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A Tutorial and Self-paced Activity
BUSINESS PLAN OUTLINE
Use the outline below as a guide. Also see Outside Business Plan Resources at the
bottom of the page.
Elements of a Business Plan
THE BUSINESS PLAN - WHAT IT INCLUDES
What goes in a business plan? This is an excellent question. And, it is one that many
new and potential small business owners should ask, but oftentimes don't ask. The body of
the business plan can be divided into four distinct sections: 1) the description of the
business, 2) the marketing plan, 3) the financial management plan and 4) the management
plan. Addenda to the business plan should include the executive summary, supporting
documents and financial projections.
THE BUSINESS PLAN - DESCRIPTION OF THE BUSINESS
In this section, provide a detailed description of your business. An excellent question
to ask yourself is: "What business am I in?" In answering this question include
your products, market and services as well as a thorough description of what makes your
business unique. Remember, however, that as you develop your business plan, you may have
to modify or revise your initial questions.
The business description section is divided into three primary sections. Section 1
actually describes your business, Section 2 the product or service you will be offering
and Section 3 the location of your business, and why this location is desirable (if you
have a franchise, some franchisors assist in site selection).
When describing your business, generally you should explain:
A cover sheet goes before the description. It includes the name, address and telephone
number of the business and the names of all principals. In the description of your
business, describe the unique aspects and how or why they will appeal to consumers.
Emphasize any special features that you feel will appeal to customers and explain how and
why these features are appealing.
The description of your business should clearly identify goals and objectives and it
should clarify why you are, or why you want to be, in business.
THE BUSINESS PLAN - 2. Product/Service
Try to describe the benefits of your goods and services from your customers'
perspective. Successful business owners know or at least have an idea of what their
customers want or expect from them. This type of anticipation can be helpful in building
customer satisfaction and loyalty. And, it certainly is a good strategy for beating the
competition or retaining your competitiveness. Describe:
THE BUSINESS PLAN - 3. The Location
The location of your business can play a decisive role in its success or failure. Your
location should be built around your customers, it should be accessible and it should
provide a sense of security. Consider these questions when addressing this section of your
It may be a good idea to make a checklist of questions you identify when developing
your business plan. Categorize your questions and, as you answer each question, remove it
from your list.
THE BUSINESS PLAN - The Marketing Plan
Marketing plays a vital role in successful business ventures. How well you market you
business, along with a few other considerations, will ultimately determine your degree of
success or failure. The key element of a successful marketing plan is to know your
customers-their likes, dislikes, expectations. By identifying these factors, you can
develop a marketing strategy that will allow you to arouse and fulfill their needs.
Identify your customers by their age, sex, income/educational level and residence. At
first, target only those customers who are more likely to purchase your product or
service. As your customer base expands, you may need to consider modifying the marketing
plan to include other customers.
Develop a marketing plan for your business by answering these questions. (Potential
franchise owners will have to use the marketing strategy the franchisor has developed.)
Your marketing plan should be included in your business plan and contain answers to the
questions outlined below.
Appendix I contains a sample Marketing Plan and Marketing Tips, Tricks and Traps, a
condensed guide on how to market your product or service. Study these documents carefully
when developing the marketing portion of your business plan.
THE BUSINESS PLAN - 1. Competition
Competition is a way of life. We compete for jobs, promotions, scholarships to
institutes of higher learning, in sports-and in almost every aspect of your lives. Nations
compete for the consumer in the global marketplace as do individual business owners.
Advances in technology can send the profit margins of a successful business into a
tailspin causing them to plummet overnight or within a few hours. When considering these
and other factors, we can conclude that business is a highly competitive, volatile arena.
Because of this volatility and competitiveness, it is important to know your competitors.
Questions like these can help you:
Start a file on each of your competitors. Keep manila envelopes of their advertising
and promotional materials and their pricing strategy techniques. Review these files
periodically, determining when and how often they advertise, sponsor promotions and offer
sales. Study the copy used in the advertising and promotional materials, and their sales
strategy. For example, is their copy short? descriptive? catchy? or how much do they
reduce prices for sales? Using this technique can help you to understand your competitors
better and how they operate their businesses.
