The Self-Generated Business Plan from Q&As: You are on the website of a weekly television show that airs on most PBS-member stations in the USA and throughout the world on IBB Worldnet television from the US State Department (VOA). We are a question-and-answer site. We go all over the USA (and now around the world) asking people questions about how and why they started their business and how they became quite so successful. Everybody's answers are quite different but there are many common themes. And one thing for sure, these people are all very special small business owners.

Every question we have ever asked is being made interactive on this site. We already have several hundred baseline questions within LearnOnline, and once a person answers about thirty of these questions within their own secured area on this site, a first-draft business plan is generated automatically for just the owner of the information. These are the same questions that Hattie has asked hundreds of business owners who have appeared on this show. But within LearnOnline, you watch the video of that small business owner, hear their answers, then answer from your heart and knowledge.

Fun work.

Once we know who you -- that you're are a good person with a good business -- you can then use these same answers to populate pages within this site. Click on Home (in the left blue column) and look through the information about Profiles. We are listing good people with good businesses on the learning indexes, then we invite people to automatically generate a profile page (an executive summary), a case study guide, and transcript.

If you register on this site, take a course, you will develop that business plan, and then get some help from all these profiles of other businesses.

Focus:
1. James Cook, entrepreneur extraordinaire, wrote the book, The Start-Up Entrepreneur. He says, "The new company with the most information stands the best chance of succeeding. When investigating a potential business or after beginning one, you need to pile up data on many topics."

2. Hattie comments: "This is an exercise to put your feet on the ground. The thought processes and discipline that I am going to take you through in this chapter will either inspire you to go ahead with the development of your business idea, or cause you to step back, modify it, and try another approach. Don't get me wrong - I don't want you to take your head out of the clouds or throw away your dreams. I simply want you to plant your feet firmly in reality and get very honest."

"Writing a business plan does not mean you have to have to be a great writer. Your plan will not be published. If you really want it to look perfect, you can hire your old high school English teacher to put the commas in the right place and correct any syntax errors." (This template is Chapter 4, Beating the Odds, by Hattie Bryant, Prima, 1996)

3. Ken Yancey. Ken, a former banker and the head of the Counselor's to America's Small Business (SCORE), says: "A business plan is an internal document the entrepreneur uses to guide him or her along the path to success. Using the plan to raise money is only a minor reason to take the time to put your ideas in writing."

Focus, focus, focus:

Marsh Damerell. Marsh fought in World War II and the Korean War. He then went to college through the Navy's GI Bill. At the age of twenty-six with a degree in mechanical engineering, he and a friend started a tool-cutting manufacturing company. Thirteen years later they were a multi-million dollar business with 120 employees. But, Marsh wasn't happy. He sold out to his partner; and he and his wife bought a small machine shop. Even though he intentionally kept the business small (only 15 employees), Marsh had fun and made plenty of money. The shop ran so smoothly, he and his wife were able to take off to sail around the world.

Marsh rhetorically asks, "Don't you think it took good planning to build a business to the point you could leave it for two years to sail around the world?" He frequently used sailing metaphors to run his business. If he had not plotted the course in advance, he could never have achieved his goal of going around the world (Figure A).

In 1987, Marsh sold the business to his foreman and still volunteers with the Counselor's to America's Small Business (SCORE). Here, through free one-on-one counseling and workshops, you will get some great help to get your business going on the right foot. Their offices have over 15,000 volunteers in over 400 locations They follow a basic outline to teach business planning, as do all the advisors at the 1500+ Small Business Development Centers across the country. Call SCORE, or find the Small Business Development Centers nearest you; call 800-8-ASK-SBA (or, 800-827-5722).

At SCORE, Marsh works with people who want to own their own business and teaches a workshop on how to write a business plan. After owning his own business for 40 years, he has this to say: "Going into business for yourself is not a way to get rich quick. Wealth only comes with persistence and planning. If you persist in the right direction, you will make your dreams come true."

