business plan chapter 5 example

5 Chapter 5 – The Business Plan

Developing your strategy.

As mentioned in Chapter 2 , it is critically important for any business organization to be able to accurately understand and identify what constitutes customer value. To do this, one must have a clear idea of who your customers are or will be. However, simply identifying customer value is insufficient. An organization must be able to provide customer value within several important constraints. One of these constraints deals with the competition—what offerings are available and at what price. Also, what additional services might a company provide? A second critically important constraint is the availability of resources to the business organization. Resources consist of factors such as money, facilities, equipment, operational capability, and personnel.

Here is an example: a restaurant identified its prime customer base as being upscale clientele in the business section of a major city. The restaurant recognized that it has numerous competitors that are interested in providing the same clientele with an upscale dining experience. Our example restaurant might provide a five-course, five-star gourmet meal to its customers. It also provides superlative service. If a comparable restaurant failed to provide a comparable meal than the example restaurant, the example restaurant would have a competitive advantage. If the example restaurant offered these sumptuous meals for a relatively low price in comparison to its competitors, it would initially seem to have even more of an advantage. However, if the price charged is significantly less than the cost of providing the meal, the service in this situation could not be maintained. In fact, the restaurant inevitably would have to go out of business. Providing excellent customer service may be a necessary condition for business survival but, in and of itself, it is not a sufficient condition.

So how does one go about balancing the need to provide customer value within the resources available while always maintaining a watchful eye on competitors’ actions? We are going to argue that what is required for that firm is to have a strategy .

The word strategy is derived from the Greek word strategos , which roughly translates into the art of the general, namely a military leader. Generals are responsible for marshaling required resources and organizing the troops and the basic plan of attack. Much in the same way, executives as owners of businesses are expected to have a general idea of the desired outcomes, acquire resources, hire and train personnel, and generate plans to achieve those outcomes. In this sense, all businesses, large and small, have strategies, whether they are clearly written out in formal business plans or reside in the mind of the owner of the business.

There are many different formal definitions of strategy with respect to business. The following is a partial listing of some of the definitions given by key experts in the field:

“A strategy is a pattern of objectives, purposes or goals and the major policies and plans for achieving these goals, stated in such a way as to define what business the company is in or is to be in and the kind of company it is or to be .” [1] “The determination of the long-run goals and objectives of an enterprise, and the adoption of courses of action and the allocation of resources necessary for carrying out these goals .” [2] “What business strategy is all about, in a word, is competitive advantage .” [3]

We define the strategy of a business as follows: A firm’s strategy is the path by which it seeks to provide its customers with value, given the competitive environment and within the constraints of the resources available to the firm.

Whatever definition of strategy is used, it is often difficult to separate it from two other terms: strategic planning and strategic management. Both terms are often perceived as being in the domain of large corporations, not necessarily small to midsize businesses. This is somewhat understandable. The origin of strategic planning as a separate discipline occurred over fifty years ago. It was mainly concerned with assisting huge multidivisional or global businesses in coordinating their activities. In the intervening half-century, strategic planning has produced a vast quantity of literature. Mintzberg, Lampel, Ahlstrand, in a highly critical review of the field, identified ten separate schools associated with strategic planning. [4] With that number of different schools, it is clear that the discipline has not arrived at a common consensus. Strategic planning has been seen as a series of techniques and tools that would enable organizations to achieve their specified goals and objectives. Strategic management was seen as the organizational mechanisms by which you would implement the strategic plan. Some of the models and approaches associated with strategic planning and strategic management became quite complex and would prove to be fairly cumbersome to implement in all but the largest businesses. Further, strategic planning often became a bureaucratic exercise where people filled out forms, attended meetings, and went through the motions to produce a document known as the strategic plan. Sometimes what is missed in this discussion was a key element—strategic thinking. Strategic thinking is the creative analysis of the competitive landscape and a deep understanding of customer value. It should be the driver (see “Strategy Troika”) of the entire process. This concept is often forgotten in large bureaucratic organizations.

Strategy Troika

Strategic thinkers often break commonly understood principles to reach their goals. This is most clearly seen among military leaders, such as Alexander the Great or Hannibal. Robert E. Lee often violated basic military principles, such as dividing his forces. General Douglas MacArthur shocked the North Koreans with his bold landings behind enemy lines at Inchon. This mental flexibility also exists in great business leaders.

Solomon and Friedman recounted a prime example of true strategic thinking. [5] Wilson Harrell took a small, closely held, cleaning spray company known as Formula 409 to the point of having national distribution. In 1967, the position that Formula 409 held was threatened by the possible entry of Procter & Gamble into the same spray cleaning market. Procter & Gamble was a huge consumer products producer, noted for its marketing savvy. Procter & Gamble began a program of extensive market research to promote its comparable product they called Cinch. Clearly, the larger firm had a much greater advantage. Harrell knew that Procter & Gamble would perform test market research. He decided to do the unexpected. Rather than directly confront this much larger competitor, he began a program where he reduced advertising expenditures in Denver and stopped promoting his Formula 409. The outcome was that Procter & Gamble had spectacular results, and the company was extremely excited with the potential for Cinch. Procter & Gamble immediately begin a national sales campaign. However, before the company could begin, Harrell introduced a promotion of his own. He took the Formula 409 sixteen-ounce bottle and attached it to a half-gallon size bottle. He then sold both at a significant discount. This quantity of spray cleaner would last the average consumer six to nine months. The market for Procter & Gamble’s Cinch was significantly reduced. Procter & Gamble was confused and confounded by its poor showing after the phenomenal showing in Denver. Confused and uncertain, the company chose to withdraw Cinch from the market. Wilson Harrell’s display of brilliant strategic thinking had bested them. He leveraged his small company’s creative thinking and flexibility against the tremendous resources of an international giant. Through superior strategic thinking, Harrell was able to best Procter & Gamble.

Do You Have a Strategy and What Is It?

We have argued that all businesses have strategies, whether they are explicitly articulated or not. Perry stated that “small business leaders seem to recognize that the ability to formulate and implement an effective strategy has a major influence on the survival and success of small business.” [6]

The extent to which a strategy should be articulated in a formal manner, such as part of a business plan, is highly dependent on the type of business. One might not expect a formally drafted strategy statement for a nonemployee business funded singularly by the owner. One researcher found that formal plans are rare in businesses with fewer than five employees. [7] However, you should clearly have that expectation for any other type of small or midsize business.

Any business with employees should have an articulated strategy that can be conveyed to them so that they might better assist in implementing it. Curtis pointed out that in the absence of such communication, “employees make pragmatic short-term decisions that cumulatively form an ad-hoc strategy.” [8] These ad hoc (realized) strategies may be at odds with the planned (intended) strategies to guide a firm. [9] However, any business that seeks external funding from bankers, venture capitalists, or “angels” must be able to specify its strategy in a formal business plan.

Clearly specifying your strategy should be seen as an end in itself. Requiring a company to specify its strategy forces that company to think about its core issues, such as the following:

• Who are your customers?
• How are you going to provide value to those customers?
• Who are your current and future competitors?
• What are your resources?
• How are you going to use these resources?

One commentator in a blog put it fairly well, “It never ceases to amaze me how many people will use GPS or Google maps for a trip somewhere but when it comes to starting a business they think that they can do it without any strategy, or without any guiding road-map.” Harry Tucci, comment posted to the following blog: [10]

Types of Strategies

In 1980, Michael Porter a professor at Harvard Business School published a major work in the field of strategic analysis— Competitive Strategy . [11] To simplify Porter’s thesis, while competition is beneficial to customers, it is not always beneficial to those who are competing. Competition may involve lowering prices, increasing research and development (R&D), and increasing advertising and other expenses and activities—all of which can lower profit margins. Porter suggested that firms should carefully examine the industry in which they are operating and apply what he calls the five forces model. These five forces are as follows: the power of suppliers, the power of buyers, the threat of substitution, the threat of new entrants, and rivalry within the industry. We do not need to cover these five forces in any great detail, other than to say that once the analysis has been conducted, a firm should look for ways to minimize the dysfunctional consequences of competition. Porter identified four generic strategies that firms may choose to implement to achieve that end. Actually, he initially identified three generic strategies, but one of them can be bifurcated. These four strategies are as follows (see “Generic Strategies”): cost leadership, differentiation, cost focus, and differentiation focus. These four generic strategies can be applied to small businesses. We will examine each strategy and then discuss what is required to successfully implement them.

Generic Strategies

Low-Cost Advantage

A  cost leadership strategy requires that a firm be in the position of being the lowest cost producer in its competitive environment. By being the lowest-cost producer, a firm has several strategic options open to it. It can sell its product or service at a lower price than its competitors. If price is a major driver of customer value, then the firm with the lowest price should sell more. The low-cost producer also has the option of selling its products or services at prices that are comparable to its competitors. However, this would mean that the firm would have a much higher margin than its competitors.

Obviously, following a cost leadership strategy dictates that the business be good at curtailing costs. Perhaps the clearest example of a firm that employs a cost leadership strategy is Walmart. Walmart’s investment in customer relations and inventory control systems plus its huge size enables it to secure the “best” deals from suppliers and drastically reduce costs. It might appear that cost leadership strategies are most suitable for large firms that can exploit economies of scale. This is not necessarily true. Smaller firms can compete on the basis of cost leadership. They can position themselves in low-cost areas, and they can exploit their lower overhead costs. Family businesses can use family members as employees, or they can use a web presence to market and sell their goods and services. A small family-run luncheonette that purchases used equipment and offers a limited menu of standard breakfast and lunch items while not offering dinner might be good example of a small business that has opted for a cost leadership strategy.

Differentiation

A  differentiation strategy involves providing products or services that meet customer value in some unique way. This uniqueness may be derived in several ways. A firm may try to build a particular brand image that differentiates itself from its competitors. Many clothing lines, such as Tommy Hilfiger, opt for this approach. Other firms will try to differentiate themselves on the basis of the services that they provide. Dominoes began to distinguish itself from other pizza firms by emphasizing the speed of its delivery. Differentiation also can be achieved by offering a unique design or features in the product or the service. Apple products are known for their user-friendly design features. A firm may wish to differentiate itself on the basis of the quality of its product or service. Kogi barbecue trucks operating in Los Angeles represent such an approach. They offer high-quality food from mobile food trucks.” [12] They further facilitate their differentiation by having their truck routes available on their website and on their Twitter account.

Adopting a differentiation strategy requires significantly different capabilities than those that were outlined for cost leadership. Firms that employ a differentiation strategy must have a complete understanding of what constitutes customer value. Further, they must be able to rapidly respond to changing customer needs. Often, a differentiation strategy involves offering these products and services at a premium price. A differentiation strategy may accept lower sales volumes because a firm is charging higher prices and obtaining higher profit margins. A danger in this approach is that customers may no longer place a premium value on the unique features or quality of the product or the service. This leaves the firm that offers a differentiation strategy open to competition from those that adopt a cost leadership strategy.

Focus—Low Cost or Differentiation

Porter identifies the third strategy—focus. He said that focus strategies can be segmented into a  cost focus and a differentiation focus .

In a focus strategy, a firm concentrates on one or more segments of the overall market. Focus can also be described as a niche strategy. Focus strategy entails deciding to some extent that we do not want to have everyone as a customer. There are several ways that a firm can adopt a focus perspective:

• Product line. A firm limits its product line to specific items of only one or more product types. California Cart Builder produces only catering trucks and mobile kitchens.
• Customer. A firm concentrates on serving the needs of a particular type of customer. Weight Watchers concentrates on customers who wish to control their weight or lose weight.
• Geographic area. Many small firms, out of necessity, will limit themselves to a particular geographic region. Microbrewers generally serve a limited geographic region.
• Particular distribution channel. Firms may wish to limit themselves with respect to the means by which they sell their products and services. Amazon began and remains a firm that sells only through the Internet.

Firms adopting focus strategies look for distinct groups that may have been overlooked by their competitors. This group needs to be of sufficiently sustainable size to make it an economically defensible option. One might open a specialty restaurant in a particular geographic location—a small town. However, if the demand is not sufficiently large for this particular type of food, then the restaurant will probably fail. Companies that lack the resources to compete on either a national level or an industry-wide level may adopt focus strategies. Focus strategies enable firms to marshal their limited resources to best serve their customers.

As previously stated, focus strategies can be bifurcated into two directions—cost focus or differentiation focus. IKEA sells low-priced furniture to those customers who are willing to assemble the furniture. It cuts its costs by using a warehouse rather than showroom format and not providing home delivery. Michael Dell began his business out of his college dormitory. He took orders from fellow students and custom-built computers to their specifications. This was a cost focus strategy. By building to order, it almost totally eliminated the need for any incoming, work-in-process, or finished goods inventories.

A focus differentiation strategy concentrates on providing a unique product or service to a segment of the market. This strategy may be best represented by many specialty retail outlets. The Body Shop focuses on customers who want natural ingredients in their makeup. Max and Mina is a kosher specialty ice cream store in New York City. It provides a constantly rotating menu of more than 300 exotic flavors, such as Cajun, beer, lox, corn, and pizza. The store has been written up in the New York Times and People magazine. Given its odd flavors, Max and Mina’s was voted the number one ice cream parlor in America in 2004. [13]

Evaluating Strategies

The selection of a generic strategy by a firm should not be seen as something to be done on a whim. Once a strategy is selected, all aspects of the business must be tied to implementing that strategy. As Porter stated, “Effectively implementing any of these generic strategies usually requires total commitment and supporting organizational arrangements.” [14] The successful implementation of any generic strategy requires that a firm possess particular skills and resources. Further, it must impose particular requirements on its organization (see “Summary of Generic Strategies”).

Even successful generic strategies must recognize that market and economic conditions change along with the needs of consumers. Henry Ford used a cost leadership strategy and was wildly successful until General Motors began to provide different types of automobiles to different customer segments. Likewise, those who follow a differentiation strategy must be cautious that customers may forgo “extras” in a downturn economy in favor of lower costs. This requires businesses to be vigilant, particularly with respect to customer value.

Summary of Generic Strategies

Key Takeaways

• Any firm, regardless of size, needs to know how it will compete; this is the firm’s strategy.
• Strategy identifies how a firm will provide value to its customers within its operational constraints.
• Strategy can be reduced to four major approaches—cost leadership, differentiation, cost focus, and differentiation focus.
• Once a given strategy is selected, all of a firm’s operations should be geared to implementing that strategy.
• No strategy will be successful forever and therefore needs to be constantly evaluated.

The Necessity for a Business Plan

An intelligent plan is the first step to success. The man who plans knows where he is going, knows what progress he is making and has a pretty good idea of when he will arrive. Planning is the open road to your destination. If you don’t know where you’re going, how can you expect to get there? – Basil Walsh

In Chapter 1, we discussed the issue of failure and small businesses. Although research on small business failure has identified many factors, one reason that always appears at the top of any list is the failure to plan. Interestingly, some people argue that planning is not essential for a start-up business, but they are in a distinct minority. [15] The overwhelming consensus is that a well-developed plan is essential for the survival of any small (or large) business. [16] Perry found that firms with more than five people benefit from having a well-developed business plan. [17]

A recent study found that there was a near doubling of successful growth for those businesses that completed business plans compared to those that did not create one. It must be pointed out that this study might be viewed as being biased because the founder of the software company whose main product is a program that builds business plans conducted the study. However, the results were examined by academics from the University of Oregon who validated the overall results. They found that “except in a small number of cases, business planning appeared to be positively correlated with business success as measured by our variables. While our analysis cannot say the completing of a business plan will lead to success, it does indicate that the type of entrepreneur who completes a business plan is also more likely to produce a successful business.” [18]

Basically, there are two main reasons for developing a comprehensive business plan: (1) a plan will be extraordinarily useful in ensuring the successful operation of your business; and (2) if one is seeking to secure external funds from banks, venture capitalists, or other investors, it is essential that you be able to demonstrate to them that they will be recovering their money and making a profit. Let us examine each reason in detail.

Many small business owners operate under a mistaken belief that the only time that they need to create a business plan is at the birth of the company or when they are attempting to raise additional capital from external sources. They fail to realize that a business plan can be an important element in ensuring day-to-day success.

The initial planning process aids the operational success of a small business by allowing the owner a chance to review, in detail, the viability of the business idea. It forces one to rigorously consider some key questions:

• Is the business strategy feasible?
• What are the chances it will make money?
• Do I have the operational requirements for starting and running a successful business?
• Have I considered a well-thought-out marketing plan that clearly identifies who my customers will be?
• Do I clearly understand what value I will provide to these customers?
• What will be the means of distribution to provide the product or the service to my customers?
• Have I clarified to myself the financial issues associated with starting and operating the business?
• Do I have to reexamine these notions to ensure success?

Possessing an actual written plan enables you to have people outside the organization evaluate your business plan. Using friends, colleagues, partners, or even consultants may provide you with an unbiased evaluation of the assumptions.

It is not enough to create an initial business plan; you should anticipate making the planning process an annual activity. The Prussian military theorist von Moltke once argued that no military plan survives the first engagement with the enemy. Likewise, no company evolves in the same way as outlined in its initial business plan.

Overcoming the Reluctance to Formally Plan

By failing to prepare, you will prepare them to fail . -Benjamin Franklin

Unfortunately, it appears that many small businesses do not make any effort to build even an initial business plan, let alone maintain a planning process as an ongoing operation, even though there is clear evidence that the failure to plan may have serious consequences for the future success of such firms. This unwillingness to plan may be understandable in nonemployee businesses, but it is inexcusable as a business grows in size. Why, therefore, do some businesses fail to begin the planning process?

• We do not need to plan. One of the prime reasons individuals fail to produce a business plan is that they believe that they do not have to plan. This may be attributable to the size of the firm; nonemployee firms that have no intention of seeking outside financing might sincerely believe that they have no need for a formal business plan. Others may believe that they so well understand the business and/or industry that they can survive and prosper without the burdensome process of a business plan. The author of Business Plan for Dummies , Paul Tiffany, once argued that if one feels lucky enough to operate a business successfully without resorting to a business plan, then he or she should forget about starting a business and head straight to Las Vegas.
• I am too busy to plan. Anyone who has ever run a business on his or her own can understand this argument. The day-to-day demands of operating a business may make it seem that there is insufficient time to engage in any ancillary activity or prepare a business plan. Individuals who accept this argument often fail to recognize that the seemingly endless buzz of activities, such as constantly putting out fires, may be the direct result of not having thought about the future and planned for it in the first place.
• Plans do not produce results. Small-business owners (entrepreneurs) are action- and results-oriented individuals. They want to see a tangible outcome for their efforts, and preferably they would like to see the results as soon as possible. The idea of sitting down and producing a large document based on assumptions that may not play out exactly as predicted is viewed as a futile exercise. However, those with broader experience understand that there will be no external funding for growth or the initial creation of the business without the existence of a well-thought-out plan. Although plans may not yield the specified results contained within them, the process of thinking about the plan and building it often yield results that the owner might not initially appreciate.
• We are not familiar with the process of formal planning. This argument might initially appear to have more validity than the others. Developing a comprehensive business plan is a daunting task. It might seem difficult if not impossible for someone with no experience with the concept. Several studies have indicated that small business owners are more likely to engage in the planning process if they have had prior experience with planning models in their prior work experience. [19] Fortunately, this situation has changed rather significantly in the last decade. As we will illustrate, there are numerous tools that provide significant support for the development of business plans. We will see that software packages greatly facilitate the building of any business plan, including marketing plans and financial plans for small businesses. We also show that the Internet can provide an unbelievably rich source of data and information to assist in the building of these plans.

Although one could understand the reticence of someone new to small business (or in some cases even seasoned entrepreneurs), their arguments fall short with respect to the benefits that will be derived from conducting a structured and comprehensive business planning process.

Plans for Raising Capital

Every business plan should be written with a particular audience in mind. The annual business plan should be written with a management team and for the employees who have to implement the plan. However, one of the prime reasons for writing a business plan is to secure investment funds for the firm. Of course, funding the business could be done by an individual using his or her own personal wealth, personal loans, or extending credit cards. Individuals also can seek investments from family and friends. The focus here will be on three other possible sources of capital—banks, venture capitalists, and angel investors. It is important to understand what they look for in a business plan. Remember that these three groups are investors, so they will be anticipating, at the very least, the ability to recover their initial investment if not earn a significant return.

Bankers, like all businesspeople, are interested in earning a profit; they want to see a return on their investment. However, unlike other investors, bankers are under a legal obligation to ensure that the borrower pledge some form of collateral to secure the loan. [20] This often means that banks are unwilling to fund a start-up business unless the owner is willing to pledge some form of collateral, such as a second mortgage on his or her home. Many first-time business owners are not in a position to do that; securing money from a bank occurs most frequently for an existing business that is looking to expand or for covering a short-term cash-flow need. Banks may lend to small business owners who are opening a second business provided that they can prove a record of success and profitability.

Banks will require a business plan. It should be understood that bank loan officers will initially focus on the financial components of that client, namely, the income statement, balance sheet, and the cash-flow statement. The bank will examine your projections with respect to known industry standards. Therefore, the business plan should not project a 75 percent profit margin when the industry standard is 15 percent, unless the author of the plan can clearly document why he or she will be earning such a high return.

Some businesses may raise funds with the assistance of a Small Business Administration (SBA) loan. These loans are always arranged through a commercial bank. With these loans, the SBA will pledge up to 70 percent of the total value of the loan. This means that the owner still must provide, at the very least, 30 percent of the total collateral. The ability to secure one of these loans is clearly tied to the adequacy of the business plan.

