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Business Plan (PDF) the plan: A Step-by-Step BUSINESS PLAN WORKBOOK Illinois Small Business Development Centers "Experts, networks, and tools to transform your business" Illinois Small Business Development Centers Jo Daviess Stephenson Winnebago Boone Mc Henry Lake (SBDC) provide information, confidential business guidance, training and other Carroll Ogle resources to early stage and existing small De Kalb Kane Cook businesses. Whiteside See Lee Illinois International Trade Centers (ITC) Du Page* Note Below provide information, counseling and Kendall Will training to existing, new to-export Henry Bureau La Salle companies inte rested in pursuing Rock Island Grundy international trade opportunities. Mercer Illinois Procurement Technical Stark Putnam Kankakee Knox Marshall Assistance Centers (PTAC) provide one- Warren Livingston Peoria Iroquois on-one counseling, technical Woodford information, marketing assistance and Henderson McLean training to existing businesses Fulton Tazewell that are interested in selling their Hancock Mc Donough Ford products and/or services to Vermilion Mason Champaign local, state, or federal Logan Schuyler De Witt government agencies. Adams Piatt Menard Brown Technology, Innovation and Cass Macon Entrepreneurship Specialty Sangamon (TIES) ten SBDC locations Morgan Douglas Edgar Pike Scott Moultrie help Illinois businesses, Christian Coles entrepreneurs and citizens to Shelby Greene Macoupin succeed in a changing economy by: Calhoun Clark developing the skills of their workers; Montgomery Cumberland promoting safe and healthy workplaces; Jersey Fayette Engham assisting in the commercialization of new Jasper Crawford technologies; and providing access to Madison Bond modernizing technologies and practices. Clay Richland Lawrence Marion Business Center Locations Clinton St. Clair Wayne Edwards SBDC Wabash Washington Jeerson SBDC/ITC Monroe Hamilton White SBDC/ITC/PTAC Randolph Perry SBDC/PTAC Franklin Jackson PTAC Saline Gallatin Technology Services Williamson *SeeSee the Northeast Northeast Region Region map map on on other the last side page * Union Johnson Pope Hardin forfor the Business Business Center Center Services Services in in that that area. area. Alexander Pulaski Massac www.ilsbdc.biz This resource is made possible through a partnership with the Illinois Department of Commerce and Economic Opportunity, Small Business Development Center and the U.S. Small Business Administration. 800-252-2923 THE PLAN A Step-By-Step Business Plan Guidebook INTRODUCTION Planning is your map to success THE PLAN helps you find hidden in the business world. You need to business flaws and makes you write a business plan if you are: think carefully about each phase of your business. • starting or buying a business It is important that you write • financing or refinancing your business plan. Why? You your business will gain in-depth knowledge • raising debt or about your business which will equity capital make it easier to answer lenders’ Much money is made then lost questions. The process of writing because one area of a business your business plan will clarify fails, dragging the positive parts what is involved in making your down with it. business work successfully. Design: © NewGround Publications. (Phone: 800 207-3550) All rights reserved. Photocopying any part of this book is against the law. This book may not be reproduced in any form including information storage and retrieval systems, without prior permission in writing from the publisher. 0213 How To Business Loan Basics ASK YOURSELF THESE QUESTIONS: • How much money do I need? _______________________________________ Use This • What type of lender do I need? (bank, state or federal agency, venture capitalist firm, or other investor) ______________________________________ Workbook • What is the lender’s minimum and maximum loan size? ________________ • Can the lender meet my present and future needs? ______________________ • What types of businesses will the lender finance? ______________________ Divide your business plan into sections that match the “contents” • What collateral does the lender accept? ________________________________ outline shown on the next page. There is no set length for your BEFORE MEETING WITH A LENDER: answers — they will range from a • Call to find out the rules for their business loans. paragraph to a few pages long. • Make sure the lender is looking for loans of your size and type. Once it’s written, your business plan • Ask for a loan application. will need editing. Ask other people to • Make an appointment. read and critique your plan. Include • Rehearse your presentation. a statement on the inside cover that says its contents are confidential, and • Remember, the lender is like a customer. You have to convince making copies