Marsh believes that most people fail in business because they either lack management skills, don't price their product right, don't have the right people in their business with them, or don't keep proper financial records.

There is no right way to write a plan. The following outline is provided by the Small Business Development Center, Howard University, Washington, DC.

People do not put their plan in writing often think that they don't have enough time. Some simply do not care enough. Others do not see the value of it. Marsh cautions, "If you can't discipline yourself to do a written plan, don't start a business."

The business plan is your pathway to profit. It can mean the difference between success and failure. A business plan with goals and actions can guide you through turbulent economic times with alternative channels which you can fall back upon as changes dictate.

Through the development of a business plan, you will identify your areas of strengths and weakness, and you will spot opportunities and threats which may loom on the horizon. You will review competitive conditions of the marketplace and isolate opportunities and situations that seem advantageous to your business.

The business plan will communicate your understanding of the industry in which you operate, the competitive situation in which you operate, the capability of your management, the capacities of your particular business, event he suitability of your location. It will make reasonable assumptions and forecasts of your expectations concerning sales, expenses, cash flow and attainment.

Letter of Transmittal

You should enclose a letter explaining why your business plan is being sent to the addressee and what he or she is expected to do with it. The contents of the letter of transmittal typically includes:

1. The identity and purpose of the business

2. A very short history of the business.

3. The purpose of the plan.

4. The identity of the person requesting the money.

5. The amount and type of financing required.

6. The purpose of this plan: an operating guide or a financing proposal.

Title Page

You should start the plan with a title page that identifies the key information about the business, title of the plan, dates, copy and revision number, and instructions regarding confidentiality - reproduction - dissemination of the plan.

Name(s) of principle(s): ______________________________________

Name of Business: __________________________________________

Address: _________________________________________________

Phone, fax, e-mail: __________________________________________

Executive Summary

A one-paragraph to one-page summary should be presented next. It is not necessary to cover the contents of the letter of transmittal or each of the sections of the plan. The summary must succinctly identify the purpose of the business plan, its short-term and long-term goals, and the means by which these goals will be reached.

Table of Contents

I. Description of the Business

II. Products or Services Offered

III. Market Analysis

IV. Marketing Strategy

V. Production Processes

VI. Management and Personnel

VII. Financial Data

VIII. Summary and Conclusions

IX. Appendices and Supporting Documents

X. Checklist

I. Description of Business

The purpose of this section is to explain the nature of your business, your targeted customer, and your specific short-term and long-term goals.

A. What is the current status of the business?

1 . What is the business today and what will it become?

2. What market do you intend to service? What is the size of the markets? And, what is your expected share?

3. Who is your competition and why can you service that market better than your competition?

4. Why you have chosen your particular location?

5. What management and other personnel are required and available for the operation?

6. Why will your investment or someone else's money (debt/equity) help make your business profitable?

B. What is your business?

1. What type of business: primarily merchandising retail, manufacturing, wholesale, or service?

2. What is the nature of the product(s) or service(s)?

3. What is the status of business: start-up, franchise, or take-over, buy-out, or expansion of an existing business?

4. Business form: sole proprietorship, partnership or corporation?

5. Who are the customers or clients and/or your prospective customers?

6. Why is your business going to be profitable?

7. When will (did) your business open?

8. What hours of the day and days of the week will you be (are you) in operation?

9. What have you learned about your kind of business from outside sources (trade suppliers, banks, other business people, publications)?

NOTE: If you have a seasonal business, or if the hours will be adjusted seasonally, make sure that the seasonality is reflected in your replies to the two previous questions.

C. FOR A NEW BUSINESS:

1. Why will you be successful in this business?

2. What is your experience in this business?

3. Have you spoken with other people in this type of business about their experiences, challenges and rewards? What were their responses?

4. What will be special about your business?

5 Have you spoken with prospective trade suppliers to find out what managerial and/or technical help they will provide?

6. Have you asked about trade credit?

7. If you will be doing any contract work, what are the terms? Reference any firm contract and include it as a supporting document.

