BUSINESS PLAN INVENTORY
A Tool for Preparing Your Business Plan
Small Business Development Center
Eastern Iowa Community College District
320 West 3rd Street
Davenport, Iowa 52801
A business plan is a road map to success for your business. You must write it;
you must understand it; and you must be able to explain it to others. Your business
plan is an operating tool, which, if carefully crafted and properly used will help you
manage your business and work toward its success.
The importance of planning in business can never be overemphasized. Whether
you are starting a new business, expanding an existing business or evaluating the
success of your business, you must take an objective look at four key areas of the
business – mission, marketing, operations and profitability. Writing or updating an
existing business plan forces you to identify strengths and weaknesses, forecast
opportunities and spot problems early. A well-prepared business plan can even help
you learn from the mistakes of others and avoid some problems altogether.
The business plan also provides information to others who can be key to the
financial success of your business, specifically investors and lenders who can provide
the needed equity to assure your success. The plan is the most important tool they
have to evaluate your business. It should be clear and concise, while providing enough
information to allow them to make an informed and accurate decision.
Remember the goals of the business plan are:
Take your business from concept to reality.
Define the purpose of the business, the product and the market.
Understand the market and how your product or service will meet its
Assist in capitalization by helping to secure financing or equity investment.
Become a tool to guide and measure results.
This business plan inventory will assist you in bringing together your thoughts
and ideas and accumulating the information you will need to write a successful plan. It
is not a template. Don’t just fill in the blanks with short yes or no answers. Every plan
and every business is as unique as you are. Take time to do your research and answer
the questions as thoroughly as possible. While the business plan is first and foremost a
tool for you and your business, remember that you will use this tool to convey the
essence and form of your business to others who have no other information than the
plan before them.
I. DESCRIPTION OF THE BUSINESS
This section will provide a detailed description of the business. Ask yourself, “What
business am I in?” Include your products, market and services as well as a thorough
description of what makes your business unique. This section is divided into three
subsections: a) describing the business; b) describing the product or service; and c)
identifying the location of the business.
Describe the Business:
1. In a single sentence of 25 words or less, describe the business.
2. What is the form of the business?
_____ Sole proprietorship _____ “S” Corporation
_____ Partnership _____ “C” Corporation
_____ Limited Liability Company
3. What is the type of business?
_____ Retail _____ Manufacturing _____Service
4. Is this business
_____ New _____ Existing _____ Takeover _____Expansion
5. If this is a new business, is it independent or a franchise?
6. If the business is a franchise, describe your franchise territory.
7. Why will your business be profitable? What is unique about the business?
8. Is there opportunity for the business to grow? If so, under what conditions would
expansion be considered. If the business is a franchise, discuss under what
conditions can the business expand?
9. When will the business open?
10. What have you learned about your kind of business from outside sources (trade
suppliers, bankers, other franchise owners, franchisor, publications)?
Describe the Product or Service:
1. What are you selling?
2. How will your product or service benefit the customer?
3. Is the product or service in steady demand or is it seasonal?
4. What is different about the product or service you are offering?
Describe the Location:
1. Where will the business be located?
2. What kind of space is required?
3. Why is the area and/or building desirable?
4. Is the location easily accessible from all directions? Describe any ingress/egress
problems, traffic signals, etc.?
Is public transportation available?
Is parking adequate and reasonably priced?
Is the area considered safe by your market? Is adequate lighting available?
Is the location properly zoned?
5. Is the makeup of the neighborhood stable or is it changing in character?
Describe the changes and whether they will impact your business.
II. The Marketing Plan
Understanding your market and knowing how to reach that market is vital to the success
of any business venture. A marketing plan is not simply an advertising plan. A
successful marketing plan proves that you understand who your customers are and
what their likes, dislikes and expectations are. The plan acknowledges and identifies
the competition you have in trying to satisfy the needs of the market. It analyzes your
ability to penetrate the market and determines your pricing structure. And after all that
work is completed it details how you will reach your market and what your advertising
strategy will be.
