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The Business Plan
Think of the business plan as answers to a few basic and logical questions about a business. Imagine that someone is coming to see you to explain a new business idea. What questions would you ask in order to fully understand that new idea?
Those questions are surprisingly few. They are simple, and they should flow in a logical order:
- What is your business? (Give a basic description)
- Who will you sell to? (Tell about your customers)
- How much do you expect to sell?
- Who is the competition? (Tell about the other businesses competing for the same market.)
- How will you achieve your sales? (Explain any advantages that you may have over the competition)
- How much money do you need? (List start up costs and operating costs)
- How much profit will you make? (Explain why this is a feasible business idea) Make sure that a one-year financial projection is included. Financial forecast formats may be obtained from various sources, including banks, government agencies, REDAs etc.
- Are you a good manager? (Explain your qualifications, experience, what you have to offer the business)
Once you have received satisfactory answers to the above eight basic questions, you will have a better understanding of you new business idea.
Business Plan Checklist
The following information should be included in a comprehensive business plan:
- An introductory letter
- A title page
- A summary statement including a brief description of your business
- Background information
- Legal status of your firm
- Start-up costs of your business
- A description of the industry
- Principal Characteristics
- Trends
- Players
- Barriers
- A description of your product or service
- Assessment of strengths and weaknesses
- Patents, trademarks, copyright protection
- Technology that you will use
- A description of your management team
- Who they are, qualifications, experience
- Marketing Plan
- Assessment of total market area
- Assessment of competition
- Pricing policy
- Distribution policy
- Who is your target market?
- Advertising and promotional plan
- Description of land, buildings and equipment
- Location
- Land and equipment requirements
- Operating Plan
- Inventory control
- Supplies
- Work Flow and material
- Suppliers
- Personal References
- From banks, professionals and/or former employers
- Financial Plan
- Capital requirements
- Cash flow budgets
- Pro forma balance sheet
- Projected income statements
- Break-even chart
- Sources of financing
- Personal balance sheet including net worth
- Risks and problems associated with your business and how to resolve them
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