A business plan is above all a presentation device to potential investors. The business plan includes a generalized narrative, planning assumptions, and detailed financial projections.

Above all, potential investors are concerned with return on investment; this plan must forecast how you expect the business to perform over a specified time period.

The two significant financial factors in a business plan are the company’s gross sales and the net profit resulting from those sales. Most investors feel more comfortable when they find your forecasts to be almost pessimistic, since they will usually equate such a stance with what is perceived as a sensible, level headed attitude. The most effective strategy, however, is  to provide a best and worst case scenario.

Besides financial information, the business plan must also provide a detailed description of the conditions in which the business will exist, with special emphasis on such factors as:

• organizational structure
• consumer trends and actions of the government in relation to your industry
• potential market segments
• the manner in which the company will achieve pro forma financial projections
• how sales will be accomplished

Business Plan Guidelines

Every strategic plan contains the six essential elements.  These are:  where, why, how, when, who, and what:

WHERE the business is to be located may be determined by considering  its purpose, the competition, the capabilities of management and the opportunities for success. 

WHY the business will succeed is determined by identifying market and product advantages.  HOW describes the company’s resources and its ability to carry out the plan. 

WHEN is indicated by milestones measured in profits, sales calls, number of employees, and so forth, as per the plan. 

WHO defines each person’s responsibilities for accomplishing the goals of the business. 

WHAT it costs is indicated by the cash flow projections.

One of the most important guidelines to remember in relation to writing a business plan is to utilize what are termed “third-party verifications.” Instead of merely conveying your own personal analysis of the situation, cite information secured from authoritative sources (e.g., governmental agencies, newspapers, magazines, noted economists, and so on). Whenever possible, include photocopies of articles and other documents to lend even greater credibility.