Psychology Today: Here To Help


We LOVE this framework. It establishes an intellectual rigor for our clients seeking to develop their own businesses. But it can also be used by senior executive job candidates as a punch list of key issues that ought to be understood prior to accepting or rejecting a job offer.

Any good business starts with a strong beginning and a strong ending.

The beginning is the mission statement. That statement ought to clearly articulate what value it provides customers and how it will generate income.

The strong ending is a clear articulation of the company's exit strategy and its timetable for achieving that strategy.

There is a world of difference between a "lifestyle business," an exit strategy of being acquired by a larger competitor within 3-5 years, and an exit strategy of an IPO in 18 months!

A clear understanding of the exit strategy alone will give you an important clue as to the kind of culture required.

The business plan is the framework for understanding the context of what ought to happen between the beginning and the end of the company's life.

Have fun!

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Business Plan Template
4.10.96 MM

Here's your sample Title Page.

It's a great idea to put a color picture of your product right on the front. But leave room for the following information.

[Your Company Name]

April 1996
[month and year issued]

Business Plan Copy Number [x]
This document is confidential. It is not for re-distribution.

[Name of point man in financing]
[City, State ZIP]

This is a business plan. It does not imply an offering of Securities.

Table of Contents

Here's a sample Table of Contents. Be sure to modify the page numbers when you've finished your Business Plan.

Executive Summary 1-1
Mission 2-1
Company Overview 3-1
Legal Business Description 3-2
Strategic Alliances 3-3
Product 4-1
Current Product 4-2
Research and Development 4-3
Production and Delivery 4-4
The Market 5-1
Market Definition 5-2
Customer Profile 5-3
Marketing Plan 5-4
Sales Strategy 5-5
Distribution Channels 5-6
Advertising, Promotion, PR.............................5-7
Risk/Opportunity 7-1
Management Team 8-1
Capital Requirements 9-1
Exit/Payback Strategy 9-2
Financial Plan.......................................................10-1
Assumptions 10-2
Financial Statements 10-3
Conclusion 10-4
Exhibits 11-1
Executive Summary

If the executive summary doesn't succeed, your business plan will never sell investors. We recommend that you write the summary first and use it as a template for the plan as a whole. Since one of its primary functions is to capture the investor's attention, the summary should be no longer than two pages. The shorter the better.

Want to see what the pros think about raising money? Tune into The MoneyHunt Show (for info on showtimes, etc., go to

In 19?? [your company name] was [formed / created] to [describe the purpose of your business].

Our company is a [high-profile retail merchant, manufacturer, value-added assembler of x, etc.].

We have just [started / designed / developed / tested / introduced] our [product / service] -- a unique and proprietary [potato peeler, new hanger, etc.].

The legal form of [your company name] is [Sole Proprietorship / General or Limited Partnership / Corporation / Subchapter S-Corporation, Limited Liability Company], located in [give primary business address].

Last [full period], our operation was producing $[x] in sales, and has operated at [a profit, break-even, etc.] ever since [date]. Revenue projected for fiscal year 19?? without internal funding is expected to be $[y].

Now [your company name] is at a point where [what you need or want to do next].

Place your company in the industry vis-à-vis competition or technology, etc.

To implement our plans we require a [loan / investment] totaling $[x] for the following purposes: Hey -- why do you need the money?

To build manufacturing facilities and ramp up production and inventory to meet customer demands.

To increase sales with an extensive campaign to promote our products / services.

To add retail locations, regional marketing / sales offices, print a direct-mail catalog.

To improve Customer Support services to handle the increased demands created by the influx of new orders and broader coverage of existing accounts.

To recruit staff to support prolonged growth under the new marketing plan.

To increase R&D to create follow-on products as well as improve our competitive advantages.

Our Products
Tell us about your product or service in terms we can understand.

[Your company name] currently offers [x] products: [list products and resources].

[Y], our principal product, consists of [z].

Overall, our existing product line is in the [introductory / growth / maturity / growth] stage.

The technology in our products consists of [a].