Venture Capitalists

Another possible source of funding is venture capitalists . The first thing that one should realize about venture capitalists is that they are not in it just to make a profit; they want to make returns that are substantially above those to be found in the market. For some, this translates into the ability to secure five to ten times their initial investment and recapture their investment in a relatively short period of time—often less than five years. It has been reported that some venture capitalists are looking for returns in the order of twenty-five times their original investment. [21]

The financial statement, particularly the profit margin, is obviously important to venture capitalists, but they will also be looking at other factors. The quality of the management team identified in the business plan will be examined. They will be looking at the team’s experience and track record. Other factors needed by venture capitalists may include the projected growth rate of the market, the extent to which the product or the service being offered is unique, the overall size of the market, and the probability of producing a highly successful product or service.

Businesses that are seeking financing from banks know that they must go to loan officers who will review the plan, even though a computerized loan assessment program may make the final decision. With venture capitalists, on the other hand, you often need to have a personal introduction to have your plan considered. You should also anticipate that you will have to make a presentation to venture capitalists. This means that you have to understand your plan and be able to present it in a dynamic fashion.

Angel Investors

The third type of investor is referred to as angel investors , a term that originally came from those individuals who invested in Broadway shows and films. Many angel investors are themselves successful entrepreneurs. As with venture capitalists, they are looking for returns higher than they can normally find in the market; however, they often expect returns lower than those anticipated by venture capitalist. They may be attracted to business plans because of an innovative concept or the excitement of entering a new type of business. Being successful small business owners, many angel investors will not only provide capital to fund the business but also bring their own expertise and experience to help the business grow. It has been estimated that these angel investors provide between three and ten times as much money as venture capitalists for the development of small businesses. [22]

Angel investors will pay careful attention to all aspects of the proposed business plan. They expect a comprehensive business plan—one that clearly specifies the future direction of the firm. They also will look at the management team not only for its track record and experience but also their (the angel investor’s) ability to work with this team. Angel investors may take a much more active role in the management of the business, asking for positions on the board of directors, taking an equity position in the firm, demanding quarterly reports, or demanding that the business not take certain actions unless it has the approval of these angel investors. These investors will take a much more hands-on approach to the operations of a firm.

• Planning is a critical and important component of ensuring the success of a small business.
• Some form of formal planning should not only accompany the start-up of a business but also be a regular (annual) activity that guides the future direction of the business.
• Many small business owners are reluctant to formally plan. They can produce many excuses for not planning.
• Businesses may have to raise capital from external sources—bankers, venture capitalists, or angel investors. Each type of investor will expect a business plan. Each type of investor will be more or less interested in different parts of the plan. Business owners should be aware of what parts of the plan each type of investor will focus on.

Building a Plan

Before talking about writing a formal business plan, someone interested in starting a business might want to think about doing some personal planning before drafting the business plan. Some of the questions that he or she might want to answer before drafting a full business plan are as follows:

• Why am I going into this business?
• What skills and resources do I possess that will help make the business a success?
• What passion do I bring to this business?
• What is my risk tolerance?
• Exactly how hard do I intend to work? How many hours per week?
• What impact will the business have on my family life?

What do I really wish from this business?

• Am I interested in financial independence?
• What level of profits will be required to maintain my personal and/or family’s lifestyle?
• Am I interested in independence of action (no boss but myself)?
• Am I interested in personal satisfaction?
• Will my family be working in this business?
• What other employees might I need? [23]

Having addressed these questions, one will be in a much better position to craft a formal business plan.

Gathering Information

Building a solid business plan requires knowing the economic, market, and competitive environments. Such knowledge transcends “gut feelings” and is based on data and evidence. Fortunately, much of the required information is available through library resources, Internet sources, and government agencies and, for a fee, from commercial sources. Comprehensive business plans may draw from all these sources.

Public libraries and those at educational institutions provide a rich resource base that can be used at no cost. Some basic research sources that can be found at libraries are given in this section— be aware that the reference numbers provided may differ from library to library .

Library Sources

Background sources.

• Berinstein, Paula. Business Statistics on the Web: Find Them Fast—At Little or No Cost (Ref HF1016 .B47 2003).
• The Core Business Web: A Guide to Information Resources (Ref HD30.37 .C67 2003).
• Frumkin, Norman. Guide to Economic Indicators , 4th ed. (Ref HC103 .F9 2006). This book explains the meanings and uses of the economic indicators.
• Solie-Johnson, Kris. How to Set Up Your Own Small Business , 2 volumes (Ref HD62.7 .S85 2005). Published by the American Institute of Small Business.

Company and Industry Sources

• North American Industry Classification System, United States (NAICS), 2007 (Ref HF1042 .N6 2007). The NAICS is a numeric industry classification system that replaced the Standard Industrial Classification (SIC) system. An electronic version is available from the US Census Bureau .
• Standard Industrial Classification Manual (Ref HA40 .I6U63 1987). The industry classification system that preceded the NAICS.
• Value Line Investment Survey (Ref HG4751 .V18). Concise company and industry profiles are updated every thirteen weeks.

Statistical Sources

• Almanac of Business and Industrial Financial Ratios (Ref HF5681 .R25A45 2010).
• Business Statistics of the United States (Ref HC101 .A13123 2009). This publication provides recent and historical information about the US economy.
• Economic Indicators (1971–present). The Council of Economic Advisers for the Joint Economic Committee of Congress publishes this monthly periodical; recent years are in electronic format only. Ten years of data are presented. Electronic versions are available in ABI/INFORM and ProQuest from September 1994 to present and Academic OneFile from October 1, 1991.
• Industry Norms and Key Business Ratios (Dun & Bradstreet; Ref HF5681 .R25I532 through Ref HF5681 .I572 [2000–2001 through 2008–2009]).
• Rma Annual Statement Studies (Ref HF5681 .B2R6 2009–2010). This publication provides annual financial data and ratios by industry.
• Statistical Abstract of the United States (Ref HA202 .S72 2010). This is the basic annual source for statistics collected by the government. Electronic version is available at www.census.gov/compendia/statstatab .
• Survey of Current Business (1956–present). The Bureau of Economic Analysis publishes this monthly periodical; recent years are in electronic format only.

At some libraries, you may find access to the following resources online:

• Mergent Webreports. Mergent (formerly Moody’s) corporate manuals are in digitized format. Beginning with the early 1900s, the reports include corporate history, business descriptions, and in-depth financial statements. The collection is searchable by company name, year, or manual type.
• ProQuest Direct is a database of general, trade, and scholarly periodicals, with many articles in full text. Many business journals and other resources are available.
• Standard and Poor’s Netadvantage is a database that includes company and industry information.

Internet Resources

In addition to government databases and other free sources, the Internet provides an unbelievably rich storehouse of information that can be incorporated into any business plan. It is not feasible to provide a truly comprehensive list of useful websites; this section provides a highly selective list of government sites and other sites that provide free information.

Government Sites

• US Small Business Administration (SBA) . This is an excellent site to begin researching a business plan. It covers writing a plan, financing a start-up, selecting a location, managing employees, and insurance and legal issues. A follow-up page at http://www.sba.gov provides access to publications, statistics, video tutorials, podcasts, business forms, and chat rooms. Another page— http://www.sba.gov/about-offices-list/2 —provides access to localized resources.
• SCORE Program . The SCORE program is a partner of the SBA. It provides a variety of services to small business owners, ranging from online (and in-person) mentoring, workshops, free computer templates, and advice on a wide range of small business issues.

In developing a business plan, it is necessary to anticipate the future economic environment. The government provides extensive statistics online.

• Consumer Price Index . This index provides information on the direction of prices for industries and geographic areas.
• Producer Price Index . Businesses that provide services or are focused on business-to-business (B2B) operations may find these data more appropriate for estimating future prices.
• National Wage Data . This site provides information on prevailing wages and can be broken down by occupation and location down to the metropolitan area.
• Consumer Expenditures Survey . This database provides information on expenditures and income. It allows for a remarkable level of refinement by occupation, age, or race.
• State and Local Personal Income and Employment . These databases provide a breakdown of personal income by state and metropolitan area.
• GDP by State and Metropolitan Region . This will provide an accurate guide to the overall economic health of a region or a city.
• US Census . This is a huge site with databases on population, income, foreign trade, economic indicators, and business ownership.

There are nongovernment websites, either free or charging a fee, that can provide assistance in building a business plan. A simple Google search for the phrase small business plan yields more than 67 million results. Various sites will either help with writing the plan, offer to write the plan for a fee, produce reports on industries, or assist small businesses by providing a variety of support services. The Internet offers a veritable cornucopia of information and support for those working on their business plans.

Forecasting for the Plan

Prediction is very difficult, especially about the future. Nils Bohr, Nobel Prize winner

Any business plan is a future-oriented document. Business plans are required to look between three and five years into the future. To produce them and accurately forecast sales, you will need estimates of expenses and other items, such as the required number of employees, interest rates, and general economic conditions. There are many different techniques and tools that can be used to forecast these items. The type of techniques used will be influenced by many factors, such as the following:

• The size of the business. Smaller businesses may have fewer resources to apply a wide variety of forecasting techniques.
• The analytical sophistication of people who will be conducting the forecast. The owner of a home business may have no prior experience with forecasting techniques.
• The type of the organization. A manufacturing concern that sells to a stable and relatively predictable environment that has been in existence for years might be able to employ a variety of standard statistical forecasting techniques; however, a small firm operating in a new or a chaotic environment might have to rely on significantly different techniques.
• Historical records. Does the firm have historical records for sales that can be used to project into the future?

There is no universal set of forecasting techniques that can be used for all types of small and midsize businesses. Forecasting can fall into a fairly comprehensive range of techniques with respect to level of sophistication. Some forecasting can be done on an intuitive basis (e.g., back-of-the-envelope calculations); others can be done with standard computer programs (e.g., Excel) or programs that are specifically dedicated to forecasting in a variety of environments.

A brief review of basic forecasting techniques shows that they can be divided into two broad classes:  qualitative forecasting methods and quantitative forecasting methods . Actually, these terms can be somewhat misleading because qualitative forecasting methods do not imply that no numbers will be involved. The two techniques are separated by the following concept: qualitative forecasting methods assume that one either does not have historical data or that one cannot rely on past historical data. A start-up business has no past sales that can be used to project future sales. Likewise, if there is a significant change in the environment, one may feel uncomfortable using past data to project into the future. A restaurant operates in a small town that contains a large automobile factory. After the factory closes, the restaurant owner should anticipate that past sales will no longer be a useful guideline for projecting what sales might be in the next year or two because the owner has lost a number of customers who worked at the factory. Quantitative forecasting, on the other hand, consists of techniques and methods that assume you can use past data to make projections into the future.

“Overview of Forecasting Methods” provides examples of both qualitative forecasting methods and quantitative forecasting methods for sales forecasting. Each method is described, and their strengths and weaknesses are given.

Overview of Forecasting Methods

Forecasting key items such as sales is crucial in developing a good business plan. However, forecasting is a very challenging activity. The further out the forecast, the less likely it will be accurate. Everyone recognizes this fact. Therefore, it is useful to draw on a variety of forecasting techniques to develop your final forecast for the business plan. To do that, you should have a fairly solid understanding of the strengths and weaknesses of the various approaches. There are many books, websites, and articles that could assist you in understanding these techniques and when they should or should not be used. In addition, one should be open to gathering additional information to assist in building a forecast. Some possible sources of such information would be associations, trade publications, and business groups. Regardless of what technique is used or the data source employed in building a forecast for business plan, one should be prepared to justify why you are employing these forecasting models.

Web Resources for Forecasting

• Three methods of sales forecasting ( sbinfocanada.about.com/od/cashflowmgt/a/salesforecast.htm ). This site provides three simplified approaches to sales forecasting.
• Time-critical decision making for business administration ( home.ubalt.edu/ntsbarsh/stat-data/forecast.htm ). This site has an e-book format with several chapters devoted to analytical forecasting techniques.

Building your first business plan may seem extremely formidable. This may explain why there are so many software packages available to assist in this task. After building your first business plan, that steep learning curve should make subsequent plans for the business or other businesses significantly easier.

In preparing to build a business plan, there are some problem areas or mistakes that you should be on guard to avoid. Some may be technical in nature, while others relate to content issues. For the technical side, first and foremost, one should make sure that there are no misspellings or punctuation errors. The business plan should follow a logical structure. No ideal business plan clearly specifies the exact sections that need to be included nor is there an ideal length. Literature concerning business plans indicates that the appropriate length of the body of a business plan line should be between twenty and forty pages. This does not include appendixes that might provide critical data for the reader.

In developing a lengthy report, sometimes it is easy to fall into clichés or overused expressions. These should be avoided. Consider the visuals in the report. Data should be placed in either clearly mapped-out tables or well-designed graphs. The report should be as professional-looking as possible. Anticipate the audience that will be reading the report and write in a way that easily reaches them; avoid using too much jargon or technical terms.

The content in any business plan centers on two areas: realism and accuracy.

Components of the Plan

There is no idealized structure for a business plan or a definitive number of sections that it must contain. The following subsections discuss the outline of a plan for a business start-up and identify some of the major sections that should be part of the plan.

The cover page provides the reader with information about either the author of the plan or the person to contact concerning the business plan. It should contain all the pertinent information to enable the reader to contact the author, such as the name of the business, the business logo, and the contact person’s address, telephone number, and e-mail address.

The table of contents enables the reader to find the major sections and components of the plan. It should identify the key sections and subsections and on which pages those sections begin. This enables the reader to turn to sections that might be of particular importance.

Executive Summary

The  executive summary is a section of critical importance and is perhaps the single most important section of the entire business plan. Quite often, it is the first section that a reader will turn to, and sometimes it may be the only section of the business plan that he or she will read. Chronologically, it should probably be the last section written. [24] The executive summary should provide an accurate overview of the entire document, which cannot be done until the whole document is prepared.

If the executive summary fails to adequately describe the idea behind the business or if it fails to do so in a captivating way, some readers may discard the entire business plan. As one author put it, the purpose of the executive summary is to convince the reader to “read on.” [25] The executive summary should contain the following pieces of information:

• What is the company’s business?
• Who are its intended customers?
• What will be its legal structure?
• What has been its history (where one exists)?
• What type of funding will be requested?
• What is the amount of that funding?
• What are the capabilities of the key executives?

All this must be done in an interesting and captivating way. The great challenge is that executive summaries should be relatively short—between one and three pages. For many businesspeople, this is the great challenge—being able to compress the required information in an engaging format that has significant size limitations.

Business Section

Goals. These are broad statements about what you would like to achieve some point in the near future. Your goals might focus on your human resource policies (“We wish to have productive, happy employees”), on what you see as the source of your competitive advantage (“We will be best in service”), or on financial outcomes (“We will produce above average return to our investors.”) Goals are useful, but they can mean anything to anyone. It is therefore necessary to translate the goals into objectives to bring about real meaning so that they can guide the organization. Ideally, objectives should be SMART —specific, measurable, achievable, realistic, and have a specific timeline for completion. Here is an example: one organizational goal may be a significant rise in sales and profits. When translating that goal into an objective, you might word the objectives as follows: a 15 percent increase in sales for the next three years followed by a 10 percent increase in sales for the following two years and a 12.5 percent increase in profits in each of the next five years. These objectives are quite specific and measurable. It is up to the decision-maker to determine if they are achievable and realistic. These objectives—sales and profits—clearly specify the time horizon. In developing the plan, owners are often very happy to develop goals because they are open to interpretation, but they will avoid objectives. Goals are sufficiently ambiguous, whereas objectives tie you to particular values that you will have to hit in the future. People may be concerned that they will be weighed on a scale and found wanting for failing to achieved their objectives. However, it is critical that your plan contains both goals and objectives. Objectives allow investors and your employees to clearly see where the firm intends to go. They produce targeted values to aim for and, therefore, are critical for the control of the firm’s operations.

Vision and Mission Statements. To many, there is some degree of confusion concerning the difference between a vision statement and a mission statement.  Vision statements articulate the long-term purpose and idealized notion of what a business wishes to become. In the earliest days of Microsoft, when it was a small business, its version of a vision statement was as follows: “A computer on every desk and in every home.” In the early 1980s, this was truly a revolutionary concept. Yet it gave Microsoft’s employees a clear idea (vision) that to bring that vision into being, the software being developed would have to be very “user-friendly” in comparison to the software of that day. Mission statements , which are much more common in small business plans, articulate the fundamental nature of the business. This means identifying the type of business, how it will leverage its competencies, and possibly the values that drive the business. Put simply, a mission statement should address the following questions:

• Who are we? What business are we in?
• Who do we see as our customers?
• How do we provide value for those customers?

Sometimes vision and mission statements are singularly written for external audiences, such as investors or shareholders. They are not written for the audience for whom it would have the greatest meaning—the management team and the employees of the business. Unfortunately, many recognize that both statements can become exercises of stringing together a series of essentially meaningless phrases into something that appears to sound right or professional . You can find software on the web to automatically generate such vacuous and meaningless statements.

Sometimes a firm will write a mission statement that provides customers, investors, and employees with a clear sense of purpose of that company. Zappos has the following as its mission statement: “Our goal is to position Zappos as an online service leader. If we can get customers to associate Zappos as the absolute best in service, then we can expand beyond shoes.” [26] The mission statement of Ben & Jerry’s Ice Cream focuses both on defining their product and their values: “To make, distribute and sell the finest quality all-natural ice cream and euphoric concoctions with a continued commitment to incorporating wholesome, natural ingredients and promoting business practices that respect the Earth and the Environment.” [27]

Keys to Success . This section identifies those specific elements of your firm that you believe will ensure success. It is important for you to be able to define the competencies that you intend to leverage to ensure success. What makes your product or service unique? What specific set of capabilities do you bring to the competitive scene? These might include the makeup of and the experience of your management team; your operational capabilities (e.g., unique skills in design, manufacturing, or delivery); your marketing skill sets: your financial capabilities (e.g., the ability to control costs); or the personnel that make up the company.

Industry Review

In this section, you want to provide a fairly comprehensive overview of the industry. A thorough understanding of the industry that you will be operating in is essential to understand the possible returns that your company will earn within that industry. Investors want to know if they will recover their initial investment. When will they see a profit? Remember, investors often carefully track industries and are well aware of the strengths and limitations within a particular industry. Investors are looking for industries that can demonstrate growth. They also want to see if the industry is structurally attractive. This might entail conducting Porter’s five forces analysis; however, this is not required in all cases. If there appear to be some issues or problems with industry-level growth, then you might want to be able to identify some segments of the industry where growth is viable.

Products or Services

This section should be an in-depth discussion of what you are offering to customers. It should provide a complete and clear statement of the products or the services that you are offering. It should also discuss the core competencies of your business. You should highlight what is unique, such as a novel product or service concept or the possession of patents. You need to show how your product or service specifically meets particular market needs. You must identify how the product or the service will satisfy specific customers’ needs. If you are dealing with a new product or service, you need to demonstrate what previously unidentified needs it will meet and how it will do so. At its birth, Amazon had to demonstrate that an online bookstore would be preferable to the standard bookstore by offering the customer a much wider selection of books than would be available at an on-site location.

This section could include a discussion of technical issues. If the business is based on a technological innovation—such as a new type of software or an invention—then it is necessary to provide an adequate discussion of the specific nature of the technology. One should take care to always remember the audience for whom you are writing the plan. Do not make this portion too technical in nature. This section also might discuss the future direction of the product or service—namely, where will you be taking (changing) the product or the service after the end of the current planning horizon? This may require a discussion of future investment requirements or the required time to develop new products and services. This section may also include a discussion of pricing the product or the service, although a more detailed discussion of the issue of pricing might be found in the marketing plan section. If you plan to include the issue of pricing here, you should discuss how the pricing of the product or the service was determined. The more detailed you are in this description, the more realistic it will appear to the readers of the business plan. You may wish to discuss relationships that you have with vendors that might have an impact on reducing cost and therefore an impact on price. It is important to discuss how your pricing scheme will compare with competitors. Will it be higher than average or below the average price? How does the pricing fit in with the overall strategy of the firm?

This section must have a high degree of honesty. Investors will know much about the industry and its limitations. You need to identify any areas that might be possible sources of problems, such as government regulations, issues with new product development, securing distribution channels, and informing the market of your existence. Further, it is important to identify the current competitors in the industry and possible future competitors.

Marketing Plan

An introductory marketing course always introduces the four Ps: product, price, place, and promotion. The marketing section of the business plan might provide more in-depth coverage of how the product or the service better meets customer value than that of competitors. It should identify your target customers and include coverage of who your competitors are and what they provide. The comparison between your firm and its competitors should highlight differences and point to why you are providing superior value. Pricing issues, if not covered in the previous section, could be discussed or discussed in more detail.

The issue of location, particularly in retail, should be covered in detail. Perhaps one of the most important elements of the marketing plan section is to specify how you intend to attract customers, inform them of the benefits of using your product or service, and retain customers. Initially, customers are attracted through advertising. This section should delineate the advertising plan. What media will be used—flyers, newspapers, magazines, radio, television, web presence, direct marketing, and/or social media campaigns? This section should cover any promotional campaigns that might be used.

The Management Team

Physical resources are not the only determinant of business success. The human resources available to a firm will play a critical role in determining its success. Readers of your business plan and potential investors should have a clear sense of the management team that will be running a business. They should know the team with respect to the team’s knowledge of the business, their experience and capabilities, and their drive to succeed. Arthur Rock, a venture capitalist, was once quoted as saying, “I invest in people, not the idea.” [28]

This section of the business plan has several elements. It should contain an organizational chart that will delineate the responsibilities and the chain of command for the business. It should specify who will occupy each major position of the business. You might want to explain who is doing what job and why. For every member of the management team, you should have a complete résumé. This should include educational background (both formal and informal) and past work experience, including the jobs they have held, responsibilities, and accomplishments. You might want to include some other biographical data such as age, although that is not required.

If you plan to use specific advisers or consultants, you should mention the names and backgrounds of these people in this section of the plan. You should also specify why these people are being used.