THE BUSINESS PLAN - 2. Pricing and Sales
Your pricing strategy is another marketing technique you can use to improve your
overall competitiveness. Get a feel for the pricing strategy your competitors are using.
That way you can determine if your prices are in line with competitors in your market area
and if they are in line with industry averages.
Some of the pricing strategies are:
- retail cost and pricing
- competitive position
- pricing below competition
- pricing above competition
- price lining
- multiple pricing
- service costs and pricing (for service businesses only)
- service components
- material costs
- labor costs
- overhead costs
The key to success is to have a well-planned strategy, to establish your policies and
to constantly monitor prices and operating costs to ensure profits. Even in a franchise
where the franchisor provides operational procedures and materials, it is a good policy to
keep abreast of the changes in the marketplace because these changes can affect your
competitiveness and profit margins.
Appendix 1 contains a sample Price/Quality Matrix, review it for ideas on pricing
strategies for your competitors. Determine which of the strategies they use, if it is
effective and why it is effective.
THE BUSINESS PLAN - 3. Advertising and Public
How you advertise and promote your goods and services may make or break your business.
Having a good product or service and not advertising and promoting it is like not having a
business at all. Many business owners operate under the mistaken concept that the business
will promote itself, and channel money that should be used for advertising and promotions
to other areas of the business. Advertising and promotions, however, are the life line of
a business and should be treated as such.
Devise a plan that uses advertising and networking as a means to promote your business.
Develop short, descriptive copy (text material) that clearly identifies your goods or
services, its location and price. Use catchy phrases to arouse the interest of your
readers, listeners or viewers. In the case of a franchise, the franchisor will provide
advertising and promotional materials as part of the franchise package, you may need
approval to use any materials that you and your staff develop. Whether or not this is the
case, as a courtesy, allow the franchisor the opportunity to review, comment on and, if
required, approve these materials before using them. Make sure the advertisements you
create are consistent with the image the franchisor is trying to project. Remember the
more care and attention you devote to your marketing program, the more successful your
business will be.
A more detailed explanation of the marketing plan and how to develop an effective
marketing program is provided in the Workshop on Marketing. See Training
Module 3 - Marketing Your Business for Success.
THE BUSINESS PLAN - THE MANAGEMENT PLAN
Managing a business requires more than just the desire to be your own boss. It demands
dedication, persistence, the ability to make decisions and the ability to manage both
employees and finances. Your management plan, along with your marketing and financial
management plans, sets the foundation for and facilitates the success of your business.
Like plants and equipment, people are resources-they are the most valuable asset a
business has. You will soon discover that employees and staff will play an important role
in the total operation of your business. Consequently, it's imperative that you know what
skills you possess and those you lack since you will have to hire personnel to supply the
skills that you lack. Additionally, it is imperative that you know how to manage and treat
your employees. Make them a part of the team. Keep them informed of, and get their
feedback regarding, changes. Employees oftentimes have excellent ideas that can lead to
new market areas, innovations to existing products or services or new product lines or
services which can improve your overall competitiveness.
Your management plan should answer questions such as:
- How does your background/business experience help you in this business?
- What are your weaknesses and how can you compensate for them?
- Who will be on the management team?
- What are their strengths/weaknesses?
- What are their duties?
- Are these duties clearly defined?
- If a franchise, what type of assistance can you expect from the franchisor?
- Will this assistance be ongoing?
- What are your current personnel needs?
- What are your plans for hiring and training personnel?
- What salaries, benefits, vacations, holidays will you offer? If a franchise, are these
issues covered in the management package the franchisor will provide?
- What benefits, if any, can you afford at this point?
If a franchise, the operating procedures, manuals and materials devised by the
franchisor should be included in this section of the business plan. Study these documents
carefully when writing your business plan, and be sure to incorporate this material. The
franchisor should assist you with managing your franchise. Take advantage of their
expertise and develop a management plan that will ensure the success for your franchise
and satisfy the needs and expectations of employees, as well as the franchisor.