Behind our existing [products / services] we have [developed / plan to introduce] [follow-on products / services], which are [b] and are especially useful to prospective customers who can now easily [c].

Key factors in our [production / service] delivery include [x]. Our current [product / service] is produced at [y or by supplier z]. Because of [a], our future facility will need to [expand / move / etc.]. Our biggest advantage is [b].

Market Definition
The [x] market is [growing rapidly stagnant / contracting] and amounted to $[y] million in 19?? -- representing a [z]% growth over $[a] million in 19??.

Who are your customers? Where are they, and how do you reach them?

Are they buying your product / service from someone else?

How will you educate customers to buy from you? Why will they care?

Our major competition comes from [competitor x], [competitor y], and [competitor z].

Compared to [competitive products or the closest product available today] our [product / service] [can / will] do [x].

[Y] is a capability unique to [the company]'s [products / services].

Advantages the product or service has over existing products or services.

Management Team
Our management team consists of [x: number] men and women, whose backgrounds consist of [y] years of marketing with [list company names] and [z] years of corporate development with [list company names].

Capital Requirements
We require additional investment of $[x] and $[y] in [z] [months / years] and [a] [months / years] to allow us to [reason for capital request and why the venture is exciting].

Financial Plan
At this point the investor must have a clear idea of where your business stands today. If you bore him or make the information he needs hard to find, you get canned. You must provide a snapshot, however sparse, of your financial position.

Sales Summary

Last Year This Year Next Year Year Two
Gross profit:

Current Balance Sheet Summary

Book Value:

In [x] years we will provide an exit, which we expect to be in the form of [y] or perhaps [z]. The increase in profits generated by [a] will allow us to have the funds to repay the loan in [b months / years]. Mission
No one understands a successful company's mission like entrepreneurs who have built successful companies themselves. See Money Hunter's Mentors at

Mission Statement
We strive to become a [market leader / small participant] in the [identify the niche] of the larger [identify the industry] in the next [x] years. We will achieve $[y] in sales and [z] percent profitability by that time.

In order to achieve our objectives, [your company name] commits to the following:

[Your company name]'s Mission is to provide [innovative / practical / top-quality / low cost] products that [save time / solve problems] and improve the way people do [x]. We believe our first responsibility is to the [y] who use our products and services. A stronger financial position will enable us to [z].

In carrying out our day-to-day business we strive to:

1. Treat stakeholders as [x].
2. Treat our customers as [y].
3. Serve our community by [z: Geeze, do we have to?].

As a result of our long-term commitment to this mission, we will be known as a company that [x]. Our stakeholders see [your company name] as offering [describe the benefits, feelings, knowledge, results, paybacks, etc.]. The Company

Legal Business Description
The legal name of [your company name] is [list full name of company as listed on your registration with the local government].

Include dba (doing business as) in the legal name of the company.

The legal form of [your company name] is [Sole Proprietorship / General or Limited Partnership / Corporation / Subchapter S-Corporation, Limited Liability Company].

The business is located at [list primary business address as well as other locations].

Government Regulations can cut now if inapplicable.

Because [your company name] is operating in the [x] industry, we are under the regulation of [y]. The manufacture and sale of [z] are regulated by both federal and state authorities. [Your company name] has obtained all required federal and state permits, licenses, and bonds to operate its facilities. There can be no assurance that [your company name]'s operations and profitability will not be subject to more restrictive regulation or increased taxation by federal, state, or local agencies.

List licenses and permits required.

Explain your company's relationship with relevant government agencies. How will these agencies regulate your business?

Strategic Alliances
The leverage from relationships can be appealing to investors. Explain how you work with others to improve your performance.

[Your company name] has formed important and beneficial relationships with major companies in the [x] industry. A list of these relationships follows:

Joint Marketing Agreements
Joint marketing with established companies will produce revenues, credibility, and market presence. [Your company name] is pursuing joint marketing agreements with other organizations to expand the presence of our products in the [x] market. Our plans include having these organizations market our [y] products within their product line.

