bp2011 business plan model 1 (1)

7/28/2019 BP2011 Business Plan Model 1 (1)

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Product of SCORE score.orgvisit this site for many helpful tools

Nelson edits in yellow

Business Plan for a Startup BusinessThe business plan consists of a summary statement, a narrative and severalfinancial worksheets. The narrative template below is the body of thebusiness plan. It contains more than 150 questions divided into severalsections. Here is a recommendation for working out the sections:

1. Determine performance goals for the business 3-5 year horizon. Use 3-5key metrics related to growth and operations.2. Thick description of your first products. Have others relate to that one (youmay have just one for 3-5 years and thats ok).3. Cost out your product/s. Doing this will get you started on your operationaltimeline.4. Determine your industry category and do competitive analysis.

5. Describe the customer market/s generally for this product. Then focus on2-3 key early target customer groups. Use demographics andpsychographics; features and benefits.6. Derive your competitive advantages given your product, market andcompetition.7. Determine a marketing approach, including your pricing strategy.8. Determine your technology strategy.

9. Determine what kind of organization you need to launch. Employees? Howmany? Where? Offices? Advisory board? Board?10. Develop an operational time line for three years. What are the bigmoments? When do you begin selling? Do you hire?


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1. Products/Services Description2. Marketing Plan

3. Technology Plan4. Management and Organization5. Operational Plan6. Growth Plan/Exit Strategy7. Start-up Expenses and Capitalization8. Financial Plan9. General Company Description10. Executive Summary

Edit to make a smooth flowing document.

The real value of creating a business plan is not in having the finishedproduct in hand; rather, the value lies in the process of researching andthinking about your business in a systematic way. The act of planning helpsyou to think things through thoroughly, study and research if you are notsure of the facts, and look at your ideas critically. It takes time now, butavoids costly, perhaps disastrous, mistakes later.

This business plan is a generic model suitable for all types of businesses.However, you should modify it to suit your particular circumstances. Beforeyou begin, review the section titled Refining the Plan, found at the end. Itsuggests emphasizing certain areas depending upon your type of business(manufacturing, retail, service, etc.). It also has tips for fine-tuning your plan

to make an effective presentation to investors or bankers. If this is whyyoure creating your plan, pay particular attention to your writing style. Youwill be judged by the quality and appearance of your work as well as by yourideas.


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Business Plan


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I. Table of Contents

I.Table of Contents.................................................................................4

II.Executive Summary............................................................................5

III.General Company Description............................................................6

IV.GROWTH STRATEGY...........................................................................7

V.Products and Services.........................................................................8

VI.Markets and Marketing ......................................................................9

VII.Technology Plan .............................................................................16

VIII.Operational Plan.............................................................................17

IX.Management and Organization........................................................21

X.Startup Expenses and Capitalization.................................................22

XI.Financial Plan...................................................................................23

XII.Appendices......................................................................................26

XIII.Refining the Plan............................................................................27


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II. Executive Summary

Write this section last.

We suggest that you make it two pages or fewer.

Include everything that you would cover in a five-minute interview.

Explain the fundamentals of the proposed business: What business are you

in? Who are your customers? What is the business model and how will youmake money?

What will your product/service be? Provide a thick description.

Who will your customers be? Detail 2-3 very specific target markets to start.Understand and share how your market will grow as your business grows.

What is the value proposition? (why would someone want to part with theirmoney to get your product or service?)

What is your growth strategy? Exit event?

What do you think the future holds for your business and your industry?

Who are the founders and why are they well suited to the task of start-up?

What are the key management roles, are they filled? Who will fill them, ifnot? What qualities are essential to those roles?

Who are the current owners, if any?


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III. General Company Description

What business will you be in? What will you do? What are theproducts/services you will offer to start .

Mission Statement: Many companies have a brief mission statement, usuallyin 30 words or fewer, explaining their reason for being and their guidingprinciples. This can include your thoughts about a Business Philosophy: Whatis important to you in business? If you want to draft a mission statement, this

is a good place to put it in the plan, followed by:

Company Goals and Objectives: Goals are destinationswhere you wantyour business to be. Objectives are progress markers along the way to goalachievement. For example, a goal might define the company in 3-5 years interms of measures of the growth strategy. Objectives might be next yearannual sales targets and growth goals to that ongoing.

DO NOT SPEND MORE THAN 30 MINUTES WRITING THESE YOUR FIRST TIMEAROUND. They will become naturally refined as you work your way throughwriting the plan.

To whom will you market your products? Be general and then specific - forexample, women over 50 years old in the US, and particularly highlyeducated and in urban areas (State it briefly hereyou will do a morethorough explanation in the Marketing Plan section).

