How to Write a Business Plan

How to Write a Business Plan

by Mike P. McKeever

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Overview

Step-by-step advice on preparing a business plan


You need a sound business plan to start a business or raise money to expand an existing one. For over 30 years, How to Write a Business Plan has helped fledgling entrepreneurs—from small service businesses and retailers to large manufacturing firms—write winning plans and get needed financing.


This bestselling book contains clear step-by-step instructions and forms to put together a convincing business plan with realistic financial projections, effective marketing strategies, and overall business goals. You’ll learn how to:

  • figure out if your business idea will make money
  • determine and forecast cash flow
  • create profit and loss forecasts
  • prepare marketing and personnel plans
  • find potential sources of financing, and
  • present your well-organized plan to lenders and other backers, and
  • learn about best practices for raising money, from SBA loans to equity crowdfunding.

Product Details

ISBN-13: 9781413325454
Publisher: NOLO
Publication date: 12/15/2018
Edition description: Fourteenth Edition
Pages: 344
Sales rank: 196,969
Product dimensions: 6.90(w) x 8.90(h) x 0.80(d)

About the Author

Mike P. McKeever has consulted with thousands of entrepreneurs on their business plans, started and run his own successful businesses, taught college classes in small business management and entrepreneurship, and written on the subject for numerous business publications.

Read an Excerpt

What Is a Business Plan?

"Marry in haste, repent at leisure."
(proverb)

"A stitch in time saves nine."
(proverb)

A business plan is a written statement that describes and analyzes your business and gives detailed projections about its future. A business plan also covers the financial aspects of starting or expanding your business -- how much money you need and how you'll pay it back.

Writing a business plan is a lot of work. So why take the time to write one? The best answer is the wisdom gained by literally millions of business owners just like you. Almost without exception, each business owner with a plan is pleased she has one, and each owner without a plan wishes he had written one.
Why Write a Business Plan?

Here are some of the specific and immediate benefits you will derive from writing your business plan.
Helps You Get Money

Most lenders or investors require a written business plan before they will consider your proposal seriously. Even some landlords require a sound business plan before they will lease you space. Before making a commitment to you, they want to see that you have thought through critical issues facing you as a business owner and that you really understand your business. They also want to make sure your business has a good chance of succeeding.

In my experience, about 35% to 40% of the people currently in business do not know how money flows through their business. Writing a business plan with this book teaches you where money comes from and where it goes. Is it any wonder that your backers want to see your plan before they consider your financial request?

There are as many potential lenders andinvestors as there are prospective business owners. If you have a thoroughly thought-out business and financial plan that demonstrates a good likelihood of success and you are persistent, you will find the money you need. Of course, it may take longer than you expect and require more work than you expect, but you will ultimately be successful if you believe in your business.
Helps You Decide to Proceed or Stop

One major theme of the book may surprise you. It's as simple as it is important. You, as the prospective business owner, are the most important person you must convince of the soundness of your proposal. Therefore, much of the work you are asked to do here serves a dual purpose. It is designed to provide answers to all the questions that prospective lenders and investors will ask.

But it will also teach you how money flows through your business, what the strengths and weaknesses in your business concept are, and what your realistic chances of success are.

The detailed planning process described in this book is not infallible -- nothing is in a small business -- but it should help you uncover and correct flaws in your business concept. If this analysis demonstrates that your idea won't work, you'll be able to avoid starting or expanding your business. This is extremely important. It should go without saying that a great many businesspeople owe their ultimate success to an earlier decision not to start a business with built-in problems.
Lets You Improve Your Business Concept

Writing a plan allows you to see how changing parts of the plan increases profits or accomplishes other goals. You can tinker with individual parts of your business with no cash outlay. If you're using a computer spreadsheet to make financial projections, you can try out different alternatives even more quickly. This ability to fine-tune your plans and business design increases your chances of success.

For example, let's say that your idea is to start a business importing Korean leather jackets. Everything looks great on the first pass through your plan. Then you read an article about the declining exchange ratio of U.S. dollars to Korean currency. After doing some homework about exchange rate fluctuations, you decide to increase your profit margin on the jackets to cover anticipated declines in dollar purchasing power. This change shows you that your prices are still competitive with other jackets and that your average profits will increase. And you are now covered for any likely decline in exchange rates.
Improves Your Odds of Success

One way of looking at business is that it's a gamble. You open or expand a business and gamble your and the bank's or investor's money. If you're right, you make a profit and pay back the loans and everyone's happy. But if your estimate is wrong, you and the bank or investors can lose money and experience the discomfort that comes from failure. (Of course, a bank probably is protected because it has title to the collateral you put up to get the loan. See Chapter 4 for a complete discussion.)

