Who has management responsibilities? Include the resumes of key managers as supporting documents. Include position descriptions for all key employees. List important advisors, such as attorney, accountant, banker, insurance agent, and advisory board or board of directors. Include estimated financial costs and necessary services provided.
Discuss methods of production or service delivery, product or service development, quality control, inventory control.
What is your credit policy? Do/will you sell on credit? What are the terms? Explain how you perform a credit check. What are your collection policies?
How many employees are required? What skills are necessary? Define the pay and personnel policies. Are there any position descriptions and/or training programs?
Equipment, Technology, & Inventory
How much inventory is needed? What is its value? Why is that amount of inventory appropriate for your business and location? List your major suppliers and discuss any terms they extend to your business. What equipment and technology is necessary to operate the business?
Research and understand all legal issues. (Licensing, bonding, permits, insurance, zoning, government regulations, patents, trademarks, copyrights, etc.)
Describe exit strategies should the firm perform lower than expectations (personal or business). Will inventory be liquidated? Will you close the business or sell?
Financial Plan & Projections
The financial plan provides the numbers that correspond to your written plan. Historical and/or projected figures should be included. In addition, you should always include a narrative explaining the assumptions you used to arrive at the dollar value of sales, expenses, etc. You must demonstrate that your numbers are reasonable. Detailed financial information is critical to the business planning process.
Start-up Expenses and Capital
Carefully calculate and categorize all start-up expenses including inventory, rent, etc. For example, what amount will be needed for renovations and equipment? Remember to include any cash you may need to operate and pay bills until the business begins generating cash. Provide a detailed list of equipment, furniture, and/or fixtures to be purchased. Include actual price quotes for larger items.
If yours is an existing firm, include the income statements, balance sheets and/or tax returns for the past three years.
Profit and Loss Projection (Income Statement)
Include a monthly profit and loss projection for at least 12 months of business operation. Be sure to provide a written explanation of assumptions used to develop your projections.
Cash Flow Projection
Include a monthly cash flow projection for at least 12 months of business operation. The cash flow projection differs from the profit and loss statement. Cash flow statements illustrate how much and when cash flows in and out of your business. Be sure to provide a written explanation of assumptions used to develop your projections.
Projected Balance Sheet
Your plan should include a projected balance sheet showing assets (things owned), liabilities (debts) and owner’s equity. If yours is a start-up business, the balance sheet should show your financial position on opening day.
- Personal résumés for owners and management
- Letters of reference
- Personal financial statements from all principals
- Contracts and/or letters of intent from suppliers and customers
- Copies of leases, licenses, permits, or any other legal documents
- Any document referred to within the plan but not included in body
Contact your local Kentucky Small Business Development Center for additional tips and templates for preparing an effective business plan. Your SBDC Consultant will provide assistance preparing and reviewing the business plan prior to meeting with lending institutions.