Describe your industry. Is it a growth industry? What changes do youforesee in the industry, short term and long term? How will your company bepoised to take advantage of them?


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IV. GROWTH STRATEGY

Describe succinctly how you will grow for each of the first three years ofoperation, and then generally after that.

Give specific growth measures relevant to your business. If you can tiegrowth outcomes to any incomes for example, capital infusions, product

development, etc, that is good. In other words, share your model of yourcompanys growth.


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V. Products and Services

Describe in depth your products or services. Identify your first product andhow others are related by growth strategy.

What factors will give you competitive advantages or disadvantages?Examples include level of quality or unique or proprietary features.

What are the pricing, fee, or leasing structures of your products or services?


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VI. Markets and Marketing

Market researchNo matter how good your product and your service, the venture cannotsucceed without effective marketing. And this begins with careful, systematicresearch. It is very dangerous to assume that you already know about yourintended market. You need to do market research to make sure youre ontrack. Those who evaluate your plan look for it.

As you know, there are two kinds of market research: primary andsecondary.

Secondary research means using published information such as industryprofiles, trade journals, newspapers, magazines, census data, anddemographic profiles. This type of information is available in public libraries,industry associations, chambers of commerce, from vendors who sell to your

industry, and from government agencies. Start with the SOM library, and forreference, our librarian, Linda Schuller. You will be amazed at what isavailable. There are more online sources than you could possibly use. Yourchamber of commerce has good information on the local area. Tradeassociations and trade publications often have excellent industry-specificdata.

Primary research means gathering your own data. For example, you could do

your own traffic count at a proposed location, use the yellow pages toidentify competitors, and do surveys or focus-group interviews to learn aboutconsumer preferences. Professional market research can be very costly, butthere are many books that show small business owners how to do effective


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Trends in target marketgrowth trends, trends in consumerpreferences, and trends in product development.

Growth potential and opportunity for a business of your size.

How many customers can you claim to be able to reach? You can presentthis as a percent share of market, but be careful about 1% of a $1Bmarket is achievable. Everyone is suspicious of such claims. This is animportant issue as you MUST QUANTIFY TO TRANSLATE INTO YOURREVENUE PROJECTIONS IN FINANCIALS. There must be a reliable and logical

reasoning behind the market share you suggest.

What barriers to entry do you face in entering this market with your newcompany? Some typical barriers are:

High capital costsHigh production costsHigh marketing costsConsumer acceptance and brand recognitionTraining and skillsUnique technology and patentsUnion arrangements or other personnel constraintsShipping costsTariff barriers and quotas

And of course, how will you overcome the barriers?

What are the BIG macro issues that could impact your business? Be


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For each product or service:

Describe the most important features. What is special about it?

Describe the benefits. That is, what will the product do for the customer?

Note the difference between features and benefits, and think about them.For example, a house that gives shelter and lasts a long time is made withcertain materials and to a certain design; those are its features. Its benefitsinclude pride of ownership, financial security, providing for the family, and

inclusion in a neighborhood. You build features into your product so that youcan sell the benefits.

What after-sale services will you give? Some examples are delivery,warranty, service contracts, support, follow-up, and refund policy.

Customers

Identify TWO TO THREE targeted customers, their characteristics, and their geographiclocations, otherwise known as their demographics (e.g., age, sex, income level, educational level,

geographic location, etc). (Include psychographics, too - e.g., hipster, aging hippy, socially

conscious. Psychographics include: personality, values, attitudes, interests, or lifestyles. They arealso called IAO variables (for Interests, Activities, and Opinions). For example, the market for

shampoo may consist of various psychographic segments described by their primary purchase

motives (beauty, health, grooming), usage styles (daily, weekly, salon-only), or lifestyle

(frequent travelers, parents with young children, empty-nesters).The psychographiccharacteristics of the market affect not only advertising copybut also packaging (travel size,

child-proof, decorator pump) and channels of distribution (supermarkets, pharmacies, specialty

stores).Psychographic data can be gathered firsthand through personal interviews, focus group
http://www.answers.com/topic/copyinghttp://www.answers.com/topic/copyinghttp://www.answers.com/topic/copying


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end consumer and the middleman businesses to which you sell. IN ANYCASE, you should know your full supply chain from absolute raw material to

final consuming customer.

You may have more than one customer group. Identify the most importantgroups, especially for your initial sales.