Writing a business plan helps beat the odds. Most new, small businesses don't last very long. And, most small businesses don't have a business plan. Is that only a coincidence, or is there a connection between these two seemingly unconnected facts? My suggestion is this: Let someone else prove the connection wrong. Why not be prudent and improve your odds by writing a plan?
Helps You Keep on Track

Many business owners spend countless hours handling emergencies, simply because they haven't learned how to plan ahead. This book helps you anticipate problems and solve them before they become disasters.

A written business plan gives you a clear course toward the future and makes your decision making easier. Some problems and opportunities may represent a change of direction worth following, while others may be distractions that referring to your business plan will enable you to avoid. The black and white of your written business plan will help you face facts if things don't work out as expected. For example, if you planned to be making a living three months after start-up, and six months later you're going into the hole at the rate of $100 per day, your business plan should help you see that changes are necessary. It's all too easy to delude yourself into keeping a business going that will never meet its goals if you approach things with a "just another month or two and I'll be there" attitude, rather than comparing your results to your goals.
Issues Beyond the Plan

I have written this book to provide you with an overview of the issues that determine success or failure in a small business. Experienced lenders, investors, and entrepreneurs want a plan that takes these issues into account. of course, this book can't cover everything. Here are some of the key business components that are left out of this initial planning process.
Bookkeeping and Accounting

This book discusses the numbers and concepts you as the business owner need to open and manage your small business. You have the responsibility to create bookkeeping and accounting systems and make sure they function adequately. (Some suggestions for setting up a system are contained in Chapter 6.)

One of the items generated by your accounting system will be a balance sheet. A balance sheet is a snapshot at a particular moment in time that lists the money value of everything you own and everything you owe to someone else.
Taxes

While there are a few mentions of tax issues throughout the book, most of the planning information doesn't discuss how taxes will be calculated or paid. The book focuses its efforts on making a profit and a positive cash flow. If you make a profit, you'll pay taxes and if you don't make a profit, you'll pay fewer taxes. A CPA or tax advisor can help you with tax strategies.
Securities Laws

If you plan to raise money by selling shares in a corporation or limited partnership, you'll fall under state or federal securities regulations. You can, however, borrow money or take in a general partner without being affected by securities laws. A complete discussion of these issues is beyond the scope of this book. For now, take note that you must comply with securities regulations after you complete your plan and before you take any money into your business from selling shares or partnership interests.
Your Management Skill

This book shows you how to write a very good business plan and loan application. However, your ultimate success rests on your ability to implement your plans -- on your management skills. If you have any doubts about your management ability, check out the resources in Chapter 12. Also see Chapter 11 for a thought-stimulating discussion of management.
Issues Specific to Your Business

How successfully your business relates to the market, the business environment, and the competition may be affected by patents, franchises, foreign competition, location, and the like. Of necessity, this book focuses on principles common to all businesses and does not discuss the specific items that distinguish your business from other businesses. For example, this book doesn't discuss how to price your products to meet your competition; I assume that you have enough knowledge about your chosen business to answer that question.

Table of Contents

1. Benefits of Writing a Business Plan
2. Do You Really Want to Own a Business?
3. Choosing the Right Business
4. Potential Sources of Money to Start or Expand Your Small Business
5. Your Resume and Financial Statement
6. Your Profit and Loss Forecast
7. Your Cash Flow Forecast and Capital Spending Plan
8. Write Your Marketing and Personnel Plans
9. Editing and Finalizing Your Business Plan
10. Selling Your Business Plan
11. After You Open—Keeping on the Path to Success
12. Good Resources for Small Businesses
13. Business Plans for Nonprofits
Appendixes
A. Business Plan for a Small Service Business
B. Business Plan for a Manufacturing Business
C. Business Plan for Project Development
D. How to Use the Downloadable Forms on the Nolo Website
Index