Third Party Supplier Agreements
We do not have the resources to [develop / produce / install] [x] products, so we rely on [y] manufacturers for the development of many types of [additional features / components]. Our [z] product is one such example of valuable [a]. [Your company name] has an established Third Party Supplier relationship with [b].

Joint Development Efforts
[Your company name] has been involved in joint development efforts with [x] and [y]. Financial and technical responsibilities [are / were] shared when engaged in joint development with [z]. We have discussed a joint development project with [a], but the project has not yet been initiated. We will also receive technical input from [a], [b], and [c].

OEM Relationships
OEMs (original equipment manufacturers) [example: a company whose valve is integrated into a larger system built by another company] provide an additional source of income. While selling through OEMs reduces product recognition, it is an efficient way to penetrate market.

The Product

Current Product
Explain how your product works or how the service is used. What burning marketplace needs are addressed by your product? What value do you add to the product?

The Mentors also have a wealth of experience when it comes to positioning their products. See

[Your company name] currently offers [x] products: [list products or services].

[Y], our principal product, consists of [z]. Overall our existing product line is [give status]. We are now developing [new products / existing product upgrades / spin-off products].

The first product developed by [your company name] is called [product a] and was introduced in 19?? in order to [explain purpose]. We subsequently introduced [product b] in 19?? and then [provide a brief history of your product line up to the present].

Proprietary Technology
Our products are protected by the following:

List relevant patents, copyrights, trademarks, etc.

For our [x] [technology / capability] we have [explain licensing or royalty plans] with [y] as follows: [give general terms of agreements].

Unique Features/Benefits
What quality distinguishes your product or service? Convince us why this quality will satisfy customer needs and desires.

Our products have [x] unique qualities. In particular, our [y] capability is a standout sought after by our customers, benefitting them by [z: explain]. This, in turn, can be used for [detail additional customer benefits].

Keep in mind what motivates people to buy: safety, quality, packaging, etc.

[Product a] provides [list features] that [explain specific customer benefits].

[Product b] provides [list features] that [explain specific customer benefits].

For example, one of [product a]=s features is its ability to [x], and [product b] allows users to [y]. Compared to [competing product c], our [product a] is approximately [z] and does not require [d].

Tell us about the unique value-added characteristics your product line or process provides to customers and how these characteristics translate into a competitive advantage for your company.

The major benefits of [your company name]=s combined products are enhanced by [x], [y], and [z].

Research and Development
During the past [quarter / year], [your company name] has spent $[x] on research and [product / process] development. In 19?? [your company name] spent approximately [y]% of sales revenues on R & D. Our plans for 19?? and beyond call for an [increase / decrease] in R & D spending to [z]% of sales.

[Your company name] is regularly examining roles that new products will play in the growth of the company. In order to promote the speed and effectiveness of our future product-development efforts, [your company name]=s management is committed to the following: [list your commitments].

Product Selection Criteria
Examples include: relatively low investment requirements, positive return on investment, fit with present strategy, feasibilty of development and production, relatively low risk, time to see intended results, buyer in common. Explain how and why your company arrives at its product development decisions.

At [your company name], focus on our customer is critical. And as [our single largest / a large] expense, marketing is where [most / much] of our effort is applied. The idea is to maintain customer loyalty by perpetually providing a valuable [product or service], thereby reducing the cost of reaching and appealing to the market. Wise product selection is therefore critical to [your company name]'s success.

Planned Products
In the future [your company name] will continue to develop new products and enhance existing products. As a response to the demonstrated needs of our market, new [products] slated for development include [x], [y], and [z].

Additional [concepts / plans] for follow-on [next generation] products include [a].

Discuss plans for your next generation of products.

Discuss add-on services for future customer needs.

[New product a] development, which [will begin / began] on [date], will require the following resources: [staffing, materials, tooling, capital equipment, technology, new processes, etc.]. The targeted release of [new product a] is [date].

[New product b] development, which [will begin / began] on [date], will require the following resources: [staffing, materials, tooling, capital equipment, technology, new processes, etc.]. The targeted release of [new product b] is [date].