An additional element of your discussion of the management team will be the intended compensation schemes. You should specify the intended salaries for the management team while also including issues of their benefits and bonuses or any stock position that they may take in the company. This section should also identify any gaps in the management team and how you intend to fill these positions.

Depending on the nature of the business, you might wish to include in this section the personnel (employees) that will be required. You should identify the number of people that are currently working for the firm or that will have to be hired; you should also identify the skills that they need to possess. Further discussion should include the pay that will be provided: whether they will be paid a flat salary or paid hourly, if and when you intend to use overtime, and what benefits you intend to provide. In addition, you should discuss any training requirements or training programs that you will have to implement.

Financial Statements

The financial statements section of the business plan should be broken down into three key subsections: the income statement, the balance sheet, and the cash-flow statement. Before proceeding with these sections, we discuss the assumptions used to build these sections. The opening section of the financial statements section should also include, in summary format, projections of sales, the sales growth rate, key expenses and their growth rates, net income across the forecasting horizon, and assets and liabilities. [29]

As previously discussed, bankers—and to lesser extent venture capitalists—will be primarily concerned with this section of the business plan. It is vital that this section—whether you are an existing business seeking more funding or a start-up—have realistic financial projections. The business plan should contain clear statements of the underlying assumptions that were used to make these financial projections. The clearer the statements and the more realistic the assumptions behind these statements, then the greater the confidence the reader will have in these projections. Few businesspeople have a thorough understanding of these financial statements; therefore, it is advisable that someone with an accounting or a financial background review these statements before they are included in the report. We will have a much more in-depth discussion of these statements in Chapter 9 .

The future planning horizon for financial projections is normally between three and five years. The duration that you will use will depend on the amount of capital that the business is seeking to raise, the type of industry the business is in, and the forecasting issues associated with making projections. Also, the detail required in these financial statements will be directly tied to the type and size of the business.

Income Statement

The  income statement examines the overall profitability of a firm over a particular period of time. As such, it is also known as a profit-and-loss statement. It identifies all sources of revenues generated and expenses incurred by the business. For the business plan, one should generate annual plans for the first three to five years. Some suggest that the planner develop more “granulated” income statements for the first two years. By granulated, we mean that the first year income statement should be broken down on a monthly basis, while the second year should be broken down on a quarterly basis.

Some of the key terms (they will be reviewed in much greater detail in Chapter 10 ) found in the income statement are as follows:

• Income. All revenues and additional incomes produced by the business during the designated period.
• Cost of goods sold. Costs associated with producing products, such as raw materials and costs associated directly with production.
• Gross profit margin. Income minus the cost of goods sold.
• Operating expenses. Costs in doing business, such as expenses associated with selling the product or the service, plus general administration expenses.
• Depreciation. This is a special form of expense that may be included in operating expenses. Long-term assets—those whose useful life is longer than one year—decline in value over time. Depreciation takes this fact into consideration. There are several ways in which this declining value can be determined. It is a noncash expenditure expense.
• Total expenses. The cost of goods sold plus operating expenses and depreciation.
• Net profit before interest and taxes. This is the gross profit minus operating expenses; another way of stating net profit is income minus total expenses.
• Interest. The required payment on all debt for the period.
• Taxes. Federal, state, and local tax payments for the firm.
• Net profit. This is the net profit after interest and taxes. This is the term that many will look at to determine the potential success of business operations.

Balance Sheet

The  balance sheet examines the assets and liabilities and owner’s equity of the business at some particular point in time. It is divided into two sections—the credit component (the assets of the business) and the debit component (liabilities and equity). These two components must equal each other. The business plan should have annual balance sheet for the three- or five-year planning horizon. The elements of the credit component are as follows:

• Current assets. These are the assets that will be held for less than one year, including cash, marketable securities, accounts receivable, notes receivable, inventory, and prepaid expenses.
• Fixed assets. These assets are not going to be turned into cash within the next year; these include plants, equipment, and land. It may also include intangible assets, such as patents, franchises, copyrights, and goodwill.
• Total assets. This is the sum of current assets and fixed assets.

Liabilities consist of the following:

• Current liabilities. These are debts that are to be paid within the year, such as lines of credit, accounts payable, other items payable (including taxes, wages, and rents), short-term loans, dividends payable, and current portion of long-term debt.
• Long-term liabilities. These are debts payable over a period greater than one year, such as notes payable, long-term debt, pension fund liability, and long-term lease obligations.
• Total liabilities. This is the sum of current liabilities and long-term liabilities.
• Owner’s equity. This represents the value of the shareholders’ ownership in the business. It is sometimes referred to as net worth. It may be composed of items such as preferred stock, common stock, and retained earnings.

Cash-Flow Statement

From a practical and survival standpoint, the  cash-flow statement may be the most important component of the financial statements. The cash-flow statement maps out where cash is flowing into the firm and where it flows out. It recognizes that there may be a significant difference between profits and cash flow. It will indicate if a business can generate enough cash to continue operations, whether it has sufficient cash for new investments, and whether it can pay its obligations. Businesspeople soon realize that profits are nice, but cash is king.

Cash flows can be divided into three areas of analysis: cash flow from operations, cash flow from investing, and cash flow from financing. Cash flow from operations examines the cash inflows from revenues and interest and dividends from investments held by the business. It then identifies the cash outflows for paying suppliers, employees, taxes, and other expenses. Cash flow from investing examines the impact of selling or acquiring current and fixed assets. Cash flow from financing examines the impact on the cash position from the changes in the number of shares and changes in the short- and long-term debt position of the firm. Given the critical importance of cash flow to the survival of the small business, it will be covered in much more detail in Chapter 10 .

Additional Information

Depending on the nature of the business and the amount of funding that is being sought, the plan might include more materials. For an existing business, you may wish to include past tax statements and/or personal financial statements. If the business is a franchise, you should include all legal contracts and documents. The same should be done for any leasing, licensing, or rent agreements. This section should be seen as a catchall incorporating any materials that would support the plan. One does not want to be in the position of being asked by readers of the plan—“Where are these documents?”

The financial section of the business plan should include summaries of the three key financial elements. The details behind the financial statements should be included as an appendix along with clear statements concerning the assumptions that were used to build them. The appendixes may also include different scenarios that were considered in building the plan, such as alternative market growth assumptions or alternative competitive environments. Demonstrating that the author(s) considered “what-if” situations tells potential investors that the business is prepared to handle changing conditions. It should include items such as logos, diagrams, ads, and organizational charts.

Developing Scenarios

Business plans are analyses of the future; they can err on the side of either optimistic projections or conservative projections. From the standpoint of the potential investor, it is always better to err on the side of conservatism. Regardless of either bias, business plans are generally built on the basis of expected futures and past experience. Unfortunately, the future does not always emerge in a clearly predicated manner. One can have a dramatic change that can have significant impact on the business. Often such changes occur in the external environment and are beyond the control of the business management team. These external changes can occur within the technical environment; it can be based on changes in customer needs, changes with respect to the suppliers, changes in the economic environment—at the local, national, or global level. Dramatic change can also occur within the organization itself—the death of the owner or members of the management team. [30]

One way for an organization to deal with significant changes is a process known as scenario planning . The real origins of scenario planning can be traced back to the early nineteenth century activity known as Kreigsspiel—war gaming—a system for training officers developed by the Prussian command. This process of looking at future wars was adopted by many militaries in the later nineteenth century. In the 1950s, a more formal format was used at the RAND Institute for examining possible future changes in the military and geopolitical environments. The early 1980s saw it applied to industrial settings. Royal Dutch Shell examined the question of what would happen if there were a significant drop in the price of oil. This was after two oil crises that pushed the price of oil up significantly. The notion that oil prices would drop was considered to be an extremely unlikely event, but it did occur. Royal Dutch Shell was one of the few oil companies that did not suffer because its scenario analyses enabled them to be ready to deal with that situation. [31]

What could be the possible use of scenario planning for small businesses? There are several areas in which small businesses should apply scenario planning to be better prepared for future disruptions.

Identify Significant Changes That Might Impact the Business

Consider major shifts in the customer’s notion of value. As mentioned in Chapter 2 , the firm should always be examining what constitutes value in the eyes of the consumer and how that might shift. Henry Ford’s model T car was a global success because customers initially valued a reliable vehicle at a low price. Ford Motor Company continued to meet the customer’s notion of value by constantly driving down the unit cost. However, by the mid-1920s, customers’ notion of value included not only price but also issues such as styling and improved technologies. General Motors was able to recognize that there were changes in the customer’s value notion and provided them with a range of vehicles. Ford failed to recognize that change and suffered a significant drop in sales.

Shifts in the economic environment. The recent recession clearly indicates that economies can suffer significant shifts in a short period of time. These shifts can have dramatic impact on all business operations. Small-business owners have seen significant tightening of bank credit and changes with respect to the requirements for using credit cards. One could easily imagine the critical importance for small businesses to consider the impacts that would follow significant changes in interest rates. Southwest Airlines, in anticipation of possible fluctuations in oil prices, used futures contracts to deal with dramatic shifts in the price of oil. When oil prices rose significantly, they were in a much better position than their competitors.

The entrance of new competitors. Small businesses should always be ready to consider the impact of facing new competitors and new types of competition. Consider the case of small local retail outlets when a Walmart superstore opens in the area.

Consideration of Disasters

The best way to deal with any potential disaster is not while it is occurring or after it has happened but before it occurs. Small businesses should anticipate what they will do in the case of physical disasters, such as fire, earthquakes, or floods. Other disasters might involve the bankruptcy or loss of a major supplier or a major customer. A restaurant or a food market should have a contingency plan in the case of a power failure that might lead to food spoilage. Such a business might also want to conduct a scenario planning exercise to see what its responses would be in the case of a customer complaining of food poisoning. Other disaster scenarios that should be considered by small businesses include the impact and ramifications of having the computer system crash; having the service for the website crash; or having the website hacked, with the possible loss of customer information.

New Opportunities

Almost all businesses, large and small, must be prepared to seize new opportunities. This may mean that they have to consider the impact of technological change on the business or how technology can offer them new business opportunities. The technology of stereo lithography, a process by which three-dimensional objects are built layer by layer, has been available for more than a decade. Bespoke Innovations saw the potential for using this technology. Bespoke Innovations can develop, in a short period of time, custom artificial legs for a price of $5,000–$6,000 and with features that are not found in $60,000 prostheses. [32]

Scenario planning should be a periodic exercise, but it should be conducted no more than once a year. The actual frequency might be dependent on the perceived rate of change for the industry or the presence of storm clouds on the horizon. Scenario planning has several distinct activities, which may be as follows:

• Pick one area that might occur in the future that would have significant impact on the business. What if the national joblessness rate remains at over 9 percent for the next three to five years? What if a major customer decides to buy from a competitor or that customer is in financial trouble? What if there are changes in the national defense budget? A luncheonette in New London, Connecticut, where Electric Boat builds nuclear submarines, wants to consider the impact of changes in the defense budget. A decrease in the budget for building nuclear submarines would reduce the number of subs made in New London, which might lead to layoffs at Electric Boat and fewer customers for the luncheonette.
• Identify factors that might impact that issue. This sometimes is referred to as a PEST analysis, where the P stands for political issues, E stands for economic issues, S stands for sociocultural issues, and T stands for technology issues. Each factor would be analyzed to see how it might impact the scenario. In our previous luncheonette example, the restaurant might want to consider an upcoming election to see how each party would support defense appropriations, and it might look at the overall economy to determine whether a downturn in the economy might lead to a cut in defense appropriations. It is unlikely that sociocultural issues would impact defense appropriations. Technology issues, whether a breakthrough in some design by the United States or by some other country, might determine the number and location of submarines built in the United States.
• Rank the relative importance of the previous factors. Not all factors under consideration can be considered equally important. It is critical in a scenario planning exercise to see which factors are most important so that decision-makers can focus on the ramifications of those factors in the analysis.
• Develop scenarios. Having identified the relative importance of the factors, the next stage would be to develop a limited number of possible scenarios (no more than two or three). Each scenario would map out possible outcomes for each key factor. Based on these values, the group conducting the scenario planning exercise would develop insights into this possible future world.
• How do the scenarios impact your business? For each future scenario, the team should examine how that possible future state would impact the operation of the business. Continuing with the luncheonette example, the owner might see that a particular political party would be elected in the next election and the economy will still be in the doldrums. Together, this might indicate a cut in the naval building budget. This will translate into a reduced number of submarines built in New London and a reduction in employment at Electric Boat. The luncheonette’s sales will obviously drop off. Now the owner must consider what it might do in that situation.

Scenario planning offers the opportunity for small business owners to examine the future on a long-term basis. It should force them to look at external environments and conditions that can have a dramatic impact on the survival of their firm. It broadens their thinking and creates an environment of increased flexibility. It enables a business to respond to those sudden shocks that might destroy other firms.

Computer Aids

Business plans can be built using a combination of word-processing and spreadsheet programs by those who are adept at using them. However, the entire process of constructing a comprehensive business plan can be greatly simplified by using a dedicated business plan software package. These packages are designed to produce reports that have all the required sections for a business plan, they greatly facilitate the creation of the financial statements with charts, and they often allow for the inclusion of materials from other programs. Most of them are fairly reasonably priced from $50 to $150.

There are many such packages on the market, and they range from those designed for novices to those that can generate annual plans by easily incorporating data from external sources, such as the accounting programs of a business. When evaluating competing programs, there are some primary and secondary factors that should be considered. [33] The primary factors are as follows:

• Ease of building the report. The various sections of the report should be clearly identified, and the authors should be able to work on each section independent of their sequence within the report. Text and data entry should be simple and allow for easy corrections or revisions.
• Financial statements. The software should facilitate building the income statement, the balance sheet, and the cash-flow statement. For multiyear projections, the software should support the forecasting process.
• Import from other programs. The software should be able to incorporate data from a variety of programs, such as Word and Excel. Ideally, it should be able to import data from a variety of accounting programs.
• Support services. The software company should bundle a variety of support services, including clear instructions, tutorials, and access to Internet or call-number support. Many packages provide sample business plans for different industries.

The secondary factors are as follows:

• Access to research support. Some software packages include access to business publications and databases to aid with market research.
• Export options. These packages allow for the report or parts of the report to be exported to different formats—Word, Excel, PowerPoint, HTML, or PDF.
• Ancillary analysis tools. Some packages either directly include or offer additional programs for market planning, budgeting, or valuation.

The following is a partial listing of companies that have business planning software:

• Business Plan Pro . This company provides business planning software with sample plans for a wide number of industries plus options for acquiring industry data at national, state, or local levels. The company also has programs for marketing planning and legal issues advice.
• Business Plan Software . This company offers a number of products, including business planning software, a strategic planning program, financial projection and cash-flow forecasting programs, and marketing planning software.
• Plan Magic . This company offers a suite of planning products ranging from particular industries to financial and marketing planning software.
• The business planning for a start-up business should consider if the owner(s) is/are ready to accept the challenges of operating a business.
• Comprehensive business plans will require information about the industry, competitors, and customers. Owners or the writers of the business plan should be aware of where they can obtain this information.
• Forecasting is critical to the success of any business. There are many different approaches to forecasting: some are simple extrapolations of trends, while others can be computationally complex. The business should use a forecasting system that is not only accurate but also makes the users feel comfortable.
• Although business plans come in different “sizes and shapes,” they should have some key sections: executive summary, mission statement, industry analysis, marketing plan, description of the management team, and financial projections.
• Some businesses should make it a practice of conducting scenario analyses. This is a process of examining possible future events and what should be the response of the business.
• The complexity and difficulty of building a comprehensive business plan can be significantly reduced by using one of the available business-planning software packages.
• Kenneth Arrow, The Concept of Corporate Strategy (Homewood, IL: Irwin, 1971), 28. ↵
• Alfred Chandler, Strategy and Structure (Cambridge, MA: MIT Press, 1962), 13. ↵
• Kenichi Ohmae, The Mind of the Strategist (Harmondsworth, UK: Penguin Books, 1983), 6. ↵
• Henry Mintzberg, Joseph Lampel, and Bruce Ahlstrand, Strategic Safari: A Guided Tour through the Wilds of Strategic Management (New York: Free Press, 1998). ↵
• Paul Solman and Thomas Friedman, Life and Death on the Corporate Battlefield: How Companies Win, Lose, Survive (New York: Simon and Schuster, 1982), 24–27. ↵
• Stephen C. Perry, “A Comparison of Failed and Non-Failed Small Businesses in the United States: Do Men and Women Use Different Planning and Decision Making Strategies?,” Journal of Developmental Entrepreneurship 7, no. 4 (2002): 415. ↵
• Stephen C. Perry, “An Exploratory Study of U.S. Business Failures and the Influence of Relevant Experience and Planning,” (Ph.D. diss., George Washington University, 1998; dissertation available through UMI Dissertation Services, Ann Arbor, MI), 42. ↵
• David A. Curtis, Strategic Planning for Smaller Businesses: Improving Corporate Performance and Personal Reward (Cambridge, MA: Lexington Books, 1983), 29. ↵
• Henry Mintzberg, The Rise and Fall of Strategic Planning (New York: Free Press, 1994), 46. ↵
• Rieva Lesonsky, “A Small Business Plan Doubles Your Chances for Success, Says a New Survey, Small Business Trends, June 20, 2010, accessed October 10, 2011, smallbiztrends.com/2010/06/business-plan-success-twice-as-likely.html. ↵
• Michael Porter, Competitive Strategy: Techniques for Analyzing Industries and Competitors (New York: Free Press, 1980), 21. ↵
• Kogi Truck Schedule,” Kogi BBQ, accessed October 10, 2011, kogibbq.com. ↵
• Max and Mina’s Ice Cream, accessed October 10, 2011, www.maxandminasicecream.com. ↵
• Jason Cohen, “Don’t Write a Business Plan,” Building43, January 27, 2010, accessed October 10, 2011, www.building43.com/blogs/2010/01/27/dont-write-a -business-plan. ↵
• T. C. Carbone, “Four Common Management Failures and How to Avoid Them,” Management World 10, no. 8 (1981): 38. Patricia Schaeffer, “The Seven Pitfalls of Business Failure and How to Avoid Them,” Business Know-How, 2011, accessed October 10, 2011, www.businessknowhow.com/startup/business-failure.htm. Isabel M. Isodoro, “10 Rules for Small Business Success,” PowerHomeBiz.com , 2011, www.powerhomebiz.com/vol19/rules.htm . Rubik Atamian and Neal R. VanZante, “Continuing Education: A Vital Ingredient of the ‘Success Plan’ for Small Business,” Journal of Business and Economic Research 8, no. 3 (2010): 37. ↵
• Rieva Lesonsky, “A Small Business Plan Doubles Your Chances for Success, Says a New Survey,” Small Business Trends, June 20, 2010, accessed October 10, 2011, smallbiztrends.com/2010/06/business-plan-success-twice-as-likely.html. ↵
• H. Hodges and T. Kent, “Impact of Planning and Control Sophistication in Small Business,” Journal of Small Business Strategy 17, no. 2 (2006–7): 75. ↵
• Tim Berry, “What Bankers Look for in a Business Plan…and What You Should Expect When Taking Your Business Plan to a Bank,” AllBusiness.com, November 7, 2006, accessed October 10, 2011, www.allbusiness.com/business-planning-structures/business-plans/3878953-1.html. ↵
• Marc Mays, “Small Business Venture Capital Strategies,” eZine Articles, 2010, accessed October 10, 2011, ezinearticles.com/?Small-Business-Venture-Capital-Strategies &id=4714691. ↵
• “The Importance of Angel Investing in Financing the Growth of Entrepreneurial Ventures,” Small Business Notes, September 2008, accessed October 10, 2011, www.smallbusinessnotes.com/aboutsb/rs331.html. ↵
• Melinda Emerson, “Life Plan before Business Plan,” Small Business Trends, March 22, 2010, accessed October 10, 2011, smallbiztrends.com/2010/03/life-plan -before-business-plan.html. ↵
• Jeffry Timmons, Andrew Zachary, and Stephen Spinelli, Business Plans That Work—A Guide for Small Business (New York: McGraw-Hill, 2004), 113. ↵
• Carolyn Brown, “The Dos and Don’ts of Writing a Winning Business Plan,” Black Enterprise, April 1996, 114–122. ↵
• “Inc. 500 Mission Statements,” MissionStatements.com, accessed October 10, 2011, www.missionstatements.com/inc_500_mission_statements.html. ↵
• “Mission Statement,” Ben & Jerry’s, accessed October 10, 2011, www.benjerry.com/activism/mission-statement. ↵
• “Invest in People, Not Ideas,” Michael Karnjanaprakorn, January 15, 2009, accessed October 10, 2011, www.mikekarnj.com/blog/2009/01/15/invest-in-people-not-ideas. ↵
• Amir M Hormozi, Gail S. Sutton, Robert D. McMinn, Wendy Lucio, “Business Plans for New or Small Businesses: Paving the Path to Success,” Management Decision 40, no. 8 (2002): 755. ↵
• “Workshops and Events,” SCORE, accessed October 10, 2011, www.score.org/events/workshops. ↵
• P. McNamee, Tools and Techniques for Strategic Management (New York: Pergamon Press, 1985), 187. ↵
• Ashlee Vance, “A Technology Sets Inventors Free to Dream,” New York Times, September 14, 2010. ↵
• “2012 Business Plan Software Product Comparisons,” TopTenReviews.com, accessed October 10, 2011, business-plan-software-review.toptenreviews.com. ↵

The path by which a firm seeks to provide its customers with value, given the competitive environment and within the constraints of the resources available to the firm.

A firm is in the position of being the lowest cost producer in its competitive environment.

A firm provides products or services that meet customer value in some unique way.

A firm seeks to provide value through low cost for a subset of the market given the competitive environment and within the constraints of the resources available to the firm.

A firm concentrates on providing a unique product or service to a segment of the market.

