Business Plans Made Easy:
A Business Plan Outline That Works

As apart of this business plan outline, the executive summary is considered to be what most readers will go to first, so it has to be good. Write it last, using specific highlights and summarized points from other sections of your business plan.

Your executive summary is just that - a summary - so it should be from one to three pages in length, no more. Make sure you include: your business concept, financial features, financial requirements, current state of your business, when it was formed, principal owners and key personnel, and major achievements.

Your table of contents provides readers with a quick and easy way to navigate your business plan. All pages of your business plan should be numbered and the table of contents should reference those page numbers.

2. Business Description

A concise, easy-to-understand description of your company will help your business plan and will benefit you in: networking, making cold calls, and approaching the media for interviews and articles.

Your business description is your corporate vision, and includes:

Let's digress from the business plan outline for a moment to briefly discuss your USP, position, and pricing:

Your USP is what sets your product or service apart from your competition. If you are using your business plan to get funding, this is what your reader will want to see. If it is an internal document, your USP will be critical to your sales and marketing strategies. Without a USP, your product or service will not stand out and there will be no compelling reason for people to buy it.

Your position is your identity in the marketplace: how you want the market and your competitors to perceive your product or service. While your USP is based on features of your product or service, your positioning is based on your customers and competition. Ask yourself:

In terms of pricing, what you will charge for your product or service? How did you come up with that price? Show how this pricing strategy compares to that of your competition. Next, explain how your price will get the product or service accepted, maintain and/or increase your market share, and produce profits.

Now, back to the business plan outline:

3. The Market

This section of the business plan outline covers:

If you're seeking capital for your home business, then this section needs to provide enough facts to convince an investor, potential partner or other reader that you can generate enough sales.

If you're creating your business plan to use as an internal document, go through the exercise of completing this section. Take the time to conduct all of the relevant research. Doing so will give you a far greater understanding of your customer, which will enable you to build your business more effectively.

Also, as you'll see further in this business plan outline, the sections of your business plan that follow - from development & production, to sales & marketing, to financials - will be based on the sales estimates you create here.

Here are some tips for each aspect of this section of the business plan outline:

Be specific when creating a description of your target customer. Define the characteristics of the people to whom you want to sell. Are these people cost or quality conscious? Under what circumstances will they buy? What are their concerns? If you have an existing business, list your customers and look for trends in the business that you've conducted with them.

What is the size of your market? Are you most interested in a specific slice of this market? If so, then you're probably going after a target base of customers. Use numbers as well as trend information to support any assumptions that you are making. Use geography, company size, business organization, lifestyle, sex, age, occupation, and other characteristics to describe the companies or consumers likely to buy your product or service. Describe your target customers in terms of common, identifiable characteristics.

Estimate your sales. Assess the advantages of your product or service, your customers, the size of your market, and your competition. This should include sales in units and dollars for the next three years, with the first year broken down by quarter if that's appropriate for your industry. These numbers will be crucial to other financial documents you present later in the plan. Use a one-paragraph summary to justify your projections.

Let's move to item 4 of the business plan outline:

4. Development & Production

The Development & Production section of your business plan includes:

Development Status: Describe the current status of your product or service. What, if anything, needs to be done so that to your product or service is ready to be marketed? Make sure you thoroughly consider all facets of the development of your product or service.

Include provisions for obtaining a patent/trademark/or copyright.

Is your business plan is for a service company? Then your development status section will look at items such as setting up the offices, making plans for fielding calls, getting stationery and business cards, conducting market research, gathering references, and do a sample mailing of sales pieces.

Production Process: Walk the reader through the stages of product production from the its inception to when it will be sold. With a service company, describe the process of delivering the service.

Make or Buy: Are you going create (in house) all components necessary for the production of your product or service? Or are you going to buy a service or a product to add to yours?

Location: In this section present the geographic location for the production of your product or service. Justify this decision with information such as savings in rent or lease, convenience to suppliers, labor, materials, or other factors important to your business.

Since you are locating your business from home, discuss the cost-savings of choosing to have a home office. Make it clear that having a home office location will not be negatively perceived in your industry.

Cost of Development: Present and discuss a design and development budget. Include in your development budget the cost of a prototype (if you're making one) and the expense to take your product into production. Be sure to include labor, materials, consulting fees, and the cost of professionals such as attorneys.

This section is important for all businesses. Service businesses have expenses such as consulting services, training, and preparation of materials, among many other things.

Labor Requirements: Many people who build a home business not have a management team because they are building their business by themselves or with a significant other. However, there are many people who build businesses from home and do have a management team, all of whom work from home. This is the section where the management team is outlined.

Also provide details of other labor you will need to start up and run your business.

Expenses and Capital Requirements: In this section you will include three financial forms that will build a foundation for the Financials section of your plan. These forms outline your operating expenses, capital requirements, and cost of goods.