THE BUSINESS PLAN - THE FINANCIAL MANAGEMENT PLAN
Sound financial management is one of the best ways for your business to remain
profitable and solvent. How well you manage the finances of your business is the
cornerstone of every successful business venture. Each year thousands of potentially
successful businesses fail because of poor financial management. As a business owner, you
will need to identify and implement policies that will lead to and ensure that you will
meet your financial obligations.
To effectively manage your finances, plan a sound, realistic budget by determining the
actual amount of money needed to open your business (start-up costs) and the amount needed
to keep it open (operating costs). The first step to building a sound financial plan is to
devise a start-up budget. Your start-up budget will usually include such one-time-only
costs as major equipment, utility deposits, down payments, etc.
The start-up budget should allow for these expenses.
- personnel (costs prior to opening)
- legal/professional fees
- payroll expenses
An operating budget is prepared when you are actually ready to open for business. The
operating budget will reflect your priorities in terms of how your spend your money, the
expenses you will incur and how you will meet those expenses (income). Your operating
budget also should include money to cover the first three to six months of operation. It
should allow for the following expenses.
- loan payments
- miscellaneous expenses
- payroll expenses
The financial section of your business plan should include any loan applications you've
filed, a capital equipment and supply list, balance sheet, breakeven analysis, pro-forma
income projections (profit and loss statement) and pro-forma cash flow. The income
statement and cash flow projections should include a three-year summary, detail by month
for the first year, and detail by quarter for the second and third years.
The accounting system and the inventory control system that you will be using is
generally addressed in this section of the business plan also. If a franchise, the
franchisor may stipulate in the franchise contract the type of accounting and inventory
systems you may use. If this is the case, he or she should have a system already intact
and you will be required to adopt this system. Whether you develop the accounting and
inventory systems yourself, have an outside financial advisor develop the systems or the
franchisor provides these systems, you will need to acquire a thorough understanding of
each segment and how it operates. Your financial advisor can assist you in developing this
section of your business plan.
The following questions should help you determine the amount of start-up capital you
will need to purchase and open a franchise.
- How much money do you have?
- How much money will you need to purchase the franchise?
- How much money will you need for start-up?
- How much money will you need to stay in business?
Other questions that you will need to consider are:
- What type of accounting system will your use? Is it a single entry or dual entry system?
- What will your sales goals and profit goals for the coming year be? If a franchise, will
the franchisor set your sales and profit goals? Or, will he or she expect you to reach and
retain a certain sales level and profit margin?
- What financial projections will you need to include in your business plan?
- What kind of inventory control system will you use?
Your plan should include an explanation of all projections. Unless you are thoroughly
familiar with financial statements, get help in preparing your cash flow and income
statements and your balance sheet. Your aim is not to become a financial wizard, but to
understand the financial tools well enough to gain their benefits. Your accountant or
financial advisor can help you accomplish this goal.
Sample balance sheets, income projections (profit and loss statements) and cash flow
statements are included in Appendix 2, Financial Management. For a detailed explanation of
these and other more complex financial concepts, contact your local SBA Office. Look under
the U.S. Government section of the local telephone directory.
THE BUSINESS PLAN - SELF-PACED ACTIVITY
During this activity you will: Briefly describe what goes into a business plan.
Identify advantages of developing the marketing,
management and financial management plans.
List financial projections included in the financial
Sketch an outline for a business plan.
THE BUSINESS PLAN - APPENDIX 1
This is the marketing plan
I. MARKET ANALYSIS
A. Target Market - Who are the customers?
a. Private sector _______ ______
b. Wholesalers _______ ______
c. Retailers _______ ______
d. Government _______ ______
e. Other _______ ______
2. We will be targeting customers by:
a. Product line/services.
We will target specific lines ________________
b. Geographic area? Which areas? ________________
c. Sales? We will target sales of ________________
d. Industry? Our target industry is ________________
e. Other? ________________
3. How much will our selected market spend on our
type of product or service this coming year?
Years in Business ___________________
Market Share ___________________
Years in Business ____________________
Market Share ____________________
Features ____________________ 2. How competitive is the market?