For business customers, the demographic (or firmographic) factors might be:

Industry (or portion of an industry)

Location

Size of firm

Quality, technology, and price preferences

Brand, mission

Competitive dynamics

Other (specific to your industry)

Other (specific to your industry)

CompetitionWhat products and companies will compete with you? Which are already in


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NicheNow that you have systematically analyzed your industry, your product, yourcustomers, and the competition, you should have a clear picture of whereyour company fits into the world.

In one short paragraph, define your niche, your unique corner of the market.This should be done in the form of a value proposition: For these targetmarkets ____________ I will offer these features and benefits__________________ that will exceed the competition because of these

distinctive competencies of my company ____________________.

Marketing StrategyNow outline a marketing strategy that is consistent with your niche. Use the4 Ps model.

Promotion

How will you get the word out to customers?

Advertising: What media, why, and how often? Why this mix and notsome other?

Web and Social Media

* Note technology section can be integrated here or referred to andpresented as a separate section of the plan. At a minimum, you shoulddiscuss a website and social media strategy for launch and post


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Should you have a system to identify repeat customers and thensystematically contact them?

Promotional Budget

How much will you spend on the items listed above?

Before startup? (These numbers will go into your startup budget.)

Ongoing? (These numbers will go into your operating plan budget.)

Pricing

Explain your method or methods of setting prices. For most smallbusinesses, having the lowest price is not a good policy. It robs you ofneeded profit margin; customers may not care as much about price as youthink; and large competitors can under price you anyway. Usually you will dobetter to have average prices and compete on quality and service.

Does your pricing strategy fit with what was revealed in your competitiveanalysis?

Compare your prices with those of the competition. Are they higher, lower,the same? Why?

How important is price as a competitive factor? Do your intended customers

really make their purchase decisions mostly on price?ONLY IF IT IS IMPORTANT TO YOUR VENTURE: What will be your customerservice and credit policies?


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Web and social media strategy*

Retail

Direct (mail order, Web, catalog)

Wholesale

Your own sales force

Agents

Independent representatives

Bid on contracts

Sales ForecastNow that you have described your products, services, customers, markets,

and marketing plans in detail, its time to attach some numbers to your plan.

Forecasting sales of your product or service is the starting point for thefinancial projections. The sales forecast is the key to the whole financial plan,so it is important to use realistic estimates. Divide your projected monthlysales into "Categories", which are natural divisions that make sense for yourtype of business. Typical categories are product types or lines. You mightalso indicate departments, branch locations, customer groups, geographical

territories, or contracts, depending on your business.

Please see a simple sales projection sheet in the appendices of this report.


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VII. Technology Plan

At its most basic, how will you use the web and social media to advance yourbusiness?

For technology based companies, explain the technology and how it will beused/integrated.


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VIII. Operational Plan

Build a detail of what you need to do to launch and grow your business ingreatest detail for the first year of operation, in less detail for years 2-3.

Explain the daily operation of the business, its location, equipment, people,processes, and surrounding environment.

ProductionHow and where are your products or services produced?

Explain your methods of

Production techniques and costs

Quality control

Customer service

Inventory control

Product development

Location

What qualities do you need in a location? Describe the type of location youllhave.

Physical requirements:


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Cost: Estimate your occupation expenses, including rent, but also includingmaintenance, utilities, insurance, and initial remodeling costs to make the

space suit your needs. These numbers will become part of your financialplan.

What will be your business hours?

Legal EnvironmentDescribe the following:

Licensing and bonding requirements

Permits

Health, workplace, or environmental regulations

Special regulations covering your industry or profession

Zoning or building code requirements

Insurance coverage

Trademarks, copyrights, or patents (pending, existing, or purchased)

Personnel in three years Number of employees

Type of labor (skilled, unskilled, and professional)


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For certain functions, will you use contract workers in addition toemployees?

Inventory What kind of inventory will you keep: raw materials, supplies, finished

goods?

Average value in stock (i.e., what is your inventory investment)?

Rate of turnover and how this compares to the industry averages?

Seasonal buildups?

Lead-time for ordering?

SuppliersIdentify key suppliers:

Names and addresses

Type and amount of inventory furnished

Credit and delivery policies

History and reliability

Should you have more than one supplier for critical items (as a backup)?


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How will you check the creditworthiness of new applicants?

What terms will you offer your customers; that is, how much credit andwhen is payment due?

Will you offer prompt payment discounts? (Hint: Do this only if it is usualand customary in your industry.)

Do you know what it will cost you to extend credit? Have you built thecosts into your prices?

Managing Your Accounts Receivable

You will need a policy for dealing with slow-paying customers:

When do you make a phone call?

When do you send a letter?

When do you get your attorney to threaten?