8. Do you have letters of intent from prospective suppliers or purchasers'?

D. FOR AN EXISTING BUSINESS OR A TAKE-OVER:

1. When and by whom was the business founded?

2. Why is the owner selling it?

3. How did you arrive at a purchase price for the business?

4. What is the trend of sales?

5. If the business is going downhill, why? How can you turn it around

6. How will your management make the business more profitable?

II. Products or Services Offered This section describes your products and services in sufficient detail so the readers knows what you are offering, what the customer receives from your products or service, and how the customer prefers to buy and pay. Remember who is reading your plan. This section should be written so it can be easily understood by a lay person.

A. What are the specific products or services that you sell?

B. Do you possess any proprietary knowledge, positions, patents, copyrights, trademarks, or other legal or technical advantages?

C. What are some of the other factors that your customers perceive as a part of their purchase?

1. Savings.
2. Convenience
3. Personal service.
4. Status.
5. Safety.

D. How do your products (or services) compare to those of your competitors?

1. If they are not unique, why would people buy from you?
2. Are you able to differentiate your products and services from those of your competitors based on the above?
3. Do you plan to market future "new" products or services?

III. Market Analysis

Provide an analysis of the industry, customers, market and competition in sufficient detail that the reader knows that you understand what it takes to succeed in your industry.

A. The industry or business:

1. What is the business structure (i.e., sole proprietorship, general partnership, limited partnership, C corporation. or Subchapter S corporation)?
2. Who is (are) the principle(s)?
3. What is to be done?
4. Why will it be profitable?

And for those of you who are preparing a Financing Proposal:

1. Who is asking for money?
2. How much money is being requested?
3. What is the money needed for?
4. How will the funds benefit the business?
5. How will the funds be repaid?
6. Why does the loan or investment make sense?

B. Customers

C. Market size and trends.

1 . What are the characteristics of your target markets?

• Demographics (age, sex, profession, income)
• How were these characteristics determined (survey, literature review, manufacturer or trade association, discussions with customers, suppliers distributors, and others)?

2. What is the current size of the market?

3. Is the market competitive?

• Does your business retain a profitable share?
• Does the market have potential for added growth?
• What percent of the market do you expect to capture?

4. What is the market's growth potential? If the market does grow, do you have the resources needed to maintain (and increase) your market share?

5. How can you expand your market? In what ways will you attract additional customers?

D. Location

1 . Where is the business located? Why? What kind of space do you need?

2. How would you describe the area? Is it compatible with the needs your customers are trying to fulfill? What are the attributes and/or features of your present or desired business location?

3. For your area, what are the expected population trends?

4. What are the advantages of your business location? Why is this a desirable area? Why is this a desirable building? Is it easily accessible? Is it close to your customers? Is it close to your customers? Does the community show any enthusiasm for you and your business? Is the building accessible by public transportation? Is free or low-cost parking nearby?

5. Do you know the local zoning laws? Also, what are the state and local taxes, laws, utilities, and other variables that may affect this location of your business?

6. What are the advantages and disadvantages of the site in terms of wage rates, labor unions and labor availability?

7. Do you need a long-term or short-term lease?

8. Are there any new developments upcoming in the next five years which could affect your business? How do you plan to keep an eye on any demographic shifts in your area?

E. Competition.

1. Who are your key competitors and why?

2. Is your competitor's market share increasing, decreasing or steady?

3. What are your competitors strengths and weaknesses?

4. Do your strengths and weaknesses match up favorably with theirs?

5. How will your operation be better than theirs? What have you learned from watching their operations?

6. Why will your customers buy from you rather from them?

7. How are you going to price your service or product, to make a fair profit, and at the same time, be competitive? How do you plan to keep an eye on the competition in the future?

8. What price do you anticipate getting for your product or service?

9 . Is the price competitive?

10. Why will someone pay your price?

11. How did you arrive at the price? Is it profitable?

12. What special advantage do you offer that may justify a higher price? (You don't necessarily have to engage in direct price competition).

