The Executive Summary (Two pages or less.

) Give a brief description of the proposed business and the product and/or service it will provide. (For an existing business, describe the products and services currently offered and any new products or services that will be offered in the future.)

List the most important trends in your industry.

State the type of advertising and promotion that will be implemented. (For an existing business, state the type of advertising and promotion that has been used in the past and any new methods that will be used in the future.)

Give the projected sales and profits for the next three years (For an existing company, give the sales and profits of the last three years and the projected sales and profits for the next three years.) Describe the education and work experience of the owners and other key personnel.

Include any other information that is critical in understanding how your business operates.

End of Executive Summary

The Mission Statement In 50 words or less, state the purpose of your business, the products and services to be offered, and your management philosophy.

The Analysis of the Business Environment Describe national trends that will affect your business. Consider demographic changes, legislative actions, technological changes, economic trends, and so forth. Possible sources of information include the Census of the Population, the Economic Census, and the Business Conditions Digest. (For an existing business, describe any national trends that have affected your business in recent years and

any projected trends that will affect the business in the future.)

For both new and existing businesses: Provide current industry information such as: Is this industry dominated by large or small firms? What is the failure rate of the industry? Is this a new industry or one that is well established? What is the typical profitability in this industry? What are the positive and negative trends occurring in the industry? (Sources of information include The Encyclopedia of Associations, Annual Statement Studies, Dun and Bradstreet's Key Business Ratios, and the U.S. Industrial Outlook.)

For both new and existing businesses: Include information about the community in which the business will be or is located. Answer the following: Is the population of the community increasing or decreasing? What are the economic conditions of your community? What is the attitude of the community toward your business? Is it positive, negative, or neutral?

Describe Your Product or Service Include information concerning any applicable data such as size, shape, raw materials, colors, weight, speed, packaging, texture, and so forth. (For existing businesses, include information on existing products as well as new products to be introduced.)

Include information concerning services such as personalized attention, guaranteed response time, custom ordering, trial offers, money-back guarantees, and so forth.

If your business is a franchise, answer the following questions: How long has the franchise corporation been operating? Who owns the franchise corporation? How many franchised outlets currently exist? Does the corporation provide training? Is it at franchise headquarters or at your location? Does the franchise corporation provide ongoing assistance once you are in business?

Analyze the Competition

Identify three of your main competitors by name.

State the distance between you and each of the competitors.

Describe their trading areas in comparison to yours.

Identify the strengths and weaknesses of your competitors by using the following checklist. Complete one checklist for each of the three competitors and then summarize the information in a paragraph. (Note: Not all information will be available on all competitors.) Competitor's Name _________________ Product selection _____________________________________________ Large Average Small

Market share _____________________________________________ 100% 50% 0% Product Quality _____________________________________________ Good Average Poor Qality of Service ____________________________________________ Good Average Poor Amount of Advertising __________________________________________ and Promotion Heavy Average Very little advertising

Pricing ____________________________________________ Higher Average Lower than most than most Workforce turnover _____________________________________________ Very stable Average turnover High

Workforce _____________________________________________ Knowledgeable Average Poorly informed Financial Condition _____________________________________________ Very profitable Avg. profits Incurs losses Financial Condition ___________________________________________ Level of Debt Low Average High Equipment _____________________________________________ New Average Obsolete

Production Capacity _____________________________________________ Operating at Has full capacity excess capacity

Describe Your Pricing Strategies State your pricing objectivethe goal to be achieved through pricing. (Possible objectives might include a

certain level of profit, a specific market share, or a certain sales volume.)

If you are a retailer or wholesaler, state your average markup on cost and markup on selling price.

If you are a service firm, state your labor and material costs per hour. Then give your price per hour.

If you are a manufacturer, identify your total direct costs and total fixed costs. State how many units you plan to produce each of the first three years.

If you are a wholesaler, state whether you will use average cost, first-in-first-out, or last-in-first-out.

For all businesses, describe the typical markup in this industry and how your prices compare. Identify your pricing policies and general pricing guidelines. For example, will you run seasonal sales? Will you try to match the competitors' prices? Will you use coupons? Will you give employees discounts on merchandise purchased?