Managing Your Accounts Payable

You should also age your accounts payable, what you owe to your suppliers.This helps you plan whom to pay and when. Paying too early depletes yourcash, but paying late can cost you valuable discounts and can damage your

credit. (Hint: If you know you will be late making a payment, call the creditorbefore the due date.)

Do your proposed vendors offer prompt payment discounts?


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IX. Management and Organization

Who will manage the business on a day-to-day basis? What experience doesthat person bring to the business? What special or distinctive competencies?Is there a plan for continuation of the business if this person is lost orincapacitated?

If youll have more than 10 employees, create an organizational chartshowing the management hierarchy and who is responsible for key functions.

Include position descriptions for key employees. If you are seeking loans orinvestors, include resumes of owners and key employees.

Professional and Advisory SupportList the following:

Board of directors

Management advisory board

Attorney

Accountant

Insurance agent

Banker


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X. Startup Expenses and Capitalization

You will have many startup expenses before you even begin operating yourbusiness. Its important to estimate these expenses accurately and then toplan where you will get sufficient capital. This is a research project, and themore thorough your research efforts, the less chance that you will leave outimportant expenses or underestimate them.

Even with the best of research, however, opening a new business has a way

of costing more than you anticipate. There are two ways to make allowancesfor surprise expenses. The first is to add a little padding to each item in thebudget. The problem with that approach, however, is that it destroys theaccuracy of your carefully wrought plan. The second approach is to add aseparate line item, called contingencies, to account for the unforeseeable.This is the approach we recommend.

Talk to others who have started similar businesses to get a good idea of how

much to allow for contingencies. If you cannot get good information, werecommend a rule of thumb that contingencies should equal at least 20percent of the total of all other start-up expenses.

Explain your research and how you arrived at your forecasts of expenses.Give sources, amounts, and terms of proposed loans. Also explain in detailhow much will be contributed by each investor and what percent ownershipeach will have.
http://www.score.org/downloads/Start-up%20Expenses1.xlshttp://www.score.org/downloads/Start-up%20Expenses1.xls


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XI. Financial Plan

The financial plan consists of 3 years of data (at least) presented in a:

1. Start up budget

2. 12-month profit and loss projections for first year andquarterly for 2 additional years (at least)

3. a cash-flow projection4. a projected balance sheet

5. a break-even calculation.

Together these constitute a reasonable estimate of your company's financialfuture. More important, the processof thinking through the financial plan willimprove your insight into the inner financial workings of your company.

THIS IS CRITICAL FOR ANALYSIS: ADD FOOTNOTES TO THE BOTTOM OF EACHOF THESE SPREADSHEETS TO EXPLAIN THE SOURCE OF THE NUMBER (IF IT ISNOT OBVIOUS FROM THE SPREADSHEET INFORMATION). FOR EXAMPLE,REVENUE LINE GETS A FOOTNOTE THAT SAYS,

# OF ITEMS SOLD X COST PER ITEM, WITH % INCREASE IN SALES OVER TIME

## REVENUE ADJUSTED BY X TO ACCOUNT FOR SEASONAL FLUCTATION

ETC.


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Three Year Profit ProjectionThe 12-month projection is the heart of your financial plan.The Three-YearProfit projection carries the forecasts beyond the first year. Years 2 and 3can be done on a quarterly report basis. Do more if your business needs it.

Of course, keep notes of your key assumptions, especially about things thatyou expect will change dramatically after the first year.

Projected Cash Flow

If the profit projection is the heart of your business plan, cash flow is theblood. Businesses fail because they cannot pay their bills. Every part of yourbusiness plan is important, but none of it means a thing if you run out ofcash.

The point of this worksheet is to plan how much you need before startup, forpreliminary expenses, operating expenses, and reserves. You should keepupdating it and using it afterward. It will enable you to foresee shortages in

time to do something about themperhaps cut expenses, or perhapsnegotiate a loan. But foremost, you shouldnt be taken by surprise.

There is no great trick to preparing it: The cash-flow projection is just aforward look at your checking account.

For each item, determine when you actually expect to receive cash (forsales) or when you will actually have to write a check (for expense items).

You should track essential operating data, which is not necessarily part ofcash flow but allows you to track items that have a heavy impact on cashflow such as sales and inventory purchases
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Are there irregular expenses, such as quarterly tax payments, maintenanceand repairs, or seasonal inventory buildup, that should be budgeted?

Loan payments, equipment purchases, and owner's draws usually do notshow on profit and loss statements but definitely do take cash out. Be sure toinclude them.

And of course, depreciation does not appear in the cash flow at all becauseyou never write a check for it.

