1. How to Write Effective Business Plans
Jennifer Abel
Virginia Cooperative Extension
Feb. 2, 2005

2. What is a business plan? An outline of what your business will be
It is a chance for you to:
Set yourself apart from the competition
Set SMART goals for your business (Specific, Measurable, Attainable, Realistic, Time-bound)
Explain how your business will grow
Ask for start-up funding
--A business plan is a roadmap for your biz. It allows you to list the signposts and milestones you will need to reach on your way to success.
--It gives you the chance to show why you are unique
--SMART goals are Specific, Measurable, Attainable, Realistic, and Time-bound

3. Why write a business plan?
Obtain loans or capital to get your business started
Establish clear objectives for yourself
List your strengths
Analyze the market—know the competition
Create a plan for growth
--Any lender will want to see a detailed business plan before they agree to give you money. They will want assurances that your business will be strong and grow so that they can be guaranteed to get their money back.
--Writing a business plan forces you to create specific objectives and a timeline for achieving them. This way you will have a well-defined plan for success.
--The plan also forces you to think about who your competition will be and how you will stand out and do something different from what is already being done.

4. Pieces of the Plan: Objectives
What do you want the business to accomplish in its first three years?
At what rate will your client base increase each year?
By how much will revenues increase each year?
Make objectives Specific, Measurable, Attainable, Realistic, and Time-bound
--In the cleaning service example you can see that they have clear objectives listed: increase number of clients served by 20% per year. At least 30% of the leads that contact them will utilize the cleaning service.
--These are the kinds of objectives you should develop for your business, but they need to be based in reality, i.e. you need to do your homework to make sure your projections can really happen.

5. Pieces of the Plan: Mission
Provides a clear statement of what the business will do, who it will serve, and why a customer would want to pick your business over a competitor’s
--Come up with a 2-3 sentence description of what your business is all about. This tells lenders and other interested parties quickly what you are trying to achieve. You can also use it on your brochures and other promotional materials.

6. Pieces of the Plan: Company Summary
Provides information on:
Company background
Company ownership
Needed start-up purchases
--Tell people something about your background.
--Who are you?
Why do you want to start this business?
--What experience do you have?
--What assets do you already have in place to get the business moving forward/

7. Pieces of the Plan: Services
What products will you sell or what services will you provide?
Who will be your target customer?
--Describe clearly how your products or services, or your approach, will differ from what is already available to consumers in your area.
--Describe the audience you will target. In the housecleaning example, they are targeting two groups: an affluent one-income household in which the one who is not working does not want to do housework and the two-income household where they don’t have time to clean.

8. Pieces of the Plan: Market Analysis
What segment of the market will you target?
How will your biz be different?
What is your competition?
How will you reach your market?
What are the current buying patterns of the people you want to serve?
--In our example Mother’s House Cleaning Service says they are the only service that is specifically targeting the wealthy. They say that they provide the reliability, professionalism, and trustworthiness that this segment of the population demands.
--They indicate that everyone else in the area is not targeting this group and is not providing the level of service expected by the affluent.
--They also show that they will attract new clients through referrals and lists from exclusive local membership clubs.

9. Pieces of the Plan: Implementation
How will you maintain your competitive edge?
Sales strategy
Sales forecast
Milestones—what points will you have along the way to measure success?
Personnel plan
--In our example, the company shows they will maintain their competitive edge through rigorous training for new employees.
--They describe their sales strategy as sparking interest through brochures, having people call to find out more information, and taking the opportunity to give callers a thorough explanation of services and the business’s philosophy.
--In the sales forecast they detail how personnel will grow as sales grow, with a projected staff of six by the end of the seventh month.
--Again, in our example, the milestones section details key points along the business’s road to success, including setting up the office to being fully staffed to fulfill the anticipated demand for services.
--The personnel plan in our example shows how high caliber employees will be attracted by offering a competitive wage and also provides a timeline for when staff will be brought on.

10. Financial Plan Break-even analysis Projected profits and losses
Projected cash flow
Projected balance sheet
--Break-even analysis shows at what point your costs equal your revenue. After that point you will be able to start recording profits.
--The profit and loss statement allows you to project your expenses over three years and show how your profits will grow over that same time through increased sales.
--Cash flow analysis shows cash you will have on hand after expenses are taken into account.
--The balance sheet details your assets, liabilities, and resultant net worth.

11. Summary Business plans help you set clear goals
They are necessary for you to get funding
Free help is available to assist you in writing them
Contact the Arlington office of Virginia Cooperative Extension at