Production and Delivery
Tell us about the proposed organizational location, make vs. buy decisions, facilities, and logistics. Examples: use of capital, labor, and material resources; manufacturing processes; vendor relations; experience and distribution requirements. Statements should indicate initial volume and expansion requirements as well as product or process complexity, uniqueness, and costs.

We produce our products by [describe]. Key factors in the [manufacturing / service delivery] process are [x], [y], and [z].

[Raw / prefabricated] [materials / components / subassemblies] required for production are [a], [b], and [c].

Enumerate and explain capital equipment, material, and labor requirements. Are the above items readily available? Do you have multiple supply sources?

List quality and technical specifications.

List inventory requirements.

Identify hazardous materials or other significant safety factors.

Are alternate sources or materials available? If so, describe them.

At [your company name] we [fabricate / assemble / subcontract] the following [key parts / components / subassemblies]:

List parts, etc., including information on vendors, lead-time, costs, etc.

Our [manufacturing / distribution] facility [is / will] be located in [x].

This location will provide needed space for [initial / current] production and expansion to meet projected demand over the next [give timeframe]. Our current production capacity, including internal and external production, is [y] units per [week / month / year].

If we realize increases in demand up to [z] units per [week / month / year], additional facilities will be needed by [date]. Selection of the future site will take into account the following:

Detail needs and cost of expansion.

Especially important for consumer-end user products, packaging needs to convince store buyers and ultimate buyers that the products will fly off the shelf. Explain why the products are unique.

The message our packaging delivers is [explain your strategy]. Our competitors use [x type of packaging] as well, but we differentiate our products by [explain what is distinctive; include photos in Exhibits section]. These final steps in the manufacturing process are critical for establishing a desired image in the consumer=s mind.

Product Fulfillment
Product fulfillment is a critical component in customer satisfaction. [Your company name] utilizes [x group / external resource y] to monitor and manage the delivery, billing, repair, and warranty of our products to ensure customer satisfaction and repeat sales.

The Market
Sad fact: this is the most crucial but worst-prepared section of most business plans.

Market Definition
What markets are you competing in? If you make glove-compartment hinges, don't gush about the $80 billion automobile market. You make hinges -- not cars -- for that market, so tell us how many hinges were sold last year. Are there other markets where you sell your products?

For specific information on understanding your market, see How to Hunt,

Industry Analysis
Our [x] market is [growing / stagnant / shrinking]. The market for these products amounted to $[y] in 19?? -- representing a [z]% growth over $[a] in 19??. Based on our research [provide reference sources], the major trend will be [b], while in the past the trend has been toward [explain].

Market research [again, provide source] indicates that there is currently only [c] product for every [x] customers. The [market / industry], as a whole, is looking toward [manufacturers / suppliers / retailers / experts] in order to expand existing [applications / product lines / services].

The overall [y] market for the [z] industry is projected to be $[a] by the end of 19??. We anticiapte the niche in which we will compete to be a [b] market with [list and briefly profile competition]. The overall market potential for [product category] is estimated to be $[c] by 19??, and the [additional product]=s portion of this market is estimated to be $[x].

The area of greatest growth in the [y] market is [z].

Indentify where you got this information, and how up to date it is.

Market Segment
We define our market segment as [x], [y], and [z].

Currently, the market is shared by [a] competitors.

How is the market divided among the major participants?

What are the share-gain and loss trends?

Briefly explain your view of the trends and implied opportunities.

Users of [product b] are looking for quality and productivity improvements. [Past / Current / Recent / Lack of] development of [product b] has resulted in the need to [change / correct / apply new technologies]. This innovation, called [c], allows [product b] to operate efficiently as [x].

For existing businesses (your own or a recent acquisition) review: sales history; market share and position; industry trends; profits; marketing methods

Based on [z product category] performance over the past two years, we consider this market segment to be [volatile / uncertain / solid].

What do industry forecasters predict for the next two years?

The major market segments are:

[Segment a].

[Segment b].

List, in general categories, the types of customers you are likely to reach (retailers, electrical contractors, catalog buyers, etc.).

