Writing a Business Paln

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U.S. Small Business Administration

MP-32

HOW TO WRITE A BUSINESS PLAN
Managing and Planning Series

______________________________________________________________________________ Copyright 1993, Linda Pinson and Jerry Jinnett. All rights reserved. No part may be reproduced, transmitted or transcribed without the permission of the authors. SBA retains an irrevocable, worldwide, nonexclusive, royalty-free, unlimited license to use this copyrighted material. While we consider the contents of this publication to be of general merit, its sponsorship by the U.S. Small Business Administration does not necessarily constitute an endorsement of the views and opinions of the authors or the products and services of the companies with which they are affiliated. All of SBA's programs and services are extended to the public on a nondiscriminatory basis. ______________________________________________________________________________ TABLE OF CONTENTS INTRODUCTION 1 COVER SHEET 1 STATEMENT OF PURPOSE (MISSION STATEMENT) THE BUSINESS Legal Structure 2 Description of the Business 2 Products or Services 3 Location 3 Management 3 Personnel 3 Methods of Record Keeping 3 Insurance 4 Security 4 Summary 5 MARKETING Target Market 5 Competition 5 2

Methods of Distribution 5 Advertising 7 Pricing 7 Product Design 7 Timing of Market Entry Location 8 Industry Trends 8

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FINANCIAL DOCUMENTS Summary of Financial Needs 8 Sources and Uses of Funds Statement Cash Flow Statement (Budget) 9 Three-year Income Projection 10 Break-even Analysis Graph 15 Actual Performance Statements 16 Balance Sheet 16 Summary 21 SUPPORTING DOCUMENTS Personal Resumes 22 Personal Financial Statement 22 Credit Reports 22 Copies of Leases 22 Letters of Reference 22 Contracts 22 Legal Documents 23 Miscellaneous Documents 23

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PUTTING YOUR BUSINESS PLAN TOGETHER KEEPING YOUR BUSINESS PLAN CURRENT Making Revisions 23 Implementing Changes 23 Anticipating Problems 24 REFERENCES 24 25

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APPENDIX: INFORMATION RESOURCES

______________________________________________________________________________ INTRODUCTION There are two main purposes for writing a business plan. The first, and most important, is to serve as a guide during the life of your business. It is the blueprint of your business and will serve to keep you on the right track. To be of value, your plan must be kept current. If you spend

the time to plan ahead, many pitfalls will be avoided and needless frustrations will be eliminated. Second, the business plan is a requirement if you are planning to seek loan funds. It will provide potential lenders with detailed information on all aspects of the company's past and current operations and provide future projections. The text of a business plan must be concise and yet must contain as much information as possible. This sounds like a contradiction, but you can solve this dilemma by using the Key Word approach. Write the following key words on a card and keep it in front of you while writing: Who What Where When Why How How Much

Answer all of the questions asked by the key words in one paragraph at the beginning of each section of the business plan. Then expand on that statement by telling more about each item in the text that follows. There is no set length to a business plan. The average length seems to be 30 to 40 pages, including the supporting documents section. Break the plan down into sections. Set up blocks of time for work with target dates for completion. You may find it effective to spend two evenings per week at the library where the reference materials needed will be close at hand. It takes discipline, time and privacy to write an effective business plan. You will save time by compiling your list of supporting documents while writing the text. For example, while writing about the legal structure of your business, you will realize the need to include a copy of your partnership agreement. Write partnership agreement on your list of...
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