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Expert Answers to Biz Questions Listen in! Pick up some expert advice to a reader's question that we selected from CyberSchmooz. The Biz Question What exactly is a business plan? I hear the term "business plan" brought up a lot, but I get "dazed and confused" about what it really means. Can you break it down in simple terms for a beginner like me? -- Erin Answer from our Guest Expert Kent Capener of Capener Consulting Dear Erin: Don't feel alone! Business plans are not simple things, but I'll try and answer your question. Basically, there are two types of business plans. One is used to provide money to the business either through borrowing or through investors. The second is a plan of operating the business. As the term implies, a plan is just that: a plan. Incorporating the philosophy of the business (you) into a cohesive document, that when read by a disinterested party, will have the same, or as close to the same, understanding of your business as you do. (The trick is if they actually read it and paid attention). Over time, there have been formats tried, tested, rejected and accepted. Generally, though, for a business plan to obtain funding, it must contain, at a minimum, sections that explain in detail what you're going to do regarding the applicable elements of your business. Those sections are: Executive Summary -- A succinct summarization of your business, strategies and goals. Proposed Transaction -- If equity, how much and for what purpose. Introduction -- You introduce your concept of the business and why it's feasible. Summary Financial Information -- One or two page summarization of the five-year income statement in the projections. Key Investment Considerations -- These are the key points that make your business worth investing in. Marketing -- Stating your strategies, tactics and budgets. Operations -- Who does what, when, how, and how much do they get? Finance -- A key management element. Risks -- Be real. What could happen and how will you manage it. Management & Organization -- Self-explanatory, but very important. Often, investors base their decisions on the management aspect alone. Appendix -- Contain exhibits, which are supporting documents that support or confirm your conclusions in the plan. Projections -- These must cover a variety of time-periods, such as five-year, monthly, years one and two, quarterly, year three, and annually years four and five. The projections should contain the following: Income Statement Income Statement Analysis Balance Sheet Working Capital Cash Flow Revenue Cost of Sales Volume Personnel Costs/Stock Plan Summary Financials Marketing/Advertising Budget Equity Analysis General & Administrative Expense So, Erin, that's a lot, I know. This is just a basic outline of a business plan and what it does. For more details, I encourage you to check out my book, How To Write Your Own Professional Business Plan. It's an all-encompassing "how-to" including eighty pages of answers from projections dilemmas, to what to include, what to think about when you are writing and hundreds of other questions. I wrote it to help people be able to write a professional business plan themselves. Here's more info... Hope this helps! Kent Capener of Capener Consulting Have a biz question of your own? Go post it in CyberSchmooz Meet the Experts Enter your search terms Submit search form       Search Idea Cafe Web Small Business Tax Center • Idea Cafe Home • Sign Up • Biz Grant Center • CyberSchmooz •Coffee Talk with Experts • People in Biz Profiles • Starting Your Biz • Biz Planning • Running Your Biz • FREE Trade Publications • Marketing • Financing Your Biz • Human Resources • Legal & Biz Forms • Managing Your Biz • eCommerce • You and Your Biz • Gen X • Work@Home • The Fridge • De-Stress • Send an Award • Send an eGreeting • Yoga @ Your Desk • Web Guide • Idea Cafe in the News • About Idea Cafe • Advertise on Idea Cafe • Contact Us • Privacy Policy • Site Map • Small Biz News Copyright 1995-2024, Idea Cafe Inc. Downloads are for personal use only, not for resale to others, and may not be reprinted in any form without written permission from Idea Cafe Inc. DISCLAIMER: We hope whatever you find on this site is helpful, but be cautioned that it may not apply to your own situation, or be totally current at any given time. Idea Cafe Inc. and all of its current and past experts, sponsors, advertisers, agents, contractors and advisors disclaim all warranties with regard to anything found anywhere on this family of websites, quoted from, or sent from Idea Cafe. and its related sites, publications and companies. We also take no responsibility for comments published by others on these pages. TRADEMARKS: The following are Registered Trademarks or Servicemarks of DevStart, Inc.: Idea Cafe®, Online Coffee Break®, The Small Business Gathering Place®, Take out Info®, Biz Bar & Grill®, Complaint-O-Meter®, A Fun Approach to Serious Business™, CyberSchmooz™, and BizCafe™.