Below is an
outline for a business plan. Use this model as a guide when developing
the business plan for your business.
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 business plan:
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
Relations
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.
Start-up Budget
- personnel (costs prior
to opening)
- legal/professional fees
- occupancy
- licenses/permits
- equipment
- insurance
- supplies
- advertising/promotions
- salaries/wages
- accounting
- income
- utilities
- 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.
Operating Budget
- personnel
- insurance
- rent
- depreciation
- loan payments
- advertising/promotions
- legal/accounting
- miscellaneous expenses
- supplies
- payroll expenses
- salaries/wages
- utilities
- dues/subscriptions/fees
- taxes
- repairs/maintenance
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 management plan.
- Sketch
an outline for a business plan.
THE
BUSINESS PLAN - APPENDIX 1
MARKETING
_________________________________________________________________
THE
ENTREPRENEUR'S
MARKETING PLAN
This is
the marketing plan of____________________________
I.
MARKET ANALYSIS
A.
Target Market - Who are the customers?
a.
Private sector _______ ______
b.
Wholesalers _______ ______
c.
Retailers _______ ______
d.
Government _______ ______
e. Other
_______ ______
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?
________________
$________________
B.
Competition
NAME
________________________________________
ADDRESS
_________________________________________
_________________________________________
Years in
Business ___________________
Market
Share ___________________
Price/Strategy
___________________
Product/Service
Features
___________________
NAME
_________________________________________
ADDRESS
_________________________________________
_________________________________________
Years in
Business ____________________
Market
Share ____________________
Price/Strategy
____________________
Product/Service
Features
____________________
High
____________________
Medium
____________________
Low
____________________
Strengths
Weaknesses
1._______________________
1._____________________
2._______________________
2._____________________
3._______________________
3._____________________
4._______________________
4._____________________
C.
Environment
________________________________________________
________________________________________________
________________________________________________
________________________________________________
________________________________________________
________________________________________________
________________________________________________
________________________________________________
________________________________________________
________________________________________________
________________________________________________
________________________________________________
II.
PRODUCT OR SERVICE ANALYSIS
A.
Description
________________________________________________
________________________________________________
________________________________________________
B.
Comparison
__________________________________________________
__________________________________________________
__________________________________________________
__________________________________________________
__________________________________________________
__________________________________________________
C. Some
Considerations
__________________________________________________
__________________________________________________
__________________________________________________
III.
MARKETING STRATEGIES - MARKET MIX
__________________________________________________
a. Markup
on cost ____ What % markup? _____
b.
Suggested price ____
c.
Competitive ____
d. Below
competition ____
e.
Premium price ____
f. Other
____
____________________________________________________
____________________________________________________
____________________________________________________
1.
Television ________
2. Radio
________
3. Direct
mail ________
4.
Personal contacts ________
5. Trade
associations ________
6.
Newspaper ________
7.
Magazines ________
8. Yellow
Pages ________
9.
Billboard ________
10.
Other___________ ________
__________________________________________________
__________________________________________________
__________________________________________________
_________________________________________________________________
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
- Human
- Material
- Production
_________________________________________________________________
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 Constructing
- Emphasize
Customer Advantage
Must be
Important
to the
Customer: When the perception of competitive
advantage
varies between supplier and customer, the customer wins.
Must be
Specific: When a competitive advantage lacks
specificity,
it translates into mere puffery and is ignored.
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 Behavior
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 Means..."
- 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
quality
buyer)
_________________________________________________________________
NOTES
AND STRATEGIES FOR YOUR BUSINESS
_________________________________________________________________
CONVERT
FEATURES INTO BENEFITS-
THE
"...WHICH MEANS..." TRANSITION
FEATURES
"WHICH MEANS" BENEFITS
Performance
Time Saved
Reputation
Reduced Cost
Components
Prestige
Colors
Bigger Savings
Sizes
Greater Profits
Exclusive
Greater
Convenience
Uses
Uniform Production
Applications
Uniform Accuracy
Ruggedness
Continuous Output
Delivery
Leadership
Service
Increased Sales
Price
Economy of Use
Design
Ease of Use
Availability
Reduced Inventory
Installation
Low Operating Cost
Promotion
Simplicity
Lab Tests
Reduced Upkeep
Terms
Reduced Waste
Workmanship
Long Life
BUYING
MOTIVES
RATIONAL
EMOTIONAL
Economy
of Purchase Pride of
Appearance
Economy
of Use Pride of Ownership
Efficient
Profits Desire of Prestige
Increased
Profits Desire for
Recognition
Durability
Desire to Imitate
Accurate
Performance Desire for Variety
Labor-Saving
Safety
Time-Saving
Fear
Simple
Construction Desire to Create
Simple
Operation Desire for
Security
Ease of
Repair Convenience
Ease of
Installation Desire to Be
Unique
_________________________________________________________________
PRICE /
QUALITY MATRIX
SALES APPEALS
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 Ticking" "Bargain
Strategy
Strategy Hunter"
Strategy
THE
BUSINESS PLAN - APPENDIX 2
FINANCIAL
MANAGEMENT
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
expenses
Taxes
Net
profit (loss) after
taxes
_________________________________________________________________
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.
