Business Planning and Key Components of a Business Plan

Key Components of a Business Plan

Business name, address, phone number, fax number, email, Internet World Wide Web site address
Business Tax Identification Number (IRS and state sales tax)
Organization Type (sole proprietorship, partnership, corporation)
Names, home addresses, home phone numbers, and Social Security Numbers of all proprietors, partners and shareholders
Citizenship of proprietors, partners and shareholders (if not U.S. citizens, provide alien registration numbers, E-1, E-2, or L-1 Visas)
Names, addresses and phone numbers of accountants, attorneys and insurance agents
Names, addresses and phone numbers of any affiliated businesses, with a description of the relationship

Detailed description of products and services sold (this should be very specific)
Description of manufacturing or value-added services performed
Description of facilities, including size, location, specialized equipment, and any branched or sub-locations
Number of employees (indicate full-time and part-time separately)
For established businesses, a history of the business, including when started and changes in products or services produced
For franchises, a franchise agreement and Federal Trade Commission statement
For business purchases, a copy of the sales contract

Resumes, including educational backgrounds, on each principle, partner, executive, and key manager, explaining their specific skills to help this business
Specific industry product knowledge and experience to assure adequate sales to repay the loan
Description of community and industry relationships that will benefit the business

Define the product and how purchasers use it
Describe the market, including size, scope (local, regional, national or international), and growth history
Describe social or economic trends that affect potential sales of the product
Describe the competition. Who are they? How many? Where are they located? How long have they been established? How big are they? It is nor recommended to claim there is no competition, even if the product or service is new or if there is no local competitors. If this is the case, describe how potential customers are getting along without the product or service.
Define the target market. What kind of customer buys the product or service? How many are in the area? Are they willing and able to buy the product or service?
Describe how the product or service will be advertised, packaged and distributed
Include any market research studies that have been conducted, including a summary of the results

Business plan must demonstrate the ability to repay the loan from the cash flow of the business
For established businesses, current (within 90 days) balance sheet and income statement, tax returns for the past three years, financial reports for the past three years
For business start-ups, balance sheet for the day the business starts, income statement or profit and loss statement projection for two years, cash flow analysis month by month for two year, personal tax returns of owners and principals for the past three years, personal financial statements of owners and principals
Personal credit history of owners and principals
Amount of equity provided by owners:

Financial ratios for the business. Show how the business compares to industry averages for the same type of business. Normal industry ratios can be obtained from:

Does the business cash flow adequately? If not in the first month, when?
When will the business break even?
Are there cash reserves to cover inadequate cash flow and unforeseen expenses?
Is there a contingency plan if the business is slower than expected or takes longer than expected to develop?