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How to Write a Business Plan 4.4 out of 5 based on 0 ratings. 11 reviews.
Anonymous More than 1 year ago
The writer helps you to piece your business plan together one focus point at a time. This book is for the person who has never written a business plan before and would be useful to someone who has great ideas that need to be organized to put your vision and ideas on paper. Great Book! Recommend this book to anyone starting or trying to organize an existing business.
toddgrotenhuis on LibraryThing More than 1 year ago
I wanted this book because I am looking into small business opportunities.Here are the things that I really appreciated about the book:*Used plain language wherever possible, and explained jargon when not*Instructions on what portions of the book you could skip, depending on your sector, need for funding, whether your business already exists, etc.*Information was tailored for different sectors*Tools and forms to help with calculations, charts, predictions*Lots of tips and warning on topics that I had not considered*Wasn't overly discouraging nor encouraging, rather, frankly presented what is necessary to be successful*Contains three example plans in different sectorsWarnings:*There weren't really many tips on unconventional business models (which is to be expected)*Too many retail examples, for my purposes (may not be a concern for you, and are easily skimmed or skipped)*The technology sections in the resources chapter (12) are dated in many aspectsOverall, I would certainly recommend this book to someone considering whether or not to start a small business.
m4marya on LibraryThing More than 1 year ago
I requested this book because I am thinking of writing up a business plan for an idea I have. This book proved to be full of information that I didn't even think that I would need. It has been enlightening, and will be a very valuable resource for when I sit down to create my own document.
ShawnMarie on LibraryThing More than 1 year ago
I've worked with SCORE and other agencies to write business plans before but never have I had such a complete and readable reference to use while writing one.This book tells you with real world examples and in simple language what each portion of a business plan is for and why you need it (or why you don't.)Anyone starting a business of their own, or trying to reinvent an existing business, should get a copy of this book.I believe if you use this book to write a doable business plan you are halfway to success.Excellent reference!
atbradley on LibraryThing More than 1 year ago
This is an impressively-thorough and clearly written guide to every facet of planning a new business. The appendices include examples of plans for three different types of business that go even further to clarify the concepts explained in the book. Overall, a very useful read for anyone considering opening a new business.
spounds on LibraryThing More than 1 year ago
I come from a long line of employees, not entrepreneurs, so I know very little about starting a small business. That's one of the reasons I wanted to read this book--to see if someone with no experience could "get it." I'm pleased to say that I did. The book is well laid out in easy to understand steps with lots of great examples. The appendices contain examples of real business plans that are similar enough to help you learn what is required and different enough to make you realize that all business plans don't come from the same cookie cutter.Recommended!
nonRIVAL on LibraryThing More than 1 year ago
As a small business owner this was a pleasant addition. I took a leap into a field I felt comfortable with, without knowing anything about business or what makes a business viable and sustainable (besides income). This book asks questions of the reader that may seem simplistic but are important aspects of a business that are often overlooked.
davincidad on LibraryThing More than 1 year ago
This is a really good guide for assembling a business plan. It takes you step by step through the entire process with many examples without getting too bogged down in technical terms and legal mumbo-jumbo.
bakersfieldbarbara on LibraryThing More than 1 year ago
After 25 years, why a book on business plans? This is an update on a very important book for fledgling businesses. How many of us, wanting to start a business, know the first thing about it? Nola, known for its free legal information, and expertise in legal matters, once more has come through for the person wanting to write a business plan, and yet not knowing how to do it. This book will help you present a convincing financial opportunity to banks and investors in an understandable format. Included are strategies for evaluating the profitability of a business idea, estimating operating expenses, and presenting a plan to your lender. One of the best features for me was the CD-ROM included with the book, with essential spreadsheets and 3 sample business plans that a person can modify for their own use. I wish I had known about this book a few years ago when my son started his own business; the headaches would have been few and with Nola at our beck and call, we could have been so much wiser. A great book, valued over the years and now updated with the latest laws, banking regulations and new resources.
TheCaptain59 More than 1 year ago
NOLO books are some of the greatest reference and instruction guides on a number of professional topics, and their business plan guide exceeds that standard. The topic of business plans is very technical because of the wide disparity in needs for various industry. This guide does an excellent job of describing how much or how little information certain types of business plans need, while showing why those criteria are needed. If you're planning a business venture, get this book and take solace in knowing you could consult other sources, but you won't have to.
Anonymous More than 1 year ago