The [c] segment of the market is generally based on [list products] with retail prices in the range of $[x] to $[y]. The vast majority of sales in this category will be handled by [OEMs, retailers, manufacturer's representatives]. The minority of sales will be conducted through [z].

Our product has [a] handicaps. The only notable marketplace disadvantages are [b], due to [explain]. By 19?? we should be able to position ourselves as [c] and thereby reduce this weakness considerably.

Corporate weaknesses, at present, consist only of [x]. We are now taking the following steps to alleviate these problems: [explain].

Environmental threats [such as declining markets / trade barriers / consumer trends / changing economy] include [y].

Other known threats include [z].

Customer Profile
The most typical customer for our product is someone who is in the [x] field who currently uses [product] for [explain application / purpose].

What motivates people to buy your product? What is the practical and emotional appeal?

Explain your methods of research -- telemarketing, warranty cards, ad inquiries, etc.

How are your key competitors perceived?

How do customers perceive your company and its products? And how will they receive new products?

How sensitive are they to pricing differences?

Marketing Plan
The overall marketing plan for our product is based on the following fundamentals:

Type of business you want to found.

Segment of the market[s] you plan to reach.

Distribution channels to be used to reach market segment: retail, rack jobbers, wholesalers, brokers, door to door, mail order, party plan, etc. Share of the market we expect to capture over time.

To prove the value of [product] we can [demonstrate benefits] and [increase credibility with scientific reports and studies].

Sales Strategy
[X] should be treated as a [long-term / short-term] product.

How do customers perceive your company and product relative to competition?

A focus group is a great way to find out how on target (or off base) your product and market positioning is.

Our [product] is viewed by the consumer to be [explain]. Our product's unique [technical / quality / performance] advantages lead to the perception [x] in the consumer's mind.

In market segmentation, we can use [upscale consumers / ethnic targeting] to diversify our appeal.

How do we set prices? Is there a policy?

Is our pricing competitive? Are prices based on costs or standard markup? Why are they higher or lower than competing prices? How elastic (the effect of pricing on demand for product) is the market for these products? How do consumer preferences affect elasticity?

Is there perceived value (it costs more, therefore it must be better) inherent in higher prices?

We price our product based on [competition / costs / suppliers / manufacturers / package deals]. Note that [sliding-scale / volume / regulated / competitive / perceived-value] pricing is essential to our market profile.

In contrast to the competition, our prices are [x]. Various seasonal aspects of our market affect our pricing due to [example: selling seasons, raw-materials costs, etc.].

We feel that our customers will pay $[z] because [explain purchasing rationale].

Margin Structure
We plan to review our pricing and product margin every [z] months.

Should a new pricing policy be investigated? Are potential profits being lost? Do we have time for this?

Current Selling Methods
Strategies used to sell your product.

How do you promote the product? (Via direct calling, advertising, mail, radio, television, etc.)

Provide any sample brochures, dummy advertisements, announcements, or other promotional literature in the Supporting Documents section.

Detail the margins of safety allowed in sales forecasts.

Distribution Channels
[Your company name]'s marketing department plans to sell our [product] through diverse channels.

These channels work because of:

The customer profile.


Seasonal variations.

Efficient use of funds.

The feasibility of using channels of similar products already on the market.

Our competition uses the same [x] distribution channels. However, our distribution strategy allows us to [explain advantages over competition].

A partial list of [your company name]'s major current customer include:

List the top 5 to 10 customers.

Our distribution channels include:

Executive Sales

Direct Sales

Manufacturer Representatives
Because manufacturers' representatives carry several product lines that are compatible with ours, we believe it would be appropriate to select manufacturers representatives carrying [x] and [y] complementary and compatible products [examples: automotive products to parts stores, marine supplies to boat dealerships, etc.].


Targeting of our distributors is a crucial element of our marketing plan. We will select pre-existing distribution channels that are professionally staffed and well regarded.


What dealers want from manufacturers:

Price point: make it attractive and reasonable.

Profit margin: worthy of sales emphasis.

Technical support: an accurate and immediate response is needed.

Quality design, construction and packaging.

