Business & Career Library

Small Business Guides: How do I write a Business Plan?

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There is much to think about when starting a business. One of the first things to do is to prepare a business plan, in which you write down all the ideas and strategies you have developed. A business plan helps you organize your thinking so you can share your vision with others, whether they are potential partners or potential sources of funding. A standard business plan is outlined below, followed by suggestions for helpful books, Web sites and organizations that can help with the overall development of your plan. Lastly, the elements of the business plan outline are explained along with details on how to find the data you will need.

Business Plan Outline
  1. Cover sheet--Name of Business, Owner, Address and Phone Number
  2. Statement of Purpose or Executive Summary
  3. Table of Contents
  4. Description of the Business:
    1. The Industry - the specific products or services of your business
    2. The Customers - your market
    3. The Competition - other companies in the same business
    4. The Location - its advantages
    5. Selling and Advertising Strategies
    6. Company Personnel and Management
  5. Financial Data - balance sheets, profit & loss statements, etc.
  6. Supporting Documents - personnel resumes, credit reports, leases and contracts
Help Organizing a Business Plan

A plan needs to capture the attention of an investor or a lender, so it should be clear and to the point.

Books: on writing a business plan offer a thorough explanation of the process.

The Small Business Sourcebook lists hundreds of types of small businesses and refers the reader to further resources such as books, magazines, trade associations and government agencies about each business. For more business plan titles, see the Library Catalog.

The Business Plans Handbook is a multi-volume collection of sample business plans. You can also access these samples online using one of the library's databases, Small Business Resource Center. See the Articles & Databases section of this site for a complete list of the library's business databases.

Websites: offer great tips, links to actual resources and sample plans.

MyOwnBiz
Brooklyn Public Library's site for young people provides a thorough explanation of the business planning process with helpful links to resources and websites. Particularly useful are the interactive TOOLS.

The U.S. Small Business Administration
This site is an excellent place to begin your Business Plan development because it links to so many essential sites and government agencies.

BizPlanit's Virtual Business Plan
BizPlanit's Virtual Business Plan provides a great outline with specific details on industry analysis, competition and target markets.

About.com's Small Business Information
About.com's Small Business Information offers guidelines and hints to help you organize your plan, plus sample plans.

Bplans.com
For a fee, Bplans.com a host of sample plans that include actual market data for specific businesses are available.

Technical Assistance: You can receive free individualized help with your business plan at the Business Library by making an appointment with a SCORE representative. Call our telephone reference desk at 718-623-7000 or visit SCORE's NYC Website for more information. Or you can e-mail your questions to the national site: Ask SCORE for Business Advice . Other local organizations also offer classes and consultation; Brooklyn and New York City organizations are listed in the Local Business Assistance Providers section of the Small Business section of this site.

Description of the Business - Where to Find the Data

Keep in mind that your business plan has basically two parts, the business description and the financial data. The business description covers the unique and winning features of your business, and also provides data that demonstrates there is a market that makes it likely to be successful.

The Business Library can help you find information on your industry' s size and trends, your potential customers, the number and size of your competitors, and the demographics of your location. The second part of the plan should outline financial projections to show that you understand the cost of doing business and the income you must sustain to be profitable. A number of resources can help you develop figures that are realistic.

A. The Industry

Every business fits into an industry sector or section of the economy. For instance, a clothing store is part of the retail industry, while an auto repair shop is part of the service industry. A well-written business plan will include research on the overall situation and future trends in a specific industry because it indicates that you understand and anticipate changes in the factors that impact your business. You are giving an overview, so this data will generally be on the national or even international level. You might answer some of the following questions in this section.

  • What is the size of the industry, measured by number of firms, employment and revenue size?
  • What are some characteristics of the industry; is it labor intensive, is it highly regulated, is it dominated by a few companies or many?
  • What role does technology play?
  • What new products are being developed that will impact the industry?

You can begin researching these questions by checking out the How to Research an Industry section of this site; it explains how to identify the Standard Industrial Code (SIC) or new NAICS codes for your business, and lists a wide variety of essential resources. Following are a few sources which are particularly useful when writing a business plan.

SBDC National Information Clearinghouse
Industry reports from the Small Business Development Centers Network, designed to help in business planning. These reports cover industries that are traditionally represented by small businesses such as eldercare, convenience stores, and more.

U.S. Economic Census
Available in print as a multivolume set or on the internet, this is the place to get statistics on the number of companies and sales volume for specific industries, for the U.S. as a whole or just one ZIP code area. The Economic Census is conducted every five years; the last survey was 2002.

ABI Inform Research
A collection of indexes to newspapers (including Wall Street Journal) and other periodicals covering business and economics, education, and general subjects.

B. The Customers

Your business plan must be able to answer the critical question: "Who are my customers?"

No matter how great your product or service, your business will not succeed unless someone needs or wants it. Your business plan defines your customers, whether they are individuals or businesses.

Individual Customers: If you are starting a women's clothing boutique, you need to collect data indicating there is a sizeable female population in your area, who are the right age to be interested in fashion and with income to afford to shop. Use the Demographic Information section on this Website's guide to Market Demographics to get an explanation of the resources that report on population, income, ethnicity and other such data for a particular location.

You can also research consumer spending; what, where and how do different segments of the population spend their income? The Business Library has numerous BOOKS and MAGAZINES that offer information on consumer spending such as:

Business Customers: If your customers are primarily other businesses, you need to determine what type of business would buy your product, is the number of these companies growing, where are they located and what other factors impact their purchasing decisions? Some of the steps in How to Research a Company or How to Research an Industry will lead you to this data.