Opening Day Balance SheetA balance sheet is one of the fundamental financial reports that any businessneeds for reporting and financial management. A balance sheet shows whatitems of value are held by the company (assets), and what its debts are(liabilities). When liabilities are subtracted from assets, the remainder isowners equity.

Use a startup expenses and capitalization spreadsheet as a guide topreparing a balance sheet as of opening day. Then detail how you calculatedthe account balances on your o pening day balance sheet.

Optional: Some people want to add a projected balance sheet showing theestimated financial position of the company at the end of the first year. Thisis especially useful when selling your proposal to investors.

Break-Even AnalysisA break-even analysis predicts the sales volume, at a given price, required torecover total costs. In other words, its the sales level that is the dividing linebetween operating at a loss and operating at a profit
http://www.score.org/downloads/Opening%20Day%20Balance%20Sheet1.xlshttp://www.score.org/downloads/C%20Projected_Balance_Sheet3.xlshttp://www.score.org/downloads/Break-Even%20Analysis1.xlshttp://www.score.org/downloads/Opening%20Day%20Balance%20Sheet1.xlshttp://www.score.org/downloads/C%20Projected_Balance_Sheet3.xlshttp://www.score.org/downloads/Break-Even%20Analysis1.xls


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XII. Appendices

Include ESSENTIAL details and studies used in your business plan; forexample:

Blueprints and plans

Maps and photos of location

Detailed lists of equipment owned or to be purchased

Copies of leases and contracts

Patent information

Summaries of market research studies

List of assets available as collateral for a loan


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XIII. Refining the Plan

The generic business plan presented above should be modified to suit yourspecific type of business and the audience for which the plan is written.

For Raising CapitalFor Bankers

Bankers want assurance of orderly repayment. If you intend using this

plan to present to lenders, include:

o Amount of loan

o How the funds will be used

o What this will accomplishhow will it make the businessstronger?

o Requested repayment terms (number of years to repay). You willprobably not have much negotiating room on interest rate butmay be able to negotiate a longer repayment term, which willhelp cash flow.

o Collateral offered, and a list of all existing liens against collateral

For Investors

Investors have a different perspective. They are looking for dramatic


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o Involvement of investors on the board or in management

For Type of BusinessManufacturing

Planned production levels

Anticipated levels of direct production costs and indirect (overhead)costshow do these compare to industry averages (if available)?

Prices per product line

Gross profit margin, overall and for each product line

Production/capacity limits of planned physical plant

Production/capacity limits of equipment

Purchasing and inventory management procedures

New products under development or anticipated to come online afterstartup

Service Businesses

Service businesses sell intangible products. They are usually moreflexible than other types of businesses, but they also have higher laborcosts and generally very little in fixed assets.


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Strategy for keeping client base

High Technology Companies

Economic outlook for the industry

Will the company have information systems in place to manage rapidlychanging prices, costs, and markets?

Will you be on the cutting edge with your products and services?

What is the status of research and development? And what is requiredto:

o Bring product/service to market?

o Keep the company competitive?

How does the company:

o Protect intellectual property?

o Avoid technological obsolescence?

o Supply necessary capital?

o Retain key personnel?

High-tech companies sometimes have to operate for a long time withoutprofits and sometimes even without sales If this fits your situation a banker


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o Selection and price should be consistent with company image.

o

Inventory level: Find industry average numbers for annualinventory turnover rate (available in RMA book). Multiply yourinitial inventory investment by the average turnover rate. Theresult should be at least equal to your projected first year's costof goods sold. If it is not, you may not have enough budgeted forstartup inventory.

Customer service policies: These should be competitive and in accord

with company image.

Location: Does it give the exposure that you need? Is it convenient forcustomers? Is it consistent with company image?

Promotion: Methods used, cost. Does it project a consistent companyimage?

Credit: Do you extend credit to customers? If yes, do you really need to,and do you factor the cost into prices?


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Nearly everyone who has ever started a business has underestimatedthe costs, and then faced the danger of running with inadequate capital

reserves. The key to avoiding this pitfall is to adopt a rigorous approachto your research and planning.

Our Startup Expenses worksheet will lead you through the process.

EXPENSES - Begin by estimating expenses. What will it cost you to getyour business up and running? The key to accuracy here is attention todetail. For each category of expense, draw up a list of everything you

will need to purchase. This will include both tangible assets (forexample, equipment, inventory) and services (for example, remodeling,insurance). Then determine where you might purchase these goods orservices. Research more than one vendor; i.e.: comparison shop. Do notlook at price alone; terms of payment, delivery, reliability, and serviceare also important.

CONTINGENCIES - Add a reserve for contingencies. Be sure to explain inyour narrative how you decided on the amount you are putting into thisreserve.

