Business Plan Outline

Cover Sheet

1. Indicate full formal name of company 2. Indicate ownership status 3. List full street address 4. List mail address if different
  5. List phone, Fax/telecopier, e-mail and web site information

6. List principal contact name and title
  7. Date the plan
  Table of Contents
Categorize the contents. Use section names and page numbers. You have a choice of only main category headings (History, Management, Product, etc.) or detailed categories (History--date founded, founding members, place founded, etc.). Make note of any charts, tables, or graphs.

Executive Summary
A very important part, the executive summary briefly sets forth the contents, taking key sentences from each section of the plan to overview the project for the reader. Limit the summary to two or three pages: more is too many.
Consider using your mission statement or a brief visionary type of paragraph. It should be concise and to the point. This section is the first thing that investors read, and they may not read further if you haven't captured their interest.
 
History
The first several paragraphs should briefly describe the product or service, to whom it is sold, the current status of your industry, and where your new company fits in. This is your second chance to give the reader an overview to establish a basis for detailed understanding.

After this brief introduction, include a description of how, when, and by whom the company was started, its achievements and acceptance setbacks. Then bring these experiences to current-day status.

Product or Service
To succeed with an entrepreneuring company, you must know your product or service; to succeed in obtaining capital, you have to be able to clearly describe your product or service. After giving a simple, straightforward description, outline the need for the product or service in today's marketplace, how it will make a difference, the benefits derived from using it (or what will make the customer buy it), and its advantages.

Explain any special training needed to sell or use it. Include all relevant regulations that may affect its sale or use. Expound on any exclusivity or technological uniqueness. Unless your plan is going only to specialists in your industry area, assume you are writing for the layperson.

Forget industry jargon and replace it with words that the nonspecialist can understand. If you tend to write overly technical descriptions, engage a professional writer.
 
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Market Description and Analysis
This section profiles three key areas: customers, industry, and competition.
Prepare a Customer Profile
Describe what customers form your market, where they can be found, why they purchase your product or service rather than another, and whether it appeals to a single individual or to groups. Document quality, warranty, service, and price significance: pinpoint the buyer and user. Point out political influences, if any. Describe market coverage, whether local, regional, national, or international.
Prepare an Industry Profile.
Discuss pertinent trends, past, present, and future. Offer available statistical data on sales and units. Use charts, graphs, and tables if they can make the presentation clearer and more impressive. Refer to trade associations if helpful.

 
Prepare a Competitive Profile.
Stress advantages of price, quality, warranties, service, and distribution. Include the operational strengths and weaknesses. Project potential market share trends in sales and profitability.

Don't guess in this section. Check all your facts and note all your sources. You can be sure that these will be checked with a fine-tooth comb during an investor's due diligence process. If you're citing voluminous reports or statistical information, note that you have them available for further review.

Marketing Strategy
This is a critical section that should clearly specify the company's marketing goals, how they are to be achieved, and who will have the responsibility for achieving them. Qualify all distribution methods (representatives, dealers, and so forth) and describe any planned advertising or public relations activities. Include references to sales aids, foreign licensing, and training plans as appropriate. Simply, detail how you are going to sell the product or service.

Operations Plan
This section is primarily oriented toward facilities, manufacturing capability, and equipment. Disclose all present capabilities as to equipment and facilities, as well as further projections for offices, branches, manufacturing, and distribution.
 

It often helps if you include current floor plans as well as expected future space plans for production or manufacturing companies. For all fast-growth companies, task/time charts can be especially useful in this section. They help impress on the reader that the Entrepreneur has a real handle on the operational challenge.
 
Research and Development
The length of this section depends on whether you're a service or product company and--if a you're a product company--on how technical your product is. The object is to explain all past research and development efforts and accomplishments as well as future expectations.
Here is your opportunity to justify past time and dollar expenditures. Substantiate the patentability of inventions, proprietary processes, or other advantages that your company will have over the competition and the resultant, anticipated market impact.

Schedule
Describe the timing and sequential steps that will be taken to bring the company up to full speed. Graphs or charts help indicate the timing and interrelationships of the major events in the company.
 

Take it month by month for the first year. Thereafter, indicate the progress expected quarterly. Areas that may be important include completion of prototypes, starts of beta tests, early significant sales, when key people are to be hired, physical expansions or moves, opening of branches, trade show or convention dates, major equipment purchases, and the like.

Management
In the eyes of the investors, the quality of the management team often determines the potential success of the company. Consequently, this section should cover career highlights, accomplishments, and positions held, with an emphasis on good performance records. Describe how the team has worked together in the past. List all directors, consultants, advisers, and other key professionals who will be involved in company operations and point out how they add value. Detailed resumes of key management should be appended with bios of others as appropriate.
 

Risks and Problems
Risks could be a red flag. There are diverse opinions about the inclusion of this category. Some investors object to the obvious and prefer to discover their own negatives. Others prefer that the company openly acknowledge risks and potential problems. It's a toss-up; however, high-profile, success-threatening risks should be brought out.
 

Use of Proceeds
Judiciously present a timetable indicating how much money will be needed, when it will be needed, and how it will be used. Most companies require multiple stages of financing, including both debt and equity. Show the proposed capital structure, including who is going to own what part or percentage of the company at what stage. Start-up plans need to detail start-up use of proceeds and then generalize on the additional stages.

Finances
Present the company's current equity capital structure as well as future plans. Itemize the equity payments made with dates paid. List all outstanding stock options. Include both historical and current profit and loss statements and balance sheets. Present current and proposed salary structure for those who are already on board and those who will come on board at a later date.
 

Show projections, including balance sheets, profit and loss statement, and cashflow studies. These should be month by month for the first year, quarterly for the second and third years, and yearly thereafter.
It is mandatory that detailed assumptions accompany all projections. It is also very helpful if the very first part of this section summarizes the details. In fact, in many cases, details can be appended or supplied separately.

Appendix
Include a glossary (if pertinent) and all essential pieces of evidence, such as resumes, product brochures, customer listings, testimonials, and news articles.
 

Creating a Special Executive Summary

Another unique aspect of the good entrepreneurial business plan is the putting together of a special executive summary. This summary is not the same as that in the business plan; it does, however, take advantage of the high points in the plan. It serves as an entering wedge to semi-interested parties as well as potential investors.
 
The business plan executive summary, discussed under the Business Plan Outline section, usually summarizes the business plan in two or three pages. The special executive summary expounds on the most enticing parts of the business plan for about six to eight pages.

In essence, it's a condensed business plan that shows the company to best advantage. It's an entree, when initially seeking help, to locate and identify potential financial sources. It can also be used as an overview for those who do not need to know all that much about the company (like staff personnel or suppliers), or for those from whom management wants to keep proprietary information. It can be changed and adapted to any particular audience. It's kind of the bait before the hook, a plan used to capture one's initial interest and motivate one to request more information.

A special executive summary should not be taken lightly. It is indispensable, and should be kept updated. This is easier to do than revising a whole business plan if the entrepreneurial team simply wants to test some new plan ideas or gain some quick feedback. It may very well be the key to reaching the right source.