Individuals who provide money for start-up businesses or additional capital for a business to grow. They invest to make not only a profit but also returns that are substantially above those found in the market.

Individuals who initially invested in Broadway shows and films. As with venture capitalists, they are looking for returns higher than they can normally find in the market; however, they often are expecting returns lower than those anticipated by the venture capitalist.

Methods that assume that one does not have historical data or cannot rely on past historical data.

Methods that consist of techniques that assume you can use past data to make projections of the future.

The introduction to the business plan that describes the company’s business, the intended customers, the legal structure, the type and amount of funding that will requested, and the capabilities of the key executives.

A document that articulates the long-term purpose and idealized notion of what the business wishes to become.

A document that articulates the fundamental nature of the business. It should address what business the company is in, the company’s potential customers, and how customer value will be provided.

A report that provides an examination of the overall profitability of a firm over a particular period of time.

A report that examines the assets, liabilities, and owner’s equity of the business at some particular point in time.

A document that maps out where cash is flowing into a firm and where it flows out. It recognizes that there may be a significant difference between profits and cash flow.

A process that examines the impact and possible responses to events that may be unlikely but that would have significant impact on a business.

Small Business Management Copyright © by Jason Anderson is licensed under a Creative Commons Attribution-NonCommercial-ShareAlike 4.0 International License , except where otherwise noted.

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550+ Business Plan Examples to Launch Your Business

Need help writing your business plan? Explore over 550 industry-specific business plan examples for inspiration.

Find your business plan example

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Business plan template: There's an easier way to get your business plan done.

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Finish your plan faster with step-by-step guidance, financial wizards, and a proven format.

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View all sample business plans

Example business plan format

Before you start exploring our library of business plan examples, it's worth taking the time to understand the traditional business plan format . You'll find that the plans in this library and most investor-approved business plans will include the following sections:

Executive summary

The executive summary is an overview of your business and your plans. It comes first in your plan and is ideally only one to two pages. You should also plan to write this section last after you've written your full business plan.

Your executive summary should include a summary of the problem you are solving, a description of your product or service, an overview of your target market, a brief description of your team, a summary of your financials, and your funding requirements (if you are raising money).

Products & services

The products & services chapter of your business plan is where the real meat of your plan lives. It includes information about the problem that you're solving, your solution, and any traction that proves that it truly meets the need you identified.

This is your chance to explain why you're in business and that people care about what you offer. It needs to go beyond a simple product or service description and get to the heart of why your business works and benefits your customers.

Market analysis

Conducting a market analysis ensures that you fully understand the market that you're entering and who you'll be selling to. This section is where you will showcase all of the information about your potential customers. You'll cover your target market as well as information about the growth of your market and your industry. Focus on outlining why the market you're entering is viable and creating a realistic persona for your ideal customer base.

Competition

Part of defining your opportunity is determining what your competitive advantage may be. To do this effectively you need to get to know your competitors just as well as your target customers. Every business will have competition, if you don't then you're either in a very young industry or there's a good reason no one is pursuing this specific venture.

To succeed, you want to be sure you know who your competitors are, how they operate, necessary financial benchmarks, and how you're business will be positioned. Start by identifying who your competitors are or will be during your market research. Then leverage competitive analysis tools like the competitive matrix and positioning map to solidify where your business stands in relation to the competition.

Marketing & sales

The marketing and sales plan section of your business plan details how you plan to reach your target market segments. You'll address how you plan on selling to those target markets, what your pricing plan is, and what types of activities and partnerships you need to make your business a success.

The operations section covers the day-to-day workflows for your business to deliver your product or service. What's included here fully depends on the type of business. Typically you can expect to add details on your business location, sourcing and fulfillment, use of technology, and any partnerships or agreements that are in place.

Milestones & metrics

The milestones section is where you lay out strategic milestones to reach your business goals.

A good milestone clearly lays out the parameters of the task at hand and sets expectations for its execution. You'll want to include a description of the task, a proposed due date, who is responsible, and eventually a budget that's attached. You don't need extensive project planning in this section, just key milestones that you want to hit and when you plan to hit them.

You should also discuss key metrics, which are the numbers you will track to determine your success. Some common data points worth tracking include conversion rates, customer acquisition costs, profit, etc.

Company & team

Use this section to describe your current team and who you need to hire. If you intend to pursue funding, you'll need to highlight the relevant experience of your team members. Basically, this is where you prove that this is the right team to successfully start and grow the business. You will also need to provide a quick overview of your legal structure and history if you're already up and running.

Financial projections

Your financial plan should include a sales and revenue forecast, profit and loss statement, cash flow statement, and a balance sheet. You may not have established financials of any kind at this stage. Not to worry, rather than getting all of the details ironed out, focus on making projections and strategic forecasts for your business. You can always update your financial statements as you begin operations and start bringing in actual accounting data.

Now, if you intend to pitch to investors or submit a loan application, you'll also need a "use of funds" report in this section. This outlines how you intend to leverage any funding for your business and how much you're looking to acquire. Like the rest of your financials, this can always be updated later on.

The appendix isn't a required element of your business plan. However, it is a useful place to add any charts, tables, definitions, legal notes, or other critical information that supports your plan. These are often lengthier or out-of-place information that simply didn't work naturally into the structure of your plan. You'll notice that in these business plan examples, the appendix mainly includes extended financial statements.

Types of business plans explained

While all business plans cover similar categories, the style and function fully depend on how you intend to use your plan. To get the most out of your plan, it's best to find a format that suits your needs. Here are a few common business plan types worth considering.

Traditional business plan

The tried-and-true traditional business plan is a formal document meant to be used for external purposes. Typically this is the type of plan you'll need when applying for funding or pitching to investors. It can also be used when training or hiring employees, working with vendors, or in any other situation where the full details of your business must be understood by another individual.

Business model canvas

The business model canvas is a one-page template designed to demystify the business planning process. It removes the need for a traditional, copy-heavy business plan, in favor of a single-page outline that can help you and outside parties better explore your business idea.

The structure ditches a linear format in favor of a cell-based template. It encourages you to build connections between every element of your business. It's faster to write out and update, and much easier for you, your team, and anyone else to visualize your business operations.

One-page business plan

The true middle ground between the business model canvas and a traditional business plan is the one-page business plan . This format is a simplified version of the traditional plan that focuses on the core aspects of your business.

By starting with a one-page plan , you give yourself a minimal document to build from. You'll typically stick with bullet points and single sentences making it much easier to elaborate or expand sections into a longer-form business plan.

Growth planning

Growth planning is more than a specific type of business plan. It's a methodology. It takes the simplicity and styling of the one-page business plan and turns it into a process for you to continuously plan, forecast, review, and refine based on your performance.

It holds all of the benefits of the single-page plan, including the potential to complete it in as little as 27 minutes . However, it's even easier to convert into a more detailed plan thanks to how heavily it's tied to your financials. The overall goal of growth planning isn't to just produce documents that you use once and shelve. Instead, the growth planning process helps you build a healthier company that thrives in times of growth and remain stable through times of crisis.

It's faster, keeps your plan concise, and ensures that your plan is always up-to-date.

Download a free sample business plan template

Ready to start writing your own plan but aren't sure where to start? Download our free business plan template that's been updated for 2024.

This simple, modern, investor-approved business plan template is designed to make planning easy. It's a proven format that has helped over 1 million businesses write business plans for bank loans, funding pitches, business expansion, and even business sales. It includes additional instructions for how to write each section and is formatted to be SBA-lender approved. All you need to do is fill in the blanks.

How to use an example business plan to help you write your own

How do you know what elements need to be included in your business plan, especially if you've never written one before? Looking at examples can help you visualize what a full, traditional plan looks like, so you know what you're aiming for before you get started. Here's how to get the most out of a sample business plan.

Choose a business plan example from a similar type of company

You don't need to find an example business plan that's an exact fit for your business. Your business location, target market, and even your particular product or service may not match up exactly with the plans in our gallery. But, you don't need an exact match for it to be helpful. Instead, look for a plan that's related to the type of business you're starting.

For example, if you want to start a vegetarian restaurant, a plan for a steakhouse can be a great match. While the specifics of your actual startup will differ, the elements you'd want to include in your restaurant's business plan are likely to be very similar.

Use a business plan example as a guide

Every startup and small business is unique, so you'll want to avoid copying an example business plan word for word. It just won't be as helpful, since each business is unique. You want your plan to be a useful tool for starting a business —and getting funding if you need it.

One of the key benefits of writing a business plan is simply going through the process. When you sit down to write, you'll naturally think through important pieces, like your startup costs, your target market , and any market analysis or research you'll need to do to be successful.

You'll also look at where you stand among your competition (and everyone has competition), and lay out your goals and the milestones you'll need to meet. Looking at an example business plan's financials section can be helpful because you can see what should be included, but take them with a grain of salt. Don't assume that financial projections for a sample company will fit your own small business.

If you're looking for more resources to help you get started, our business planning guide is a good place to start. You can also download our free business plan template .

Think of business planning as a process, instead of a document

Think about business planning as something you do often , rather than a document you create once and never look at again. If you take the time to write a plan that really fits your own company, it will be a better, more useful tool to grow your business. It should also make it easier to share your vision and strategy so everyone on your team is on the same page.

Adjust your plan regularly to use it as a business management tool

Keep in mind that businesses that use their plan as a management tool to help run their business grow 30 percent faster than those businesses that don't. For that to be true for your company, you'll think of a part of your business planning process as tracking your actual results against your financial forecast on a regular basis.

If things are going well, your plan will help you think about how you can re-invest in your business. If you find that you're not meeting goals, you might need to adjust your budgets or your sales forecast. Either way, tracking your progress compared to your plan can help you adjust quickly when you identify challenges and opportunities—it's one of the most powerful things you can do to grow your business.

Prepare to pitch your business

If you're planning to pitch your business to investors or seek out any funding, you'll need a pitch deck to accompany your business plan. A pitch deck is designed to inform people about your business. You want your pitch deck to be short and easy to follow, so it's best to keep your presentation under 20 slides.

Your pitch deck and pitch presentation are likely some of the first things that an investor will see to learn more about your company. So, you need to be informative and pique their interest. Luckily we have a round-up of real-world pitch deck examples used by successful startups that you can review and reference as you build your pitch.

For more resources, check out our full Business Pitch Guide .

Ready to get started?

Now that you know how to use an example business plan to help you write a plan for your business, it's time to find the right one.

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Business Plan Development Guide

(6 reviews)

Lee Swanson, University of Saskatchewan

Copyright Year: 2017

Publisher: OPENPRESS.USASK.CA

Language: English

Formats Available

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Learn more about reviews.

Reviewed by Kevin Heupel, Affiliate Faculty, Metropolitan State University of Denver on 3/4/20

The text does a good job of providing a general outline about writing and developing a written business plan. All of the important steps and components are included. However, the text is light on details, examples, and rationale for each element... read more

Comprehensiveness rating: 3 see less

The text does a good job of providing a general outline about writing and developing a written business plan. All of the important steps and components are included. However, the text is light on details, examples, and rationale for each element of the business plan. Some examples from actual business plans would be helpful.

Content Accuracy rating: 4

For the most part, the content is accurate. The content covers all important aspects of drafting a business plan. I thought the industry analysis could use more information about collecting primary and secondary sources; instead, this information was referenced in the marketing plan section.

Relevance/Longevity rating: 5

Most of the content relies on cites as far back as 2006; however, when it comes to developing and writing a business plan nothing has changed. Thus, the content is current and there is no concern about it becoming obsolete in the near future.

Clarity rating: 4

The text is clear. There are no difficult terms used and the writing is simple. The text uses a lot of bullet points though, which gets tedious to read for a few pages.

Consistency rating: 5

The text does a good job of maintaining consistency in terms of framework and terminology. The text is organized where it's easy to find the information you want in a quick manner.

Modularity rating: 3

The text has a lot of bullet points and the paragraphs are dense. However, the use of subheading is excellent.

Organization/Structure/Flow rating: 5

The book is organized as if you're writing a business plan from start to finish, which is helpful as a practical guide.

Interface rating: 5

There are no navigation problems, distortion of images/charts, or any other display features that may distract or confuse the reader.

Grammatical Errors rating: 5

The text is free of grammatical errors. The sentence structure is simple with many bullet points, which helps to avoid any grammatical issues.

Cultural Relevance rating: 5

This book was written by a Canadian professor and provides references to Canadian sources. However, the information in this text can be used for U.S. schools.

This book is very short and provides a good, general overview about the process of creating and writing a business plan. It won't help a reader if he/she is confused about a certain part of the business plan. The reader will have to find another source, such as "Preparing Effective Business Plans" by Bruce Barringer, Ph.D. The book provides links to good resources and a finished business plan that the reader can reference. I would recommend the book for undergraduate courses.

Reviewed by Kenneth Lacho, Professor of Management, The University of New Orleans on 6/19/18

1. Text is relevant to Canada. Not the United States 2. Needs to cover resources available to entrepreneur, e.g., federal government agencies, trade associations, chambers of commerce, economic development agencies. 3. Discuss local economy or... read more

1. Text is relevant to Canada. Not the United States 2. Needs to cover resources available to entrepreneur, e.g., federal government agencies, trade associations, chambers of commerce, economic development agencies. 3. Discuss local economy or economic area relevant to this proposed business. 4. Business model ok as a guide. 5. Suggested mission statement to cover: product/business, target customer, geographical area covered. 6. Need detailed promotion plan, e.g., personal selling, advertising, sales promotion, networking publicity, and social media. 7. How do you find the target market? 8. Chapter 6 too much detail on debt and equity financing. 9. Discuss how to find sources of financing, e.g., angels. 10. Expand coverage of bootstring, crowdfunding. 11. Chapter 4 – good checklist. 12. Chapter 3 - overlaps. 13. Chapter 7 – 3 pages of executive summary – double or single spaced typing. Number all tables, graphs. 14. Some references out-of-date, mostly academic. Bring in trade magazines such as Entrepreneur.

Content Accuracy rating: 5

In my opinion, the content is accurate and error free.

Relevance/Longevity rating: 4

The material is relevant to writing a business plan. I wonder if the Porter, SWOT VRIO, etc. material is too high level for students who may not be seniors or have non-business degrees (e.g., liberal arts). Porter has been around for a while and does have longevity. The author has to be more alert to changes in promotion, e.g., social media and sources of financing, e.g., crowdfunding.

Clarity rating: 3

As noted in No. 9, the tone of the writing is too academic, thus making the material difficult to understand. Paragraphs are too long. Need to define: Porter, TOWS Matrix, VRIO, PESTEL. A student less from a senior or a non-business major would not be familiar with these terms.

Consistency rating: 4

The text is internally consistent. The model approach helps keep the process consistent.

Modularity rating: 4

The process of developing a business plan is divided into blocks which are parts of the business plan. Paragraphs tend to be too long in some spots.

Organization/Structure/Flow rating: 4

The topics are presented in a logical step-wise flow. The language style is too academic in parts, paragraphs too long. Leaves out the citations. Provides excellent check lists.

There are no display features which confuse the reader.

Grammatical Errors rating: 4

The text has no grammatical errors. On the other hand, I found the writing to be too academic in nature. Some paragraphs are too long. The material is more like an academic conference paper or journal submission. Academic citations references are not needed. The material is not exciting to read.

The text is culturally neutral. There are no examples which are inclusive of a variety of races, ethnicities, and backgrounds.

This book best for a graduate class.

Reviewed by Louis Bruneau, Part Time Faculty, Portland Community College on 6/19/18

The text provides appropriate discussion and illustration of all major concepts and useful references to source and resource materials. read more

Comprehensiveness rating: 5 see less

The text provides appropriate discussion and illustration of all major concepts and useful references to source and resource materials.

Contents of the book were accurate, although it could have benefited from editing/proofreading; there was no evidence of bias. As to editing/proofreading, a couple of examples: A. “Figure 1 – Business Plan… “ is shown at the top of the page following the diagram vs. the bottom of the page the diagram is on. (There are other problems with what is placed on each page.) B. First paragraph under heading “Essential Initial Research” there is reference to pages 21 to 30 though page numbering is missing from the book. (Page numbers are used in the Table of Contents.)

The book is current in that business planning has been stable for sometime. The references and resources will age in time, but are limited and look easy to update.

Clarity rating: 5

The book is written in a straightforward way, technical terms that needed explanations got them, jargon was avoided and generally it was an easy read.

The text is internally consistent in terms of terminology and framework.

Modularity rating: 5

The book lends itself to a multi-week course. A chapter could be presented and students could work on that stage of Plan development. It could also be pre-meeting reading for a workshop presentation. Reorganizing the book would be inappropriate.

The topics in the text are presented in a logical, clear fashion.

Generally, the book is free of interface problems. The financial tables in the Sample Plan were turned 90° to maintain legibility. One potential problem was with Figure 6 – Business Model Canvas. The print within the cells was too small to read; the author mitigated the problem by presenting the information, following Figure 6, in the type font of the text.

I found no grammatical errors.

The text is not culturally insensitive or offensive in any way.

I require a business plan in a course I teach; for most of the students the assignment is a course project that they do not intend to pursue in real life. I shared the book with five students that intended to develop an actual start-up business; three of them found it helpful while the other two decided not to do that much work on their plans. If I were planning a start-up, I would use/follow the book.

Reviewed by Todd Johnson, Faculty of Business, North Hennepin Community College on 5/21/18

The text is a thorough overview of all elements of a business plan. read more

Comprehensiveness rating: 4 see less

The text is a thorough overview of all elements of a business plan.

The content is accurate and seems to lack bias.

Content seems relevant and useful . It does not help an entrepreneur generate ideas, and is very light on crowdfunding and other novel funding source content. It is more traditional. This can be easily updated in future versions, however. "Social Media" appears once in the book, as does "Crowd Funding".

The book is comprehensive, but perhaps not written in the most lucid, accessible prose. I am not sure any college student could pick this up and just read and learn. It would be best used as a "teach along guide" for students to process with an instructor.

The text seems consistent. The author does a nice job of consistently staying on task and using bullets and brevity.

Here I am not so certain. The table of contents is not a good guide for this book. It does make the book look nicely laid out, but there is a lot of complexity within these sections. I read it uncertain that it was well organized. Yes there are many good bits of information, however it is not as if I could spend time on one swathe of text at a time. I would need to go back and forth throughout the text.

Organization/Structure/Flow rating: 2

Similar to the above. I did not like the flow and organization of this. An editor would help things be in a more logical order.

Interface rating: 2

The interface is just OK. It is not an attractice interface, as it presents text in a very dense manner. The images and charts are hard to follow.

I did not find any grammatical errors.

Cultural Relevance rating: 4

I a not certain of the origins of Saskatchewan, but I do feel this is a different read. It is more formal and dense than it has to be. This would be a difficult read for my students. I do not feel it is insensitive in any way, or offensive in any way.

I would not adopt this book if given the chance. It is too dense, and not organized very well, even though the information is very good. The density and lack of modularity are barriers to understanding what is obviously very good information.

Reviewed by Mariana Mitova, Lecturer, Bowling Green State University on 2/1/18

Though this textbook has a prescriptive nature, it is quite comprehensive. The author strikes a good balance between presenting concepts in a concise way and providing enough information to explain them. Many every-day examples and live links to... read more

Though this textbook has a prescriptive nature, it is quite comprehensive. The author strikes a good balance between presenting concepts in a concise way and providing enough information to explain them. Many every-day examples and live links to other resources add to the completeness of the textbook.

Content seems accurate.

Since the content is somewhat conceptual, the text will not become obsolete quickly. In addition, the author seems to be updating and editing content often hence the relevance to current developments is on target.

The text is very clear, written in clear and straight-to-the point language.

The organization of content is consistent throughout the entire text.

The textbook is organized by chapters, beginning with overview of the model used and followed by chapters for each concept within the model. Nicely done.

The flow is clear, logical and easy to follow.

Overall, images, links, and text are well organized. Some headlines were misaligned but still easy to follow.

No concerns for grammar.

No concerns for cultural irrelevance.

Reviewed by Darlene Weibye, Cosmetology Instructor, Minnesota State Community and Technical College on 2/1/18

The text is comprehensive and covers the information needed to develop a business plan. The book provides all the means necessary in business planning. read more

The text is comprehensive and covers the information needed to develop a business plan. The book provides all the means necessary in business planning.

The text was accurate, and error-free. I did not find the book to be biased.

The content is up-to-date. I am reviewing the book in 2017, the same year the book was published.

The content was very clear. A business plan sample included operation timelines, start up costs, and all relevant material in starting a business.

The book is very consistent and is well organized.

The book has a table of contents and is broken down into specific chapters. The chapters are not divided into sub topics. I do not feel it is necessary for sub topics because the chapters are brief and to the point.

There is a great flow from chapter to chapter. One topic clearly leads into the next without repeating.

The table of contents has direct links to each chapter. The appearance of the chapters are easy to read and the charts are very beneficial.

Does not appear to have any grammatical errors.

The text is not culturally insensitive or offensive.

I am incorporating some of the text into the salon business course. Very well written book.

Table of Contents

Introduction

• Chapter 1 – Developing a Business Plan
• Chapter 2 – Essential Initial Research
• Chapter 3 – Business Models
• Chapter 4 – Initial Business Plan Draft
• Chapter 5 – Making the Business Plan Realistic
• Chapter 6 – Making the Plan Appeal to Stakeholders and Desirable to the Entrepreneur
• Chapter 7 – Finishing the Business Plan
• Chapter 8 – Business Plan Pitches

References Appendix A – Business Plan Development Checklist and Project Planner Appendix B – Fashion Importers Inc. Business Plan Business Plan Excel Template

Ancillary Material

About the book.

This textbook and its accompanying spreadsheet templates were designed with and for students wanting a practical and easy-to-follow guide for developing a business plan. It follows a unique format that both explains what to do and demonstrates how to do it.

