Professional Documents
Culture Documents
a company is going,
Outline for
a Business
Plan
A proven approach for entrepreneurs only
once it arrives.
e
business plan cover 4/23/97 8:16 PM Page 4
A business plan can take many forms, from a glossy, professionally produced
company is going, how it will get there, and what it will look like
once it arrives.
1
business plan layout 4/23/97 8:36 PM Page 2
Uses of a
A business plan is a valuable management tool that can be utilized in a wide
variety of situations.
Business Plan In most companies, business plans are used at a minimum to:
When utilized most efficiently, the same business plan, with slight modification, can be used for
all three actions.
Performance Benchmarks
A business plan can also be used to develop and document milestones along your business’s path to
success. In the heat of daily operations, you may find that taking an objective look at the perform-
ance of your business is difficult. Often, the trees encountered daily obscure your view of the forest
in which your company operates. A business plan can provide you and your management team
with an objective basis for determining if the business is on track to meet the goals and objectives
you have set.
Your business plan should show how all the pieces of your company fit together to create a
vibrant organization capable of meeting its goals and objectives. It must be able to communi-
cate your company’s distinctive competence to anyone who might have an interest.
2
business plan layout 4/23/97 8:36 PM Page 3
his booklet presents a generalized outline for writing a business plan. The outline is intended
T to be used with Ernst & Young’s Business Plan Guide, published by John Wiley & Sons. The
Steps in
Preparing
Guide can be purchased at many bookstores, or see page 15 for ordering information.
Listed below are the steps you should follow in preparing your business plan, whether you are Your
writing it for the first time or rewriting it for the twentieth.
Business Plan
STEP 1—IDENTIFY YOUR OBJECTIVES
Before you can write a successful business plan you must determine who will read the plan, what
they already know about your company, what they want to know about your company, and how
they intend to use the information they will find in the plan. The needs of your target audience
must be combined with your communication objectives—what you want the reader to know.
Once you have identified and resolved any conflicts between what your target audience wants to
know and what you want them to know, you are ready to begin preparing a useful business plan.
You will probably find it necessary to research many areas before you have enough information
to write about them. Most people begin by collecting historical financial information about their
company and/or industry, and completing their market research before beginning to write any
part of their plan. Even though you may do extensive research before you begin to develop your
plan, you may find that additional research is required before you complete it. You should take
the time to complete the required research because many of the assumptions and strategies
described in the plan will be based on the findings and analysis of your research.
Initial drafts of prospective financial statements are often prepared next, after the basic financial
and market research and analysis are completed.
3
business plan layout 4/23/97 8:36 PM Page 4
Your them. As you develop your prospective statements, be certain that you keep detailed notes on
the assumptions you make to facilitate preparation of the footnotes that must accompany the
Business Plan statements, as well as the composition of other business plan elements.
The last element of a business plan to be prepared is the Executive Summary. Since it is a sum-
mary of the plan, its contents are contingent on the rest of the document, and it cannot be writ-
ten properly until the other components of the plan are essentially complete.
While preparing each element of your plan, refer to the outline in this booklet to be certain that
you have covered each area thoroughly.
4
business plan layout 4/23/97 8:36 PM Page 5
5
business plan layout 4/23/97 8:36 PM Page 6
8. Key trends and anticipated changes within your primary target markets
2. Growth strategy
a. Internal
b. Acquisition
c. Franchise
d. Horizontal (providing similar products to different users)
e. Vertical (providing the products at different levels of the distribution chain)
4. Communication
a. Promotion
Outline for a
b. Advertising
c. Public relations Business Plan
d. Personal selling
e. Printed materials (catalogues, brochures, etc.)