WORKING CAPITAL - You cannot open with an empty bank account. Youneed a cash cushion to meet expenses while the business gets going.Eventually you should do a 12-month cash flow projection. This is whereyou will work out your estimate of working capital needs. For now, either

leave this line blank or put in your best rough guess. After you havedone your cash flow, you can come back and enter the carefullyresearched figure.


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Enter your company name here

Sources of Capital

Owners' Investment (name andpercent ownership)

Your name and percent ownership $ -

Other investor -Other investor -

Other investor -

Total Investment $ -

Bank Loans

Bank 1 $ -

Bank 2 -

Bank 3 -

Bank 4 -Total Bank Loans $ -

Other Loans

Source 1 $ -

Source 2 -

Total Other Loans $ -

Startup Expenses

Buildings/Real Estate


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Total Capital Equipment $ -

Location and Admin Expenses

Rental $ -

Utility deposits -

Legal and accounting fees -

Prepaid insurance -

Pre-opening salaries -

Other -

Total Location and Admin Expenses $ -

Opening InventoryCategory 1 $ -

Category 2 -

Category 3 -

Category 4 -

Category 5 -

Total Inventory $ -

Advertising and PromotionalExpenses

Advertising $ -

Signage -

Printing -

Travel/entertainment -

Other/additional categories -

Total Advertising/PromotionalExpenses $ -

Other Expenses

Other expense 1 $ -

Other expense 2


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Location/administration expenses -

Opening inventory -

Advertising/promotional expenses -

Other expenses -

Contingency fund -

Working capital -

Total Startup Expenses $ -

Security and Collateral for Loan Proposal

Collateral for Loans Value DescriptionReal estate $ -

Other collateral -

Other collateral -

Other collateral -

Owners

Your name hereOther owner

Other owner

Loan Guarantors (other than owners)

Loan guarantor 1

Loan guarantor 2

Loan guarantor 3


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Sales Forecast (12 Months)Enter your Company Namehere

Fiscal Year Begins Jun-05

12-month Sales Forecast

Jun-05 Jul-05 Aug-05 Sep-05 Oct-05 Nov-05 Dec-05 Jan-06 Feb-06 Mar-06 Apr-06 May-06AnnualTotals

Cat 1 unitssold 0

Sale price

@ unit Cat 1TOTAL 0 0 0 0 0 0 0 0 0 0 0 0 0

Cat 2 unitssold 0

Sale price@ unit

Cat 2TOTAL 0 0 0 0 0 0 0 0 0 0 0 0 0

Cat 3 unitssold 0

Sale price@ unit

Cat 3TOTAL 0 0 0 0 0 0 0 0 0 0 0 0 0


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Cat 4 unitssold 0

Sale price@ unit

Cat 4TOTAL 0 0 0 0 0 0 0 0 0 0 0 0 0

Cat 5 unitssold 0

Sale price@ unit

Cat 5TOTAL 0 0 0 0 0 0 0 0 0 0 0 0 0

Cat 6 units

sold 0Sale price@ unit

Cat 6TOTAL 0 0 0 0 0 0 0 0 0 0 0 0 0

Cat 7 unitssold 0

Sale price@ unit

Cat 7

TOTAL 0 0 0 0 0 0 0 0 0 0 0 0 0

Monthlytotals: AllCategories 0 0 0 0 0 0 0 0 0 0 0 0 0

Profit and Loss Projection (12Months)


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Enter your Company Name here

Fiscal YearBegins

Jun-05

IND.%

Jun-05

%B/A

Jul-05

%

Aug-05

%

Sep-05

%

Oct-05

%

Nov-05

%

Dec-05

%

Jan-06

%

Feb-06

%

Mar-06

%

Apr-06

%

May-06

Revenue(Sales)

Category 1 - - - - - - - - - - -

Category 2 - - - - - - - - - - -

Category 3 - - - - - - - - - - -

Category 4 - - - - - - - - - - -

Category 5 - - - - - - - - - - -

Category 6 - - - - - - - - - - -

Category 7 - - - - - - - - - - -

Total Revenue(Sales) 0 0.0 0 0.0 0 0.0 0 0.0 0 0.0 0 0.0 0 0.0 0 0.0 0 0.0 0 0.0 0 0.0 0

