Sophisticated Business Plan Template

1. Executive Summary
This is a summary of each subsequent section of the business plan. It allows investors and other parties
to get an idea of the business without having to read the entire plan. This part should be written last.

2. Financial Plan
This part of the plan will give you (1) an idea of the financial viability of your business and (2) a
financial feel for the business. Completing the financial plan will require you to gather information
about the prospective business.

2.1 Cost Slips

A cost slip is a report that lists all resources and costs of producing a product. Costs slips may
optionally include other useful, pertinent information such as price, contribution margin and profit.
Cost slips and the research they require are very useful for getting a financial feel for a business. If you
do only one part of this business plan, do this one. It is the most important. Companies treasure their
cost slips for their indispensability in making business decisions. A sample cost slip follows:

Definitions:
Direct Materials

Direct Labor

Overhead

Contribution Margin

2.2 Cost-Volume-Profit Analysis

Cost-Volume-Profit analysis is a tool businesses use to see how much they have to sell (volume)
assuming some cost in order to make some profit. It is very useful for determining the viability of a
business endeavor and for setting price. The following formulas for Cost-Volume-Profit analysis are
equivalent:

Price = Unit Variable Cost + (Fixed Cost + Profit)/Sales Volume

Sales Volume = (Fixed Cost + Profit)/(Price – Unit Variable Cost)

Profit = Sales Volume*Price – Sales Volume*Unit Variable Cost - Fixed Costs

Definitions:
Unit Variable Cost – The costs that change with production for one unit. Mostly direct labor, direct
materials, utilities and supplies.
Fixed Cost – The total costs that do not change with production. Things like rent and administrative
overhead (manager’s salary, secretary’s salary).

Sales Volume – The number of units sold

Profit – Sales Volume * Price – Total Cost. Note: Profit should not include the cost of your personal
labor.

(not listed) Break-Even Point -

Instructions for performing Cost-Volume-Profit Analysis:

Solve the above equation that is the most convenient for you. Keep playing with the variables until you
find a reasonable price for some realistic sales volume that yields an acceptable profit. An example
of a reasonable price is total costs + a 10% markup. An example of a realistic sales volume is 300
customers a day. An example of an acceptable profit is 5% - 20% of revenue, not including your salary.
Most of the work is calculating the costs first.

Tip: Do not include “down time labor” in unit variable cost. This is time the employee could spend
multitasking.

Small Business Education

A small retail business can expect about 200 to 300 customers a day.
For a restaurant, the food itself should be between 25% to 45% of the price.
An acceptable profit margin is 5% to 20%. This is not including your salary.
Keystone pricing is price = cost of goods sold * 2, or a contribution margin of 50% (price – unit
variable cost).
The more you lower your price, the more your sales will increase. The more you raise your price the,
more your sales will decrease. This is called the law of demand and it is useful for making pricing
decisions.

2.3 Projected Cash Daybook

The Cash Daybook is the business from a practical, financial point of view. It contains the business’s
daily transactions. If the Cash Daybook is successful, the business will be successful. One thing to look
for on the Cash Daybook is that the business doesn’t run out of money when an outflowing transaction
is made, for example, when paying the rent. Not having enough money to pay creditors is the number
one reason small businesses fail.

Instructions for projecting the Cash Daybook:

For a typical month, list the business’s daily transactions and their amounts in sequential order. At the
end of the list, state the remaining balance. A sample Cash Daybook follows:

Date Transaction Amount Cash

4/1 Bank Deposit 1000
1000
4/2 Rent (800)
200
4/3 Day’s Sales 2500
2700
4/4 Day’s Sales 2500
5200
4/5 Payment to Suppliers (600)
4600

2.4 Income Statement

The income statement tells you how much money you made at the end of some period. It is a
subtraction of itemized expenses from itemized revenues and the resulting profit or loss.

Definitions
Revenue -any money taken in by the company, mostly sales
Expense – any money going out of the company, mostly costs

Instructions for writing the Income Statement:

Add up all the like revenues from your Cash Daybook and list them on a piece of paper. Then add up
all the like expenses. The subtract expenses from revenues and list it at the bottom. A sample income
statement follows:

2.5 Balance Sheet

The balance sheet is a list of all assets and liabilities and their net equity. The balance sheet, also know
as the statement of financial position, tells how financially “healthy” the company is. When assets are
greater than liabilities, the company is in good shape. If liabilities are greater than assets, this is an
indication of a problem.