Describe any special pricing strategies such as these examples: Introductory priceslow prices used to gain entry into the market. Skimmingsetting a high initial price and then gradually lowering it. Price lininggrouping inventory into categories and then setting the same price for all items in each category. Odd-endingprices set at odd numbers such as $1.99, $3.95, etc. Loss-leaderselling one or a few items below cost in order to attract customers. All-one-priceSetting every item equal to the same price. Bundlinggrouping items together and selling them for less than if each item were purchased separately.

Determine the shipping costs for the goods you will order. Are the termsF.O.B. Seller, F.O.B. Buyer, etc.? Be sure to include the shipping costs when you establish your sales price.

If you ship goods to your customers, state who pays the shipping costs.

Describe Your Credit Policy Describe your credit terms to customers. (Cash upon sale, net 30, 2/10 net 30, etc.)

Compare your credit terms to those of your competitors.

State whether you will accept checks, credit cards, etc.

If you will use a check verification system or a credit reporting agency, give the agency's name and the costs for those services.

Develop Your Competitive Advantage Describe your competitive advantage in as much detail as possible. This might include quality, price, selection, location, service, and/or fast turn-around time.

Explain how you will achieve your competitive advantage. For example, how will you have better

quality? What will make your service better? Why is your location better? Try to combine several advantages, if possible.

Describe your target market using one of the common segmentation methods. Possible methods include: Geographicallythe geographic area you will serve Demographicallythe age, sex, race, and income of your target market Benefitthe benefits customers are buying, such as status, security/safety, convenience, romance, sociability, entertainment, comfort, self-indulgence, and durability Usage-ratethe percentage of your customers that account for the largest portion of your sales Psychographicallythe values and lifestyle of your customers such as outgoing, introverted, scholarly, party-goers, athletic, and/or family-oriented

Describe Your Location Will your business be home-based? If so, answer the following: Have you checked zoning laws? What additional insurance will be needed? Will any renovations be required? If yes, describe. Are the current utilities adequate? If not, what needs to be done?

PROVIDE THIS INFORMATION IF YOUR BUSINESS IS RETAIL OR SERVICE (If it is a manufacturing plant or wholesale operation, other instructions follow this list.) Give the business address. State whether the property is correctly zoned or if rezoning is necessary. Describe your trading area.

Provide the demographic data for your trading area, giving age, sex, race, income, occupation, etc.

Give the average traffic count in front of the outlet.

State the average speed of the traffic passing the outlet.

Describe anything hindering accessibility such as medians, one-way streets, congested traffic, or a difficult entrance. Identify any factors helping accessibility such as multiple entrances or a location near major highways.

Identify the businesses adjacent to your site. State whether these businesses serve the same customers as your business and whether these businesses have similar operating hours. Discuss any adjacent or nearby businesses that attract a large number of customers.

Provide information concerning the visibility of the site by stating whether it is visible from 400 feet, 200 feet, 100 feet, or less. Do any signs, trees, buildings, or other objects hinder visibility?

Research and describe the community's sign laws. Describe any restrictions that would affect the sales of the business.

Research and describe the parking ordinances. State the minimum number of parking spaces you need for the size of your store. Is there a parking lot or street parking? How many parking spaces are available?

USE THE FOLLOWING LOCATION INFORMATION FOR A MANUFACTURING PLANT State the business address. State whether the property is correctly zoned or if it needs to be rezoned.

Describe the labor climate and the level of union activity. Identify average wage rates and describe the work ethic of the residents. If possible, determine absentee rates and turnover rates in neighboring businesses.

State whether your company needs to be near raw materials or customers.

Describe utility access and rates.

Identify tax rates and state how they compare to other sites you considered.

Describe the quality of the transportation facilitiesair, water, rail, highway, etc.

Describe any environmental regulations that will apply.

Describe the quality of life in the area.

USE THIS SITE INFORMATION IF YOUR BUSINESS IS A WHOLESALE FIRM State the business address. Is this within city limits or an outlying area? Why did you choose this site?

State whether the property is correctly zoned or if rezoning is necessary.

Describe the quality of the transportation facilities that will be neededair, water, highway, rail, etc.

Provide information concerning the financial condition of the community. Are the retail stores financially strong? What is the turnover rate of the retail outlets?

Promotional Plan

List the types of promotion you will usesales and direct marketing, advertising, publicity and public relations, and sales promotion.