3. List below your strengths and weaknesses compared
to your competition (consider such areas as location, size of resources, reputation,
services, personnel, etc.):
2. The following are some important legal factors
that will affect our market:
3. The following are some important government
4. The following are other environmental factors that
will affect our market, but over which we have no control:
II. PRODUCT OR SERVICE ANALYSIS
2. What disadvantages does it have?
C. Some Considerations
2. List other considerations:
III. MARKETING STRATEGIES - MARKET MIX
B. Features 1. List the features we will emphasize: a. __________________________________________
C. Pricing 1. We will be using the following pricing strategy:
a. Markup on cost ____ What % markup? _____
b. Suggested price ____
c. Competitive ____
d. Below competition ____
e. Premium price ____
f. Other ____
2. Are our prices in line with our image?
3. Do our prices cover costs and leave a margin of profit?
D. Customer Services 1. List the customer services we provide: a. ____________________________________________
2. These are our sales/credit terms: a. ____________________________________________
3. The competition offers the following services:
E. Advertising/Promotion 1. These are the things we wish to say about the
2. We will use the following advertising/promotion
1. Television ________
2. Radio ________
3. Direct mail ________
4. Personal contacts ________
5. Trade associations ________
6. Newspaper ________
7. Magazines ________
8. Yellow Pages ________
9. Billboard ________
10. Other___________ ________
3. The following are the reasons why we consider the
media we have chosen to be the most effective:
MARKETING TIPS, TRICKS & TRAPS
1. Marketing Steps
- Classifying Your Customers' Needs
- Targeting Your Customer(s)
- Examining Your "Niche"
- Identifying Your Competitors
- Assessing and Managing Your Available Resources Financial
NOTES AND STRATEGIES FOR YOUR BUSINESS
MARKETING TIPS, TRICKS & TRAPS
2. Marketing Positioning
- Follower versus Leader
- Quality versus Price
- Innovator versus Adaptor
- Customer versus Product
- International versus Domestic
- Private Sector versus Government
NOTES AND STRATEGIES FOR YOUR BUSINESS
MARKETING TIPS, TRICKS & TRAPS
3. Sales Strategy
- Use Customer-Oriented Selling Approach - By
- Emphasize Customer Advantage
Must be Important
to the Customer: When the perception of competitive
advantage varies between supplier and customer, the
Must be Specific: When a competitive advantage lacks
specificity, it translates into mere puffery and is
Must be Promotable: When a competitive advantage is
proven, it is essential that your customer know it,
lest it not exist at all.
NOTES AND STRATEGIES FOR YOUR BUSINESS
MARKETING TIPS, TRICKS & TRAPS
4. Benefits vs. Features
- The six "O's" of organizing Customer Buying
ORIGINS of purchase: Who buys it?
OBJECTIVES of purchase: What do they need/buy?
OCCASIONS of purchase: When do they buy it?
OUTLETS of purchase: Where do they buy it?
OBJECTIVES of purchase: Why do they buy it?
OPERATIONS of purchase: How do they buy it?
Convert features to benefits using the "...Which
Sales Maxim: "Unless the proposition appeals to
their INTEREST, unless it satisfies their DESIRES, and unless it shows them a GAIN-then
they will not buy!"