Advertising and public relations: customer awareness and demand should be maximized.

Effective sales materials to ease and expedite sales process.

Competitive advantages: features and benefits.

Stocking and delivery: the product should be available when needed.

Market stability: maintain profit margins and market position.


With Original Equipment Manufacturers (OEMs) we can incorporate our [product] into their product line by [explain how your product can be included within theirs: they sell your outboards with their boats or your windshield wipers with their cars].

Direct-Response Mail

We will be exploring the benefits of incremental, coordinated direct-mail programs in the [provide timeframe]. We anticipate a strong profit potential as we strengthen our direct response capabilities. We will be approaching this scientifically, as we improve our customer targeting ability. We propose [example: two 50,000-piece campaigns, each preceded by a 5,000-piece test].


Look in your telephone directory under ADirect Mail@ for mailing houses. Some also handle inquiries, and others provide an 800 number.

International Market

It's important to consider your worldwide opportunities from the start.

List target countries in order of priority: rationale; language; usage of product; getaway destination if everything goes haywire.

Method of Distribution.

How your products are (or can be) distributed.

Make a chart to show how they get to the end-user consumer.

Customer Service
Our customers emphasize that service and support are major concerns, and they are constantly impressed with the support we provide. Hotline service is currently available to all customers enrolled in our [maintenance / support] program.

Returns and Adjustments Policy
At this time, general trade customs for handling returns are [describe how returns are generally handled]. We will use the following policies: [explain].

Advertising, Promotion and PR

Your purpose: Enhance, promote, and support the fact that your products perform better.

Remember: advertising and promotion is an investment, not a cost.

[Your company name] recognizes the key to success at this time requires extensive promotion. This must be done aggressively on a wide scale. To accomplish our sales goals, we require an extremely capable advertising agency and public relations firm. [Your company name] [plans to advertise / now advertises] in major trade magazines such as [x]. Upon funding, an agency will be selected and, with its assistance, a comprehensive advertising and promotion plan will be drafted. We will advertise both independently and in cooperation with [distributors, OEMs, retailers, and companies] that have joint [marketing / sales] relationships with us.

Our publicity efforts will:

Position us at the leading edge in providing products for [y industry or market segment].

Enhance our reputation and [name / brand] recognition among [managers / buyers / customers] in [prospective companies / industries / markets].

We will communicate on a regular basis with the following:

Editors of major trade, business, and local publications.

Key management personnel in the existing customer companies.

Organizations of employees and sales representatives.

Trade Shows
[Your company name] participates in three kinds of trade shows: [x], [y], and [z].

In 19??, instead of [a], [your company name] will concentrate on [b]. In deciding on our plan for trade shows, the following factors have been taken into consideration:

Target audience of the show: will this get the message to our target market?

Geography: aim for a good mix of shows around the country.

Time frame: preferably no more than one show a month.

Past experience, if any.

Participation in someone else's booth.

Based on the above considerations, these shows have been chosen for 19??. Competition

Tell us about key competitors in regard to product, price, location, promotion, management, and financial position. False or incomplete information here translates as dishonesty and negligence to investors, bankers, etc. Do not delude yourself (or your investors) about your competition.

Look in your telephone book's yellow pages. Look in the industrial directories at your local library. Search on-line databases that provide competitive profiles of other companies. Read industry magazines and look for advertisers.

Money Hunter can help you size up the competition:

[Your company name]'s products offer [x] in [y] situations.

Companies that compete in this market are [competitor a], [competitor b], and [competitor c].

Provide a sample profile of each. For example:
Acme Inc. is a $3 million sales manufacturer and marketer of pencils in the Northeast region. Acme Inc. is a division of Acme Corp, a public company with $800 million sales. The division sells pencils, pens, and other writing and drawing instruments. The recent trend for the division has been static, as the parent has not provided working capital to modernize machinery. Acme Inc. is managed by one Vice President who has been there for six months. The previous manager worked there for 11 months.

Our competitors' major strengths and weaknesses are [example: price, location, quality]. The major competitors' objectives and strategies are [list]. Their likely response to current [economic / social / cultural / demographic / geographic / political / governmental / technological / competitive] trends affecting our industry will be [explain].