State your promotional goals. This might include a specific sales volume, a percent increase sales, or increased awareness. Or you may seek to inform customers of a sale or to eliminate seasonal merchandise.

Provide information on your inside and/or outside sales force. State whether you hire only experienced salespeople or if you hire inexperienced personnel and train them. Describe the compensation packages for the sales force (salary only, salary plus commission, etc.). Describe how customer accounts are divided among the sales forcegeographically, by industry, by company size, etc.

If you will use telemarketing, state whether you have your own telemarketing staff or if an outside telemarketing firm is used.

Describe any direct mail, catalogs, or direct response ads that will be used.

Identify any trade-oriented or consumer-oriented sales promotions that will be implemented. State the objective of the promotions and the total annual cost.

Will you have a Web site? If so, describe the site and what will be offered to consumers.

For each month, complete the following chart to help determine your total advertising budget.

(Month) _____ Advertising Plan (Media) _______

Size of ad _____________ Number of ads this month __________ Message of the ads _____________ Cost for each ad ____________ Total number in target market reached _____________ Total ad costs for this media _____________ (Media) _______ Size of ad _____________ Number of ads this month __________ Message of the ads _____________ Cost for each ad ____________ Total number in target market reached _____________ Total ad costs for this media _____________ (Media) _______ Size of ad _____________ Number of ads this month __________ Message of the ads ____________ Cost for each ad ____________ Total number in target market reached _____________ Total ad costs for this media _____________ Total advertising costs this month $___________________

Public Relations State whether you will sponsor a youth sports team. If so, identify which one.

If you will participate in local business organizations such as the chamber of commerce, identify those organizations.

If you will donate time or funds to charitable organizations, identify them.

Will you write an article for the local newspaper concerning the grand opening, expansion plans, new products that are developed, employee promotions, employee anniversaries (10 years with the company), etc.? Are any company activities interesting enough to be featured on local radio or television stations?

Are there any other public relations activities the company might employ? If so, identify them.

Is your target market overseas? Will you be exporting? If so, answer the following: What products will be exported? What countries will be targeted? Why? What channel of distribution will you use? Export management company? Independent agents? Distributors? Selling direct to retailers? Selling direct to customers? Will you use letters of credit for payment?

Management and Personnel Include a paragraph describing the education and work experience of the owner(s) and all key personnel. Emphasize any management experience and any experience in the industry of the proposed business.

Include complete resumes if they are available. Is this a family business? If so, state which family members will be employed and give their relationship to the owner(s).

Explain in paragraph form the type of employee positions (busboy, secretary, etc.) and the pay and benefits that will be provided.

Then complete the following chart to show all personnel needed: Job Title # needed PT/FT (part/full time) Salary or Hourly Pay Benefits

Identify paid holidays the company observes. Which employees are entitled to holiday pay?

State how vacation time is accrued and which employees will have paid vacations. (Full-time and parttime, or only full-time?)

What is your policy concerning sick days? (Are paid sick days available to full-time and part-time or only full-time employees?)

What is your policy concerning funeral leave? How many days are granted? For which relatives?

How many employees do you have? Are hiring and firing policies legally governed by: Title VII of the Civil Rights Acts Age Discrimination Laws The Americans with Disabilities Act The Family Leave Act

Complete an organizational chart.

Complete a work schedule for a typical work week.

Start-up Costs and Financing Complete a Checklist of for Furniture/Fixtures and Machinery/Equipment Furniture/Fixtures Item Quantity Needed Price for Each Total Price Sample: Desk 3 $150 $450 Shelving 7 $100 $700 __________ ____________ ________ _______ __________ ____________ ________ _______ __________ ____________ ________ _______ __________ ____________ ________ _______ __________ ____________ _______ _______ Total for Furniture and Fixtures $_______

Machinery/Equipment Sample: IBM PC and Software 1 $1,200 Telephone/Fax Combination 1 600 ____________ ___________ __________ ____________ ___________ __________ ____________ ___________ __________ ____________ ___________ __________ ____________ ___________ __________ ____________ ___________ __________ ____________ ___________ __________ Total for Machinery and Equipment Checklist for Start-up Costs Inventory _______ Furniture and Fixtures _______ Machinery and Equipment _______ Prepaid Expenses Insurance ________ Grand Opening Advertising _______ Legal Fees _______ Accounting Fees _______ Employee Wages _______ Other (specify) _______ Total Prepaid Expenses _______ Deposits Lease _______ Utility _______ Tax _______ Other (specify _______ Total Deposits ________