Cost of Sales

Category 1 - - - - - - - - - - -

Category 2 - - - - - - - - - - -

Category 3 - - - - - - - - - - -

Category 4 - - - - - - - - - - -

Category 5 - - - - - - - - - - -

Category 6 - - - - - - - - - - -

Category 7 - - - - - - - - - - -Total Cost of

Sales 0 - 0 - 0 - 0 - 0 - 0 - 0 - 0 - 0 - 0 - 0 - 0

Gross Profit 0 - 0 - 0 - 0 - 0 - 0 - 0 - 0 - 0 - 0 - 0 - 0

Expenses Salaryexpenses - - - - - - - - - - -Payrollexpenses - - - - - - - - - - -Outsideservices - - - - - - - - - - -


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Supplies (officeand operating) - - - - - - - - - - -

Repairs andmaintenance - - - - - - - - - - -

Advertising - - - - - - - - - - -Car, delivery

and travel - - - - - - - - - - -Accounting andlegal - - - - - - - - - - -

Rent - - - - - - - - - - -

Telephone - - - - - - - - - - -

Utilities - - - - - - - - - - -

Insurance - - - - - - - - - - -

Taxes (realestate, etc.) - - - - - - - - - - -

Interest - - - - - - - - - - -

Depreciation - - - - - - - - - - -Other

expenses(specify) - - - - - - - - - - -Otherexpenses(specify) - - - - - - - - - - -Otherexpenses(specify) - - - - - - - - - - -

Misc.(unspecified) - - - - - - - - - -TotalExpenses 0 - 0 - 0 - 0 - 0 - 0 - 0 - 0 - 0 - 0 - 0 - 0

Net Profit 0 - 0 - 0 - 0 - 0 - 0 - 0 - 0 - 0 - 0 - 0 - 0

You should change "category 1, category 2", etc. labels to the actual names of your sales categories.Enter sales for each category for each month. The spreadsheet will add up total annual sales. In the"%" columns, the spreadsheet will show the % of total sales contributed by each category.


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COST OF GOODS SOLD (also called Cost of Sales or COGS): COGS are those expenses directly relatedto producing or buying your products or services. For example, purchases of inventory or rawmaterials, as well as the wages (and payroll taxes) of employees directly involved in producing yourproducts/services, are included in COGS. These expenses usually go up and down along with thevolume of production or sales. Study your records to determine COGS for each sales category.Control of COGS is the key to profitability for most businesses, so approach this part of your forecastwith great care. For each category of product/service, analyze the elements of COGS: how much forlabor, for materials, for packing, for shipping, for sales commissions, etc.? Compare the Cost ofGoods Sold and Gross Profit of your various sales categories. Which are most profitable, and whichare least - and why? Underestimating COGS can lead to under pricing, which can destroy your abilityto earn a profit. Research carefully and be realistic. Enter the COGS for each category of sales foreach month. In the "%" columns, the spreadsheet will show the COGS as a % of sales dollars for thatcategory.

GROSS PROFIT: Gross Profit is Total Sales minus Total COGS. In the "%" columns, the spreadsheet willshow Gross Profit as a % of Total Sales.

OPERATING EXPENSES (also called Overhead): These are necessary expenses which, however, are notdirectly related to making or buying your products/services. Rent, utilities, telephone, interest, andthe salaries (and payroll taxes) of office and management employees are examples. Change thenames of the Expense categories to suit your type of business and your accounting system. Youmay need to combine some categories, however, to stay within the 20 line limit of the spreadsheet.Most operating expenses remain reasonably fixed regardless of changes in sales volume. Some, likesales commissions, may vary with sales. Some, like utilities, may vary with the time of year. Yourprojections should reflect these fluctuations. The only rule is that the projections should simulateyour financial reality as nearly as possible. In the "%" columns, the spreadsheet will show OperatingExpenses as a % of Total Sales.

NET PROFIT: The spreadsheet will subtract Total Operating Expenses from Gross Profit to calculate NetProfit. In the "%" columns, it will show Net Profit as a % of Total Sales.

INDUSTRY AVERAGES: The first column, labeled "IND. %" is for posting average cost factors for firmsof your size in your industry. Industry average data is commonly available from industry associations,


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major manufacturers who are suppliers to your industry, and local colleges, Chambers of Commerce,and public libraries. One common source is the book Statement Studies published annually by RobertMorris Associates. It can be found in major libraries, and your banker almost surely has a copy. It isunlikely that your expenses will be exactly in line with industry averages, but they can be helpful inareas in which expenses may be out of line.