Generate spreadsheets for the year in which you establish your business as well as projections for two years after. An accountant can assist you with compiling this information.

Now we're ready to move on to item 5 of the business plan outline:

5. Sales & Marketing

What strategy and tactics will you use to get customers to buy your products or services?

Sales and marketing is the weak link in many business plans, so take your time with this section. A strong sales and marketing section can serve as a roadmap for you, just as this business plan outline can serve as a road map for you in creating your business plan.

Your sales and marketing section includes:

Strategy: You've defined your product, positioning, pricing, target customer, market, and competition. Now wrap up all those assumptions into a sales and marketing strategy. This is your action plan for how you will get customers to buy your products. Your strategy will support the tactics you describe later on in this section.

Keep in mind that your strategy may be only a few sentences in length, or it might be a couple of paragraphs.

Important elements for a sales and marketing strategy include:

Who you are targeting with your initial push?
What customers you have designated for follow-up phases?
How you will find your prospects?
Once you find your prospects, how will you educate them about your product?
What features of your product or service do you emphasize to get customers to notice your product?

Include any innovative marketing or sales techniques you will employ.

Will you focus your efforts locally, regionally, nationally or internationally? Do you plan to extend your efforts beyond your initial region? Why?

Method of Sales: Many entrepreneurs do not give adequate thought to a method of sales.

Let me stress this part of the business plan outline - Your method of sales is an important element of your plan and your business. How are you going to get your products or services to the end user? This is your method of distribution.

Will you be selling directly to your customers?
Will you be using sales representatives, distributors, or brokers?
Do you plan to have a direct sales force in place?
Will you use a "ground service"?
Will you use a next-day delivery service like Federal Express or Parcel post?

Again, I want to digress, briefly from the business plan outline to make a point:

Avoid making the mistake of confusing sales with marketing. The two are closely linked, but are distinct from one another.

Marketing deals the effort toward getting potential clients interested in your products and thereby generating leads. Sometimes this is simply creating an awareness of your products in the marketplace.

Sales focuses on handling those leads with the intention of getting the business and getting your products into the hands of your customers.

Okay, back to the business plan outline:

Advertising and Promotion: How are you going to communicate information about your product or service to your potential clients?

Include a description of all advertising vehicles you plan to use - newspapers, magazines, radio & TV, Yellow Pages, direct mail, your public relations program, sales/promotional materials (such as brochures and product sheets), package design, and trade shows efforts.

Are you going to use an agency for your advertising and/or PR? If so, be sure to discuss their talents and the services they will provide to you.

Now we're ready for itme 6 of the business plan outline:

6. Management

Use this section to describe company management including the responsibilities and expertise of each person.

Most people who are building a home business do it by themselves or with one other person with whom they live. The tendency is to think that this section of the business plan is not necessary under such a business model. In fact, you might be wondering why it's even included in this business plan outline. Avoid this trap.

Instead, in addition to following this business plan outline, outline the areas in which you are strong (for example, marketing) and the areas where you will be using outside resources (for example, accounting). Do this even if your writing your business plan as an internal document - it'll help you clarify for yourself where you may need additional resources.

The final item of the business plan outline is:

7. Financials

Financials are used to document, justify, and convince - yourself and/or potential investors.

In this section you will back up what you've been saying about your business all along. You'll back it up with numbers - actually, with financial statements and forms. These financial statements and forms document the viability of your business (and its soundness as an investment).

If possible, include the following sections and have a Certified Public Accountant (CPA) help you:

An income statement and a cash flow statement differ because an income statement does not include details of when revenue was collected or expenses paid.

This section of the business plan outline is only relevant if you are seeking capital for your business.

State the amount of funding and the type (debt or equity) of investment you seek. Provide a breakdown of how the money will be used. Discuss what effect the capital will have on the business' potential to grow and profit, when the money is needed, and what investment has already been made in the company.

What will investors receive in return for their capital? They want to know this so be clear and don't leave it up to the investor to make assumptions or figure it out for themselves. Meaning include both the potential upside and the potential downside of investing in your business.

If the company founders have invested in the company, include this in your plan. This may encourage some investors.

Create an exit plan that describes how investors will get their money out of your company. Help potential investors clearly see this so that they do not worry that it may be difficult for them to get a good price for their shares, even if the company is profitable. What do many investors insist upon? A cash-out option in five years or assurance that the company will become a strong candidate for a purchase or an IPO (Initial Public Offering).

If after reading the above business plan outline you're still feeling overwhelmed about creating your business plan, then simply focus on the first section of the business plan outline.

Start there.

When you're done with the first section of the business plan outline, move onto the second section.

If you want to read more about business plans, click here for book recommendations.

If you need help, contact me. I am here to help.

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