1. Who is your typical customer?
Age Range: _____________________________________________
Household Income: _____________________________________________
Family Size: _____________________________________________
Geographic area: Urban________ Suburban_________ Rural_________
Education Level: _____________________________________________
2. Define your physical limits of your target market. How far will customer’s travel to
purchase your product or service?
3. How many of your potential customers are located within the physical limits you
4. Is the pool of potential customers in your area growing, steady or declining?
5. Is the pool of potential customers, in general, growing steady or declining?
6. If you are purchasing a franchise, how is your market defined? Do you have the
opportunity to expand the market? If so, how?
7. Is your pool of potential customers large enough to allow your business to
expand? Under what conditions would you grow the business?
1. Who are your five nearest direct competitors?
2. How is their business – steady, increasing or decreasing?
3. How are their operations similar or dissimilar to yours?
4. What are their strengths or weaknesses?
5. How does their product or service differ from yours?
6. What have you learned from watching their operations? What works for them?
What doesn’t work? What have you learned from their advertising?
7. How will your business be better than theirs?
8. Who are your indirect competitors? How will they impact your sales? What
factors could make them direct competitors?
Pricing and Sales:
Pricing is a strategic marketing tool. You must be clear on your objectives in setting the
price of your product or service. Price is important, but it is not the main reason people
buy a certain product or service. Perceived value is a vital consideration in your
customer’s decision. Price, quality, service and profitability are interwoven to create
perceived value. Honestly assess your pricing objective in the following question.
1. What is your pricing objective? Rank these objectives in order of importance,
with 1 being most important and 5 being least important.
_____ Be the lowest price in town
_____ Maximize profits
_____ Remain Competitive
_____ Build up a new product line
_____ Create a quality image
_____ Offer a good value at a fair price
2. Is there an industry standard overhead percentage available for pricing your
product or service?
Advertising and Public Relations:
1. If you were looking to purchase the product or service you are selling, where
would you look first, second and third for information?
2. Develop a short, descriptive word or phrase that describes your product or
service? Test them out on friends to see if they accurately describe the product.
3. How will you determine your advertising and promotional budget – fixed dollar or
percent of sales?
4. List five things you can do for free advertising for your business. Ex. Press
release for grand opening; flyers on windshields, etc.
III. The Management Plan
Managing your own business is a demanding job that requires patience, dedication and
a variety of skills. You may possess some of these skills; others may be provided by
employees or consultants. You must recognize your own personal strengths and
weaknesses in order to be able to realistically assess your personnel needs and costs.
People are the most valuable resource any business has and they should be treated as
an asset. Recruiting the right people to help you manage and run your business takes
time and forethought. Keeping the right people requires good management, a pleasant
work environment and competitive salaries and benefits. Building a sense of teamwork
is important. Keep your employees informed and solicit their ideas on products and
services, innovations and cost containment. They are your front line of communication
with your target market.
1. Describe your education?
2. List your business experience?
3. How does your background or business experience help you in this business?
4. What are your weaknesses and how can you compensate for them?
5. Who will be on your management team and what will their duties be? Have you
clearly defined those duties in job descriptions?
6. If this is a franchise, what type of assistance can you expect from the franchisor?
Will that assistance be ongoing?
7. What are your current personnel needs? Are they full-time or part-time? What
will be your personnel needs in 3 years and 5 years?
8. How do you plan to hire and train personnel? How will you build a sense of
ownership among your employees?
9. What salaries, benefits, vacations, holidays will you offer? What is the cost of
your benefit package as a percentage of salary?
IV. The Financial Management Plan
Sound financial management is the key to a successful business. It is imperative that a
business owner have a basic understanding of financial statements and key financial
analysis tools. Throughout the life of your business you must constantly analyze the
financial health of your company and make changes to assure its future.
To build a sound financial base, you must realistically budget to determine the amount
of money needed to open your business (start-up costs) and the amount needed to
keep it open (operating costs). Many new businesses fail before they open the doors
because they are under-capitalized. The following is a list of common start-up costs.