Our [products / services] are positioned relative to our major competitors by [price / delivery / location]. Sales and profit ranking of major competitors in the industry have [detail change] over recent years. These rankings have changed because [list reasons for ranking change].

Supplier and distributor relationship in this industry is [explain the effect of suppliers and distributors on your product]. Competitive threats today come from [other companies / industries / new or entrenched technologies / foreign countries].

[Your company name]'s products perform in virtually all situations where [your features, benefits, or customers are likely to be]. [X]'s [competitive] product does not provide the same capabilities in a situation where [describe circumstances].

The [competition] advertises in [a], [b], and [c] publications.

Discuss results: if the competition advertises consistently and continuously there, it probably works.

[Competitor X]'s products only operate in a [limited, etc.] way.

-- Or --

This market segment is not shared with any direct competitors. Competition does exist, however, in [x] [industries / countries]. Competitors in these areas are [a], [b], and [c]. Risks / Opportunities

Business Risks
Asses the major risks in your business: limited operating history; limited resources; limited management experience; market uncertainties; production uncertainties; dependence on key management.

Moneyhunter's Mentors know a thing or two about taking risks. See:

Discuss the major opportunities your company can capitalize on.

The upside potential for [x] and our [product y] in [each of the currently addressed markets] over the next two years is [explain].

-- Or --

An altogether new application for this product would be tapping [y] markets.

Further opportunity for our product exists in [z] markets.

Can the current line of products and technological capabilities be leveraged effectively?

What is the estimated cost of entry, timeframe, and risk?

Alternative distribution or technology licensing creating up / down market brands, etc. Management Team

It's clichéd but true: investing is a people business. Tell us not only about your managers, but how they work together as a team.

Officers and Key Employees Age Stock

Frankly, if you have more than a few people filling these positions, you're lucky. Tell us who you have.

[A], President [i] [q]

[B], Vice President of Marketing [j] [r]

[C], Vice President of Sales [k] [s]

[D], Vice President of Finance [l] [t]

[E], Vice President of R & D [m] [u]

[F], Vice President of Operations [n] [v]

[G], Controller [o] [w]

[H], Corporate Attorney [p] [x]

Of the [y] people who make up the corporate staff, there are [z] founders, who hold the following positions:




Stock Allocation
[X] shares of [your company name] common stock have been authorized by the state of [y]. At this time [z] shares are outstanding and have been allocated as shown above.

Provide short job descriptions of your company=s key positions.

Outside Support
Additionally, our outside management advisors help make decisions and enhance creativity.

[X], Accountant/CPA

[Y], Corporate Attorney

[Z], [Type of] Consultant

Either here or in the Supporting Documents section include an organizational chart describing relevant business functions and relationships.

Board of Directors
An external Board of Directors, including qualified business and industry professionals and experts, will assist our management team in making appropriate decisions and taking the most effective action; however, they will not be responsible for management decisions.

Use this page to highlight the backgrounds of your Board of Directors.

Put each director's actual resume in the Supporting Documents section. Capital Requirements

Needless to say, this is important -- state what your capital requirements are.

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The [initial / first year / total] capital required is $[a]. We will require additional investments of $[b], $[c], $[d] and $[e] in [months / years], [months / years], [months / years] and [months / years], respectively, to enable us to increase our production capacities to meet market demand.

After analyzing our working capital, we estimate our operating working capital requirements as $[f], $[g], $[h], $[i] and $[j] for years one through five, respectively. We will need to borrow $[k] to finance working capital for a period of [months / years], the remainder to be financed through cash from operations.

In order to purchase [additional facilities / equipment / inventory], an estimated total of $[l] loan financing is required for the five-year period. The annual requirements for each year are estimated as $[m], $[n], $[o], $[p] and $[q] respectively.

How Funds Will Be Used

Explain specifically how the loan and / or investment funds will be used.

The [loan / equity investment] proceeds will be used to [purchase / buy / build / develop / gain / acquire / finance] [equipment / facilities / working capital].

