Components of a

Business Plan

Jill Kline
Wyoming SBDC
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Why develop a
Business Plan?
All the work you do in thinking up your
idea, testing it, studying it, and producing
it, has been for nothing if you cant sell it.
Whether you start you own business to
produce and sell your invention,
subcontract out the manufacturing part, or
sell your rights in return for a percentage of
the proceeds, you need a business plan.
- Pamela Riddle Bird, PhD, Inventing For Dummies
CEO, Innovative Product Technologies, Inc.

Why develop a
Business Plan?
You've just come up with an idea. What to
do next? There is no exact order of what
you should be doing. But we like to suggest
two broad areas for inventors to embark on.
First, learn all you can about running a
business, even if you hope to license your
idea. Second, write a business plan. Even if
you hope to license your idea, (and that's
actually a rarity among the successful
inventors we've met) you'll still need to have
a plan.
- Mark Ellwood, Past UIA Board of Directors

Why develop a
Business Plan?
A business plan is vital for enterprises
needing investment, grant funding or
significant borrowing; more so for
innovation ventures, as the greater number
of unknowns makes it even harder to
attract backing. But dont make the mistake
of thinking that only other people need your
business plan. Its primarily a tool to reveal
possibly awkward truths about your
business to you.
- a Creative Investor

Three Types of Plans

Summary Plan
10 pages, 3 important points

Comprehensive Plan
10-40 pages, seeking capital or alliances

Operational Plan
40+ pages, for going concerns, part of an
annual process
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The Summary Plan

The Business
Legal Structure, Products or Services,
Management, Personnel, Record Keeping

Marketing
Target Market, Competition, Advertising

Financials
Summary of Needs, Use of Funds, 3 Year
Cash Flow Projections, Income Projections
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The Comprehensive Plan

1. Executive
Summary
2. Problem
3. Solution
4. Business Model
5. Secrets

6. Marketing and
Sales
7. Competition
8. Management
Team
9. Financials
10.Current Status
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Executive Summary
Define problem, solution, business model,
and why your solution is better
Write it last
Grab readers attention
No more than 2 pages!
Most important part of your plan and
usually written last
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Problem
What problem are you solving?
Describe how the state of the art is
insufficient
Get your reader to agree that the current
situation isnt optimal
If there isnt a problem, take your idea
back to the drawing board
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Solution
How do we solve the Problem?
Explain what you sell
State your value proposition

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Value Proposition
Worksheet
First Sentence:
For (target customer)
who (statement of the need or opportunity),
the (product/service name) is a (product/service
category)
that (statement of benefit).

Second Sentence:
Unlike (primary competitive alternative),
our product (statement of primary differentiation).
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Business Model
Explain how you make money
Who pays you?
How do you collect?
What are your channels of distribution?
How do you integrate suppliers?

Use examples if necessary

Be complete
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Secrets
Describe your technology, process
improvement, etc.
Use charts, diagrams, schematics, as
much as possible
Understand your Intellectual Property

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Marketing and Sales

Define your primary, secondary, and other
audiences
Show some numbers
How will you find, sell, and retain
customers?
Advertising and promotion budget
Identify your leverage points
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Competition
Everyone has competitors!
Provide a complete view of the competitive
landscape
Direct and indirect competitors
Current and anticipated competitors
Competitor strengths and weaknesses
Your competitive advantages
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Management Team
Describe your key players
Management Team
Board of Directors
Board of Advisors
Major Investors

Who are you missing?

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Financial Projections

Cash Flow Projections

Income Projections
Balance Sheets
Assumptions

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Business Plan
Format
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Executive Summary

Company name, address, and phone number

Name(s), addresses, phone number(s) of all key people
Brief description of the business
Brief overview of the market for your product
Brief overview of the strategic actions you plan to take to make your
firm a success
Brief description of the managerial and technical experience of your
key people
Brief statement of the financial need and how the money will be
used
Income statements and balance sheets for the last three years of
operation
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Detailed Business
Plan
A. Background on your business
1. Brief history of the business
2. Current situation
B. Detailed description of your business
1. uniqueness of your business
2. how it creates value for others
3. key factors that influence the success of
business (price, quality, durability, dependability,
technical features, etc)
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Detailed Business
Plan
C. Market Analysis
1. Potential buyers for your products
2. Their motivation to buy
3. Size of market
4. Total annual purchases
5. Nature of buying cycle
6. External market influence
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Detailed Business
Plan
D. Competitive Analysis
Description of the following factors, including
their influence on your success:1. Existing competitors
2. Firms that might enter the market
3. Strengths and weaknesses of each
competitors business
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Detailed Business
Plan
E. Strategic plan for your business
1.Plan to market your products to the target
market identified, specifically considering
marketing strategy on these key factors:
- pricing, promotion & advertising, customer
service

2.Comparison of your products with those

presently in the market
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F. Specifics of your organization &

management
1.How your business is organized
2.Key people (now or in future) in your
business, backgrounds, & specific talents
that enhance the chance of success.

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G. Financial plans
1.Money needed to make this product or
service & your business a long-term
success
Tie the response to this question to your
production and marketing plan
Be realistic and specific

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2. Create a cash budget to show the banker

or investor what you need in terms of
money, when you need it, and how &
when you plan to generate revenues from
operations and sales
3. Realistic projection of operational cost
Materials, labor, equipment, marketing,
overhead, others
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4. Actual and projected balance sheets and

income statement
5. Breakeven analysis

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H. Strategic action plan

1.Clear mission
2.Specific performance goals and objectives
3.Restatement of your production and marketing
strategies
4.How these strategies will be converted into
operating action plan
5.Control procedures to keep business on track
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