Developing a Business Plan

A business plan defines your business, identifies your goals, and serves as your firm's resume. The most fundamental components include a current and pro forma balance sheet, an income statement, and a cash flow analysis. It helps you allocate resources, handle unforeseen complications, and make sound business decisions. A good business plan provides specific and organized information about your company and how you will repay borrowed money. Clearly, it is a crucial part of any loan application.

The importance of a comprehensive, thoughtful business plan cannot be overemphasized; in fact, everything from outside funding to promotion and marketing of your business hinges on a well-written plan.

Despite the critical importance of a business plan, many entrepreneurs drag their feet when it comes to its preparation. So, here at BOk, we have developed a simple outline to better guide the process. Although this outline is not meant to be all-inclusive, it reviews the most common elements to a good plan.

1. Preliminary Pages
1. Cover sheet
2. Statement of purpose
3. Table of contents


2. The Business
   1. Description of business
   2. Marketing
   3. Competition
   4. Operating procedures
   5. Personnel
   6. Business insurance
   
   
3. Financial Data
   1. Loan applications
   2. Capital equipment and supply list
   3. Balance sheet
   4. Breakeven analysis
   5. Pro-forma income projections (profit & loss statements)
      1. Three-year summary
      2. Detail by month, first year
      3. Detail by quarters, second and third years
      4. Assumptions upon which projections were based
   6. Pro-forma cash flow
   
   
4. Supporting Documents
   1. Tax returns of principals for last three years
   2. Personal financial statement (all banks have these forms)
   3. A copy of the franchise contract and all supporting documents, if applicable
   4. Copy of the proposed lease or purchase agreement for building space
   5. Copy of licenses and other legal documents
   6. Copy of resumes of all principals
   7. Copies of letters of intent from suppliers, etc

Keep in mind that no business plan is perfect and it may take several attempts before you have a plan with which you are comfortable. Your plan should also evolve over time and continue to be updated on a yearly basis. Keep it concise, simple to read, easy to understand, and remember to take the time to convey the opportunities that lay ahead for your business.