About the Contributors

Dr. Lee Swanson is an Associate Professor of Management and Marketing at the Edwards School of Business at the University of Saskatchewan. His research focuses on entrepreneurship, social entrepreneurship, Aboriginal entrepreneurship, community capacity-building through entrepreneurship, and institutional-stakeholder engagement. Dr. Swanson’s current research is funded through a Social Sciences Humanities Research Council grant and focuses on social and economic capacity building in Northern Saskatchewan and Northern Scandinavia. He is also actively studying Aboriginal community partnerships with resource based companies, entrepreneurship centres at universities, community-based entrepreneurship, and entrepreneurial attitudes and intentions. He teaches upper-year and MBA entrepreneurship classes and conducts seminars on business planning and business development.

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5.6 The Business Plan

Learning objective.

• Discuss the importance of planning for your business, and identify the key sections of a business plan.

If you want to start a business, you must prepare a business plan. This essential document should tell the story of your business concept, provide an overview of the industry in which you will operate, describe the goods or services you will provide, identify your customers and proposed marketing activities, explain the qualifications of your management team, and state your projected income and borrowing needs.

Purpose of a Business Plan

The business plan is a plan or blueprint for the company, and it’s an indispensable tool in attracting investors, obtaining loans, or both. Remember, too, that the value of your business plan isn’t limited to the planning stages of your business and the process of finding start-up money. Once you’ve acquired start-up capital, don’t just stuff your plan in a drawer. Treat it as an ongoing guide to your business and its operations, as well as a yardstick by which you can measure your performance. Keep it handy, update it periodically, and use it to assess your progress.

In developing and writing your business plan, you must make strategic decisions in the areas of management, operations, marketing, accounting, and finance—in short, in all the functional areas of business that we described in Chapter 1 “The Foundations of Business” . Granted, preparing a business plan takes a lot of time and work, but it’s well worth the effort. A business plan forces you to think critically about your proposed business and reduces your risk of failure. It forces you to analyze your business concept and the industry in which you’ll be operating, and it helps you determine how you can grab a percentage of sales in that industry.

The most common use of a business plan is persuading investors, lenders, or both, to provide financing. These two groups look for different things. Investors are particularly interested in the quality of your business concept and the ability of management to make your venture successful. Bankers and other lenders are primarily concerned with your company’s ability to generate cash to repay loans. To persuade investors and lenders to support your business, you need a professional, well-written business plan that paints a clear picture of your proposed business.

Sections of the Business Plan

Though formats can vary, a business plan generally includes the following sections: executive summary, description of proposed business, industry analysis, mission statement and core values, management plan, goods or services and (if applicable) production processes, marketing, global issues, and financial plan. Let’s explore each of these sections in more detail. ( Note : More detailed documents and an Excel template are available for those classes in which the optional business plan project is assigned.)

Executive Summary

The executive summary is a one- to three-page overview of the business plan. It’s actually the most important part of the business plan: it’s what the reader looks at first, and if it doesn’t capture the reader’s attention, it might be the only thing that he or she looks at. It should therefore emphasize the key points of the plan and get the reader excited about the prospects of the business.

Even though the executive summary is the first thing read, it’s written after the other sections of the plan are completed. An effective approach in writing the executive summary is to paraphrase key sentences from each section of the business plan. This process will ensure that the key information of each section is included in the executive summary.

Description of Proposed Business

Here, you present a brief description of the company and tell the reader why you’re starting your business, what benefits it provides, and why it will be successful. Some of the questions to answer in this section include the following:

• What will your proposed company do? Will it be a manufacturer, a retailer, or a service provider?
• What goods or services will it provide?
• Why are your goods or services unique?
• Who will be your main customers?
• How will your goods or services be sold?
• Where will your business be located?

Because later parts of the plan will provide more detailed discussions of many of these issues, this section should provide only an overview of these topics.

Industry Analysis

This section provides a brief introduction to the industry in which you propose to operate. It describes both the current situation and the future possibilities, and it addresses such questions as the following:

• How large is the industry? What are total sales for the industry, in volume and dollars?
• Is the industry mature or are new companies successfully entering it?
• What opportunities exist in the industry? What threats exist?
• What factors will influence future expansion or contraction of the industry?
• What is the overall outlook for the industry?
• Who are your major competitors in the industry?
• How does your product differ from those of your competitors?

Mission Statement and Core Values

This portion of the business plan states the company’s mission statement and core values . The mission statement describes the purpose or mission of your organization—its reason for existence. It tells the reader what the organization is committed to doing. For example, one mission statement reads, “The mission of Southwest Airlines is dedication to the highest quality of customer service delivered with a sense of warmth, friendliness, individual pride, and company spirit” (Southwest Airline’s, 2011).

Core values are fundamental beliefs about what’s important and what is (and isn’t) appropriate in conducting company activities. Core values are not about profits, but rather about ideals. They should help guide the behavior of individuals in the organization. Coca-Cola, for example, intends that its core values—leadership, passion, integrity, collaboration, diversity, quality, and accountability—will let employees know what behaviors are (and aren’t) acceptable (The Coca-Cola Company, 2011).

Management Plan

Management makes the key decisions for the business, such as its legal form and organizational structure. This section of the business plan should outline these decisions and provide information about the qualifications of the key management personnel.

A. Legal Form of Organization

This section dentifies the chosen legal form of business ownership: sole proprietorship (personal ownership), partnership (ownership shared with one or more partners), or corporation (ownership through shares of stock).

B. Qualifications of Management Team and Compensation Package

It isn’t enough merely to have a good business idea: you need a talented management team that can turn your concept into a profitable venture. This part of the management plan section provides information about the qualifications of each member of the management team. Its purpose is to convince the reader that the company will be run by experienced, well-qualified managers. It describes each individual’s education, experience, and expertise, as well as each person’s responsibilities. It also indicates the estimated annual salary to be paid to each member of the management team.

C. Organizational Structure

This section of the management plan describes the relationships among individuals within the company, listing the major responsibilities of each member of the management team.

Goods, Services, and the Production Process

To succeed in attracting investors and lenders, you must be able to describe your goods or services clearly (and enthusiastically). Here, you describe all the goods and services that you will provide the marketplace. This section explains why your proposed offerings are better than those of competitors and indicates what market needs will be met by your goods or services. In other words, it addresses a key question: What competitive advantage will the company’s goods and services have over similar products on the market?

This section also indicates how you plan to obtain or make your products. Naturally, the write-up will vary, depending on whether you’re proposing a service company, a retailer, or a manufacturer. If it’s a service company, describe the process by which you’ll deliver your services. If it’s a retail company, tell the reader where you’ll purchase products for resale.

If you’re going to be a manufacturer, you must furnish information on product design, development, and production processes. You must address questions such as the following:

• How will products be designed?
• What technology will be needed to design and manufacture products?
• Will the company run its own production facilities, or will its products be manufactured by someone else?
• Where will production facilities be located?
• What type of equipment will be used?
• What are the design and layout of the facilities?
• How many workers will be employed in the production process?
• How many units will be produced?
• How will the company ensure that products are of high quality?

This critical section focuses on four marketing-related areas—target market, pricing, distribution, and promotion:

• Target market . Describe future customers and profile them according to age, gender, income, interests, and so forth. If your company will sell to other companies, describe your typical business customer.
• Pricing . State the proposed price for each product. Compare your pricing strategy to that of competitors.
• Distribution . Explain how your goods or services will be distributed to customers. Indicate whether they’ll be sold directly to customers or through retail outlets.
• Promotion . Explain your promotion strategy, indicating what types of advertising you’ll be using.

In addition, if you intend to use the Internet to promote or sell your products, also provide answers to these questions:

• Will your company have a Web site? Who will visit the site?
• What will the site look like? What information will it supply?
• Will you sell products over the Internet?
• How will you attract customers to your site and entice them to buy from your company?

Global Issues

In this section, indicate whether you’ll be involved in international markets, by either buying or selling in other countries. If you’re going to operate across borders, identify the challenges that you’ll face in your global environment, and explain how you’ll meet them. If you don’t plan initially to be involved in international markets, state what strategies, if any, you’ll use to move into international markets when the time comes.

Financial Plan

In preparing the financial section of your business plan, specify the company’s cash needs and explain how you’ll be able to repay debt. This information is vital in obtaining financing. It reports the amount of cash needed by the company for start-up and initial operations and provides an overview of proposed funding sources. It presents financial projections, including expected sales, costs, and profits (or losses). It refers to a set of financial statements included in an appendix to the business plan.

Here, you furnish supplemental information that may be of interest to the reader. In addition to a set of financial statements, for example, you might attach the résumés of your management team.

Key Takeaways

• A business plan tells the story of your business concept, provides an overview of the industry in which you will operate, describes the goods or services you will provide, identifies your customers and proposed marketing activities, explains the qualifications of your management team, and states your projected income and borrowing needs.
• In your business plan, you make strategic decisions in the areas of management, operations, marketing, accounting, and finance. Developing your business plan forces you to analyze your business concept and the industry in which you’ll be operating. Its most common use is persuading investors and lenders to provide financing.

A business plan generally includes the following sections:

• Executive summary . One- to three-page overview.
• Description of proposed business . Brief description of the company that answers such questions as what your proposed company will do, what goods or services it will provide, and who its main customers will be.
• Industry analysis . Short introduction to the industry in which you propose to operate.
• Mission statement and core values . Declaration of your mission statement , which are fundamental beliefs about what’s important and what is (and isn’t) appropriate in conducting company activities.
• Management plan . Information about management team qualifications and responsibilities, and designation of your proposed legal form of organization.
• Goods, services, and the production process . Description of the goods and services that you’ll provide in the marketplace; explanation of how you plan to obtain or make your products or of the process by which you’ll deliver your services.
• Marketing . Description of your plans in four marketing-related areas: target market, pricing, distribution, and promotion.
• Global issues . Description of your involvement, if any, in international markets.
• Financial plan . Report on the cash you’ll need for start-up and initial operations, proposed funding sources, and means of repaying your debt.
• Appendices . Supplemental information that may be of interest to the reader.

(AACSB) Analysis

Let’s start with three givens: (1) college students love chocolate chip cookies, (2) you have a special talent for baking cookies, and (3) you’re always broke. Given these three conditions, you’ve come up with the idea of starting an on-campus business—selling chocolate chip cookies to fellow students. As a business major, you want to do things right by preparing a business plan. First, you identified a number of specifics about your proposed business. Now, you need to put these various pieces of information into the relevant section of your business plan. Using the business plan format described in this chapter, indicate the section of the business plan into which you’d put each of the following:

• You’ll bake the cookies in the kitchen of a friend’s apartment.
• You’ll charge $1 each or $10 a dozen.
• Your purpose is to make the best cookies on campus and deliver them fresh. You value integrity, consideration of others, and quality.
• Each cookie will have ten chocolate chips and will be superior to those sold in nearby bakeries and other stores.
• You expect sales of $6,000 for the first year.
• Chocolate chip cookies are irresistible to college students. There’s a lot of competition from local bakeries, but your cookies will be superior and popular with college students. You’ll make them close to campus using only fresh ingredients and sell them for $1 each. Your management team is excellent. You expect first-year sales of $6,000 and net income of $1,500. You estimate start-up costs at $600.
• You’ll place ads for your product in the college newspaper.
• You’ll hire a vice president at a salary of $100 a week.
• You can ship cookies anywhere in the United States and in Canada.
• You need $600 in cash to start the business.
• There are six bakeries within walking distance of the college.
• You’ll bake nothing but cookies and sell them to college students. You’ll make them in an apartment near campus and deliver them fresh.

The Coca-Cola Company, “Workplace Culture,” The Coca-Cola Company, http://www.thecoca-colacompany.com/citizenship/workplace_culture.html (accessed August 31, 2011).

Southwest Airline’s company Web site, about SWA section, http://www.southwest.com/about_swa/mission.html (accessed August 31, 2011).

Exploring Business Copyright © 2016 by University of Minnesota is licensed under a Creative Commons Attribution-NonCommercial-ShareAlike 4.0 International License , except where otherwise noted.

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Business Plan Section 5: Market Analysis

Find out the 9 components to include in the market analysis portion of your business plan, plus 6 sources for market analysis information.

This is the part of your business plan where you really get to shine and show off that awesome idea you have. Of course, your product or service is the best! Now, let’s talk about how you know it’s a hit. Be prepared to show you know your market AND that it’s big enough for you to build a sustainable, successful business .

In writing up your market analysis, you’ll get to demonstrate the knowledge you’ve gained about the industry, the target market you’re planning to sell to, your competition, and how you plan to make yourself stand out.

A market analysis is just that: a look at what the relevant business environment is and where you fit in. It should give a potential lender, investor, or employee no doubt that there is a solid niche for what you’re offering, and you are definitely the person to fill it. It’s both quantitative, spelling out sales projections and other pertinent figures, and qualitative, giving a thoughtful overview of how you fit in with the competition. It needs to look into the potential size of the market, the possible customers you’ll target, and what kind of difficulties you might face as you try to become successful. Let’s break down how to do that.

What Goes Into A Business Plan Market Analysis?

Industry description and outlook.

Describe the industry with enough background so that someone who isn’t familiar with it can understand what it’s like, what the challenges are, and what the outlook is. Talk about its size, how it’s growing, and what the outlook is for the future.

Target Market

Who have you identified as your ideal client or customer ? Include demographic information on the group you’re targeting, including age, gender and income level. This is the place to talk about the size of your potential market, how much it might spend, and how you’ll reach potential customers. For example, if women aged 18 to 54 are your target market, you need to know how many of them there are in your market. Are there 500 or 500,000? It’s imperative to know. Similarly, if your product or service is geared toward a high-end clientele, you need to make sure you’re located in an area that can support it.

Market Need

What factors influence the need for your product or service? Did the need exist before or are you trying to create it? Why will customers want to do business with you, possibly choosing you over someone else? This is where you can briefly introduce the competitive edge you have, although you’ll get into that in more depth in following sections. Focus on how the product or service you’re offering satisfies what’s needed in the market.

Market Growth

While no one can predict the future, it’s important to get a possible idea of what business may be like down the road and make sales projections. Have the number of people in your target market been increasing or decreasing over the last several years? By how much per year? To make an intelligent forecast, you have to start with current conditions, then project changes over the next three to five years.

Market Trends

You need to take a look at trends the same way you look at population and demographics. Is there a shift to more natural or organic ingredients that might impact your business? How might energy prices figure in? The easy availability of the internet and smartphone technology? The questions will be different for every type of business, but it’s important to think about the types of changes that could affect your specific market. In this section, you can cite experts from the research you’ve done-a market expert, market research firm, trade association, or credible journalist.

Market Research Testing

Talk about what kind of testing and information gathering you’ve done to figure out where you stand in the market. Who have you spoken to about the viability of your product? Why are you confident of its success? Again, if you can, cite experts to back up your information.

Competitive Analysis

There’s no way to succeed unless you’ve examined your competition. It might be helpful to try analyzing your position in the market by performing a SWOT analysis. You need to figure out their strengths and the weaknesses you can exploit as you work to build your own business. You do need to be brutally honest here, and also look at what the potential roadblocks are-anything that might potentially stand in your way as you try to meet your goals and grow your business.

Barriers to Entry

Lenders and investors need to have a reasonable assurance they’ll be paid back, so they’ll want to know what would stop someone else from swooping in, doing what you do, and grabbing half the available business. Do you have technical knowledge that’s difficult to get? A specialized product no one else can manufacture? A service that takes years to perfect? It’s possible your industry has strict regulations and licensing requirements. All of these help protect you from new competition, and they’re all selling points for you.

Regulations

As we touched on above, you should cover regulations as a barrier to entry. If your field is covered by regulations, you do need to talk about how they apply to your business and how you’ll comply with them.

Six Sources for Market Analysis Information

The Market Analysis section of your business plan is far more than a theoretical exercise. Doing an analysis of the market really gives YOU the information you need to figure out whether your plans are viable, and tweak them in the early stages before you go wrong.

So, where do you start? Research is the key here, and there are several sources available.

1. The Internet

Some of the first information you need is about population and demographics: who your potential customers are, how many there are, and where they live or work. The U.S. Census Bureau has an impressive amount of these statistics available. USA.gov’s small business site is another good source for links to the U.S. Departments of Labor and Commerce, among others.

2. Local Chamber of Commerce

A lot of local information can be gotten from the chamber of commerce in the area where you plan to operate. Often, they can provide details into what the general business climate is like, and get even more specific about how many and what type of businesses are operating in their jurisdiction.

3. Other Resources

When actual statistical information isn’t available, you’ll often be able to put together a good picture of the market from a variety of other sources. Real estate agents can be a source of information on demographics and population trends in an area. Catalogs and marketing materials from your competition are useful. Many industry associations have a great amount of relevant information to use in putting your analysis together. Trade publications and annual reports from public corporations in your industry also contain a wealth of relevant information.

4. Customer Mindset

Take yourself out of the equation as the owner and stand in your customer’s shoes when you look at the business. As a customer, what problems do you have that need to be solved? What would you like to be able to do better, faster, or cheaper that you can’t do now? How does the competition work to solve those issues? How could this business solve them better?

5. the Competition

If you have a clothing store, visit others in your area. If you’d like to open a pizzeria, try pies from surrounding restaurants. If you’re a salon owner, park across the street and see what the store traffic is like and how customers look when they come out. Check out websites for pricing and other marketing information. Follow their Facebook pages. If you can’t be a customer of the competition, ask your customers and suppliers about them. Always be aware of what’s going on in the market.

6. Traditional Market Research

While you can gather a lot of data online, your best information will come from potential customers themselves. Send out surveys, ask for input and feedback, and conduct focus groups. You can do this yourself or hire a market research firm to do it for you.

What to Do With All That Data

Now that you’ve gathered the statistics and information and you’ve done the math to know there’s a need and customer base for your product or service, you have to show it off to your best advantage. You can start the market analysis section with a simple summary that describes your target customers and explains why you have chosen this as your market. You can also summarize how you see the market growing, and highlight one or two projections for the future.

If your information is dense with numbers and statistics, someone who reads your business plan will probably find it easier to understand if you present it as a chart or graph. You can generate them fairly easily with tools built into Google docs and free infographic apps and software .

Don’t assume that your readers have an understanding of your market, but don’t belabor simple points, either. You want to include pertinent, important information, but you don’t want to drown the reader in facts. Be concise and compelling with the market analysis, and remember that a good graphic can cover a lot of text, and help you make your point. It’s great to say you project sales to increase by 250% over the next five years, but it makes an even bigger wow when you show it in a graphic.

Always relate the data back to your business. Statistics about the market don’t mean much unless you describe how and where you fit in. As you talk about the needs of your target market, remember to focus on how you are uniquely positioned to fill them.

Don’t hesitate to break down your target market into smaller segments, especially if each is likely to respond to a different message about your product or service. You may have one market that consists of homes and another of small businesses. Perhaps you sell to both wholesale and retail customers. Talk about this in the market analysis, and describe briefly how you’ll approach each. (You will have more of an opportunity to do this in detail later in the plan.) Segmentation can help you target specific messages to specific areas, focusing in on the existing needs and how you fill them.

Remember to tailor your information to the purpose at hand. If your business plan is for internal use, you may not have to go into as much detail about the market since you and your team may already know it well. Remember, however, that the very act of doing the research may help you learn things you didn’t know, so don’t skimp on doing the work. This is a great opportunity to get information from outside that might affect your business.

It’s not about your ability to do professional-level market research; a plan intended for a bank or other lender needs to show your understanding of where your business fits into the grand scheme of things. Yes, you need to detail the information, but your main goal is to show how you’ve incorporated that knowledge into making solid decisions about the direction of your company. Use this section of your business plan to explain your understanding of your industry, your market and your individual business so that lenders and investors feel comfortable with your possibility for success.

NEXT ARTICLE > BUSINESS PLAN SECTION 6: SALES AND MARKETING

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• BusinessWeek Case Studies Reading Guide Activity
• Issues in Enterpreneurship Research Activity
• Standard and Poor's Money Talk Financial Literacy Activity
• Success Stories Writing Activity
• Technology Today Vocabulary Practice Activity

Textbook Resources

• Business Plan Project Template
• Sample Business Plans
• Links to Business Plan Resources
• Study-To-Go

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Chapter Activities

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• Software Application Activity

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A National Training and Certification Program for Transit Vehicle Maintenance Instructors (2015)

Chapter: chapter 5 - business plan.