Quality Customer Leads:
Level of need Ability to pay
Authority to pay Accessibility
Sympathetic attitude Business history
One-source buyer Reputation (price or
NOTES AND STRATEGIES FOR YOUR BUSINESS
CONVERT FEATURES INTO BENEFITS-
THE "...WHICH MEANS..." TRANSITION
FEATURES "WHICH MEANS" BENEFITS
Performance Time Saved
Reputation Reduced Cost
Colors Bigger Savings
Sizes Greater Profits
Uses Uniform Production
Applications Uniform Accuracy
Ruggedness Continuous Output
Service Increased Sales
Price Economy of Use
Design Ease of Use
Availability Reduced Inventory
Installation Low Operating Cost
Lab Tests Reduced Upkeep
Terms Reduced Waste
Workmanship Long Life
Economy of Purchase Pride of
Economy of Use Pride of Ownership
Efficient Profits Desire of Prestige
Increased Profits Desire for
Durability Desire to Imitate
Accurate Performance Desire for Variety
Simple Construction Desire to Create
Simple Operation Desire for
Ease of Repair Convenience
Ease of Installation Desire to Be
Unique Space-Saving Curiosity
Desire to be Unique
PRICE / QUALITY MATRIX
PRICE/QUALITY HIGH MEDIUM LOW
HIGH "Rolls Royce" "We Try
Harder" "Best Buy"
Strategy Strategy Strategy
MEDIUM "Out Performs" "Piece of the
Rock" "Smart Shopper"
Strategy Strategy Strategy
LOW "Feature Packed" "Keeps on
Strategy Strategy Hunter"
THE BUSINESS PLAN - APPENDIX 2
1. Income Projection Statement
- Instructions for Income Projection Statement
2. Balance Sheet
- Instructions for Balance Sheet
3. Monthly Cash Flow Projection
- Instructions for Monthly Cash Flow Projection
4. Information Resources
INCOME PROJECTION STATEMENT
Industry J F M A M J J A S O N D Annual Annual
% total %
Total net sales (revenues)
Costs of sales
Gross profit margin
Total fixed expenses
Net profit (loss)
Net profit (loss) after
INSTRUCTIONS FOR INCOME PROJECTIONS STATEMENT
The income projections (profit and loss) statement
is valuable as both a planning tool and a key management tool to help control business
operations. It enables the owner/manager to develop a preview of the amount of income
generated each month and for the business year, based on reasonable predictions of monthly
levels of sales, costs and expenses.
As monthly projections are developed and entered
into the income projections statement, they can serve as definite goals for controlling
the business operation. As actual operating results become known each month, they should
be recorded for comparison with the monthly projections. A completed income statement
allows the owner/manager to compare actual figures with monthly projections and to take
steps to correct any problems.
In the industry percentage column, enter the
percentages of total
sales (revenues) that are standard for your
industry, which are
derived by dividing
Costs/expenses items x 100%
total net sales
These percentages can be obtained from various
sources, such as trade associations, accountants or banks. The reference librarian in your
nearest public library can refer you to documents that contain the percentage figures, for
example, Robert Morris Associates' Annual Statement Studies (One Liberty Place,
Philadelphia, PA 19103).
Industry figures serve as a useful bench mark
against which to compare cost and expense estimates that you develop for your firm.
Compare the figures in the industry percentage column to those in the annual percentage
Total Net Sales (Revenues)
Determine the total number of units of products or
services you realistically expect to sell each month in each department at the prices you
expect to get. Use this step to create the projections to review your pricing practices. What returns, allowances and markdowns can be
Exclude any revenue that is not strictly related to
Cost of Sales
The key to calculating your cost of sales is that
you do not overlook any costs that you have incurred. Calculate cost of sales of all
products and services used to determine total net sales. Where inventory is involved, do
not overlook transportation costs. Also include any direct labor.
Subtract the total cost of sales from the total net
sales to obtain gross profit.
Gross Profit Margin
The gross profit is expressed as a percentage of
(revenues). It is calculated by dividing
total net sales
Controllable (also known as Variable) Expenses
- Salary expenses-Base pay plus overtime.
- Payroll expenses-Include paid vacations, sick leave,
health insurance, unemployment insurance and social security taxes.
- Outside services-Include costs of subcontracts,
overflow work and special or one-time services.
- Supplies-Services and items purchased for use in the
- Repair and maintenance-Regular maintenance and
repair, including periodic large expenditures such as painting.
- Advertising-Include desired sales volume and
classified directory advertising expenses.
- Car delivery and travel-Include charges if personal
car is used in business, including parking, tools, buying trips, etc.
- Accounting and legal-Outside professional services.
- Rent-List only real estate used in business.
- Depreciation-Amortization of capital assets.
- Utilities-Water, heat, light, etc.
- Insurance-Fire or liability on property or products.
- Loan repayments-Interest on outstanding loans.
- Miscellaneous-Unspecified; small expenditures without
Net Profit (loss)
(before taxes) - Subtract total expenses from gross
Taxes - Include inventory and sales tax, excise
tax, real estate tax, etc.
Net Profit (loss)
(after taxes) - Subtract taxes from net profit
Annual Total - For each of the sales and expense
your income projection statement, add all
the monthly figures across the table and
put the result in the annual total column.
