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
- Three-year summary
- Detail by month, first year
- Detail by quarters, second and third years
- Assumptions upon which projections were based
- Follow guidelines for letter E.
- Tax returns of principals for last three years
- Personal financial statement (all banks have these forms)
- In the case of a franchised business, a copy of franchise contract and all supporting documents provided by the franchisor
- Copy of proposed lease or purchase agreement for building space
- Copy of licenses and other legal documents
- Copy of resumes of all principals
- Copies of letters of intent from suppliers, etc.
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.
- 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
- Phase One: Establish Rapport with Customer – by agreeing to discuss what the customer wants to achieve.
- Phase Two: Determine Customer Objective and Situational Factors – by agreeing on what the customer wants to achieve and those factors in the environment that will influence these results.
- Phase Three: Recommend a Customer Action Plan – by agreeing that using your product/ service will indeed achieve what customer wants.
- Phase Four: Obtaining Customer Commitment – By agreeing that the customer will acquire your product/service.
- 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
- Books
- Magazine and newspaper articles
In addition to books and magazines, many libraries offer free workshops, lend skill-building tapes and have catalogues and brochures describing continuing education opportunities.