13. Will you offer credit to your customers (accounts receivable)? If so, is this really necessary? Can you afford to extend credit? Can you afford bad debts?

IV. Marketing Strategy

In this section you have an opportunity to express your philosophy about marketing and sales. All businesses must sell something -- be it to other businesses, the government , the general public or niche markets. Your philosophy toward service, returns, promotions, and price will markedly affect your sales and ultimately your success as a business. Factors typically considered in the marketing and sales process are:

A. Overall marketing and sales strategy/approach:

1. Service.
2. Price.
3. Convenience.
4. Philosophy concerning the customer.

B. Selling tactics:

1. Direct
2. Executive selling
3. 3. Manufacturers' representatives
4. Distributors
5. Retailers:
   • International and national.
   • Regional.
   • Independents and boutique.
   • Mail order
   • Telemarketing
6. Internet and World Wide Web

C. Pricing Objectives.

1. Profit or margin oriented - maximizes profit.
2. Sales oriented - Using a lower price to increase market share or gain a foothold in the market.
3. Status Quo - follows the leader to stabilize pricing.
4. Market oriented
   • Skimming - initial high price then lowered according to demand.
   • Penetration - initial low price to gain foothold, then raised to competitor's level to maximize profit
   • Premium - initial high price but differentiated from others for its superior features, performance, craftsmanship, etc..

D. Sales Terms & Conditions.

1. Credit.
2. Bad debt.
3. Returned items.
4. Complaints.

E. Merchandising - the attractive display of goods and services.

F. Channels of Distribution - Transferring the goods or services from the production location to the location of the final consumer.

V. Production Processes

Whether you are a service business, manufacturer, distributor, retailer . . . or whatever the work, you must produce. That production may be a physical product or something as intangible as a smile, yet to be a business, something must be produced. This section addresses how you plan to deliver the goods and services which form the basis of your business. Considerations include:
A. Physical layout.
B. Required furniture, fixtures and equipment.
C. Review of operations flow and quality control.
D. Inventory and inventory control.
E. Vendors.

VI. Management and Personnel

Your proposal is only as strong as the people you have available to assist you in executing the plan. Here you detail the key players who you have already identified or the qualifications of successful candidates to be recruited. It is wise to have already selected your most important personnel.

A. Management structure

1. What is your business background?

2. How does your background/business experience help you in this business?

3. What management experience do you have?

4. Do you have managerial experience in this type of business?

5. Do you have managerial experience acquired elsewhere - whether in totally different kinds of business, or as an offshoot of club or team membership, civic or church work, etc.?

6. What weaknesses do you have and how will you compensate for them, i.e., will you hire employees or pay consultants who have management abilities/expertise that you don't have?

7. What education do you have (including both formal and informal learning experience) which have bearing on your managerial abilities or knowledge of the industry?

8. Personal data: age; where you live and have lived; special abilities and interests and reasons for going into business?

9. Are you physically suited for this type of work? Stamina is important.

10. Why are you going to be successful at this venture?

11. Do you have direct operational experience in this type of business?

12. Who is on the management team?

13. What are the duties of each individual on the management team?

14. Are these duties clearly defined? How?

15. Who does what? Who reports to whom? Where do final decisions get made?

16. What and how will management be paid?

17. What additional resources have you arranged to have available to help you and your business? (accountant, lawyer, etc.).

NOTE: A personal financial statement must be included as a supporting document in your plan if it is a proposal for financing. Also, include your resume as a supporting document.

B. Personnel Structure

1. What are your personnel needs now? In the near future (3 years)? In five years?

2. What skills must they have?

3. Are the people you need available?

4. Will your employees be full-time or part-time?

5. Will you pay salaries or hourly wages?

6. Certain employee benefits are mandatory. Find out what they are.

7. Will you provide additional fringe benefits? If so, which ones? Have you calculated the cost of these additional fringe benefits?