Annual Percentage - Calculate the annual percentage
Annual total x 100%
total net sales
Compare this figure to the industry percentage in the
As of ____________________________, 19____
Petty cash $_______
Accounts receivable $_______
Short-term investment $_______
Prepaid expenses $_______
Long-term investment $_______
Total assets $______
Accounts payable $______
Notes payable $______
Interest payable $______
Federal income tax $______
State income tax $______
Self-employment tax $______
Sales tax (SBE) $______
Property tax $______
Payroll accrual $______
Notes payable $______
Total liabilities $______
Net worth (owner equity) $______
(name's) equity $_____
(name's) equity $_____
Capital stock $_____
Surplus paid in $_____
Retained earnings $_____
Total net worth $_____
Total liabilities and
total net worth $_____
(Total assets will always equal total liabilities
and total net worth)
INSTRUCTIONS FOR BALANCE SHEET
Figures used to compile the balance sheet are taken
from the previous and current balance sheet as well as the current income statement. The
income statement is usually attached to the balance sheet. The following text covers the
essential elements of the balance sheet.
At the top of the page fill in the legal name of the
business, the type of statement and the day, month and year.
List anything of value that is owned or legally due
the business. Total assets include all net values. These are the amounts derived when you
subtract depreciation and amortization from the original costs of acquiring the assets.
- Cash-List cash and resources that can be converted
into cash within 12 months of the date of the balance sheet (or during one established
cycle of operation). Include money on hand and demand deposits in the bank, e.g., checking
accounts and regular savings accounts.
- Petty cash-If your business has a fund for small
miscellaneous expenditures, include the total here.
- Accounts receivable-The amounts due from customers in
payment for merchandise or services.
- Inventory-Includes raw materials on hand, work in
progress and all finished goods, either manufactured or purchased for resale.
- Short-term investments-Also called temporary
investments or marketable securities, these include interest- or dividend-yielding
holdings expected to be converted into cash within a year. List stocks and bonds,
certificates of deposit and time-deposit savings accounts at either their cost or market
value, whichever is less.
- Prepaid expenses-Goods, benefits or services a
business buys or rents in advance. Examples are office supplies, insurance protection and
Also called long-term assets, these are holdings the
business intends to keep for at least a year and that typically yield interest or
dividends. Included are stocks, bonds and savings accounts earmarked for special purposes.
Also called plant and equipment. Includes all
resources a business owns or acquires for use in operations and not intended for resale.
Fixed assets may be leased. Depending on the leasing arrangements, both the value and the
liability of the leased property may need to be listed on the balance sheet. Land-List original purchase price without allowances
for market value.
List all debts, monetary obligations and claims
payable within 12 months or within one cycle of operation. Typically they include the
following: Accounts payable-Amounts owed to suppliers for goods
and services purchased in connection with business operations.
Notes payable-The balance of principal due to pay off
short-term debt for borrowed funds. Also includes the current amount due of total balance
on notes whose terms exceed 12 months.
Interest payable-Any accrued fees due for use of both
short- and long-term borrowed capital and credit extended to the business.
Taxes payable-Amounts estimated by an accountant to
have been incurred during the accounting period.
Payroll accrual-Salaries and wages currently owed.
Notes payable-List notes, contract payments or
mortgage payments due over a period exceeding 12 months or one cycle of operation. They
are listed by outstanding balance less the current position due.
Also called owner's equity, net worth is the claim
of the owner(s) on the assets of the business. In a proprietorship or partnership, equity
is each owner's original investment plus any earnings after withdrawals.
Total Liabilities and Net Worth
The sum of these two amounts must always match that
for total assets.
MONTHLY CASH FLOW PROJECTION
Name of Business Owner Type of Business Prepared by
Pre-start- 1 2 3 4 5 6 Total
up position Columns 1-6
Est.* Act.* Est.Act. Est.Act. Est.Act. Est.Act.
Est.Act. Est.Act. Est.Act.
