Professional Documents
Culture Documents
by Tim Berry
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What information needs to be in your business plan? What is the order of information that
will make the most sense to lenders and investors? You can answer these questions with the
business plan outlines provided below.
What are the standard elements of a business plan? If you do need a standard business plan to
seek funding — as opposed to a plan-as-you-go approach for running your business, which I
describe below — there are predictable contents of a standard business plan outline.
For example, a business plan normally starts with an Executive Summary, which should be
concise and interesting. People almost always expect to see sections covering the Company, the
Market, the Product, the Management Team, Strategy, Implementation, and Financial Analysis.
The precise business plan format can vary.
Is the order important? If you have the main components, the order doesn’t matter that much,
but here’s the sequence I suggest for a business plan. I have provided two outlines, one simple
and the other more detailed.
Build your plan, then organize it. I don’t recommend developing the plan in the same order
you present it as a finished document. For example, although the Executive Summary obviously
comes as the first section of a business plan, I recommend writing it after everything else is done.
It will appear first, but you write it last.
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There are also some business tables and charts that are normally expected in a standard business
plan.
Cash flow is the single most important numerical analysis in a plan, and should never be
missing. Most plans will also have Sales Forecast and Profit and Loss statements. I believe
they should also have separate Personnel listings, projected Balance Sheet, projected Business
Ratios, and Market Analysis tables.
I also believe that every plan should include bar charts and pie charts to illustrate the numbers.
Consider plan-as-you-go business planning. I’ve done a lot of work on this idea lately,
resulting in my new “Plan As You Go” business planning, which is a now a book published by
Entrepreneur Press, available through Amazon.com, Barnes and Noble, and Borders, and
bundled as an eBook with Business Plan Pro. I’ve also added a short video here to the right,
illustrating how the outline could be simpler with a new approach.
1.
Choosing the proper business entity is essential for the success of a business.
Formal Requirements
2. Generally, states require corporations to file documents, such as the corporation's articles
of incorporation and by-laws with the state. Sole proprietorships and partnerships usually
do not need to file any documents with the state, outside of tax documents.
Raising Capital
3. Corporations appear to have the easiest time raising capital, because they can sell equity
ownership interest in the corporation. A sole proprietorship cannot sell any equity
ownership and must rely solely on profit, and partnerships must admit new partners in
order to introduce new capital.
Taxation
4. The Internal Revenue Service taxes sole proprietorships on an individual tax level. All
profits and losses from the sole proprietorship belong on the owner's tax return.
Partnerships must file a form "Schedule K-1," with all partner profits included. Schedule
K-1 passes the partner's share of partnership profits and losses to the partner so the
partnership profits and losses are taxed on the partner's level. Corporations are taxed on
the corporate level, and individuals are taxed on an individual level when distributions
are passed to the shareholders of the company.
Liability
5. Generally, a sole proprietor is liable for all debts and torts of a sole proprietorship
business organization. In a partnership, partners are usually liable under agency law, and
are liable for debts up to their particular capital contributions. Corporate shareholders are
rarely liable for any actions of the corporation.
Entity
6. Corporations are considered a separate legal entity from their owners. A sole
proprietorship is not legally separated from its owner. A partnership sometimes is treated
as separate from its owners, depending on the situation. For example, a partnership can
buy property as if it were one owner.