is prohibited. the lender that your business has merit. Your business plan should be neat and organized to make a professional BASIC QUESTIONS A LENDER WILL ASK YOU: impression. After your text is written, • How much money do you want? ____________________________________ use a spelling and grammar check • How much are you investing in the business? _________________________ feature to be sure your work is error • Exactly how will the money be used? _________________________________ free. For financial data, use a spread- sheet program. • How long do you need to repay the loan? ____________________________ • How will the loan be repaid? ________________________________________ Once you’re done, make copies for • What collateral do you have to offer? _________________________________ your lender and for others who are interested in your business. Make sure all the copies you submit are LENDERS USE THE EIGHT “C’s” RULE: readable and include original 1. Credit (must be good) signatures. Lenders keep your pre- 2. Capacity (ability to repay) sentation even if you are rejected, 3. Capital (money going into the business) so make copies for yourself of everything you submit. Number the 4. Collateral (your assets that secure the loan) business plan copies and make a list 5. Character (you) of each person you’ve given one to. 6. Conditions (economy, finances, anything that affects your business) 7. It’s a good idea to put your loan Commitment (your ability and willingness to succeed) presentation in a 3-ring binder with 8. Cash Flow (can it support the business’ debt and expenses?) tabs and indexes. Business Loan Basics CONTENTS WHEN MEETING WITH A LENDER: BREAK DOWN YOUR BUSINESS • Bring your business plan, a completed loan PLAN INTO SECTIONS SIMILAR application, and any other materials you need. TO THOSE IN THIS BOOK. • Keep the entire presentation to 30 minutes. Give an overview or outline at the beginning. Know how you are going to end the presentation. Executive Summary ...................... 6 • Invite your lender for a tour of your current or proposed operation. Business Description ..................... 8 • Answer all negative questions with positive answers. Be prepared to back up your answers. Managers & Employees .............. 10 • Find out when you can expect a decision. Operations & Location ............... 11 • Ask that your lender’s decision be sent in writing, even if you received the decision on the phone. Marketing .................................. 12 • Follow up with a thank you letter and a phone call, even if your Buying a Business ....................... 16 loan request was rejected. Buying a Franchise ..................... 17 The Appendix Loan Request .............................. 18 The APPENDIX comes at the end of your business plan and includes all details and documents that support the plan. FINANCIAL STATEMENTS Items that need to be included in the APPENDIX are indicated throughout this workbook. On page 31, you’ll find a comprehensive General Information ............ 19 list, which you can use as a guide. The first page of the APPENDIX should be a listing of its contents. 1. Personal Finances ............ 20 Be sure to separate and organize the documents logically, perhaps in the order they are referred to in the plan. 2. Balance Sheet .................. 22 The APPENDIX will grow, so it is a good idea to use a 3-ring binder with tabbed dividers. Some people prefer using an expandable file. 3. Income Statement ........... 24 4. Cash Flow ....................... 26 Generally, lenders like to simplify the process FORMULAS used to screen loan requests. Take your Ratios ......................................... 28 business through the same exercise that lenders do. The complexity or size of the loan request doesn’t Formulas .................................... 30 matter; the basic formula is as simple as 1-2-3. Appendix ................................... 31 6 EXECUTIVE SUMMARY The Executive Summary (your Cover Letter) The Executive Summary should include: briefly explains the contents of your business plan • the owners’ names and their credentials in about one or two pages. • your products or services • your market(s) and the competition Page two is the Table of Contents. It shows • the amount of money needed the lender on which page each section can be • how the loan will be repaid found (see page 5 for the breakdown of sections). • how long you want the loan to last YOUR COVER LETTER SHOULD READ SOMETHING LIKE THIS ONE: Leave off your To build return address if the letter is on The Green Rose the lender’s 456 Oak Street enthusiasm, your company’s This Town, USA 67890 stationery. make references Mr. John Nelson ABC Bank to what’s 123 Main Street included in your List the purpose Anytown, USA 12345 of the
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