It is the recommendation of every contemporary business or management consultant that every company should have a written business plan. While there is nothing about a written plan that will guarantee success, having a roadmap to compare your expectations with reality will assist you in making future decisions based more on fact than estimation.
The largest differentiation between those that have and those that have not, is not their level of financial success. There are many companies that are tremendously successful without so much as a sales forecast. Flying by the seat of one's proverbial backside is a business model followed by some of the smartest people in business today. No, the difference is really a mindset; being able to view one's company from the scenic viewpoint called objectivity.
Once a plan is formalized and a review of that plan occurs, one automatically enters the realm of continuous improvement. Therein lies the true value of the business plan, it separates those that talk quality with those that measure it. .
Target Audience – Business Plan Focus
The style of the business plan should be matched to the intent for which it is being designed. Plans designed for upgrading or expansion are very different from plans that seek venture capital for a new idea. The content that is relevant to each type of plan is beyond the scope of this document and would easily fill a large book.
Determining the objective of the plan is the first order of business, then the elements of the plan can be increased of diminished based on how well they pertain to the overall intent. Do research before you start to understand your target audience, be they bankers or investors. A phone call to the appropriate person beforehand can save you a lot of time and give you valuable insight into the world through their eyes.
Business Plans for Funding Format and Elements
There are so many templates available on the Internet both free and fee based, that it is virtually impossible to make any single recommendation. An evening spent researching will give you enough options to make a selection that suits your needs. If, however, you are choosing to select Mountain Skies to assist you or to write a plan in its entirety, then a free example of our format is available in sample and template form from the links at the top of the page. For reference, the structure is described below.
Free Business Plan Template Structure
| Major Section | Sub Section | Description |
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Introduction |
Describe with passion the idea and goals of that which you are trying to accomplish. Define the big picture and stay away from details. Leave the reader with the distinct and definite impression that you believe in the project and it's success. No more that one page double spaced (4-5 paragraphs). |
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| Synopsis |
Description of Project |
Describe the scope of the project. Include the details that make up the big picture aspects (1-2 paragraphs). |
| Funding Required |
Clearly state the funding required to complete the project as defined in the plan (1 paragraph succinctly stated). |
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Return of Investment |
Include the expected return of investment for the funder and be sure to outline any specifics that will affect the outcome. Interest rates, period of funding, expected payments and total dollars paid to the investor upon completion of the funding plan (1-2 paragraphs). |
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Executive Summary |
Overview |
Give a complete overview of the project. This can be simply a fact based section or written in story form. For most potential investors, this is the one place that you need to grab their attention to sell the idea. Most investors will request the Executive Summary as their starting place and if you do not catch them here, you will loose them. Should they find that they are interested in the project from this point, they will request the detail of the plan. Be real, be realistic and above all, have the document proof-read and grammar checked. They may allow mistakes in the detail sections, but if they see flagrant errors in this section, they may loose interest. To some this may not be an issue, but error on the side of caution (1 page – can be single spaced). |
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Opportunity |
What are the opportunities that arise and can be taken advantage of by the implementation of this project? Is there a new product, an improvement on an existing idea or are their current market conditions that allow for unique opportunities? Why is now the time to proceed with this project? |
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Market |
What are the current market conditions that make this project ripe? Describe demographics, market share, political factors and technology factors that are influencing the market. The detail for this section will be located later in the document; this area should be the interpretation of that data in regards to how it affects this project. |
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Differentiation |
Why is this project different from others, what distinguishes this product or service from those that may already exist? What advantages are there for the consumer to choose your products or services over others? This area needs to be balanced against the interpretation of the market data. If possible, the market data should clearly reflect the consumer need for your differentiation. |
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Products |
What products are you offering? Products in this area refer to services also. |
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Principle Biographies |
Who are the principles involved and what traits make them uniquely qualified to carry out the objectives of this plan? Write it in the third person and have everyone you know take a look at it and make suggestions. We all have a hard time bragging about ourselves without sounding boastful. Get over it, you need to sell yourself as the person or persons who can get the job done. |
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Use of Proceeds |
What is any money you receive going to be spent on? BE SPECIFIC. |
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Key Financials |