B. Sales Strategies
Do not under-
1. Sales force
estimate the
a. Internal vs. independent representatives (advantages and
disadvantages of your strategy) importance of present-
b. Size ing a well-conceived sales
c. Recruitment and training strategy here. Without an
d. Compensation efficient approach to beat-
ing a path to the doors of
2. Sales activities
potential customers, com-
a. Identifying prospects
b. Prioritizing prospects panies with very good
c. Number of sales calls made per period products and services
d. Average number of sales calls per sale often fail.
e. Average dollar size per sale
f. Average dollar size per reorder
9
business plan layout 4/23/97 8:37 PM Page 10
2. Lead-time requirements
3. Evaluation of the risks of critical element shortages
4. Description of the existing and anticipated contractual relationships
with suppliers
10
business plan layout 4/23/97 8:37 PM Page 11
Do not use this section of the plan to negotiate future ownership of the company with potential
investors. Simply explain the current ownership. Because your
management
A. Management Staff Structure team is unique, make
1. Management staff organization chart sure that you stress mem-
2. Narrative description of the chart bers’ backgrounds and
B. Key Managers (complete resumes should be presented in an appendix to the skills, and how they will
business plan) contribute to the success of
1. Name your product/service and
2. Position business. This is especially
3. Brief position description, including primary duties important to emphasize
4. Primary responsibilities and authority when you are looking for
5. Unique skills and experiences that add to your company’s distinctive financing.
competencies
6. Compensation basis and levels (be sure they are reasonable—not too high
and not too low)
C. Planned Additions to the Current Management Team
1. Position
2. Primary responsibilities and authority
3. Requisite skills and experience
4. Recruitment process
5. Timing of employment
6. Anticipated contribution to the company’s success
7. Compensation basis and levels (be sure they are in line with the market)
D. Legal Structure of the Business
1. Corporation
a. C corporation
b. S corporation
2. Partnership
a. General
b. Limited
3. Proprietorship
E. Owners
1. Names
2. Percentage ownership
3. Extent of involvement with the company
4. Form of ownership
a. Common stock
b. Preferred stock
c. General partner 11
d. Limited partner
business plan layout 4/23/97 8:37 PM Page 12
6. Common stock
a. Authorized
b. Issued
F. Board of Directors
1. Names
2. Position on the board
3. Extent of involvement with the company
4. Background
5. Contribution to the company’s success
a. Historically
b. In the future
Note —Ernst & Young’s Guide to Financing for Growth contains a detailed discussion
of various alternatives for raising capital and may provide you with some of the ideas and
Outline for a
information you may need to write this portion of your business plan. The Guide, written
by E&Y partners and published by John Wiley & Sons, can be purchased at many bookstores.
See page 15 for additional ordering information.
Business Plan
IX. Financial Data
The Financial Data section contains the financial representation of all the information presented
in the other sections. Various prospective scenarios can be included, if appropriate.
13
business plan layout 4/23/97 8:37 PM Page 14
he copies of your plan should be controlled, and a distribution record should be kept. This
Administrative T process will allow you to update your distributed plans as needed and help to ensure that
Considerations your plan is not more widely distributed than you intend. In fact, many plans include ethical
disclaimers that limit the ability of individuals distributing or otherwise copying the plan with-
out the consent of the company’s owners. Remember too that an appropriate private placement
disclaimer should be included if the plan is being used to raise capital.
14
business plan layout 4/23/97 8:37 PM Page 15
Information for
Entrepreneurs
Call 1-800-892-1732 for more information, or contact us at our web site —http://ernie.ey.com.
To order any of the following business publications, visit the Ernst & Young Bookstore on our web site at
http://www.ey.com or call John Wiley & Sons at 1-800-225-5945.
Written by Ernst & Young partners and published by John Wiley & Sons, the book is available in
hardcover for $39.95.
15
business plan layout 4/23/97 8:37 PM Page 16
For rnst & Young’s Entrepreneurial Services personnel are experienced business professionals
E dedicated exclusively to serving the needs of growing businesses. We are business advisors to
Entrepreneurs the owners/managers and decision-makers in many organizations like yours.
Only We add experience, knowledge, and entrepreneurial know-how to the traditional areas of infor-
mation systems, assurance and advisory business services, and tax consultation. The result: a local
team with international resources that can help growing businesses reach their potential.
We are backed by the worldwide resources of Ernst & Young, one of the world’s largest and
most prestigious professional services organizations. And we’re nearby, ready to serve you with
offices in more than 100 locations in the United States and over 130 countries around the world.
Call the Director of Entrepreneurial Services in the Ernst & Young office nearest you, or call the
Entrepreneurial Services Hotline toll free: 1-800-755-2927. Ask about how we can help you pre-
pare your company’s business plan, or about any of the business services Ernst & Young provides:
e http://www.ey.com