| There are thousands of new small businesses created | | | | business plan are: |
| each year in the United States; some are successful, | | | | *Explanation of the source and amount of initial equity |
| some are not. There is one element that greatly | | | | capital. |
| influences whether a new small business will have a | | | | * Estimated start-up costs. |
| successful outcome. The factor is a solid business | | | | * Projected operating expenses. |
| plan. | | | | * Development of a monthly operating budget for the |
| The business plan should cover the business basics | | | | first year. |
| from goals to management, from marketing to | | | | * Development of an expected return on investment |
| operations. A business plan is a map for success, so | | | | and monthly cash flow for the first year. |
| don't go lightly on the details. A good business plan | | | | * Projected income statements and balance sheets |
| should include the executive summary, a definition of | | | | for a two-year period. |
| operations, an outline of the marketing strategy, and | | | | * Discussion of a break-even point. |
| how the small business will be financially managed. | | | | * Explanation the business owner's personal balance |
| The Executive Summary | | | | sheet and method of compensation. |
| The executive summary should give a overview of | | | | * Discussion of who will maintain the accounting |
| the business and should include the following areas: | | | | records and how the records will be kept. |
| * A detailed description of the business and its goals | | | | * A provision of a "what if" statements that address |
| * Identification of the business ownership and the legal | | | | alternative approaches to problems that may develop. |
| structure. | | | | In addition to all of the essential elements of a business |
| * Discussion of skills and experience the potential | | | | plan as outlined above, other important areas to |
| owner and partners (if applicable) bring to the business. | | | | consider when starting a small business are legal |
| * Identification of advantages the business will have | | | | requirements as well as registration and accounting |
| over its competitors. | | | | requirements. |
| The Business Operation | | | | Legal Requirements |
| The business operation section should cover the daily | | | | All small businesses must comply with federal, state |
| happenings of the potential small business and should | | | | and local laws and regulations. Small business owners |
| include: | | | | need to know the legal requirements affecting their |
| * An explanation of how the business will be managed | | | | business. Talking with an attorney can also be very |
| on a day-to-day basis. | | | | helpful. |
| * Discussion of hiring and personnel procedures. | | | | Registration Requirements |
| * Discussion of insurance, lease or rent agreements, | | | | One can't just start a business without approval from |
| and issues pertinent to the business. | | | | their state; in other words, practicing without a license |
| * What equipment will be necessary to produce the | | | | can result in all kinds of legal problems and can leave |
| products or services. | | | | one vulnerable to law suits. It is always important to |
| * An Outline of the production and delivery of products | | | | obtain a license or work certificate, a sales tax |
| and services. | | | | number, and to open a separate business account. |
| The Marketing Plan | | | | Once the business grows to the point where |
| The correct marketing strategy is important for any | | | | employees are needed, then the small business owner |
| small business. Getting the word out and building a | | | | is responsible for withholding income and social security |
| customer base is necessary and essential. Therefore, | | | | taxes as well with complying with state laws covering |
| the marketing plan should include: | | | | employee health, safety, and minimum wage. |
| * A description of the product or service of the | | | | The U.S. Business Advisor has a site at that assists |
| business specializes in. | | | | small business owners in meeting the necessary |
| * Identification of the customer demand for products or | | | | requirements for their particular state. |
| services. | | | | Lastly, don't forget about zoning! Be aware of local |
| * Identification of the market, including its size, location | | | | towns and cities zoning requirements. If they are not |
| and demographics. | | | | followed, a small business can easily be shut down. |
| * An explanation of how the product or service will be | | | | Careful planning by way of a business plan and |
| advertised and marketed. | | | | ensuring that all legal requirements are met are |
| * An explanation of the pricing strategy. | | | | important processes for any potential new small |
| Financial Management | | | | business owner. If done correctly, these essential |
| Effective financial management will also help determine | | | | elements can greatly impact the success of a new |
| how successful a potential small business will be. | | | | small business. |
| Therefore, important elements of this to include in the | | | | |