List here the year by year (or whatever periodic you are using) profit and loss. Include the income, cost of sales and expenses as well as the totals and accumulations |
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Strengths/Weaknesses |
This is one of the MOST important sections of the document. You may know what your strengths are and can verbalize and write them out. But you better understand what your weaknesses are. You can be assured that anyone with any moxy will be able to identify where possible weaknesses exist. By listing what you have concerns about tells the reader that you have thought about pitfalls that you will encounter. You will want to identify in other sections of the document how you plan to overcome the obstacles, but here you want to be frank and to the point about their existence. |
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Summary |
Remember the three rules of writing and public speaking. Tell them what you're going to tell them, tell them, then tell them what you just told them. Sum it all up here. |
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General Plan |
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Now is the time and this is the place to go into the details and specifics of how this plan will be initialized, implemented, and completed. If there are many subjects interwoven, take the time to set each into its individual section and reference the items in other sections. Be detailed, but be succinct. Imagine reading 20 different business plans a week; if your reader uses this to cure insomnia, then you have already lost the bid. The dryer the subject, the more detail needs to be moved to appendices. Keep the readers attention through references to agonizing detail in other areas. |
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Business Structure |
What is the business structure going to be? Profit/Non-Profit, Corporate, LLC, Partnership, Sole Proprietor, etc. Describe the principles, the directors, and the leadership. |
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Major Asset Acquisition |
If the plan requires any purchases of large capital equipment (land, machinery, etc.), then you will want to describe the features and the benefits of these purchases. Include timing, prices and life-expectancy. |
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Location |
Where will your business/project be located? Address, if possible, or at the minimum, city and state. |
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Staffing |
Are there special staffing requirements or qualifications that are pertinent to the success of the plan? Describe here positions that will be required and, if possible, include a sample job description for each in the appendices. |
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Marketing |
In the Executive Summary section you should have put the big picture view of the data that you collected. Here is where you will make your arguments for how you arrived at those interpretations. The actual data should be list in the appendices. Remember to cover market and demographics. Depending on the intent of the plan, this is one area that will grow or shrink. Doing an asset based lending plan will minimize this area, while a new product being brought to market will require this section to be quite extensive. |
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Profitability Plan/Exit Strategy |
This can be one or the other, or even both. Describe what steps you are going to take to ensure the projects’ success. If you have a plan to exit (i.e., Internet IPO strategy), then tell the reader at what point you expect that to happen. |
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Associations/External Business Relationships |
Are the external groups that you will be associated with to ensure the plans success. These can be associations that you join, or another company that you rely on for manufactured parts delivered to your facility on time. It can also include any relationship with academic institutions for training or research. |
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Conclusion |
Sum it all up for the reader. If you have any miscellaneous items, you may want to include a section before this to cover them. Here is just where you bring everything together in a final statement. |
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Financial Plan |
3-5 year income and expense detail descriptions |
This section refers to the Income & Expense portions of the projected plan. Each detailed item should be presented and the specific annual/periodic goals of each are discussed. You do not need to describe the number of paperclips you will buy for office supplies, but larger sections should have detail surrounding it to bring form to the numbers you chose and why. |
| 3-5 year income and expense spreadsheets |
Here is the place you normally would want to link in some spreadsheet data. Usually this would be a 3-5 year P&L statement or some other periodic financial analysis. |
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Detail of planned capital expenditures |
If there is anything more in detail that you need to write about that was not covered in the above section on capital expenditures (maybe a plat map of land, or engineering drawings of machinery), then here is the place you would enter that information. | |
| Supporting Documents |
Market Research Data |
Place the detail of your market research data here. |
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Cost Assumptions |
If you made assumptions in your plan; per acre cost of land, salaries, etc., you will want to detail that information here. |
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Startup Costs Schedule |
What are the startup costs you anticipate? A schedule of those costs should be provided here. |
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Amortization Schedules |
Any loan amounts should be placed here through amortization schedules. |
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Return on Investment Analysis |
An ROI analysis should be placed here for any investor type activity. |
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| Appendices | Place copies of all the detail and other documents here. | |
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Amendments |
Keep track of the amendments you make as you progress through the interview process. It will help you recall prior versions of the plan should it change over time. |