8. Will you utilize overtime? If so, you may be required by law to pay time and a half, double time, and/or other extra costs.

9. Will you have to train people for both operations and management? If so, at what costs to the business?

VII. Financial Data

The proof of the business plan is its pro forma financial reports. Many people who will read your business plan will go over the cover letter, read the summary statement, and then skip to the back to examine the financial data before reading the rest of the plan. The discussions in all the other sections of the plan should qualify and reflect the revenue and expense columns of these projections.

A. List the sources and general uses of proposed funding

B. List the productive purposes for which the money will be spent.

C. Develop a pro forma balance sheets for three years.

D. Develop projective line item expense budget.

E. Develop projected cash flow statements.

F. Prepare financial statements for businesses already in existence.

G. Develop a break-even analysis

H. Develop key financial ratios and comparisons with industry standards.

I. Develop a cost/benefit analysis.

J. Develop calculation of the payback period. Prepare financial statements for businesses already in existence.

VIII. Summary and Conclusions

This section summarizes the major goals in your plan and reiterates how you will achieve them and what the company will become if you are successful. This section should be short, to the point, and contain the most important aspects of your plan -- the key points that you want your reader to retain.

IX. Appendices and Supporting Documents

Provide clear and legible copies of pertinent documents which will help you prove your case. These documents typically include the following (which are included as appendices):

A. A copy of the corporate or partnership documents (if applicable).
B. Personal resumes of the owners and key management.
C. Letters of reference, recommendation or support, and letters of intent.
D. Other business documents that could inform the reader such as: personal financial statements, credit reports, leases, contracts, any other legal documents, and anything else that you know would be relevant to the plan.

X. Checklists

When you read through your plan, place a physical check mark beside the paragraph and on the line item within this business plan outline. All paragraphs should have check marks and all the line items of this outline should have a check mark.

XI. Loan Package Checklist First, get the necessary forms from applicable lending institution. On the application, briefly describe how the loan will benefit the business, e.g., to increase sales by utilizing more efficient machinery, by taking advantage of volume purchase discounts, by expanding current operations, etc.

FINANCIAL DATA

SOURCES AND APPLICATIONS OF FUNDING SOURCES

1. Mortgage Loan $______________

2. Term Loan $______________

3. Line of Credit $______________

4. Reserved Loan $______________

5. Personal Equity Investments $______________

6. Outside Equity Investments $______________

7. Other $______________ TOTAL $______________

APPLICATIONS

1. Building (Purchase) $______________

2. Equipment and Furniture $______________ (Purchase)

3. Renovations $______________

4. Inventory $______________

5. Working Capital $______________ (Operating Expenses)

6. Reserve for Contingencies $______________

7. Other $______________ TOTAL $______________

B. CAPITAL EQUIPMENT AND FURNITURE LISTS

MAJOR EQUIPMENT AND ACCESSORIES COST OR LIST PRICE _____________________________________ ___________________ ___________________________________________________________________ ___________________________________________________________________

TOTAL: $________________

MINOR EQUIPMENT COST OR LIST PRICE

___________________________________________________________________ ___________________________________________________________________ ___________________________________________________________________

TOTAL: $________________ FURNITURE COST OR LIST PRICE ___________________________________________________________________ ___________________________________________________________________ ___________________________________________________________________

TOTAL: $________________ GRAND TOTAL: $_______________

(FIGURE X) FINANCIAL DATA

D. BREAK-EVEN ANALYSIS

SALES $______________________

LESS: COST OF GOODS $_____________________

GROSS PROFIT $______________________

OPERATING (FIXED) EXPENSES $______________________

PRE-TAX PROFIT (LOSS) $______________________

Step 1: Divide Gross Profit by Sales to show the percentage relationship.

GROSS PROFIT (divided by) SALES=GROSS PROFIT AS A PERCENTAGE OF SALES

Step 2: Divide Fixed Expenses by Gross Profit as a percentage of Sales,

expressed as a decimal. (Gross Profit % divided by 100).