Particularly useful resources include County Business Patterns (select "View Hypertext Tables" for the easiest access) to quantify the number of companies, and Reference USA to get a list of companies (this is an E-Resources, you will need a library card!)

C. The Competition

Consider your potential competitors as well as your potential customers. In other words, what companies are in the same business, how many are there, are they successful, how are they organized, how do they distribute and market their products, are their sales growing or shrinking? All of this information will help you determine the shape and image of your company.

To learn about the ins and outs of collecting data on a company, go to the Company Research section of this site. Whether data is available on specific companies generally depends on whether they are publicly or privately owned. Most small companies and certainly the vast majority of businesses located in Brooklyn are privately owned businesses and therefore data is scarce. Reference USA, a database of 12 million U.S. establishments, is one of the few resources that list very small companies. It provides information on sales volume, number of employees, owner or manager, and address and telephone number. It is an excellent source for tracking down your competition because you can create lists of companies by geographic location as well as type of business. Use County Business Patterns, which is produced annually, to count the number of establishments in your line of business in your county from year to year. It is also useful to determine the growth in the number of companies in your geographic area or in your marketplace, by comparing previous years.

D. The Location

The selection of a site for your company is an important consideration. The type of business can dictate the location, how much space you need, if you need storefront visibility or perhaps require easy access for deliveries. In your business plan you must outline your company's unique requirements and indicate how your location responds to them. If you are actually looking for a property, the Finding a Location for Your Business section of this Web site can help you locate appropriate neighborhoods, find a real estate agent, determine who owns a property and compare property prices.

E. Selling and Advertising Strategies

No matter how superior your product or service, you must have a plan to promote and distribute it in order to succeed. These considerations should be mentioned in your business plan.

There are many books on marketing and advertising strategies, as well as directories to help you identify publishers, television and radio stations, graphic designers, sign makers and more. Use the Library Catalog.

Magazines such as Sales & Marketing Management and Advertising Age assess trends in advertising and the effectiveness of different advertising channels.

Websites are also a great source:

For a more complete discussion of resources, please see the Advertising and Marketing sections of this Web site.

Company Personnel and Management

Your business plan needs to supply information on the people who own and run the business. Studies show that the most common cause for small business failure is weak management. So it is important to give a clear picture of your capabilities and those of your staff.

Provide the resumes of top personnel here or at the end of the plan. Describe special skills of your employees, outline the organization, explain basic operations, discuss the salaries you expect to pay, and mention additional individuals such as accountants and consultants who will assist you.

To determine what you should expect to pay the different types of employees you will be hiring, refer to the information on "Wages and Prices" in the Market Demographics section of this site. If you need additional guidance in this area, check out a book on management skills and business organization. Include your own resume. If you do not have a personal resume, refer to one of the many titles on resume writing.

Financial Data

After you have thoroughly described your business and explained why it will succeed in attracting customers, provide some actual financial figures to explain how your revenues will turn into profits. In a business plan, your financial statements are used to predict the future profitability of your company. The numbers should be based on past performance, unless you are just starting out. Two important sources for financial projections are your own ACCOUNTING RECORDS and established FINANCIAL RATIOS.

ACCOUNTING RECORDS: Whether you are in business, or starting a business, you should have a bookkeeper establish simple accounting procedures to control your funds. There are also many books that can give you a good understanding of financial statements and bookkeeping concepts, from basic skills to complex principles. These books outline the components and the functions of essential financial statements such as balance sheets, income statements and cash flow analysis. If you are already in business these records will provide the basis of your financial projections for you business plan. If used properly and consistently these documents are budgeting tools that will tell you how much money you have to spend, or serve as warning signals if you are losing money.

Explore BPL's interactive site for entrepreneurs, MyOwnBiz, to determine what your bottom line has to be to make a profit. The site gives you valuable tips and allows you to calculate your startup and operating costs online using the Do It Yourself tools listed under the "Where's the Money?" section.

Many sites offer examples of the financial statements you will need in your business plan. Here are a few of the best:

FINANCIAL RATIOS: In a start-up, you will need to do some research regarding average operating costs and income. Look at other companies' annual reports or talk to other business owners regarding their expenses and their sales. Whether you are an established business or starting out, you should refer to "industry norms" as a point of comparison. Industry norms are composite financial figures derived by averaging the financial statements of companies grouped by industry and asset size. In some cases the data is presented in actual dollar amounts; in others it is in ratios that compare actual financial figures such as assets to liabilities. These key ratios and statments are determined for a number of industry sectors in a few well-known titles:

These ratios are invaluable when preparing a business plan. By using them you can estimate the figures you will need to create a Balance Sheet, a Profit and Loss Statement and a Cash Flow Statement.

Supporting Documents

Once you have added supporting documents such as copies of tax returns, resumes, legal contracts, employee agreements, etc., your business plan will be ready to submit to potential investors and lenders. If you have done your research, anticipated problems by thinking creatively, and presented your ideas and your business with clarity and confidence you will be on the road to a successful venture. Should you need assistance in organizing or writing your business plan, there are many local agencies that offer help, via consultation or classes. Many are listed in the Local Business Assistance Providers section. And don't forget to visit the Brooklyn Business Library to access our many resources.

Other Small Business Guides: