli(ery, or mu'h later= @o; ;illthis a e't 'ash Ko;=

Are some e penses paya%le in ad(an'e= :hen=

Are there irre0ular e penses, su'h as uarterly ta payments, maintenan'eand repairs, or seasonal in(entory %uildup, that should %e %ud0eted=

Loan payments, e uipment pur'hases, and o;ner s dra;s usually do notsho; on pro9t and loss statements %ut de9nitely do ta/e 'ash out$ Be sure toin'lude them$

And o& 'ourse, depre'iation does not appear in the 'ash Ko; at all %e'auseyou ne(er ;rite a 'he'/ &or it$

Openin$ ay Balance S%eetA %alan'e sheet is one o& the &undamental 9nan'ial reports that any %usinessneeds &or reportin0 and 9nan'ial mana0ement$ A %alan'e sheet sho;s ;hatitems o& (alue are held %y the 'ompany assetsD, and ;hat its de%ts arelia%ilitiesD$ :hen lia%ilities are su%tra'ted &rom assets, the remainder iso;ners e uity$

se a startup e penses and 'apitali3ation spreadsheet as a 0uide topreparin0 a %alan'e sheet as o& openin0 day$ Then detail ho; you 'al'ulatedthe a''ount %alan'es on your o penin0 day %alan'e sheet $

http://www.score.org/downloads/12%20Month%20Cash%20Flow%20Statement1.xlshttp://www.score.org/downloads/Opening%20Day%20Balance%20Sheet1.xlshttp://www.score.org/downloads/12%20Month%20Cash%20Flow%20Statement1.xlshttp://www.score.org/downloads/Opening%20Day%20Balance%20Sheet1.xls

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ptional< Some people ;ant to add a pro>e'ted %alan'e sheet sho;in0 theestimated 9nan'ial position o& the 'ompany at the end o& the 9rst year$ Thisis espe'ially use&ul ;hen sellin0 your proposal to in(estors$

Brea#&Even nalysisA %rea/"e(en analysis predi'ts the sales (olume, at a 0i(en pri'e, re uired tore'o(er total 'osts$ In other ;ords, it s the sales le(el that is the di(idin0 line%et;een operatin0 at a loss and operatin0 at a pro9t$

! pressed as a &ormula, %rea/"e(en is