Writing Section 1 of the Business Plan : The Business

Section One: The Business

The following pages describe in detail each part (A through I) of the previous
Business Plan Outline.  Disregard any questions that do not apply to your business.
A. Description of the Business
Part A provides an overview of key information which is developed in greater detail
in the following pages.  Aim for clarity and simplicity in this part.  Too much detail
here gets in the way of the main ideas.  The Elevator Test – Can you explain your
basic business idea in the time it takes to get from the lobby to the 5th floor?

Basic Questions:
1) What general type of business is this?
2) What is the status of the business?  Start-up, expansion or take-over?
3) What is the business form? Sole Proprietorship, Partnership, Corporation
or Limited Liability Company?
4) What are your products?
5) Who are (will be) your customers?

Additional Questions for Start-Ups:

1) Why will you be successful in this business?
2) What is your experience with this type of business?
3) What will be special or unique about this business?
4) Why will your business be successful?
Additional Questions for Purchase of Existing Business:
1) When and by whom was the business founded?
2) Why is the owner selling?
3) How was the purchase price determined?
4) What are the current financial conditions and trends?
5) How will your management make the business more profitable?

B. Products/Services

In this section, describe your product offering.  This will include details of product
features and an overview of unique technology or processes.  But don’t stop there and
don’t focus too much on technology.  You must also describe the product benefits and
why customers will want to buy.
For most businesses, the products/services are not totally unique.  If yours are, take
advantage of this while you can and plan for the competitive battles that will come.
If your products/services are not unique, you must find a way to position your
products/services in the mind of your customer and to differentiate them from the
competition.  Positioning is the process of establishing your image with prospects or
customers.  (Examples include: highest quality, lowest price, wider selection, Best
customer service, faster delivery, etc.)

Basic Questions:
1) What products/services are you (will you be) selling?
2) What are the features and benefits of what you sell?
3) What Position do you have (or want to have) in the market?
4) How do your products/services differ from the competition?
5) What makes your products unique and desirable?
6) Why do (will) customers buy from you?

C. Market Analysis

For start-ups or existing businesses, market analysis is important as the basis for the
marketing plan and to help justify the sales forecast.  Existing businesses will rely
heavily on past performance as an indicator of the future.  Start-ups have a greater
challenge – they will rely more on market research using libraries, trade associations,
government statistics, surveys, competitor observation, etc.  In all cases, make sure
your market analysis is relevant to establishing the viability of the business and the
reasonableness of the sales forecast.

Questions for Existing Businesses:
1) Who are your current customers?  (List largest customers or categories.)
2) What do they buy from you?
3) Why do they buy from you?  (Quality, Price, Reputation, etc.?)
Basic Questions:
1) Who are the purchasers of your products or type of products? (Geographic,
Demographic and Psychographic characteristics)
2) What is the size of the market?  Is it growing?
3) What is (will be) your share?  How will your share change over time?
4) What is the industry outlook?
5) Are there segments of users who are under-served by competition?
6) Do any of these under-served segments present opportunities?

D. Marketing Plan
In this section, you include the highlights or your detailed marketing plan.  The basic
components of a Marketing Plan are:
· What are you selling? (What benefits do you provide and what position or
image do you have?)
· Who wants the things you sell? (Identify Target Markets)
· How will you reach your Target Markets and motivate them to buy?
(Develop Product, Price, and Promotional Strategies)
Product Strategies
1) How will products be packaged?
2) How broad will your product line be?
3) What new products will you introduce?
4) What Position or Image will you try to develop or reinforce?
Pricing Strategies
1) What will be your pricing strategies? (For example: Premium, Every Day
Low Price, Frequent Sale Prices, Meet Competitor Price, etc.)
2) How will you compare with competition and how will they respond?
3) Why will customers pay your price?
4) What will be your credit policies?
5) Is there anything about your business which insulates you from price
6) Can you add value and compete on issues other than price?
Promotional Strategies
1) Who are your Target Markets?
2) How will you reach your Target Markets?  (What Media will you use?)
3) How will you motivate them to buy?  (What Message will you stress?)
4) What is the cost and timetable for implementation of the marketing plan?

E. Location
Locations with greater customer traffic usually cost more to buy or rent, but they
require less spending for advertising to attract customers.  This is especially true of
retail businesses where traffic count and accessibility are critical.
Basic Questions:
1) What is the business address?
2) Is it owned or leased?  If leased, what are the terms?
3) Are renovations or modifications needed, and what are the costs?
4) Describe the property and the surrounding area.
5) Why is this a good location for your business?
For Mail Order, Telemarketing, Manufacturing, Consulting, or other companies
where the customer does not purchase while physically at the business address, less
location detail is needed.  Modify the location section to fit your situation.  In some
cases, a good location may be one close to suppliers, transportation hubs or a
complementary business that will also attract your Target Market.
F. Competition
“Who is your competition?” is one of the first questions a banker or investor will ask.
Business by nature is competitive, and few businesses are completely new.  If there
are no competitors, be careful; there may be no market for your products.
Expand your concept of competition.  If you plan to open the first roller skating rink
in town, your competition includes movie theaters, malls, bowling alleys, etc.
Basic Questions:
1) Who are (will be) your largest competitors?  List them.
2) How will your operation be better (and worse) than your competitors?
3) How are competitors doing? What are their sales and profits?
4) (If Start-Up) How will competition respond to your market entry?

G. Management and Operations
Because management problems are the leading cause of business failures, it is
important to discuss management qualifications and structure.  Resumes of Principals
should be included in supporting data.  If your business will have few employees and
rely heavily on outside professionals, list these key people and their qualifications.  If
you are seeking financing, include personal financial statements for all principals in
supporting data section.
Basic Questions:
1) What is the business management experience of the management team?
2) What are the functional areas of the business?
3) Who will be responsible for each functional area?
4) Who reports to whom?
5) What will salaries be?
6) What management resources outside the company are available?
7) How will your products/services be produced?  (Describe manufacturing
processes, proprietary technology and key supplier relationships.)

H. Personnel
The success of many companies depends on their ability to recruit, train and retain
quality employees.  The amount of emphasis in your plan will depend on the number
and type of employees required.
Basic Questions:
1) What are the personnel needs now?  In the future?
2) What skills must they have?  What training will you provide?
3) Are the people you need available?
4) What is their compensation?  What fringe benefits will be provided?

I. Application and Effect of Loan or Investment
This section is important whether you are seeking a loan, outside investment (equity)
or investing your own money.  It may be necessary to complete Section Two,
Financial Data, before completing this part.
Basic Questions:
1) What is the total investment required?
2) How will the loan or investment be used?
3) How will the loan or investment make the business more profitable?
4) When will the loan be repaid?
5) If you are seeking equity (selling part of the business to an investor):      –
What percent of the company are you willing to give up?
– What rate of return is possible for the investor?  (Note: If your business
plan will be presented to private investors, seek legal counsel to be sure
you are in compliance with securities laws.)