1. Cash on hand (beginning
2. Cash receipts
3. Total cash receipts
4. Total cash available
(before cash out) (1+3)
5. Cash paid out
6. Total cash paid out (5a
7. Cash position (end of
month) (4 minus 6) Essential operating data
(non-cash flow information)
A. Sales volume (dollars)
B. Accounts receivable
(end on month)
C. Bad debt (end of
D. Inventory on hand (end
E. Accounts payable (end
INSTRUCTIONS FOR MONTHLY CASH FLOW PROJECTION
3. Total cash receipts (2a+2b+2c=3)
4. Total cash available (before cash out)(1+3)
5. Cash paid out - (a) Purchases (merchandise)--Merchandise for resale
or for use in product (paid for in current month).
(b) Gross wages (including withdrawals)--Base pay
plus overtime (if any)
(c) Payroll expenses (taxes, etc.)-- Include paid
vacations, paid sick leave, health insurance, unemployment insurance, (this might be 10 to
45% of 5(b))
(d) Outside services-This could include outside labor
and/or material for specialized or overflow work, including subcontracting
(e) Supplies (office and operating)--Items purchased
for use in the business (not for resale)
(f) Repairs and maintenance-Include periodic large
expenditures such as painting or decorating
(g) Advertising-This amount should be adequate to
maintain sales volume
(h) Car, delivery and travel-If personal car is used,
charge in this column, include parking
(i) Accounting and legal-Outside services, including,
for example, bookkeeping
(j) Rent-Real estate only (See 5(p) for other
(l) Utilities-Water, heat, light and/or power
(m) Insurance-Coverage on business property and
products (fire, liability); also worker's compensation, fidelity, etc. Exclude executive
life (include in 5(w))
(n) Taxes (real estate, etc.)-- Plus inventory tax,
sales tax, excise tax, if applicable
(o) Interest-Remember to add interest on loan as it
is injected (See 2© above)
(p) Other expenses (specify each)
Unexpected expenditures may be included here as a
Equipment expenses during the month should be
When equipment is rented or leased, record payments
here (q) Miscellaneous (unspecified)--Small expenditures
for which separate accounts would be practical
(r) Subtotal-This subtotal indicates cash out for
(s) Loan principal payment-Include payment on all
loans, including vehicle and equipment purchases on time payment
(t) Capital purchases (specify)--Nonexpensed
(depreciable) expenditures such as equipment, building purchases on time payment
(u) Other start-up costs-Expenses incurred prior to
first month projection and paid for after start-up
(v) Reserve and/or escrow (specify)-- Example:
insurance, tax or equipment escrow to reduce impact of large periodic payments
(w) Owner's withdrawals-Should include payment for
such things as owner's income tax, social security, health insurance, executive life
insurance premiums, etc.
6. Total cash paid out (5a through 5w)
7. Cash position (end on month) (4 minus 6)-- Enter
this amount in (1) Cash on hand following month-
Essential operating data (non-cash flow
information)--This is basic information necessary for proper planning and for proper cash
flow projection. Also with this data, the cash flow can be evolved and shown in the above
form. A. Sales volume (dollars)--This is a very important
figure and should be estimated carefully, taking into account size of facility and
employee output as well as realistic anticipated sales (actual sales, not orders
B. Accounts receivable (end of month)-- Previous
unpaid credit sales plus current month's credit sales, less amounts received current month
(deduct "C" below)
C. Bad debt (end on month)-- Bad debts should be
subtracted from (B) in the month anticipated
D. Inventory on hand (end on month)-- Last month's
inventory plus merchandise received and/or manufactured current month minus amount sold
E. Accounts payable (end of month) Previous month's
payable plus current month's payable minus amount paid during month.
F. Depreciation-Established by your accountant, or
value of all your equipment divided by useful life (in months) as allowed by Internal
THE BUSINESS PLAN - APPENDIX 3: INFORMATION
U.S. Small Business Administration (SBA)
The SBA offers an extensive selection of information
on most business management topics, from how to start a business to exporting your
This information is listed in "Resource
Directory for Small Business Management." For a free copy contact your nearest SBA
SBA has offices throughout the country. Consult the
Government section in your telephone directory for
nearest you. SBA offers a number of programs and
including training and educational programs,
financial programs and contract assistance. Ask
about Service Corps of Retired Executives (SCORE), a
national organization sponsored by SBA of over 13,000 volunteer business executives who
provide free counseling, workshops and seminars to prospective and existing small business
Small Business Development Centers (SBDCs), sponsored
by the SBA in partnership with state and local governments, the educational community and
the private sector. They provide assistance, counseling and training to prospective and
existing business people.