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CASH FLOW STATEMENTRefer back to your Profit & Loss Projection. Line-by-line ask yourself when you should expectcash to come and go. You have already done a sales projection, now you must predict whenyou will actually collect from customers. On the expense side, you have previously projectedexpenses; now predict when you will actually have to write the check to pay those bills. Most

items will be the same as on the Profit & Loss Projection. Rent and utility bills, for instance, areusually paid in the month they are incurred. Other items will differ from the Profit & Loss view.Insurance and some types of taxes, for example, may actually be payable quarterly orsemiannually, even though you recognize them as monthly expenses. Just try to make theCash Flow as realistic as you can line by line. The payoff for you will be an ability to manageand forecast working capital needs. Change the category labels in the left column as needed tofit your accounting system.

Note that lines for 'Loan principal payment' through 'Owners' Withdrawal' are for items that always aredifferent on the Cash Flow than on the Profit & Loss. Loan Principal Payment, Capital Purchases, and

Owner's Draw simply do not, by the rules of accounting, show up on the Profit & Loss Projection. Theydo, however, definitely take cash out of the business, and so need to be included in your Cash plan.On the other hand, you will not find Depreciation on the Cash Flow because you never write a checkfor Depreciation. Cash from Loans Received and Owners' Injections go in the "Loan/ other cash inj."row. The "Pre-Startup" column is for cash outlays prior to the time covered by the Cash Flow. It isintended primarily for new business startups or major expansion projects where a great deal of cashmust go out before operations commence. The bottom section, "ESSENTIAL OPERATING DATA", is notactually part of the Cash model, but it allows you to track items which have a heavy impact on cash.

The Cash Flow Projection is the best way to forecast working capital needs. Begin with the amount ofCash on Hand you expect to have. Project all the Receipts and Paid Outs for the year. If CASHPOSITION gets dangerously low or negative, you will need to pump in more cash to keep the operationafloat. Many profitable businesses have gone under because they could not pay the bills while waitingfor money to flow in. Your creditors do not care about profit; they want to be paid with cash. Cash isthe financial lifeblood of your business.

welve-Month Cash Flow


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ter Company Name Here

cal Year Begins:Jun-

00

Pre-Startup EST

Jun-00

Jul-00 Aug-00 Sep-00 Oct-00 Nov-00 Dec-00 Jan-01 Feb-01 Mar-01 Apr-01 May-01

TotalItem EST

sh on Hand (beginning of month)

SH RECEIPTS

sh Sales

llections fm CR accounts

n/ other cash inj.

TAL CASH RECEIPTS 0 0 0 0 0 0 0 0 0 0 0 0 0 0

al Cash Available (before cash out) 0 0 0 0 0 0 0 0 0 0 0 0 0 0

SH PAID OUT

rchases (merchandise)

rchases (specify)

rchases (specify)

ss wages (exact withdrawal)

yroll expenses (taxes, etc.)

tside services

pplies (office & oper.)

pairs & maintenance

vertising

r, delivery & travel

ounting & legal

nt

ephone


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lities

urance

es (real estate, etc.)

rest

er expenses (specify)er (specify)

er (specify)

cellaneous

BTOTAL 0 0 0 0 0 0 0 0 0 0 0 0 0 0

n principal payment

pital purchase (specify)

er startup costs

serve and/or Escrow

ners' Withdrawal

TAL CASH PAID OUT 0 0 0 0 0 0 0 0 0 0 0 0 0 0

sh Position (end of month) 0 0 0 0 0 0 0 0 0 0 0 0 0 0

SENTIAL OPERATING DATA (non cash flowormation)

les Volume (dollars)

ounts Receivable

d Debt (end of month)

entory on hand (eom)

ounts Payable (eom)

preciation


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Appendix: The template includes the table below it may be helpful to you, or not.

Competitive Analysis table below to compare your company with your two most important competitors. In

the first column are key competitive factors. Since these vary from one industry to another, you may wantto customize the list of factors.

In the column labeled Me, state how you honestly think you will stack up in customers' minds. Then checkwhether you think this factor will be a strength or a weakness for you. Sometimes it is hard to analyze ourown weaknesses. Try to be very honest here. Better yet, get some disinterested strangers to assess you.

This can be a real eye-opener. And remember that you cannot be all things to all people. In fact, trying tobe causes many business failures because efforts become scattered and diluted. You want an honestassessment of your firm's strong and weak points.

Now analyze each major competitor. In a few words, state how you think they compare.

In the final column, estimate the importance of each competitive factor to the customer. 1 = critical; 5 =not very important.

Table 1: Competitive Analysis

Factor MeStrength

Weakness

Competitor A Competitor BImportance toCustomer

Products

Price

Quality

Selection

Service

Reliability


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Factor MeStrength

Weakness

Competitor A Competitor BImportance toCustomer

Stability

Expertise

CompanyReputation

Location

Appearance

Sales Method

Credit Policies

Advertising

Image

bp2011 business plan model 1 (1)

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