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66 Business Plan Overview In order to implement the certification on a nationwide basis, a clear structure must be developed, and an organization must be identified with a capacity to develop, implement and maintain the structure. This business plan assumes there will be two main players involved in implementing the program. First, there will be a national steering committee responsible for issuing an RFP and contracting with an administrator, ensuring overall quality of implementation, and being responsible to the industry. This organization may be a successor to the Project F-19 panel, a newly established nonprofit, a subcommittee of APTA, or an informal committee of industry leaders. This steering organization will in turn select an AO. The AO, through a creden- tialing management system, will provide a consistent and timely confirmation of a participant’s progress through the competency model, and issue the certifications. The AO will also, either directly or through subcontractors, develop an infrastructure to directly deliver the training needed for the competency model, as well as overseeing the approval and acceptance of alternative courses. Structural Elements of AO The Project Team envisions that the AO could be an existing organization with the appropriate capacity and experience, or a newly formed nonprofit created for the purpose of implementing the program. It seems likely though, that a brand new organization whose sole purpose would be running the ICP would have more significant fixed costs than an existing organization with experience running similar or complementary programs. The organization should meet the requirements and be answerable to a standing committee of industry representatives to ensure that all expectations for the program are met. As part of the program launch, a number of critical qualifications for the AO should be sought in the RFP. The selected organization should possess these characteristics, listed in rough order of priority: • Ability to manage a program of national scope: The organization will need to communicate the value of the program to the industry as a whole and be able to administer the program without bias to any geographic region. • Experience working with transit industry: The organization should have the ability to work with multiple transit stakeholders and understand the challenges and limitations transit organizations face. • Documented instructional design expertise and material development capacity: The organi- zation will need to finalize the design of the competency model and develop all material to implement the curriculum in the identified delivery methods. C H A P T E R 5 Business Plan

Business Plan 67 • Training delivery experience, especially to instructors: The organization will need to deliver directly or subcontract with experienced trainers. It will be advantageous to have experienced training professionals and transit personnel. • Certification program administration experience and program design and administration staff: The organization will need to show a plan to use a robust credentialing management system that can seamlessly track a participant’s progress and communicate progress to participants and employing agencies. • IT infrastructure (Training and certification information management system): Experience with an adequate credentialing management system and the IT capacity to implement the program will be critical. • Sound legal system to protect against liabilities. • ADA requirements. • Program maintenance: The organization will need to have a plan to regularly review the program, update core competencies, and revise the program as necessary to meet the ongoing needs of the industry. Potential Organizations for Program Development and Delivery In Task 1 of the project, SME survey respondents provided a list of organizations that may have the potential to develop and deliver all or some components of the national training and certification program. The suggested organizations included: • Colleges, universities and technical schools (13): Many respondents consider any educational institution that prepares teachers in teaching methods for adult learners as potentially capable of carrying out the program. A dozen examples were given by the respondents, mostly local colleges and universities in their areas. • For profit and not-for-profit training, research and technical assistance organizations (8): Many of these organizations have provided training and/or certification programs to transit maintenance personnel or trainers. • Industry associations (2): Industry associations have increasingly taken on workforce develop- ment as a priority of their services to members. In the Project F-19 survey, respondents mentioned one national and one state public transportation association as examples. • Large transit agencies (2): Large training departments can have well-developed programs to prepare skilled technical workers to become equally skilled instructors. These training environments stress strong preparation for classroom time, solid documentation on what is taught and hands-on and interactive learning. Survey participants included two examples of large transit agencies as potential providers. The full details of these programs are included in the Task 2, Best Practices Report found in Chapter 3. • OEMs (4): Despite their role in transit technical training, only one respondent listed transit OEMs as potential organizations for delivering instructor training. The organizations with potential in developing and delivering instructor training and/or certification as identified through the SME survey are listed in Appendix B, along with their locations and respondent comments. An original task assignment called for the Project Team to assess the capabilities of these organizations. However, the oversight panel thought it best to leave that work for the future competitive RFP process and instead steered the Project Team toward identifying the qualification requirements needed for a national AO, and identifying existing training programs and courses that could be considered as equal alternatives to core program offerings. The list of potential organizations provides a reference point to the future AO selection process.

68 A National Training and Certification Program for Transit Vehicle Maintenance Instructors Core Competency Course Delivery A major factor in determining costs for development, delivery, and administration of the program depends on the method of course delivery selected. There are three possible options for managing the delivery of each course described in the core competency model. First, existing courses from outside providers could be accepted as equivalent for meeting all competency requirements of the model. For each core competency course, the AO will confirm that a course submitted meets the requirements, and review the reflection paper and/or course capstone requirements against an objective model. The process for evaluating these courses is described later. Alternatively, the AO or a single subcontractor could directly offer courses specifically designed to meet these competencies and delivered directly to transit instructors. Further, each of those courses could be delivered either through a traditional classroom setting or an e-learning/ video conferencing platform. There are a number of advantages and disadvantages to pursuing the different approaches as shown in Table 5.1. It seems that, with the exception of the course for mentor core competencies, there will not usually be enough participation in the program to make centralized in-person delivery of the courses viable. It would require travel for multiple days to a central location, or an instructor traveling to different regions, but in that case achieving a sufficient class size will be very difficult. In turn, with a very small class size, per student and per course cost will need to be higher, and that will further suppress participation. However, the AO may be able to identify some courses that could be offered on a limited basis in person, perhaps by tying it to another event that will draw instructors and transit professionals nationwide, such as the NTI Transit Trainers’ workshop or various APTA conferences. The e-learning and video conferencing option will almost certainly require a significant up-front development investment, but would offer flexible scheduling of courses at a reasonable cost to the AO and a reasonable charge to those pursuing certification. (Note: There may also be some existing e-learning courses that some potential AO, or subcontractors to the AO, may have that may meet some or all of the program requirements. Identifying if these exist and how to make them viable for use in the certification program will be an important part of determining development Advantages Disadvantages Outside Equivalent Courses The courses already exist and are dispersed geographically Interaction with instructors from other industries Courses not limited to transit instructor population means they can be offered more regularly Inconsistent experiences and emphases May require more time and commitment than necessary (i.e., enrollment in full grad program) Directly Delivered Courses – In-Person Consistent delivery of content that can be continually evaluated In-person interaction of transit instructors sharing best practices Need funding for development of single approved curriculum and courseware Travel costs for instructor and/or students Limited scheduling ability; would need to cancel course if enrollment not sufficient Directly Delivered Courses – E-Learning / Video Conferencing Consistent delivery of content that can be continually evaluated Interaction of transit instructors sharing best practices More flexible scheduling Substantial development cost for platform and e-learning material Inconsistent equipment on user end to participate in the classes Table 5.1. Advantages and disadvantages of course delivery approaches.

Business Plan 69 costs accurately.) Using a centrally developed e-learning and video conferencing curriculum also ensures that all participants receive the same information and level of quality and will provide opportunities for participants to learn from each other in a collaborative environment. However, it also seems important to offer the flexibility for students to submit equivalent outside courses to demonstrate the competencies. The conclusion is that the advantages and disadvantages for delivering the course on different platforms, or accepting existing courses as equivalent, will be slightly different for each course that is part of the program plan. There is no distinct advantage to forcing all courses into one mode of delivery, and the AO will need to explore the best available options for each course. The business plan therefore assumes a mix of delivery methods will be used. The operating cost and revenue projections included later assume an offering of e-learning classes will be available for all courses except mentoring, and that mentoring will be delivered in person. The projections also assume that at least one equivalent existing course will be identified for each part of the program plan, and that these outside courses will be chosen by 50 percent of the participants. Initial Development Costs Developing a full suite of e-learning and video conferencing materials for delivering the core competency model will require a significant investment. A common rule of thumb is that for each hour of instruction, 10–25 hours of professional instructional design time is necessary. With the necessity of extensive interactive material, it is reasonable to think these costs would be on the high end of that estimate. This would give an estimated development cost of: 92 hours instructional time 20 hours of development per hours of instruction $100 hr fully loaded cost of professional instructional design $184,000 × × = As shown later in the operating cost and revenue projections, even at a high rate of participation among transit maintenance instructors, the projected revenue surplus is not enough to attract an organization to front the money for initial development at this level. It seems very likely that some initial source of the money needs to be found through a consortium of transit agencies, newly established nonprofit, or potential grants. A similar situation was faced with the launch of the Transit Bus Mechanic testing program, where ASE received funding to develop the initial tests in exchange for an agreement to offer and administer the tests for a minimum of five years regardless of participation levels. As mentioned earlier, there may be some courses for which some of this development has already been completed, but it is likely there will still be significant investment needed. Another possibility to be explored is if the participation levels could be significantly expanded by changing the focus of the credential from maintenance instructors only to all transit instructors. This possibility was mentioned during the Project Team’s presentation and discussion at NTI’s Transit Trainers’ Workshop. The operating side of transit receives a lot of attention, and it was suggested that including operating trainers would garner more organizational support of the program. While some changes in the core competency model would be needed, it would in large part apply to all instructors as is. Unfortunately, the research done on participation levels to this point focused solely on maintenance instructors, and it is unclear how much larger the full instructor population is and if the NTI participants correctly estimated the interest level. If this is explored further it may be the case that a significantly higher participation level could provide enough surplus revenue to amortize the significant up-front development costs. How- ever, because of the uncertainty, the analysis that follows assumes a program focused only on the maintenance instructor population.

70 A National Training and Certification Program for Transit Vehicle Maintenance Instructors Participation Projections and Operating Cost Analysis For the transit trainer certification program to be sustainable, several critical items must be present: • Sufficient participation levels from transit trainers and agencies initially and over time. • Revenues from participants fully cover the long term costs of the organization(s) implementing the program. • Charges for certification are set to levels that are reasonable for agencies, and provide a clear ROI. Participation Estimates To determine the projected participation over time, the Project Team looked at three different populations identified in Task 1: current transit agency instructors (~600), projected annual new instructors (~40), and current mentors (~3,700). For incumbent instructors, the Project Team assumes that participation levels will be lower than participation levels for new instructors after the certification program is launched. This is due to a number of incumbent instructors being in the middle or latter part of their careers, and the likelihood that transit agencies may “grandfather” or otherwise not incentivize participation of current employees in the program in the same way as new employees. Based on these under- standings, the Project Team projected that over the first five years of the program, 20–40 percent of the instructor population would participate, but that 40–80 percent of each year’s new crop of instructors would begin the program. Mentors may benefit from portions of the certification program. The development of strong mentoring practices may help identify talent for future full-time instructors, improve the overall culture of training, and be key to the sustainability of the certification program. The Project Team estimated a steady population of 3,700 instructors, and that 6–10 percent will participate in some portion of the program each year. These assumptions provide the following projections over 10 years as shown in Table 5.2. Assumptions Applied to Revenue/Cost Projections It should be noted that Year 1 draws only from incumbent trainers; “new trainers” begin with Year 2. Also, after Year 5 the Project Team assumes that all of the present populations of trainers Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 Year 9 Year 10 Instructor Participants High Projection 48 80 80 80 80 32 32 32 32 32 Medium Projection 36 60 60 60 60 24 24 24 24 24 Low Projection 24 40 40 40 40 16 16 16 16 16 Mentor Participants High Projection 370 370 370 370 370 370 370 370 370 370 Medium Projection 296 296 296 296 296 296 296 296 296 296 Low Projection 222 222 222 222 222 222 222 222 222 222 Table 5.2. Ten-year participant projections.

Business Plan 71 who will participate have participated and so there is a drop off at that point. However, the fixed costs will also be front loaded in the early years, so a smaller participation level is necessary for sustainability after the initial costs are covered. Although the courses are not assigned to a strict time frame in the competency model, for the purposes of projecting revenue the Project Team has assumed that students, on average, will move through the program over the course of three years. The Project Team has also assumed some attrition through the program. It is projected that 10 percent of those who begin will not proceed to the second year of courses and an additional 20 percent will not proceed to the third year. The team projected that of the 10 courses identified, participants will submit the equivalent course documentation for four of them and take the remainder directly administered through the program. Whether these participation levels are sufficient to sustain the program will depend on the costs charged and the variable and fixed costs to the implementing organization. The plan to achieve the necessary participation will be discussed later. Annual Operating Costs (Fixed and Variable) As noted earlier, depending on the structure chosen for delivering classes, there may be substantial up-front development costs for e-learning and other courseware development, and platforms for delivering courses remotely via video conferencing. This analysis focuses on ongoing fixed and variable operating costs. It will almost certainly be necessary for separate funding from agencies, other organizations, or the steering organization to be identified to cover the pre-program launch costs. Each year, there will be relatively fixed costs for a website, marketing of the program to agen- cies, the credentialing management system license and administration, and ongoing updates of the competency model. An initial analysis estimates that these costs will be in the range of $35,000–50,000 per year. A detailed projection is provided in Table 5.3. Other costs will be variable based on the number of participants and the attrition and progress of participants through the program. The main types of costs are per course offering for courses offered directly through the AO, and the review of equivalent courses, evaluation of portfolios and other deliverables to confirm that competencies have been achieved, and the evaluation of the final capstone project. The cost projection is $1,000 per offering of an 8-hour course via video conferencing, or $1,500 for courses offered in person. The primary driver of these costs is direct instructor time; other costs such as curriculum development and updating are included elsewhere. The number of offerings of the course needed was calculated by the projected participation, assuming a goal of eight enrollees per course offering, and assuming that half of participants would take the course directly through the certification program and half would submit an equivalent outside course. Review of portfolios and reflection papers is projected at $25 per course and $100 for the capstone project. Revenues To cover the administration costs, several fees would be charged to participants during the certification program: • Initial registration fee (proposed at $100). • Review of course documentation and portfolios for four Training Delivery courses: $200. • Review of course documentation and portfolios for four Instructional Design courses: $200.

72 A National Training and Certification Program for Transit Vehicle Maintenance Instructors Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 Year 9 Year 10 Projected Parcipaon Parcipang Trainers (from Year 1 populaon) 48 48 48 48 48 0 0 0 0 0 Parcipang Trainers (from New Hires each year) 0 32 32 32 32 32 32 32 32 32 Parcipang Mentors 370 370 370 370 370 370 370 370 370 370 Fees/Income (Constant $ in Thousands) Cerficaon System Registraon (Charged at beginning to parcipang instructors) $100 4.8 8.0 8.0 8.0 8.0 3.2 3.2 3.2 3.2 3.2 Training Delivery Courses Mentoring Course (In Person) $250 92.5 92.5 92.5 92.5 92.5 92.5 92.5 92.5 92.5 92.5 Oral and Wrien Communicaon $250 7.2 12.0 12.0 12.0 12.0 4.8 4.8 4.8 4.8 4.8 Adult Learning $250 7.2 12.0 12.0 12.0 12.0 4.8 4.8 4.8 4.8 4.8 Delivering Instrucon $250 7.2 12.0 12.0 12.0 12.0 4.8 4.8 4.8 4.8 4.8 Instruconal Design Courses Assessment and Process Analysis $250 0.0 6.5 10.8 10.8 10.8 10.8 4.3 4.3 4.3 4.3 Instruconal Technology $250 0.0 6.5 10.8 10.8 10.8 10.8 4.3 4.3 4.3 4.3 Lesson Plan Design $250 0.0 6.5 10.8 10.8 10.8 10.8 4.3 4.3 4.3 4.3 Instruconal Material Development $250 0.0 6.5 10.8 10.8 10.8 10.8 4.3 4.3 4.3 4.3 Program Design Courses Standards Based Training $250 0.0 0.0 5.0 8.4 8.4 8.4 8.4 3.4 3.4 3.4 Program Evalua on and Management $250 0.0 0.0 5.0 8.4 8.4 8.4 8.4 3.4 3.4 3.4 Curriculum Development $250 0.0 0.0 5.0 8.4 8.4 8.4 8.4 3.4 3.4 3.4 Review of Course Documenta on and Porolios (Training Delivery Level) $200 9.6 16.0 16.0 16.0 16.0 6.4 6.4 6.4 6.4 6.4 Review of Course Documenta on and Porolios (Instruc onal Design Level) $200 0.0 8.6 14.4 14.4 14.4 14.4 5.8 5.8 5.8 5.8 Review of Course Documenta on and Porolios (Program Design Level) $150 0.0 0.0 5.0 8.4 8.4 8.4 8.4 3.4 3.4 3.4 Review of Final Capstone Project $150 0.0 0.0 5.0 8.4 8.4 8.4 8.4 3.4 3.4 3.4 Total Fees/Income 123.7 179.1 227.3 244.1 244.1 212.9 178.3 153.1 153.1 153.1 Table 5.3. Operating revenue vs. cost analysis of transit trainer and mentor certification program— high participation estimate.

Business Plan 73 Costs (Constant $ in Thousands) Note: These are recurring operang costs, both fixed and variable. There are other one me startup costs that will have to be invested and recovered over me or covered through other possible sources. Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 Year 9 Year 10 Fixed Costs (Overall) Updates for Task Analysis, Competency Model and Program Review (ongoing and major update every 5 yrs, incl. SME travel) 10.0 10.0 10.0 10.0 10.0 10.0 10.0 10.0 10.0 10.0 Marke ng to Agencies / ROI Analysis 10.0 10.0 2.5 2.5 2.5 2.5 2.5 2.5 2.5 2.5 Public Website Maintenance 5.0 5.0 5.0 5.0 5.0 5.0 5.0 5.0 5.0 5.0 Legal Costs (incl. insurance) 7.5 7.5 7.5 7.5 7.5 7.5 7.5 7.5 7.5 7.5 Creden al Management System License and Admin 15.0 15.0 15.0 15.0 15.0 15.0 15.0 15.0 15.0 15.0 Total Fixed Costs 47.5 47.5 40.0 40.0 40.0 40.0 40.0 40.0 40.0 40.0 Variable Costs Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 Year 9 Year 10 Training Delivery Courses Mentoring Course (In-Person) $1,500 46.5 51.0 51.0 51.0 51.0 51.0 51.0 51.0 51.0 51.0 Oral and Wrien Communicaon $1,000 6.0 10.0 10.0 10.0 10.0 4.0 4.0 4.0 4.0 4.0 Adult Learning $1,000 6.0 10.0 10.0 10.0 10.0 4.0 4.0 4.0 4.0 4.0 Delivering Instrucon $1,000 6.0 10.0 10.0 10.0 10.0 4.0 4.0 4.0 4.0 4.0 Instruconal Design Courses Assessment and Process Analysis $1,000 0.0 6.0 9.0 9.0 9.0 9.0 4.0 4.0 4.0 4.0 Instruconal Technology $1,000 0.0 6.0 9.0 9.0 9.0 9.0 4.0 4.0 4.0 4.0 Lesson Plan Design $1,000 0.0 6.0 9.0 9.0 9.0 9.0 4.0 4.0 4.0 4.0 Instruconal Material Development $1,000 0.0 6.0 9.0 9.0 9.0 9.0 4.0 4.0 4.0 4.0 Program Design Courses Standards-Based Training $1,000 0.0 0.0 5.0 7.0 7.0 7.0 7.0 3.0 3.0 3.0 Program Evaluaon and Management $1,000 0.0 0.0 5.0 7.0 7.0 7.0 7.0 3.0 3.0 3.0 Curriculum Development $1,000 0.0 0.0 5.0 7.0 7.0 7.0 7.0 3.0 3.0 3.0 Review of Course Documentaon and Por­olios (Training Delivery Level) ($25/person/course) $25 4.8 8.0 8.0 8.0 8.0 3.2 3.2 3.2 3.2 3.2 Review of Course Documentaon and Por­olios (Instruconal Design Level) ($25/person/course) $25 0.0 4.3 7.2 7.2 7.2 7.2 2.9 2.9 2.9 2.9 Review of Course Documentaon and Por­olios (Program Design Level) ($25/person/course) $25 0.0 0.0 2.5 4.2 4.2 4.2 4.2 1.7 1.7 1.7 Review of Capstone Projects $100 0.0 0.0 3.4 5.6 5.6 5.6 5.6 2.2 2.2 2.2 Total Variable Costs 69.3 117.3 153.1 163.0 163.0 140.2 115.9 98.0 98.0 98.0 Total Costs 116.8 164.8 193.1 203.0 203.0 180.2 155.9 138.0 138.0 138.0 Annual Cost Excess/Shortage 6.9 14.2 34.2 41.1 41.1 32.7 22.5 15.1 15.1 15.1 Cumulave Reserve/Loss 6.9 21.1 55.4 96.5 137.6 170.3 192.7 207.9 223.0 238.1 Table 5.3. (Continued).

74 A National Training and Certification Program for Transit Vehicle Maintenance Instructors • Review of course documentation and portfolios for three Program Design courses: $200. • Review of final capstone project and issuing certification: $150. Total cost to agency or trainer for certification: $850. There will also be costs for taking the courses themselves. If a participant is taking an approved equivalent course from an outside provider, the charges will be paid directly to that provider. It is projected that a fee of $250 per course for those taking courses directly through the certification managing organization. 10-Year Operating Profit/Loss Projections Tables 5.3 to 5.6 show one year cost and revenue projections based on different assumptions. Table 5.3 assumes participation for mentors and instructors will follow the “High” level projection model. Under this level of participation and using the fees indicated. Under this model, there is a projected operating profit starting with Year 1 and an ongoing projected profit of $15,000 per year from Year 8 forward. Table 5.4 assumes participation follows the “Low” model. In this case there is an operating loss almost every year, and the program would not be sustainable without significant fee increases. However, those fee increases might further decrease participation, leading to a spiral downward. Participation must certainly come in above the low projections for the program to work, and a strong marketing program and understanding of the ROI among the agencies will be critically necessary to achieve the required participation. Table 5.5 takes the “Medium” level of participation and projects the necessary fees to break even. In this case only a slight increase to the charge for the mentor course (to $260) would provide fiscal stability, as the excess from the mentor course can subsidize the overall program. Finally, Table 5.6 projects the necessary participation level given the initial projected fees. The key takeaway here is that the sustainability of the program decreases with higher instructor participation unless the mentor participation increases by a similar amount. In the long term, participation of 32 instructors per year and 270 mentors per year would provide a small annual operating surplus. All of the numbers in these projections are very preliminary and have a wide margin of error. As even the most optimistic projections do not show a substantial operating margin, the implementation of the program in an efficient manner by a well-qualified flexible organization will be critical for success. A focus of upcoming meetings with SMEs will be to determine the reasonableness of these assumptions and what steps will be necessary to ensure the required participation levels. A significant part of the evaluation of the RFP responses should be the organization’s plan to achieve the necessary participation levels for sustainability. Summary of Projections The projected operating surpluses or losses (not including up-front development costs before Year 1) are shown in Table 5.7. These figures assume that all courses except mentor training are offered in an online, video conferencing format, that one half of courses are taken directly through the program, while the others are taken through equivalent outside courses, and that there are eight participants per course offering. All participants, regardless of where courses are taken, would be required to pay the full registration fee.