$1,200 600 _________ _________ _________ _________ _________ _________ _________ $ _______

Building and Renovation If Purchased Sales Price _______ Construction/Renovation _______ If Leased Leasehold Improvements _______ Total Location Costs __________ Working Capital Cost per Month Owner's Salary x 3 = _______ Employee's Salary ____________ x 3 = _______ Employee Taxes ____________ x 3 = _______

(approximately 11% of owner and employee wages) Rent ___________ x 3 = _______ Advertising ___________ x 3 = _______ Utilities___________ x 3 = _______ Supplies ___________ x 3 = _______ Telephone ___________ x 3 = _______ Legal/Accounting Fees ___________ x 3 = _______ Loan Payment ___________ x 3 = _______ Repairs/Maintenance ___________ x 3 = _______ Auto/Travel Expenses ___________ x 3 = _______ Inventory ___________ x 1 = _______ (If customers do not pay cash for purchases, this amount will be needed to replace inventory until payment is received.) Miscellaneous ___________ x 3 = _______ Other (specify) ___________ x 3 = _______ Total Working Capital _______ Total Start-up Costs _______ Financing 1. What are your total start-up costs? $___________

2. How much will you invest from personal funds? $___________ 3. How much will you obtain in other equity? $___________ Family and friends $_____ invested for ______% ownership Dividends paid? Yes ____ No ____ _____% of profit paid quarterly___ annually____ Private investors $_____ invested for ______% ownership Dividends paid? Yes ____ No ____ _____% of profit paid quarterly___ annually____ Venture capital $_____ invested for ______% ownership Dividends paid? Yes ____ No ____ _____% of profit paid quarterly___ annually____ Silent partners $_____ invested for ______% ownership Dividends paid? Yes ____ No ____

_____% of profit paid quarterly___ annually____ Other investors (specify) $_________ ___________ $_____ invested for ______% ownership Dividends paid? Yes ____ No ____ _____% of profit paid quarterly___ annually____ 4. How much will you borrow? $___________ Friends and Family $_________ ____________ Borrowed for ___ years at __% interest Monthly payments of $______ Bank loans $_________ ____________ Borrowed for ___ years at __% interest Monthly payments of $______ Finance companies $_________ ____________ Borrowed for ___ years at __% interest Monthly payments of $______ Other (specify) $_________ ____________ Borrowed for ___ years at __% interest Monthly payments of $______ (Note: #1 = 2 + #3 + #4)

Note: The opening-day balance sheet, income statements, and cash flow projections are also on this disk in Excel.

Opening-Day Balance Sheet Complete the following opening day balance sheet. Add or delete categories as needed. Assets Current Assets Cash (working capital) Supplies Prepaid Expenses Inventory Total Current Assets Fixed Assets Furniture/Fixtures Machinery/Equipment Renovations Total Fixed Assets Total Assets Liabilities Current Liabilities Current Portion of Long-term Debt Total Current Liabilities Long-term Liabilities Note Payable Less: Current Portion Total Long-term Total Liabilities Equity Total Liabilities & Equity ______ ______ ______ ______ ______ ______ ______ ______ ______ ______

______ ______ ______ ______ ______ ______ ______ ______

Income Statements Complete this income statement if your business is a corporation. (See the following for a proprietorship or partnership.) Sales Cost of Goods Sold Beginning Inventory + Purchases + Freight - Ending Inventory = Cost of Goods Sold Gross Margin Expenses Officer's Salary Employee Wages Accounting/Legal Advertising Rent Depreciation Supplies Utilities Telephone Interest Repairs Taxes Insurance Miscellaneous Credit Card Fees Dues/Subscriptions Total Expenses Net Profit Income Taxes Net Profit after Taxes $_______ _______ _______ _______ _______ _______ _______ _______ _______ _______ _______ _______ _______ _______ _______ _______ _______ _______ _______ _______ _______ _______ _______ _______ _______ _______ _______