Purchase Real Estate & Closing Costs $__________________
Remodeling Costs $__________________
Machinery and Equipment $__________________
Furniture & Fixtures $__________________
Advertising/Promotional Costs $__________________
Rental Deposit $__________________
Utilities Deposits $__________________
Insurance (One Year up-front cost) $__________________
Legal/Professional Fees $__________________
Accounting Fees $__________________
Salaries (Prior to opening) $__________________
Franchise Purchase $__________________
Other _______________________ $__________________
Other _______________________ $__________________
The financial section of your plan should include a capital equipment and supply list,
balance sheet, pro-forma income projections and pro-forma cash flow statements. The
income and cash flow projections should include a three year summary. A cash flow
statement is included at the back of this packet.
1. How much money will you need for start-up costs?
2. How long will your business be open before you expect to generate revenue?
3. How much salary do you need?
4. How much cash do you have to invest in the business?
5. Where will the additional cash (equity) injection come from? Do you have
outside investors or family members who can invest in the company? What are
the terms, if any, of repayment of their loan or investment?
6. If you are seeking financing, what are the terms of the financing you are
requesting (rate, term in months, payments)?
7. What are your sales goals for each of the next three years? What are your profit
8. What kind of inventory control system will you use, if applicable?
9. Who will do your daily and monthly accounting? If you are doing accounting in-
house, what type of accounting system will you be using?
10. Who assisted in preparing your financial reports and projections?
PROJECTED INCOME STATEMENT
(PROFIT AND LOSS)
LESS: COST OF GOODS SOLD $____________
GROSS PROFIT $____________
PAYROLL (EXCLUDING OWNER'S DRAW) $____________
PAYROLL TAXES $____________
CAR, DELIVERY, TRAVEL $____________
DUES AND SUBSCRIPTIONS $____________
LICENSES & BUSINESS TAXES $____________
MAINTENANCE & REPAIRS $____________
PROFESSIONAL FEES $____________
MISCELLANEOUS EXPENSE $____________
TOTAL OPERATING EXPENSES $____________
PROFIT OR (LOSS) $____________
V. WRITING THE PLAN
Congratulations! You have completed the business plan inventory. Now you are ready
to put these thoughts together in the form of a business plan. A business plan needs to
be descriptive enough that others reading the plan can understand your business. It
does not need to be overly lengthy. A good business plan can be 5-10 pages in length
plus accompanying documents, depending on the nature of your business. Your
business plan should contain the following sections using the information gathered in
the business plan inventory. Remember, you’re telling your story. You may want to
practice telling your story to a friend or family member before you start writing.
a. Executive Summary
i. This is written last and summarizes the entire plan in one page or
b. Information on the Business
i. Describe the type of business and product or service
ii. History of the business, if existing
iii. Address and description of location
iv. Present and future personnel needs
v. Description of pricing strategy
vi. Description of business form and other legal issues
vii. Plans for the future of the business
c. Market Analysis
i. Description of market and customers
ii. Why the market needs this product or service
iii. Future needs of product or service
iv. Demographic information on the market
v. What differentiates your product or service in the market
vi. Estimate of market penetration
vii. Identify your competition and discuss their products/services
d. Market Strategy
i. Present your strategy for selling your product/service
ii. Describe your pricing strategy
iii. Describe how you will promote your product.service
iv. Describe your advertising plans
v. State how you will describe and differentiate your product/service to
e. Management Plan
i. Describe your role in company management and your qualifying
ii. Identify other key management personnel and their experience
iii. Identify other management roles that will be filled on a contractual
basis and discuss why
iv. Identify staffing levels over next three years
f. Financial Information
i. Identify sources and uses of cash needed for the business;
describe in detail where the money will come from and where it will
ii. Include business statements:
1. Balance Sheet – 3 years
2. Projected Income Statements – 3 years
3. Projected Cash Flow Statements – 3 years
4. Break-even Analysis
5. Accounts Receivable and Aging – Existing Business only
6. Accounts Payable and Aging – Existing Business only
7. Reconciliation of Net Worth – Existing Business only
To review an actual business plan, go to the SBA website, www.sba.gov; click on
Starting Your Business; Planning Topics, Writing the Plan; Review Examples of Real