Definitions
Asset – anything the company owns, including cash
Liability – any outstanding debt the company owes
Equity – the difference between Assets and Liabilities

Instructions for writing the Balance Sheet:

(1.) List all the property the business owns and their values under a heading called “Assets”. State the
sum of the assets. (2.) List all debts the company owes under a heading called “Liabilities”. State the
sum of the liabilities (3.) Subtract Liabilities from assets and state the difference under a heading called
“Equity”. A sample balance sheet follows:

3. Company Description
The Company Description is the business from a management point of view. It is the conceptual
company. The more attractive the conceptual company is to your target market, the more customers
will like it and the more successful the company will be.

3.1 Business Description

The business description is the activities the company carries out. It should be sufficiently descript and
touch on products and customers, and optionally, price, location, or other important parts.

3.2 Mission Statement

The mission statement is the company’s purpose. For example: to provide our customers with quality
products at an affordable price.

General Statement on Communication of the Mission Statement

3.3 Customer Value Proposition

The Customer Value Proposition is a statement that includes all the value that the company offers to
the customer. The CVP is important because it is the reason customers visit your store. The CVP
should appeal to your target market. An example of a customer value proposition is: ABC Company
offers high quality products at low prices” “Kenny’s Car Co. sells reliable used cars at fair prices with
warranties that offer piece of mind.” “Low prices. Everyday.”

General Statement on Communication of the Customer Value Proposition

3.4 Core Values

The core values are the things the company holds important. They are communicated to the customers
and if the customers like them, together with the customer value proposition, they will like the
company. Here are sample core values:

General Statement on Communication of the Core Values

Communication of core values is the most important. Customers care about the morals of the company
more than anything else so you want to make sure they are communicated. A competent offering
combined with strong morals will yield loyal customers.

4. Product Description
5. Market Analysis
5.1 Industry Analysis
Trends - Are overall sales increasing or decreasing? Why? By how much? (minimum 100 words, for
sufficient thought)

What are the latest trends in the industry? How will these trends affect your business?

Market Share guesstimate – How many customers are there in the market? How many customers can
you expect to get? Why?

5.2 Competition Analysis

Who are your major competitors? What advantages do they have over you? How do you plan to
overcome these advantages? Why will this work?

5.3 Customer Analysis / Target Customer Profile

What is your average customer/s like? age, ethnicity, profession, interests, goals, preferred media
channels? Why will these customers buy your product? How will you help your customer reach their
goals? How will you satisfy their interests?

What are your strengths and weaknesses? Why will you succeed?

5.4 Value/Price Ratio

A value/price ratio is the amount of value per dollar that the product offers. Products with higer
value/price ratios will sell better than products with lower ones. The value/price ratio determines
whether a customer will buy your product or your competition’s. Even a guesstimate of the value/price
ratio is useful for determining the attractiveness of your product. Cost information can help you figure
out the ratio.

6. Marketing Plan
The marketing plan is the business from a marketing point of view.

The marketing plan consists of general concepts and marketing tactics grouped into four plans: the
product, price, place and promotion plans. Marketing tactics are things the company does to attract and
retain customers. They are the implementation of the general concept. They can be as little and detailed
as using Heinz ketchup instead of Hunts because it tastes better with your french fries or choosing
napkins with a feminine design instead of a masculine one because your young female customers will
appreciate it to as major as charging a price with a 10% markup because the fair price resonates with
your buyers. ...Choosing a theme with lots of red and yellow because these colors stimulate the
appetite. Imagine a store where every minute detail was calculated in an orchestrated attempt to achieve
the company’s objectives.

6.1 Instructions for writing the product plan

General concept:

6.2 Instructions for writing the price plan

6.3 Instructions for writing the place plan
General concept: Play Sports Bar is a public house that adults can come to to rest and recreate. It has
the feel of a 2nd home. It feels like the customers own the bar. The atmosphere is friendly. 6 hour visits
are daily occurrences.

6.4 Instructions for writing the promotion plan

7. Operational Plan
Make a monthly schedule of tasks to be completed each day. Include intermittent tasks like unloading
shipments and paying the rent.

8. Management Plan
Write down the names of the principles and their responsibilities.

Recommended Reading
Schaum’s Outline of Managerial Accounting – this and the following three books will give you the
tools that professional accountants use to make businesses profitable. Schaum’s Outlines’ strength lies
in the solved problems.
Schaum’s Outline of Financial Accounting
Schaum’s Outline of Cost Accounting
Horngren, Study Guide to Cost Accounting, A Managerial Emphasis
Kerig, Marketing – will give you a good grasp of marketing concepts
Solomon, Consumer Behavior – will give you the knowledge to develop marketing tactics.
Sundstrom, Ted, Mathematical Reasoning: Writing and Proof – teaches you how to think. If you read
one math book, read this one. Not that difficult.
Paul, Richard and Linda Elder, Critical Thinking – teaches you how to think.