Business Information Centers (BICs), offering
state-of-the-art technology, informational resources and on-site counseling for start-up
and expanding businesses to create business, marketing and other plans, do research, and
receive expert training and assistance.
For more information about SBA business development
programs and services, call the SBA Small Business Answer Desk at 1-800-U-ASK-SBA
Other U.S. Government Resources
Many publications on business management and other
related topics are available from the Government Printing Office (GPO). GPO bookstores are
located in 24 major cities and listed in the Yellow Pages under the "bookstore"
heading. You can request a "Subject Bibliography" by writing to Government
Printing Office, Superintendent of Documents, Washington, DC 20402-9328.
Many federal agencies offer publications of interest
to small businesses. There is a nominal fee for some, but most are free. Below is a
selected list of government agencies that provide publications and other services targeted
to small businesses. To get their publications, contract the regional offices listed in
the telephone directory or write to the addresses below: Consumer Information Center (CIC)
P.O. Box 100
Pueblo, CO 81002
The CIC offers a consumer information catalog of
federal publications. Consumer Product Safety Commission (CPSC)
Washington, DC 20207
The CPSC offers guidelines for product safety
U.S. Department of Agriculture (USDA)
12th Street and Independence Avenue, SW
Washington, DC 20250
The USDA offers publications on selling to the USDA.
Publications and programs on entrepreneurship are also available through county extension
offices nationwide. U.S. Department of Commerce (DOC)
Office of Business Liaison
14th Street and Constitution Avenue, NW
Washington, DC 20230
DOC's Business Assistance Center provides listings
of business opportunities available in the federal government. This service also will
refer businesses to different programs and services in the DOC and other federal agencies. U.S. Department of Health and Human Services (HHS) -
Alcohol, Drug Abuse and Mental Health
5600 Fishers Lane
Rockville, MD 20857
Drug Free Workplace Helpline: 1-800-843-4971.
Provides information on Employee Assistance Programs.
National Institute for Drug Abuse Hotline:
1-800-662-4357. Provides information on preventing
substance abuse in the workplace.
The National Clearinghouse for Alcohol and Drug
1-800-729-6686 toll-free. Provides pamphlets and
resource materials on substance abuse. U.S. Department of Labor (DOL)
Employment Standards Administration
200 Constitution Avenue, NW
Washington, DC 20210
The DOL offers publications on compliance with labor
U.S. Department of Treasury
Internal Revenue Service (IRS)
P.O. Box 25866
Richmond, VA 23260
The IRS offers information on tax requirements for
Environmental Protection Agency Office of Small
U.S. Environmental Protection Agency (EPA)
Small Business Ombudsman (Mail Code 2131)
401 M Street, S.W.
Washington, D.C. 20460
1-800-368-5888 except in DC and VA
202-260-1211 in DC and VA
The EPA offers more than 100 publications designed
to help small businesses understand how they can comply with EPA regulations.
U.S. Food and Drug Administration (FDA)
FDA Center for Food Safety and Applied Nutrition
The FDA offers information on packaging and labeling
requirements for food and food-related products.
For More Information
A librarian can help you locate the specific
information you need
in reference books. Most libraries have a variety of
indexes and encyclopedias that cover many business
also have other resources, such as Trade association information
Ask the librarian to show you a directory of trade
associations. Associations provide a valuable network of resources to their members
through publications and services such as newsletters, conferences and seminars. Books
Many guidebooks, textbooks and manuals on small
business are published annually. To find the names of books not in your local library
check Books In Prints, a directory of books currently available from publishers. Magazine and newspaper articles
Business and professional magazines provide
information that is more current than that found in books and textbooks. There are a
number of indexes to help you find specific articles in periodicals.
In addition to books and magazines, many libraries
offer free workshops, lend skill-building tapes and have catalogues and brochures
describing continuing education opportunities.
* Last Modified: 10-16-01