For planning purposes, compute the following: Net Profit Less: Income Taxes Less: Loan Principal Net Cash ________ ________ ________ ________

(Note: Categories may need to be added or deleted depending on the type of business) Complete the following income statement if your business is a proprietorship or partnership Sales $_______

Cost of Goods Sold Beginning Inventory + Purchases + Freight - Ending Inventory = Cost of Goods Sold Gross Margin Expenses Employee Wages Accounting/Legal Advertising Rent Depreciation Supplies Utilities Telephone Interest Repairs Taxes Insurance Miscellaneous Credit Card Fees Dues/Subscriptions Total Expenses Net Profit Less: Income Taxes Less: Self-employment Tax Net Profit after Taxes

_______ _______ _______ _______ _______ _______ _______ _______ _______ _______ _______ _______ _______ _______ _______ _______ _______ _______ _______ _______ _______ _______ _______ _______ _______ $_______

Note that the owner's wages have not been subtracted anywhere on the income statement. However, the money must come out of the business; therefore, the following format is recommended for planning purposes. Net Profit Less: Income Taxes Less: Self-employment Tax Less: Owner's Wages Less: Loan Principal Net Cash ________ ________ ________ ________ ________ ________

(Note: Categories may need to be added or deleted depending on the type of business)

Cash Flow Projection

Complete a monthly cash flow projection for the first year using the following as a guide. Jan. Feb. Beginning Cash Cash In Cash Available Cash Out Rent Telephone Advertising Insurance Equipment leases Office supplies Car phone lease Owner's salary Employee wages Employee taxes Accounting/legal Repairs/maintenance Auto expense Loan payment (P&I) Inventory purchases Income taxes Other (itemize) Total Cash Out Cash Balance Nov. Dec.

(Note: Categories may need to be added or deleted depending on the type of business.)

Break-even Point Complete the following to determine your break-even point 1. Categorize all of your operating expenses as "fixed" and Sample Expense Fixed Variable Rent $3,000/yr Office Supplies $1,200/yr Expense _______ _______ _______ _______ _______ _______ Total Fixed _______ _______ _______ _______ _______ _______ _______ Variable _________ _________ _________ _________ _________ _________ _________ "variable" in the lists below:

2. Determine Your Contribution Margin a. Projected Sales for the First Year ____________ b. Projected Cost of Goods Sold for the First Year _______ c. Divide b by a (b/a) to obtain a percentage____________ Sample: Sales $200,000 Cost of Goods sold $50,000 $50,000/$200,000 = .25 d. Total the variable expenses Sample: supplies = $1,200 credit card fees = $5,000 Total $6,200 e. Divide d by a (d/a) Sample: 6,200/200,000 = .31 f. Add c plus e (c+e) Sample: .25+ .031 = .281 g. Subtract f from 1.0 (1.0f) Sample: 1.0-.281 = .719 3. Determine Your Break-even Point a. Total Fixed Expenses _____________ b. Contribution Margin _____________ c. Divide a by b (a/b) _____________ Sample: Fixed Expenses for the First Year $70,000 Contribution Margin .719 Break-even Point $70,000/.719 = $97,357 in sales the first year 4. Number of Customers Needed to Reach Break-even a. Break-even Point in Dollars (3c) $___________ b. Average Amount of a Customer's Purchase $_______ c. Divide a by b (a/b) to get number of customers for the first year _________________ d. Divide answer in c by the number of days the company is open to get the number of customers

per day _______ Sample: Break-even Point = $97,357 Average Customer Purchase = $10 Number of Customers per year = $97,357/$10 = $9,736 If the business is open 360 days per year, the number of customers needed per day is 9,736/360 = 27.

The Legal Section State the organizational form you chose and the reason for your decision.

Describe any patents, copyrights, trademarks, or trade secrets owned by the company.

Describe any contracts or exclusive agreements with suppliers, customers, employees, etc.

Insurance Research the laws covering workers' compensation in your state. Will you be required by law to provide workers' compensation? If not, will you provide it voluntarily?

Identify the greatest insurable risks your business will face.

Identify other risks you would like to insure.

Determine estimated insurance costs and list the costs.

Suppliers Identify your most important suppliers.

State their credit terms, delivery schedules, and minimum order quantities.

State whether inventory shortages are a problem in this industry.