Business Plan 75 Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 Year 9 Year 10 Projected Parcipaon Parcipang Trainers (from Year 1 populaon) 24 24 24 24 24 0 0 0 0 0 Parcipang Trainers (from New Hires each year) 0 16 16 16 16 16 16 16 16 16 Parcipang Mentors 222 222 222 222 222 222 222 222 222 222 Fees/Income (Constant $ in Thousands) Cerficaon System Registraon (Charged at beginning to parcipang instructors) $100 2.4 4.0 4.0 4.0 4.0 1.6 1.6 1.6 1.6 1.6 Training Delivery Courses Mentoring Course (In Person) $250 55.5 55.5 55.5 55.5 55.5 55.5 55.5 55.5 55.5 55.5 Oral and Wrien Communicaon $250 3.6 6.0 6.0 6.0 6.0 2.4 2.4 2.4 2.4 2.4 Adult Learning $250 3.6 6.0 6.0 6.0 6.0 2.4 2.4 2.4 2.4 2.4 Delivering Instrucon $250 3.6 6.0 6.0 6.0 6.0 2.4 2.4 2.4 2.4 2.4 Instruconal Design Courses Assessment and Process Analysis $250 0.0 3.2 5.4 5.4 5.4 5.4 2.2 2.2 2.2 2.2 Instruconal Technology $250 0.0 3.2 5.4 5.4 5.4 5.4 2.2 2.2 2.2 2.2 Lesson Plan Design $250 0.0 3.2 5.4 5.4 5.4 5.4 2.2 2.2 2.2 2.2 Instruconal Material Development $250 0.0 3.2 5.4 5.4 5.4 5.4 2.2 2.2 2.2 2.2 Program Design Courses Standards Based Training $250 0.0 0.0 2.5 4.2 4.2 4.2 4.2 1.7 1.7 1.7 Program Evaluaon and Management $250 0.0 0.0 2.5 4.2 4.2 4.2 4.2 1.7 1.7 1.7 Curriculum Development $250 0.0 0.0 2.5 4.2 4.2 4.2 4.2 1.7 1.7 1.7 Review of Course Documentaon and Porolios (Training Delivery Level) $200 4.8 8.0 8.0 8.0 8.0 3.2 3.2 3.2 3.2 3.2 Review of Course Documentaon and Porolios (Instruconal Design Level) $200 0.0 4.3 7.2 7.2 7.2 7.2 2.9 2.9 2.9 2.9 Review of Course Documentaon and Porolios (Program Design Level) $150 0.0 0.0 2.5 4.2 4.2 4.2 4.2 1.7 1.7 1.7 Review of Final Capstone Project $150 0.0 0.0 2.5 4.2 4.2 4.2 4.2 1.7 1.7 1.7 Total Fees/Income 71.1 98.8 122.9 131.3 131.3 115.7 98.4 85.8 85.8 85.8 Table 5.4. Operating revenue vs. cost analysis of transit trainer and mentor certification program— low participation estimate. (continued on next page)

76 A National Training and Certification Program for Transit Vehicle Maintenance Instructors Costs (Constant $ in Thousands) Note: These are recurring operang costs, both fixed and variable. There are other one me startup costs that will have to be invested and recovered over me or covered through other possible sources. Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 Year 9 Year 10 Fixed Costs (Overall) Updates for Task Analysis, Competency Model and Program Review (ongoing and major update every 5 yrs, incl. SME travel) 10.0 10.0 10.0 10.0 10.0 10.0 10.0 10.0 10.0 10.0 Markeng to Agencies / ROI Analysis 10.0 10.0 2.5 2.5 2.5 2.5 2.5 2.5 2.5 2.5 Public Website Maintenance 5.0 5.0 5.0 5.0 5.0 5.0 5.0 5.0 5.0 5.0 Legal Costs (incl. insurance) 7.5 7.5 7.5 7.5 7.5 7.5 7.5 7.5 7.5 7.5 Credenal Management System License and Admin 15.0 15.0 15.0 15.0 15.0 15.0 15.0 15.0 15.0 15.0 Total Fixed Costs 47.5 47.5 40.0 40.0 40.0 40.0 40.0 40.0 40.0 40.0 Variable Costs Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 Year 9 Year 10 Training Delivery Courses Mentoring Course (In Person) $1,500 28.5 30.0 30.0 30.0 30.0 30.0 30.0 30.0 30.0 30.0 Oral and Wrien Communicaon $1,000 3.0 5.0 5.0 5.0 5.0 2.0 2.0 2.0 2.0 2.0 Adult Learning $1,000 3.0 5.0 5.0 5.0 5.0 2.0 2.0 2.0 2.0 2.0 Delivering Instrucon $1,000 3.0 5.0 5.0 5.0 5.0 2.0 2.0 2.0 2.0 2.0 Instruconal Design Courses Assessment and Process Analysis $1,000 0.0 3.0 5.0 5.0 5.0 5.0 2.0 2.0 2.0 2.0 Instruconal Technology $1,000 0.0 3.0 5.0 5.0 5.0 5.0 2.0 2.0 2.0 2.0 Lesson Plan Design $1,000 0.0 3.0 5.0 5.0 5.0 5.0 2.0 2.0 2.0 2.0 Instruconal Material Development $1,000 0.0 3.0 5.0 5.0 5.0 5.0 2.0 2.0 2.0 2.0 Program Design Courses Standards Based Training $1,000 0.0 0.0 3.0 4.0 4.0 4.0 4.0 2.0 2.0 2.0 Program Evaluaon and Management $1,000 0.0 0.0 3.0 4.0 4.0 4.0 4.0 2.0 2.0 2.0 Curriculum Development $1,000 0.0 0.0 3.0 4.0 4.0 4.0 4.0 2.0 2.0 2.0 Review of Course Documentaon and Por€olios (Training Delivery Level) ($25/person/course) $25 2.4 4.0 4.0 4.0 4.0 1.6 1.6 1.6 1.6 1.6 Review of Course Documentaon and Por€olios (Instruconal Design Level) ($25/person/course) $25 0.0 2.2 3.6 3.6 3.6 3.6 1.4 1.4 1.4 1.4 Review of Course Documentaon and Por€olios (Program Design Level) ($25/person/course) $25 0.0 0.0 1.3 2.1 2.1 2.1 2.1 0.8 0.8 0.8 Review of Capstone Projects $100 0.0 0.0 1.7 2.8 2.8 2.8 2.8 1.1 1.1 1.1 Total Variable Costs 39.9 63.2 84.5 89.5 89.5 78.1 63.9 55.0 55.0 55.0 Total Costs 87.4 110.7 124.5 129.5 129.5 118.1 103.9 95.0 95.0 95.0 Annual Cost Excess/Shortage 16.3 11.9 1.6 1.8 1.8 2.4 5.5 9.2 9.2 9.2 Cumulave Reserve/Loss 16.3 28.2 29.8 28.0 26.2 28.6 34.1 43.3 52.5 61.7 Table 5.4. (Continued).

Business Plan 77 Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 Year 9 Year 10 Projected Parcipaon Parcipang Trainers (from Year 1 populaon) 36 36 36 36 36 0 0 0 0 0 Parcipang Trainers (from New Hires each year) 0 24 24 24 24 24 24 24 24 24 Parcipang Mentors 296 296 296 296 296 296 296 296 296 296 Fees/Income (Constant $ in Thousands) Cerficaon System Registraon (Charged at beginning to parcipang instructors) $100 3.6 6.0 6.0 6.0 6.0 2.4 2.4 2.4 2.4 2.4 Training Delivery Courses Mentoring Course (In Person) $260 77.0 77.0 77.0 77.0 77.0 77.0 77.0 77.0 77.0 77.0 Oral and Wrien Communicaon $250 5.4 9.0 9.0 9.0 9.0 3.6 3.6 3.6 3.6 3.6 Adult Learning $250 5.4 9.0 9.0 9.0 9.0 3.6 3.6 3.6 3.6 3.6 Delivering Instrucon $250 5.4 9.0 9.0 9.0 9.0 3.6 3.6 3.6 3.6 3.6 Instruconal Design Courses Assessment and Process Analysis $250 0.0 4.9 8.1 8.1 8.1 8.1 3.2 3.2 3.2 3.2 Instruconal Technology $250 0.0 4.9 8.1 8.1 8.1 8.1 3.2 3.2 3.2 3.2 Lesson Plan Design $250 0.0 4.9 8.1 8.1 8.1 8.1 3.2 3.2 3.2 3.2 Instruconal Material Development $250 0.0 4.9 8.1 8.1 8.1 8.1 3.2 3.2 3.2 3.2 Program Design Courses Standards Based Training $250 0.0 0.0 3.8 6.3 6.3 6.3 6.3 2.5 2.5 2.5 Program Evaluaon and Management $250 0.0 0.0 3.8 6.3 6.3 6.3 6.3 2.5 2.5 2.5 Curriculum Development $250 0.0 0.0 3.8 6.3 6.3 6.3 6.3 2.5 2.5 2.5 Review of Course Documentaon and Porolios (Training Delivery Level) $200 7.2 12.0 12.0 12.0 12.0 4.8 4.8 4.8 4.8 4.8 Review of Course Documentaon and Porolios (Instruconal Design Level) $200 0.0 6.5 10.8 10.8 10.8 10.8 4.3 4.3 4.3 4.3 Review of Course Documentaon and Porolios (Program Design Level) $150 0.0 0.0 3.8 6.3 6.3 6.3 6.3 2.5 2.5 2.5 Review of Final Capstone Project $150 0.0 0.0 3.8 6.3 6.3 6.3 6.3 2.5 2.5 2.5 Total Fees/Income 100.4 141.9 178.1 190.7 190.7 167.3 141.3 122.4 122.4 122.4 Table 5.5. Operating revenue vs. cost analysis of transit trainer and mentor certification program— medium participation estimate/adjusted pricing. (continued on next page)

78 A National Training and Certification Program for Transit Vehicle Maintenance Instructors Table 5.5. (Continued). Costs (Constant $ in Thousands) Note: These are recurring operang costs, both fixed and variable. There are other one me startup costs that will have to be invested and recovered over me or covered through other possible sources. Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 Year 9 Year 10 Fixed Costs (Overall) Updates for Task Analysis, Competency Model and Program Review (ongoing and major update every 5 yrs, incl. SME travel) 10.0 10.0 10.0 10.0 10.0 10.0 10.0 10.0 10.0 10.0 Markeng to Agencies / ROI Analysis 10.0 10.0 2.5 2.5 2.5 2.5 2.5 2.5 2.5 2.5 Public Website Maintenance 5.0 5.0 5.0 5.0 5.0 5.0 5.0 5.0 5.0 5.0 Legal Costs (incl. insurance) 7.5 7.5 7.5 7.5 7.5 7.5 7.5 7.5 7.5 7.5 Credenal Management System License and Admin 15.0 15.0 15.0 15.0 15.0 15.0 15.0 15.0 15.0 15.0 Total Fixed Costs 47.5 47.5 40.0 40.0 40.0 40.0 40.0 40.0 40.0 40.0 Variable Costs Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 Year 9 Year 10 Training Delivery Courses Mentoring Course (In Person) $1,500 37.5 40.5 40.5 40.5 40.5 40.5 40.5 40.5 40.5 40.5 Oral and Wrien Communicaon $1,000 5.0 8.0 8.0 8.0 8.0 3.0 3.0 3.0 3.0 3.0 Adult Learning $1,000 5.0 8.0 8.0 8.0 8.0 3.0 3.0 3.0 3.0 3.0 Delivering Instrucon $1,000 5.0 8.0 8.0 8.0 8.0 3.0 3.0 3.0 3.0 3.0 Instruconal Design Courses Assessment and Process Analysis $1,000 0.0 4.0 7.0 7.0 7.0 7.0 3.0 3.0 3.0 3.0 Instruconal Technology $1,000 0.0 4.0 7.0 7.0 7.0 7.0 3.0 3.0 3.0 3.0 Lesson Plan Design $1,000 0.0 4.0 7.0 7.0 7.0 7.0 3.0 3.0 3.0 3.0 Instruconal Material Development $1,000 0.0 4.0 7.0 7.0 7.0 7.0 3.0 3.0 3.0 3.0 Program Design Courses Standards Based Training $1,000 0.0 0.0 4.0 6.0 6.0 6.0 6.0 3.0 3.0 3.0 Program Evaluaon and Management $1,000 0.0 0.0 4.0 6.0 6.0 6.0 6.0 3.0 3.0 3.0 Curriculum Development $1,000 0.0 0.0 4.0 6.0 6.0 6.0 6.0 3.0 3.0 3.0 Review of Course Documentaon and Por€olios (Training Delivery Level) ($25/person/course) $25 3.6 6.0 6.0 6.0 6.0 2.4 2.4 2.4 2.4 2.4 Review of Course Documentaon and Por€olios (Instruconal Design Level) ($25/person/course) $25 0.0 3.2 5.4 5.4 5.4 5.4 2.2 2.2 2.2 2.2 Review of Course Documentaon and Por€olios (Program Design Level) ($25/person/course) $25 0.0 0.0 1.9 3.2 3.2 3.2 3.2 1.3 1.3 1.3 Review of Capstone Projects $100 0.0 0.0 2.5 4.2 4.2 4.2 4.2 1.7 1.7 1.7 Total Variable Costs 56.1 89.7 120.3 129.3 129.3 110.7 91.4 78.0 78.0 78.0 Total Costs 103.6 137.2 160.3 169.3 169.3 150.7 131.4 118.0 118.0 118.0 Annual Cost Excess/Shortage 3.2 4.6 17.8 21.4 21.4 16.6 9.9 4.4 4.4 4.4 Cumulave Reserve/Loss 3.2 1.4 19.2 40.6 62.0 78.6 88.5 93.0 97.4 101.8

Business Plan 79 Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 Year 9 Year 10 Projected Parcipaon Parcipang Trainers (from Year 1 populaon) 48 48 48 48 48 0 0 0 0 0 Parcipang Trainers (from New Hires each year) 0 32 32 32 32 32 32 32 32 32 Parcipang Mentors 270 270 270 270 270 270 270 270 270 270 Fees/Income (Constant $ in Thousands) Cerficaon System Registraon (Charged at beginning to parcipang instructors) $100 4.8 8.0 8.0 8.0 8.0 3.2 3.2 3.2 3.2 3.2 Training Delivery Courses Mentoring Course (In Person) $250 67.5 67.5 67.5 67.5 67.5 67.5 67.5 67.5 67.5 67.5 Oral and Wrien Communicaon $250 7.2 12.0 12.0 12.0 12.0 4.8 4.8 4.8 4.8 4.8 Adult Learning $250 7.2 12.0 12.0 12.0 12.0 4.8 4.8 4.8 4.8 4.8 Delivering Instrucon $250 7.2 12.0 12.0 12.0 12.0 4.8 4.8 4.8 4.8 4.8 Instruconal Design Courses Assessment and Process Analysis $250 0.0 6.5 10.8 10.8 10.8 10.8 4.3 4.3 4.3 4.3 Instruconal Technology $250 0.0 6.5 10.8 10.8 10.8 10.8 4.3 4.3 4.3 4.3 Lesson Plan Design $250 0.0 6.5 10.8 10.8 10.8 10.8 4.3 4.3 4.3 4.3 Instruconal Material Development $250 0.0 6.5 10.8 10.8 10.8 10.8 4.3 4.3 4.3 4.3 Program Design Courses Standards Based Training $250 0.0 0.0 5.0 8.4 8.4 8.4 8.4 3.4 3.4 3.4 Program Evaluaon and Management $250 0.0 0.0 5.0 8.4 8.4 8.4 8.4 3.4 3.4 3.4 Curriculum Development $250 0.0 0.0 5.0 8.4 8.4 8.4 8.4 3.4 3.4 3.4 Review of Course Documentaon and Porolios (Training Delivery Level) $200 9.6 16.0 16.0 16.0 16.0 6.4 6.4 6.4 6.4 6.4 Review of Course Documentaon and Porolios (Instruconal Design Level) $200 0.0 8.6 14.4 14.4 14.4 14.4 5.8 5.8 5.8 5.8 Review of Course Documentaon and Porolios (Program Design Level) $150 0.0 0.0 5.0 8.4 8.4 8.4 8.4 3.4 3.4 3.4 Review of Final Capstone Project $150 0.0 0.0 5.0 8.4 8.4 8.4 8.4 3.4 3.4 3.4 Total Fees/Income 98.7 154.1 202.3 219.1 219.1 187.9 153.3 128.1 128.1 128.1 Table 5.6. Operating revenue vs. cost analysis of transit trainer and mentor certification program— break even participation level. (continued on next page)

80 A National Training and Certification Program for Transit Vehicle Maintenance Instructors Costs (Constant $ in Thousands) Note: These are recurring operang costs, both fixed and variable. There are other one me startup costs that will have to be invested and recovered over me or covered through other possible sources. Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 Year 9 Year 10 Fixed Costs (Overall) Updates for Task Analysis, Competency Model and Program Review (ongoing and major update every 5 yrs, incl. SME travel) 10.0 10.0 10.0 10.0 10.0 10.0 10.0 10.0 10.0 10.0 Markeng to Agencies / ROI Analysis 10.0 10.0 2.5 2.5 2.5 2.5 2.5 2.5 2.5 2.5 Public Website Maintenance 5.0 5.0 5.0 5.0 5.0 5.0 5.0 5.0 5.0 5.0 Legal Costs (incl. insurance) 7.5 7.5 7.5 7.5 7.5 7.5 7.5 7.5 7.5 7.5 Credenal Management System License and Admin 15.0 15.0 15.0 15.0 15.0 15.0 15.0 15.0 15.0 15.0 Total Fixed Costs 47.5 47.5 40.0 40.0 40.0 40.0 40.0 40.0 40.0 40.0 Variable Costs Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 Year 9 Year 10 Training Delivery Courses Mentoring Course (In Person) $1,500 34.5 37.5 37.5 37.5 37.5 37.5 37.5 37.5 37.5 37.5 Oral and Wrien Communicaon $1,000 6.0 10.0 10.0 10.0 10.0 4.0 4.0 4.0 4.0 4.0 Adult Learning $1,000 6.0 10.0 10.0 10.0 10.0 4.0 4.0 4.0 4.0 4.0 Delivering Instrucon $1,000 6.0 10.0 10.0 10.0 10.0 4.0 4.0 4.0 4.0 4.0 Instruconal Design Courses Assessment and Process Analysis $1,000 0.0 6.0 9.0 9.0 9.0 9.0 4.0 4.0 4.0 4.0 Instruconal Technology $1,000 0.0 6.0 9.0 9.0 9.0 9.0 4.0 4.0 4.0 4.0 Lesson Plan Design $1,000 0.0 6.0 9.0 9.0 9.0 9.0 4.0 4.0 4.0 4.0 Instruconal Material Development $1,000 0.0 6.0 9.0 9.0 9.0 9.0 4.0 4.0 4.0 4.0 Program Design Courses Standards Based Training $1,000 0.0 0.0 5.0 7.0 7.0 7.0 7.0 3.0 3.0 3.0 Program Evaluaon and Management $1,000 0.0 0.0 5.0 7.0 7.0 7.0 7.0 3.0 3.0 3.0 Curriculum Development $1,000 0.0 0.0 5.0 7.0 7.0 7.0 7.0 3.0 3.0 3.0 Review of Course Documentaon and Porolios (Training Delivery Level) $25 4.8 8.0 8.0 8.0 8.0 3.2 3.2 3.2 3.2 3.2 Review of Course Documentaon and Porolios (Instruconal Design Level) $25 0.0 4.3 7.2 7.2 7.2 7.2 2.9 2.9 2.9 2.9 Review of Course Documentaon and Porolios (Program Design Level) $25 0.0 0.0 2.5 4.2 4.2 4.2 4.2 1.7 1.7 1.7 Review of Capstone Projects $100 0.0 0.0 3.4 5.6 5.6 5.6 5.6 2.2 2.2 2.2 Total Variable Costs 57.3 103.8 139.6 149.5 149.5 126.7 102.4 84.5 84.5 84.5 Total Costs 104.8 151.3 179.6 189.5 189.5 166.7 142.4 124.5 124.5 124.5 Annual Cost Excess/Short age 6.1 2.7 22.7 29.6 29.6 21.2 11.0 3.6 3.6 3.6 Cumulave Reserve/Loss 6.1 3.4 19.4 49.0 78.6 99.8 110.7 114.4 118.0 121.6 Table 5.6. (Continued).

Business Plan 81 The numbers show that, if the “medium level” of participation can be achieved and the other participation assumptions hold valid, the program can be sustainably offered. However, the margins are always fairly small and the potential AO will always be in a somewhat precarious position where a small change in demand or costs will result in an operating loss. Even at a high level of participation, the projected cumulative reserve over 10 years is not likely to attract an organization to invest in the up-front development costs. An ongoing commitment of the industry and the steering committee will be necessary for the program to be implemented. Making the Business Case to Transit Organizations— Impact and Potential ROI of Instructor Training and Certification Understanding that agencies will need to make significant investments to support the program in terms of paying for registration fees and allowing instructors the time needed away from work to complete the program, it is essential that agency managers value the outcome. When it comes to measuring the impact and ROI of an instructor training, development, and certification program, one question becomes essential: How much does a transit agency benefit from technical training and how is that benefit enhanced by skilled instructors? Research shows that in both cases investment in technical training pays dividends. Transit Technical Training Makes a Difference A study aimed specifically at transit calculated significant gains regarding ROI from technical workforce training (Transportation Learning Center 2010b). Research conducted at the Capital District Transportation Authority (CDTA), Albany, NY, showed that as a result of training provided under a special program: • Average test scores improved by 43 percent. • Some test scores improved by 70 percent. • Miles between breakdowns improved by 18 percent. • Bus spare ratio fell from 20 percent to 13 percent. • More maintenance repair work stayed in-house. • Work culture among technicians also improved. In total, 23 classes developed in-house by CDTA instructors were provided to 202 students over a one year period. The training addressed both basic and advanced technology subjects including engines, transmissions, hydraulics, and preventive maintenance. The results were impressive. A true measure of an agency’s maintenance program is to keep vehicle defects to a minimum. Defects left unattended lead to breakdowns, passenger interruptions, and safety concerns. Fortunately for the effort to measure ROI at CDTA, the agency has an annual fleet inspection 10 year cumulative reserve/(loss) Long-term annual reserve/(loss) (Year 8 and later) Low Participation -$61,700 -$9,200 Medium Participation $101,800 $4,400 High Participation $238,100 $15,100 Table 5.7. Operating surpluses or losses.