Industry
Percentage
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
column.
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 expected?
- Exclude
any revenue that is not strictly related to the business.
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.
Gross
Profit
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 total sales
(revenues).
It is calculated by dividing
gross
profits
______________
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 business.
- 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.
Fixed
Expenses
- 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 separate accounts.
Net
Profit (loss)
(before
taxes) - Subtract total expenses from gross profit.
Taxes -
Include inventory and sales tax, excise
tax, real
estate tax, etc.
Net
Profit (loss)
(after
taxes) - Subtract taxes from net profit (before
taxes)
Annual
Total - For each of the sales and expense items in
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 by dividing
Annual
total x 100%
___________________
total net
sales
- Compare
this figure to the industry percentage in the first column.
_________________________________________________________________
BALANCE SHEET
COMPANY NAME
As of
____________________________, 19____
Assets
Cash
$_______
Petty
cash $_______
Accounts
receivable $_______
Inventory
$_______
Short-term
investment $_______
Prepaid
expenses $_______
Long-term
investment $_______
Land
$_______
Buildings
$_______
Improvements
$_______
Equipment
$_______
Furniture
$_______
Automobile/vehicles
$_______
Other
assets
Liabilities
Current
Liabilities
Accounts
payable $______
Notes
payable $______
Interest
payable $______
Taxes
payable
Federal
income tax $______
State
income tax $______
Self-employment
tax $______
Sales tax
(SBE) $______
Property
tax $______
Payroll
accrual $______
Long-term
liabilities
Notes
payable $______
Total
liabilities $______
Net worth
(owner equity) $______
Proprietorship
or
Partnership
(name's)
equity $_____
(name's)
equity $_____
or
Capital
stock $_____
Surplus
paid in $_____
Retained
earnings $_____
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.
Assets
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.
Current
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 floor
space.
Long-term
Investments
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.
Fixed
Assets
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.
- Buildings
- Improvements
- Equipment
- Furniture
- Automobile/vehicles
Liabilities
Current
Liabilities
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.
Long-term
Liabilities
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.
Net worth
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 Date
Pre-start-
1 2 3 4 5 6 Total
up
position Columns 1-6
Year Month
Est.*
Act.* Est.Act. Est.Act. Est.Act. Est.Act. Est.Act. Est.Act. Est.Act.
1. Cash
on hand (beginning
month)
2. Cash
receipts
3. Total
cash receipts
(2a+2b+2c=3)
4. Total
cash available
(before
cash out) (1+3)
5. Cash
paid out
6. Total
cash paid out (5a
through
5w)
7. Cash
position (end of
month) (4
minus 6)
_________________________________________________________________
INSTRUCTIONS
FOR MONTHLY CASH FLOW PROJECTION
_______________________________________________
_______________________________________________
Unexpected
expenditures may be included here as a safety
factor________________________________________
Equipment
expenses during the month should be included
here
(non-capital equipment)__________________________
When
equipment is rented or leased, record payments here
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.
THE
BUSINESS PLAN - APPENDIX 3: INFORMATION RESOURCES
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
products.
This
information is listed in "Resource Directory for Small Business
Management." For a free copy contact your nearest SBA office.
SBA has
offices throughout the country. Consult the U.S.
Government
section in your telephone directory for the office
nearest
you. SBA offers a number of programs and services,
including
training and educational programs, counseling services,
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 people.
- 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 (827-5722).
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:
The CIC
offers a consumer information catalog of federal publications.
The USDA
offers publications on selling to the USDA. Publications and programs
on entrepreneurship are also available through county extension offices
nationwide.
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.
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 Information:
1-800-729-6686
toll-free. Provides pamphlets and resource materials on substance abuse.
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 directories,
indexes
and encyclopedias that cover many business topics. They
also have
other resources, such as
- Trade
association information