Describe the availability of suppliers. Are there many to choose from or only a few?

Uncontrollable Risks Identify uncontrollable risks that affect your business. Consider the economy, the weather, new technology, price wars, changes in consumer tastes, new competitors, etc.

For each risk you have identified, explain what could be done to minimize the financial impact if the risk occurs.

Conclusion State your conclusion.

List the assumptions you made while completing the report. State which assumptions must hold true in order for your conclusion to hold true.

Complete the following opening-day balance sheet. Add or delete categories as needed. Opening-Day Balance Sheet Assets Current Assets Cash (working capital) Supplies Prepaid Expenses Inventory Total Current Assets Fixed Assets Furniture/Fixtures Machinery/Equipment Renovations Total Fixed Assets Total Assets

0 0

Liabilities Current Liabilities Current Portion of Long-term Debt Total Current Liabilities Long-term Liabilities Note Payable Less:Current Portion Total Long-term Total Liabilities Equity 0

0 0

Total Liabilities & Equity

Projected Cash Flow Month Beginning Cash Cash In Cash Available Cash Out Rent Telephone Advertising Insurance Equipment leases Office supplies Car phone lease Owner's salary Employee wages Employee taxes Accounting/legal Repairs/maintenance Auto expense Loan payment (P&I) Inventory purchases Income taxes Other (itemize) Total Cash Out Cash Balance 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0

Sales Cost of Goods Sold Beginning Inventory + Purchases + Freight Ending Inventory Cost of Goods Sold Gross Margin Expenses Officer's Salary Employee Wages Accounting/Legal Advertising Rent Depreciation Supplies Utilities Telephone Interest Repairs Taxes Insurance Miscellaneous Credit Card Fees Dues/Subscriptions Total Expenses Net Profit Income Taxes Net Profit after Taxes For planning purposes, compute the following: Net Profit Less; Income Taxes Less: Loan Principal Add: Depreciation Net Cash

0 0

0 0 0

Projected Income Statement Proprietorship or Partnership (Type Company Name Here) Sales Cost of Goods Sold Beginning Inventory Purchases Freight Ending Inventory Cost of Goods Sold Gross Margin Expenses Employee Wages Accounting/Legal Advertising Rent Depreciation Supplies Utilities Telephone Interest Repairs Taxes Insurance Miscellaneous Credit Card Fees Dues/Subscriptions Total Expenses Net Profit Less: Income Taxes Less: Self-employment Tax Net Profit after Taxes For planning purposes complete the following:

Year Ending 20xx Year Ending 20xx Year Ending 20xx

0 0

0 0

0 0

0 0 0 0

0 0 0 0

0 0 0 0

Net Profit after Taxes 0 0 Less: Owner Wages Less: Loan Principal Add: Depreciation Net Cash 0 0 (Note: Categories may need to be added or deleted depending on the type of business.) (Self-employment tax should be calculated at 15.3% of Net Profit.)

Federal Income Tax Formulas for Corporations Taxable Income Under $50,000 $50,000 to $75,000 $75,000 to $100,000 $100,000 to $335,000 $335,000 to $10 million Taxable Formula Your net profit x .15 ((your net profit - 50,000) x .25) +7,500 ((your net profit - 75,000) x .34) +13,750 ((your net profit - 100,000) x .39) + 22,250 ((your net profit - 335,000) x .34) + 113,900

$15 million to $18,333,333 ((your net profit - 15,000,000) x .35) + 3,400,000 $18,333,333 and over ((your net profit - 18,333,333) x .35) + 6,416,667

Personal Income Tax Rates Joint Return (Married) Taxable Income 0 to $12,000 $12,001 to $45,200 $45,201 to $109,250 $109,251 to $166,500 $166,501 to $297,350 $297,351 and over Single Return Taxable Income 0 to $6,000 $6,001 to $27,050 $27,051 to $65,550 $65,551 to $136,750 $136,751 to $297,350 $297,351 and over Tax Rate

Your net profit x .10 Your net profit x .15 Your net profit x .275 Your net profit x .305 Your net profit x .355 Your net profit x .391

Note: Tax rates are affected by many factors including the number of dependents, deductions for charitable contributions, etc. The above calculations assume that your net profit is the same as taxable income. This is a probably a higher estimate than actual taxes owed.