FIXED EXPENSES (divided by)=BREAKEVEN SALES GROSS PROFIT %

E. PROJECTED INCOME STATEMENTS

THREE-YEAR SUMMARY

YEAR I

YEAR II

YEAR III

Sales ________ ________ ________

Less cost of goods sold ________ ________ ________

Gross profit ________ ________ ________

Operating Expenses

Salaries ________ ________ ________

Commissions ________ ________ ________

Outside Labor ________ ________ ________

Payroll Expenses (taxes, etc.) ________ ________ ________

Advertising & Promotion ________ ________ ________

Car & Delivery ________ ________ ________

Legal & Accounting ________ ________ ________

General Office Administration ________ ________ ________

Operating Supplies ________ ________ ________

Bad Debts ________ ________ ________

Rent ________ ________ ________

Repairs & Maintenance ________ ________ ________

Utilities ________ ________ ________

Insurance ________ ________ ________

Taxes & Licenses ________ ________ ________

Depreciation ________ ________ ________

Interest ________ ________ ________

Other Expenses ________ ________ ________

(Specify each) ________ ________ ________

TOTAL OPERATING EXPENSES ________ ________ ________

PRE-TAX PROFIT (LOSS) ________ ________ ________

INCOME TAXES ________ ________ ________

NET PROFITS (LOSS) ________ ________ ________

F. CASH FLOW PROJECTIONS THREE-YEAR SUMMARY YEAR I YEAR II YEAR III

Cash on Hand (beginning of month/year) ________ ________ ________

Cash Receipts Cash Sales ________ ________ ________

Credit Collections ________ ________ ________

Loan, Owner's Investments of other cash injections ________ ________ ________

Total Cash Receipts ________ ________ ________

Total Cash Available ________ ________ ________

Cash Paid Out Purchases ________ ________ ________

Gross Wages (Excludes owner) ________ ________ ________

Payroll Expenses (taxes, etc.) ________ ________ ________

Supplies (office and operating) ________ ________ ________

Repairs & Maintenance ________ ________ ________

Advertising ________ ________ ________

Car, Delivery and Travel ________ ________ ________

Accounting & Legal ________ ________ ________

Rent ________ ________ ________

Telephone ________ ________ ________

Utilities ________ ________ ________

Insurance ________ ________ ________

Taxes (real estate, etc.) ________ ________ ________

Interest ________ ________ ________

Subtotal ________ ________ ________

Loan Principal Payment ________ ________ ________

Capital Purchases ________ ________ ________

Other Start-up Costs ________ ________ ________

Reserve and/or Escrow ________ ________ ________

Owner's Withdrawals ________ ________ ________

Total Cash Paid Out ________ ________ ________

Cash Position (end of month/year) ________ ________ ________

By following the Howard University outline, you will end up with a thoughtful document. Remember there are no absolute rules for writing a business plan. It does not have to be fancy; it only needs to be effective for you.

Here are a few stories about business plans that have been part of television series:

Jerry bought a business plan workbook and forced himself to answer every question asked by the authors of the book. Filling in every blank helped him understand what he was facing. His idea was innovative, which was both exciting and scary. He had to buy a one-million dollar freezer and convince an entire country that bagels are delicious and healthy.

You may have to modify your plans as you go along:
Jack and Sue's franchise was doing so well that they decided to open a second complementary business. But, by 1984, the Oklahoma economy was suffering from the decline in oil prices. Like many others, the Maxwell's businesses faced possible disaster. Rather than struggle to make their original plan work, Jack took one business while Sue took the other. They did not care which one survived or how the business might change.

Lori Davis used the Small Business Development Center for help.

Donna Baase used FastTrac.

Two final words of advice:

1. There's no substitute for long hours and hard work.
2. Don't try to solve all the problems you will face before you begin.

We thank Howard University's Small Business Development Center for sharing this Business Plan template.

Your comments and/or questions are always welcomed: Click here.