Business Plan Basics

  1. The business plan should not exceed 8 pages before financials and should use the sections of the business plan as listed below. We do not recommend the use of business plan software as they often ask for unnecessary information and include unneeded repetition.
  2. Write in paragraph form and in your own words. Double-space between paragraphs, don’t double-space between lines.
  3. Limited charts and graphs should only to be used to stress an important point. However, a few photographs can be very effective.
  4. Use Spell Check and Grammar Check!

The Business Plan Outline by Section

Executive Summary – This section introduces you (the business owner) and your business.It should summarize the highlights and most significant issues in your plan. Here is what you should include:

  • Name and location of the business.
  • Type of ownership - sole proprietor, partnership, corporation, LLC, etc.
  • Ownership breakdown (outline who the owners are and the percentage of ownership each has).
  • Nature of the business - a brief statement outlining what product or service your business offers.
  • Location Details -description of the facility occupied by the business, any special features it might have and lease terms, if applicable. If retail, summarize the advantages/ disadvantages of your location.
  • Timeline - provide an anticipated timeline of the business developments for which you are requesting a loan from BLU.
  • Reasons you went into business - the “need/want” your business fulfills.
  • Personal statements (Optional) - share your personal reasons for starting the business (e.g., a unique story about why you started the business).

Use of Funds –This section explains how loan funds would be used. This includes any unusual or industry-specific purchases necessary for your particular business (e.g., specialized software or equipment). Include who these items will be purchased from.

Product or Service –What will you sell? Where will you sell it? How much will you charge? Answer these questions by including the following:

  • Products/Services offered - explain these so the reader understands the purpose, use, and/or application of the product or service. For products, include any materials (e.g., photographs, drawings, brochures, etc.) that would be helpful for the reader. Explain whether products are sold wholesale, retail or both. Please specify.
  • Product Pricing - what is your price and how did you determine your price? If selling a product, what is your cost and what is your markup? Include any quantity discounts offered.If you dealin wholesale and retail, include the pricing strategy and terms for each.
  • Service pricing - what prices do you charge for your service(s)? What is the range of prices being charged by your competitors for this service and where do you fit in that range?
  • What terms do you give your customers?
  • Method of production - outline the manufacturing process for your product (if applicable).
  • Suppliers - Who are your suppliers? What are the terms of any existing agreements with these suppliers?
  • Comparison of similar products/services on the market.

Competition –Remember most business types have 2 types of competition. The direct competitor does exactly what you do. The indirect competitor does some or all of what you do in conjunction with other products and services. Examples might be a major corporation with several divisions, only one of which competes with you or, a big box store that carries similar products in one or more of their departments.

  • Include the names of competitors, their location and size (number of locations, number of employees) and annual sales if available.
  • Comparisons to competitors (strengths and weaknesses) - this can include length of time in business, sales volume, size and number of locations, employees, product/market niches, etc.
  • What is your competitive strategy - price, location, promotion?

Market –This section answers the questions: “who is my customer” and “where are they”? Be sure to include:

  • Consumer Demographics – if you sell directly to consumers, provide the following demographic information: age range, income range, geographical location, and whether your product or service is considered an impulse buy or a planned purchase.
  • Business Customers – if you sell to businesses, what industry or industries are most likely to purchase from you? Do you know your business customers’ annual sales and/ or number of employees?
  • What is the need, want, or interest in the community you would like to meet?

Market Strategy –This section answers the question –“how will potential customers learn about your product/service?” Reading this section will convince the reader that your sales/revenue and marketing cost projections are realistic. Include:

  • Methods to identify and attract prospective customers.
  • Methods of advertising including publications, types of social media, etc.
  • Advertising message and promotional strategies.
  • Method of distribution - direct, dealer network, other.
  • Sales personnel if any.
  • Costs of marketing the product/service.

Management – This section convinces the reader that the owners and key managers are capable of running the business successfully. Continue to write in paragraph form. Resumes if available and/ or curriculum vitae’s can be inserted as an appendix. Include:

  • Owners and key managers and a brief background for each. Emphasize the talents, skills, and abilities they bring to the business that will help make it successful.
  • Valued employees – like a key sales person or manager you recruited.
  • Members of your professional team -lawyer, accountant, banker, etc.
  • Members of your informal team which will provide advice if needed. This can include family members with professional backgrounds who are willing to help, other business owners who are mentoring you, business consultants, SCORE and/or the Small Business Development Center, etc.
  • Address who will handle the day-to-day bookkeeping/accounting functions. Describe their experience and qualifications.
  • How the owners and managers will ensure that any loan funds received will be used to successfully develop and strengthen your business.

Notes to the Cash Flow Projections - This section explains how you determined the sales and expenses on your cash flow forecast. You are providing your sales and expenses in a month-by-month format for two years (see Cash Flow Forecast). Beginning with sales, tell the reader:

  • What is an average sale? Identify wholesale, retail and/or separate product lines if applicable.
  • If you are a restaurant provide separate average sale for breakfast, lunch, dinner unless the menu prices are the same for all. Alcohol sales are always a separate line item because cost of alcohol is very different from food costs.
  • How many customers per month do you expect? Cite what percent of growth you expect.
  • What terms do you give your customers?
  • Include the seasonality of the industry. Every business has good and slow months.

Next, there are certain expenses that require explanation as follows:

  • State what major expenses you have bids for, which expenses are estimated and how you determined the estimate.
  • What terms do you get from your suppliers?
  • Give the term of your lease and any expected cost increases (e.g., rent) under the lease.
  • Payroll should be explained using the number of employees, whether they are full-time or part-time, and whether any are considered seasonal.

Business Plan Basics – BLU Application Package / 1