As you consider whether to start a new business, some immediate issues you'll confront are where to start your business and how you'll fund it. You also need to know whether startup idea is viable or whether it will be difficult to get off the ground. Creating a business plan outline helps let you and your lenders know what to expect of your company.
How to outline a business plan depends on whether you're starting a small business or a large corporation. The following suggestions are for small company business plans.
Business Plan Basics
A business plan outline acts as a guide for investors, lenders, and other interested parties to see what your startup is all about, what products or services your company offers, how you expect your business will perform initially and in the future, what challenges you expect, and how you'll market the company. Likewise, a business plan is a guide for your startup so you'll know what you need to do to get the business off to a good start.
Basic business plan outlines vary from company to company, depending on the products or services are offered and the target audience. Accordingly, you want the outline for your business plan tailored to your type of business. For example, you don't want to create a plan for a major corporation if your business will only be a partnership of two people.
Before you start a business, you must have good personal credit. If your credit isn't good, you'll have to repair it before you can secure a loan or receive funding. Both lenders and potential investors want to see what your company will add to the marketplace, such as products or services, and what sales projections are for the company.
Sections in a Business Plan Outline
Most business plan outlines follow a similar template, with sections explaining the business to investors, lenders, and employees. If your company is small, your plan can be short—even under 50 pages—but it should be thorough enough that investors and lenders get all the information they need.
Business plan outlines commonly include the following sections:
- Title page and table of contents. Put the name of the company, the address, and contact information on the title page. List the sections of the business plan in the table of contents.
- Executive summary. This is an in-depth summary, so you'll want to finish this section after completing the others as your objectives could change as you do your outline. Include the type of business, the main partners and their experience, the primary business location, what services or goods you offer, the market conditions for your business, and your target customers. Explain your financial needs, the company's financial health projection for the first few years, and how and why you expect to surpass your competitors.
- Company overview. This section includes the partners' names, who will manage the company, whether there are any shareholders, the company's back story, its location, and a shorter summary about the company than what's contained in the executive summary. Describe the skills your team brings to the company.
- Market analysis. Include your target customers, market demographics, the competition, how your company will fare in its particular market, what's happening in the market at the time you prepare the business plan, and potential problems you could encounter and how your company can overcome them.
- Marketing strategies. Discuss how you'll attract customers, what your overall plan for marketing is, and whether you'll do marketing in-house or hire outside companies.
- Operations and management. This includes where your company will operate, the number of employees you anticipate and their required experience, what equipment and supplies you'll need, how the company will choose vendors, and how long you anticipate it will take to bring your goods or services to market. Add information about how you'll distribute your products and what kind of on-the-job training you'll give to employees.
- Financial plan. Explain how the business will grow, what investments it needs, what you envision for your cash flow, profit and loss statements, and balance sheets, income projections, and how your business will be profitable in the market. Include information about where you expect to get investors and funding, as well as how you expect to succeed financially. This section is often the most important to lenders and investors.
- Appendix. This should include charts and graphs, employee and management resumes, marketing materials, and, for hard-copy versions, materials such as brochures, business cards, and DVDs.
Nonprofit business plans are similar to for-profit business plans but differ in that they include sections for the mission statement and how you expect to do fundraising. You may also want to include any grants or donations you've received, which can help secure the confidence of future potential donors.
Creating the outline first can make writing the business plan itself much more efficient. Whether your company is a for-profit or nonprofit business, the document will be an invaluable guide to help get your business off on the right foot.