82 A National Training and Certification Program for Transit Vehicle Maintenance Instructors conducted by an independent contractor to measure overall maintenance efficiency. One activity is to inspect a percentage of the bus fleet on an annual basis and itemize the number of defects found. After conducting the extra training, the average number of per-bus defects at CDTA fell from 8.4 to 5.9 percent, an impressive 30 percent improvement. When the defect reduction was compared to specific training classes given through the program, the results were even more impressive. Regarding engine defects for example, where five training classes were provided, the number of defects in this critical category fell 44 percent. The training at CDTA also led to the reduction of outsourcing, a practice where vendors perform certain repair and maintenance work because the agency’s own technicians lack the required technical knowl- edge and ability. The practice brings with it many disadvantages. The primary disadvantage is that extensive outsourcing makes the agency dependent on others to do much of their work. As a result, costs and scheduling cannot be controlled. Such was the case with CDTA: lack of skills was making the agency dependent on others to do much of the critical engine and transmission work. Following training in these specific areas, however, the agency was able to bring 50 percent of this work back in-house and make the repairs themselves. Based on interviews with 20 main- tenance personnel, the ability to perform work in-house combined with the enhanced skills made possible by the training has re-energized the workforce, improved working relations, and estab- lished a “can do” attitude throughout the maintenance department. Training ROI in Pennsylvania The transit ROI study also included the benefits derived from over 11,000 maintenance training opportunities provided to various transit agencies in Pennsylvania. In this example, results of the technical training show a return of five to 12 times the training investment. The SEPTA, the largest agency participating in the training program, demonstrated several quantifiable gains derived through the training. In the area of mean distance between failures (MDBF), an indication of in-service vehicle reliability, the research compared SEPTA’s bus garages that did not receive any preventive maintenance (PM) training to those garages that did receive training. Following PM training where technicians were taught to identify and repair defects before they result in a mechanical failure, MDBF showed improvements each month with up to 1,797 more miles traveled between failures, or 39 percent improvement in miles driven between failures. This translates to fewer passengers being inconvenienced by buses that fail in service, thereby improv- ing the agency’s performance and public image. At a smaller transit agency in Pennsylvania where technicians lacked essential electrical skills, specialized training led to a sharp reduction in charging system related failures. Prior to taking these classes, many technicians were replacing perfectly good batteries because of their inability to properly diagnose charging system faults. Following the training, battery costs were reduced 26 percent. Another key measurement in bus maintenance is the ratio between scheduled maintenance events where activities are accomplished as planned service events, and unscheduled maintenance where repair jobs are usually the result of breakdowns. It is more advantageous to accomplish repairs while the vehicle is receiving scheduled maintenance than having to chase unscheduled repairs where vehicle downtime is not anticipated. Following the training provided to SEPTA technicians, unscheduled maintenance activities fell from 51 percent to 42 percent of the total maintenance activities. The reduction of unscheduled maintenance is a strong indicator of improved equipment performance, which generates cost savings from not having so many dis- ruptive and costly breakdowns and unscheduled overtime. The time and effort spent on BMT at all skill levels also produced impressive improvements in parts and labor cost reduction in many of SEPTA’s major maintenance/repair categories.

Business Plan 83 Figure 5.1 showcases an example of such savings. A PM job that once cost $114 in labor and materials now cost only $82 after four years of training because of improved skill levels, a result of improved diagnostic abilities and an overall reduction in the time needed to make repairs. SEPTA has saved a total of $8,194,000 on bus PM jobs due to its training initiatives. A broader cost/benefit analysis shows that SEPTA’s training investment has produced impressive financial gains. Figure 5.2 summarizes the total savings from reduced labor time and materials needed to accomplish maintenance jobs at SEPTA throughout the training period. As illustrated in Figure 5.2, annual savings in all bus maintenance/repair categories rose rapidly from $3.6 million in 2002 (the first year of Keystone) to $11 million in 2005. Understanding that calculating the effect of training is not an exact science, the study estimated that SEPTA’s investment of $2,625,127 to train its bus maintenance workforce over a four-year period led to a combined cost savings of between $10 million and $22 million. The savings in vehicle maintenance, repair, and bus capital costs provides solid evidence that investment in training does provide financial benefits. Instructor Training and Development Makes a Difference: Research Evidence It’s commonly understood that highly proficient teachers and instructors do make a difference when it comes to student achievement. Unfortunately, there is no known ROI study that quantifies instructor effectiveness in a transit maintenance environment. However, a study conducted by the ROI Institute, Inc. regarding the impact of instructor development on student retention and corresponding ROI in an automotive training environ- ment produced impressive findings (Imagine America Foundation 2010). The research was conducted at a campus of UTI, a provider of technical training for students seeking careers as automotive, marine and heavy-duty truck technicians. UTI is featured in the Best Practices chapter of this project. Figure 5.1. Average labor & parts cost and annual savings—SEPTA bus PM jobs.

84 A National Training and Certification Program for Transit Vehicle Maintenance Instructors The ROI study focused on measuring the impact of a comprehensive faculty development program provided to UTI by the Center for Excellence in Education (CEE), a career college employee development and performance improvement initiative. Conclusions from the study found that the CEE program had a positive effect on UTI instructors and the students they taught. Seventy-nine percent of the instructors reported their teaching performance had been enhanced as a result of the program, improving their ability to: • Incorporate multiple teaching styles to better suit a diverse class; • Develop more ways to make presentations; • Involve students in classroom teaching to help learners be more active; and • Increase listening skills to hear students’ concerns. After isolating the effects of the program, converting the measures to monetary value, and identifying the fully loaded costs, the result was a positive ROI of 517 percent for UTI. Enhanced instructor skills contributed to an improvement in student retention and the number of additional courses taken by the students because of the higher quality instruction they received. Additionally, there were notable intangible benefits of the program, including job satisfaction, faculty career development, and student satisfaction. In addition to the UTI study, there is anecdotal evidence from several technicians whose careers have benefitted from instructors that made a difference. Michele Winn, a woman working as an automotive technician, is one example. She credits the instructors at a technical school that she attended for helping her to achieve a perfect 4.0 grade average and land a well-paying and Total Labor and Parts Savings in Bus Maintenance/Repair Categories Rose Rapidly since the Start of Keystone Training $0 $2,000,000 $4,000,000 $6,000,000 $8,000,000 $10,000,000 $12,000,000 Fiscal Years A nn ua l S av in gs Accident $187,000 $163,000 $187,000 $329,000 Capitalization (Overhaul) $2,461,000 $4,566,000 $2,628,000 $2,320,000 Inspection Repairs $0 $0 $0 $3,140,000 Operator Report $32,000 $68,000 $142,000 $138,000 Overhaul $0 $184,000 $356,000 $341,000 Preventive Maintenance $827,000 $1,613,000 $2,615,000 $3,139,000 Running Repairs $0 $326,000 $586,000 $1,021,000 Service Failure $5,000 $0 $197,000 $540,000 Vandalism $35,000 $16,000 $34,000 $64,000 Warranty $32,000 $0 $3,000 $64,000 FY02 07/01-06/02 FY03 07/02-06/03 FY04 07/03-06/04 FY05 07/04-06/05 $3,579,000 $6,748,000$6,936,000 $11,096,000 Figure 5.2. Total labor and parts savings—SEPTA maintenance jobs.

Business Plan 85 satisfying job. The instructors at this particular technical school provided just enough classroom instruction to prepare students for intensive hands-on education, combining theory and practice in a way that engaged students and prepared them for real-world job experiences. In the article, “The Value of the Maintenance Instructor” (Chamberlin 2010), an aircraft mechanic reflects back on the instructors that made a difference in his career. Over the years Chamberlin observed many instructors in action. As he notes, most were just average, a few were really good, and some had no business being in the profession. The reason he gives for the high number of poor technical instructors is that rarely are there any requirements for them to have received formal training in teaching skills. Chamberlin goes on to contrast the many investments being made in training technologies such as e-learning with the lack of investment being made with regard to instructor training and preparation. As he notes, the training aids are only valuable tools when used correctly by a skilled instructor. Chamberlin asks: “What’s really important in your training program? Is it having the latest technological advances in training aids? Or is it selecting good instructors and providing them with the tools they need to accomplish their jobs?” Hopefully, transit agencies can have both. Direct evidence pointing to the benefits offered by quality instructors in more traditional teaching settings is plentiful. In the book, Teacher Quality: Understanding the Effectiveness of Teacher Attributes, by Jennifer King Rice, the author proves that teacher quality does in fact matter (Rice 2003).The book contends that the teacher is the most important school-related factor influencing student achievement. The publication lends credibility to best practices findings that experience has a positive effect on teacher effectiveness, especially when it comes to “learn-by- doing” instruction. The research also validates this effort in this project to certify transit main- tenance instructors because it suggests that teachers who are certified have an increased impact on student achievement. The study goes on to state that teaching is a complex activity influenced by many elements of teacher quality. The research suggests that investing in teachers can make a difference in student achievement. In a conventional school setting it is estimated that the difference between having a good teacher and a bad one can exceed one grade-level equivalent in annual achievement growth. The book points to several studies that argue that the single most important factor affecting student achievement is the teacher, and the effects of teachers on student achievement are both additive and cumulative. Further, the studies contend that lower-achieving students are the most likely to benefit from increases in teacher effectiveness. This is especially important in today’s transit environment where many transit technicians may have been subjected to poor quality training in the past. A study conducted by the Australian Council for Educational Research Annual Conference, Building Teacher Quality (Hattie 2003), also provides a direct correlation between teacher quality and student accomplishment. It shows that the students themselves account for about 50 percent of the variance of achievement. It’s what students bring to the table that predicts achieve- ment more than any other single variable. Of the remaining 50 percent, teachers account for 30 percent of the variance with schools, principals, and peer effects accounting for the remainder. The study identified five major characteristics of excellent teachers as those with the ability to: • Identify essential representations of their subject, • Guide learning through classroom interactions, • Monitor learning and provide feedback, • Attend to affective attributes, and • Influence student outcomes.

86 A National Training and Certification Program for Transit Vehicle Maintenance Instructors Taken together, the sources provided here and elsewhere conclude that quality teachers are a critical determinant of student achievement. There is clear evidence to suggest that technicians are in a better position to perform their jobs when provided with effective instructors. Certification Improves Instructor Employment Opportunities While research clearly shows that providing instructors with enhanced teaching skills contributes significantly to student achievement, there is also evidence that instructors themselves benefit from attaining certifications. In the article, “Does Your Resume Need New Acronyms?”, the author strongly indicates that in today’s business climate, anything that differentiates job candidates from the crowd is critical to building a substantial career (Zupek 2009). Certifications show employers that job candidates are dedicated and committed to a particular profession and they are credible and knowledgeable about current trends and best practices in their field. The article indicates that certifications are especially beneficial when coupled with an appropriate number of years of experience in a given field of work. A scan of institutions that offer instructor and teacher certifications points to several other benefits: • Certification ensures that instructors are trained to consistent skill levels. • Certified people are more employable; hiring managers believe certified individuals are more productive than their non-certified counterparts. • Certificated people are typically more productive. • Certification reduces downtime because staff members have the skills needed to cope with issues as they arise. • Gaining certifications typically results in increased salaries. • Certification ensures that knowledge has been retained. • Certification results in lower staff turnover. The National Training and Certification Program seeks to improve and verify instructor skills with the intent of not only improving the quality of training delivery to students to make them more proficient, but to elevate the position of maintenance instructor within the transit community. Examples provided in other occupations indicate that these benefits can be achieved for transit maintenance technicians and instructors. Recommended Procurement Language At the interim meeting, the panel directed the Project Team to recommend language for transit agencies to include in future vehicle procurement contracts specifying vendor instructor qualifications. APTA’s Standard Bus Procurement Guidelines document already contains a section on training. It is proposed that the relevant section be changed to read: The Contractor shall have at least one qualified instructor certified through the National Training ICP who shall be available at the Agency’s property for [insert number] calendar days between the hours of [insert starting time] and [insert closing time] per month for [insert number] months prior to, and [insert number] months after, acceptance of the first vehicle. Instructor(s) shall conduct schools and advise the personnel of the Agency on the proper operation and maintenance of the equipment. The Contractor also shall supplement classroom instruction with hands-on training and provide visual and other teaching aids (such as manuals, slide presentations, literature and other teaching aids) designed to engage students for use by the Agency’s own training staff and which shall become the property of the Agency.

TRB’s Transit Cooperative Research Program (TCRP) Report 178: A National Training and Certification Program for Transit Vehicle Maintenance Instructors provides a proposed national program structure and plan for training and certifying transit bus and rail maintenance instructors. The report also provides best practices used in the public and private sectors to prepare and certify technical instructors, as well as the attributes and instructional delivery methods found most effective for maintenance instructors.

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Biden's new student-loan forgiveness plan has already received over 24,000 comments. There are 2 weeks left to give the administration input.

• There are two weeks left for the public to comment on Biden's new student-debt relief plan.
• Once the public comment period ends, the administration will move toward final implementation.
• Still, legal challenges and the election pose threats to the debt cancellation.

The American people have just two weeks left to give President Joe Biden's administration input on its new student-loan forgiveness plan .

On April 17, the Education Department published its draft rules for a broader version of debt relief to the Federal Register. First unveiled in early April, the new plan is expected to benefit over 30 million borrowers through a range of provisions, including canceling unpaid interest for borrowers and providing debt relief to those who have made at least 20 years of payments.

This new plan is intended to replace Biden's first attempt at relief that the Supreme Court struck down last summer. In contrast to the first plan, this one requires the administration to undergo a process known as negotiated rulemaking, which entails a series of negotiations with stakeholders and an opportunity for the public to comment on the plans before final implementation.

Related stories

The plan is now in the public comment period, and there are two weeks left for anyone who wishes to provide input on the administration's proposals. So far, according to the Federal Register , the plan has received 24,532 comments as of Friday morning.

The comments are available to be viewed publicly, and some of them were supportive of Biden's plan. One stated:

"The more student loan debt that can be forgiven the better. My mom's loans were forgiven last month, and it has changed her life. The period of time when my loans were paused allowed me to buy a home. My loans are currently in repayment, and if that burden could be lifted it would be life-changing for me."

Meanwhile, others were more critical:

"No if you borrow money you need to pay it back. why should people who are hard working pay for a lazy person school. student loans needs to be payed back by the borrower not by people who are working for a living."

Once the public comment period ends on May 17, the Education Department can choose to adjust its proposals based on the feedback it received or move ahead toward final implementation. In the coming months, the department also plans to unveil a separate proposal to get relief to borrowers experiencing financial hardship, which will also have a public comment period.

The department has said it plans to move as quickly as possible with the relief this fall, but not only does the presidential election bring uncertainty to the fate of the relief — it's highly likely legal challenges will once again attempt to block it from carrying out.

For example, Missouri Attorney General Andrew Bailey wrote on X that he would see Biden in court after the release of new details for the debt relief, and he already filed a lawsuit to block the SAVE income-driven repayment plan , arguing it was an overreach of the administration's authority.

Watch: Why student loans aren't canceled, and what Biden's going to do about it

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4 Common Types of Team Conflict — and How to Resolve Them

• Randall S. Peterson,
• Priti Pradhan Shah,
• Amanda J. Ferguson,
• Stephen L. Jones

Advice backed by three decades of research into thousands of team conflicts around the world.

Managers spend 20% of their time on average managing team conflict. Over the past three decades, the authors have studied thousands of team conflicts around the world and have identified four common patterns of team conflict. The first occurs when conflict revolves around a single member of a team (20-25% of team conflicts). The second is when two members of a team disagree (the most common team conflict at 35%). The third is when two subgroups in a team are at odds (20-25%). The fourth is when all members of a team are disagreeing in a whole-team conflict (less than 15%). The authors suggest strategies to tailor a conflict resolution approach for each type, so that managers can address conflict as close to its origin as possible.

If you have ever managed a team or worked on one, you know that conflict within a team is as inevitable as it is distracting. Many managers avoid dealing with conflict in their team where possible, hoping reasonable people can work it out. Despite this, research shows that managers spend upwards of 20% of their time on average managing conflict.

• Randall S. Peterson is the academic director of the Leadership Institute and a professor of organizational behavior at London Business School. He teaches leadership on the School’s Senior Executive and Accelerated Development Program.
• PS Priti Pradhan Shah is a professor in the Department of Work and Organization at the Carlson School of Management at the University of Minnesota. She teaches negotiation in the School’s Executive Education and MBA Programs.
• AF Amanda J. Ferguson  is an associate professor of Management at Northern Illinois University. She teaches Organizational Behavior and Leading Teams in the School’s MBA programs.
• SJ Stephen L. Jones is an associate professor of Management at the University of Washington Bothell. He teaches Organizational and Strategic Management at the MBA level.

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1.1: Chapter 1 – Developing a Business Plan

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• Lee A. Swanson
• University of Saskatchewan

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Learning Objectives

After completing this chapter, you will be able to

• Describe the purposes for business planning
• Describe common business planning principles
• Explain common business plan development guidelines and tools
• List and explain the elements of the business plan development process
• Explain the purposes of each element of the business plan development process
• Explain how applying the business plan development process can aid in developing a business plan that will meet entrepreneurs’ goals

This chapter describes the purposes, principles, and the general concepts and tools for business planning, and the process for developing a business plan.

Purposes for Developing Business Plans

Business plans are developed for both internal and external purposes. Internally, entrepreneurs develop business plans to help put the pieces of their business together. Externally, the most common purpose is to raise capital.

Internal Purposes

As the road map for a business’s development, the business plan

• Defines the vision for the company
• Establishes the company’s strategy
• Describes how the strategy will be implemented
• Provides a framework for analysis of key issues
• Provides a plan for the development of the business
• Helps the entrepreneur develop and measure critical success factors
• Helps the entrepreneur to be realistic and test theories

External Purposes

The business plan provides the most complete source of information for valuation of the business. Thus, it is often the main method of describing a company to external audiences such as potential sources for financing and key personnel being recruited. It should assist outside parties to understand the current status of the company, its opportunities, and its needs for resources such as capital and personnel.

Business Plan Development Principles

Hindle and Mainprize (2006) suggested that business plan writers must strive to effectively communicate their expectations about the nature of an uncertain future and to project credibility. The liabilities of newness make communicating the expected future of new ventures much more difficult than for existing businesses. Consequently, business plan writers should adhere to five specific communication principles .

First, business plans must be written to meet the expectations of targeted readers in terms of what they need to know to support the proposed business. They should also lay out the milestones that investors or other targeted readers need to know. Finally, writers must clearly outline the opportunity , the context within the proposed venture will operate (internal and external environment), and the business model (Hindle & Mainprize, 2006).

There are also five business plan credibility principles that writers should consider. Business plan writers should build and establish their credibility by highlighting important and relevant information about the venture team . Writers need to elaborate on the plans they outline in their document so that targeted readers have the information they need to assess the plan’s credibility. To build and establish credibility, they must integrate scenarios to show that the entrepreneur has made realistic assumptions and has effectively anticipated what the future holds for their proposed venture. Writers need to provide comprehensive and realistic financial links between all relevant components of the plan. Finally, they must outline the deal , or the value that targeted readers should expect to derive from their involvement with the venture (Hindle & Mainprize, 2006).

General Guidelines for Developing Business Plans

Many businesses must have a business plan to achieve their goals. Using a standard format helps the reader understand that the you have thought everything through, and that the returns justify the risk. The following are some basic guidelines for business plan development.

As You Write Your Business Plan

1. If appropriate, include nice, catchy, professional graphics on your title page to make it appealing to targeted readers, but don’t go overboard.

2. Bind your document so readers can go through it easily without it falling apart. You might use a three-ring binder, coil binding, or a similar method. Make sure the binding method you use does not obscure the information next to where it is bound.

3. Make certain all of your pages are ordered and numbered correctly.

4. The usual business plan convention is to number all major sections and subsections within your plan using the format as follows:

1. First main heading

1.1 First subheading under the first main heading

1.1.1. First sub-subheading under the first subheading

2. Second main heading

2.1 First subheading under the second main heading

Use the styles and references features in Word to automatically number and format your section titles and to generate your table of contents. Be sure that the last thing you do before printing your document is update your automatic numbering and automatically generated tables. If you fail to do this, your numbering may be incorrect.

5. Prior to submitting your plan, be 100% certain each of the following requirements are met:

• Everything must be completely integrated. The written part must say exactly the same thing as the financial part.
• All financial statements must be completely linked and valid. Make sure all of your balance sheets balance.
• Everything must be correct. There should be NO spelling, grammar, sentence structure, referencing, or calculation errors.
• Your document must be well organized and formatted. The layout you choose should make the document easy to read and comprehend. All of your diagrams, charts, statements, and other additions should be easy to find and be located in the parts of the plan best suited to them.
• In some cases it can strengthen your business plan to show some information in both text and table or figure formats. You should avoid unnecessary repetition , however, as it is usually unnecessary—and even damaging—to state the same thing more than once.
• You should include all the information necessary for readers to understand everything in your document.
• The terms you use in your plan should be clear and consistent. For example, the following statement in a business plan would leave a reader completely confused: “There is a shortage of 100,000 units with competitors currently producing 25,000. We can help fill this huge gap in demand with our capacity to produce 5,000 units.”