Exit/Payback Strategy

Define how much time you will require before you can pay back the loan or investors can convert their equity; in other words, when an exit will be possible.

Tell us about how repayment will be accomplished, or the strategy for converting investors' equity to cash (i.e., a public stock offering, sale of the business, etc.).

Your financial projections should indicate that the loan / investment funds will help generate the profits and cash required for payback and exit. Discuss any significant increases in profits / cash flows that are expected as a direct result of financing, and how these increases help to pay back the funds.

The financial projections indicate that exit of [investor x] will be achievable in [y] years. The exit settlement will be in the form of [z].

The increase in profits generated by [a] will provide funds to repay the loan in [months / years].


Don't wimp out now. This is the place to ask for cash. DO NOT BE VAGUE.

Based on the attached financial projections, we believe that this venture represents a sound business investment.

In order to [start / continue / proceed] we are requesting a [loan / investment] of $[x] by [date]. Financial Plan


Tell us about the assumptions you made to develop your financial statements (your business assumptions, not the numbers you entered into the financial spreadsheets).

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The financial projections are based on the assumption that the additional [equipment / facility / product lines] will generate an increase in profits of [x]% or $[y] within [timeframe].

The new equipment will reduce costs by $[z], thereby increasing our profit margin by [a]%.

Cost of Goods Sold will be reduced by [b]% by taking advantage of volume discounts.

We plan to have a working prototype by [date]. Field testing of the product is to start by [date] and be completed by [date]. Initial market penetration is anticipated to be $[c] at a margin of [x]%, and increase to $[y] at the end of the first year and $[z] by the end of the fifth year.

It is usually assumed that your costs, including labor, will increase by the general inflation rate. Hopefully, costs will also be decreased by volume discounts and better negotiations with suppliers. If costs are shown to be level or decreasing, comment on that fact and the underlying reasons.

General inflation rates are assumed to be [z]% per year.

Financial Statements

Keep in mind that projected financial statements do not stand on their own. Anyone reviewing your financial statements will also expect to read a discussion that supports the projections that you made (your research on your market, competition, etc.).

Discuss briefly the summary/analysis results for each of the financial statements that you provide in the Supporting Documents section of your business plan. Growth rates for sales and any large expense items should be discussed. Economies of scale should be noted. Any large fluctuation in a category should be explained. Volume-adjusted measurements are helpful to add perspective to the discussions. These include income subtotals as a percent of sales; inventory; accounts receivable and accounts payable levels in days; return on equity; etc.

The basic question to ask yourself is: What would I want to know to evaluate a business proposal before I would consider investing my own money? If you have answered all the questions that you would have as an investor, you are probably prepared for lenders or outside investors.

Income Statements

Comment on any large items or changes, such as R & D or marketing expenses, that will appear to be disproportionately large in your first few months of operation (especially as a percentage of sales revenue) but will taper off over time.

There are two Income Statements in the Supporting Documents section. One reflects the first year by month, and the second shows annual values for five years.

Balance Sheets

Comment on any large or unusual items, such as other current assets, other accounts payable, or accrued liabilities.

There are two Balance Sheets in the Supporting Documents section. One reflects the first year by month, and the second shows annual values for five years.

Break-Even Analysis
The Break-Even Analysis in the Supporting Documents section indicates that the break-even point will be reached in [date]. Sales are projected to be $[x] above break-even in [date]. The contribution margin for the first year is [y]%, representing $[z].

Cash Flow Statements
There are two Statements of Changes in Financial Position (Cash Flows Statements) in the Supporting Documents section. One reflects the first year by month, and the second shows annual values for five years.


A common rookie error is mucking up the body of a plan with too much detail. That's what the exhibits are for.

Exhibits give an investor a better feel for the company behind the numbers. Be sure to include illustrative material such as:

  • Product literature and brochures
  • Sales sheets
  • Media coverage
  • Clips from industry publications
  • Relevant patents
  • Market research data
  • Past advertising campaigns
  • Useful photographs of facilities, warehouses etc.