Business Plan Development

Business Plan Development
Developing a comprehensive business plan is one of the services that KCARD offers to
its clients. A business plan is a company’s roadmap for success. An updated,
comprehensive business plan increases the likelihood of success for new and existing
“Failing to plan is planning to fail.”
The business plan answers the key questions about the business: who, what, where, when,
why, and how. For a developing business, the business plan begins the process of
making an idea materialize into reality and determining whether or not an idea should
become reality. The business plan establishes goals and benchmarks for the business. A
comprehensive business plan makes it easier for a business to receive external support,
especially in terms of financing from potential investors, lenders, and grant sources.
Finally, and possible most importantly, going through the process of planning is very
valuable because it forces the business owners and/or managers to think through every
detail of the business.
“In preparing for battle, I have always found that plans are useless, but planning is
indispensable.” Dwight D. Eisenhower
A comprehensive business plan should cover the following:
 Description of Business (products, locations, ownership, structure, history)
 Marketing Plan (positioning, products, pricing, target markets, distribution,
advertising, sales force)
 Management Plan (organizational structure, roles for management team, hiring &
training personnel)
 Financial Management Plan (accounting system, inventory control, loans)
 Financial Projections (3-year pro forma cash flow and income statement
KCARD staff are capable of facilitating the process of developing or updating a business
plan for new and existing businesses. In this process, KCARD takes a very hands-on
approach, but KCARD only plays the role of facilitator. KCARD will not just produce a
business plan for a company without any input from the company’s owners or managers.
In assisting with the development a business plan, KCARD will:
 Facilitate a minimum of 3 working meeting with members (3-5 members is the
optimal number involved) of the management team. Each of these meetings last
around 2-3 hours, move very quickly, and are relatively intense. Two to three
KCARD staff members will be involved in these meetings with one staff person
taking notes and one staff person running the meeting;
 Ask members of the management team questions related to the basic components
of business plan, and assigning homework to participating management team
members on various aspects of the business;
Develop financial projections based upon agreed upon assumptions by members
of the management team;
Write draft of the plan from the input of the participating management team
members, and producing final copy after management members review and edit
draft of plan;
Give oral report of the completed business plan;
Complete the business plan in 4-6 weeks—the speed in which completed is
determined by how quickly management team members can meet and work
through the key questions.
At the end of this process, KCARD is very confident that a business will not only a very
comprehensive business plan, but a plan that is truly theirs. KCARD believes that all
businesses benefit from going through this process because of the value of just going
through the planning process that is required to develop a comprehensive business plan.
Business Plans
October 2000
Timothy A. Woods and Heath Hoagland
University of Kentucky
Department of Agricultural Economics
400 Charles E. Barnhart Bldg.
Lexington, KY 40546-0276
Phone: 859-257-5762
Fax: 859-323-1913
Business Plans
What goes in a business plan?
The body of the business plan can be divided into four distinct sections:
The description of the business.
II. The marketing plan
III. The management plan
IV. The financial management plan1
Additional items to address in a business plan will include a production plan and long-term plan. These
items are not directly addressed in this paper.
I. Description of the Business.
may influence the viability of alternative supplier
positions? What competitive advantage does
the association have in the respective market?
Provide a detailed description of your business. Ask
questions such as “What business am I in?”. When
answering this question include your products,
market and services as well as a thorough
description of what makes your business unique.
As the business plan develops, initial questions may
be modified. Note the description of the business
corresponds closely with the feasibility study
questions proposed on the previous sheet.
Product line
What products will be emphasized in each
target market? How are they chosen? How
are new products introduced? Will there be any
attempt to differentiate products?
What product price will be necessary to make
the targeted market viable? What are the
break-even costs? What have prices been
historically for similar products in the market?
How will prices be determined? Who will
determine it?
II The Marketing Plan
The marketing plan, or sometimes referred to as the
“game plan” is more detailed than the questions
asked in a feasibility study. The marketing plan
actually outlines the activities to undergo in day-today operations, and the overall long run marketing
Will distribution involve largely local channels or
will there be significant inter-state trade? Is a
PACA license necessary? How might growers
efficiently manage/coordinate their deliveries
with outbound logistics? Might this be different
depending on the target market? What specific
outlets, businesses, or customers will be
targeted within targeted market channel? Are
there specific distribution and packaging needs
for these customers?
What are the intended or desired goals for the
association with respect to how they want to be
regarded as a supplier to the targeted market?
Primary in-season supplier? Gap or short order
supplier? Steady but secondary presence?
What competitive factors outside the association
Information included in this guide comes from the Small Business Administration (SBA) website, and the
NXLevel Guide for Entrepreneurs .
Sales force
Who will handle the sales activities? How will
contacts be made and maintained? Are there
guidelines that need to be developed for sales
staff? Special training? What sales activities
are standard (required?) For the targeted
resources would be necessary to carry on
needed market research?
What industry
communications monitor the relevant trends for
the targeted market? What are the costs and
benefits of the market research?
The 11 components above are guidelines to
follow. The components are very important and any
entity will vary from the next in answering the
components. The association can benefit from
having basic information and alternatives generated
from this marketing plan.
Sales promotion
Are special sales promotions beneficial to the
development of a presence in the marketing
channel? What are some cost-effective ways
of starting? What are industry conventions for
sales promotions? Trade shows? Industry
III. The Management Plan
Managing a business requires dedication,
persistence, the ability to make decisions, and the
ability to manage both employees and finances.
Your management plan, along with your marketing
and financial management plans, sets the foundation
for and facilitates the success of your business.
Employees are critical resources and will play an
important role in the overall operation of your
business. Knowing how to manage and treat
employees is critical. The management plan should
answer questions regarding:
What advertising (if any) might be justified for
the target market? What are effective media?
Should there be a portion of the budget
allocated to advertising? Should a professional
agency be employed or can the association
manage it? Are there any outside resources to
help develop advertising to targeted customers?
Are unique services expected for the market
being considered? What are the costs and
benefits to providing these services? What
service might be necessary for the association
to achieve the desired position in the market?
Who provides the services?
C How does
bac k g r o u n d s / b u s i n e s s
experience help in the business?
C Who will be on the management team?
C What are the strengths and weaknesses
of the management team?
Research and development
What activities can help the association monitor
new industry tools and technology that may help
the association improve its functioning or
products? Is R&D likely to be important for the
target market? Has there been considerable
innovation within the segment recently? How
might R&D needs be identified and
communicated to organizations positioned to
help the association with this task?
C What are the duties of the management
C What are the plans for hiring and training
C What salaries, benefits,
holidays will you offer?
Marketing research
What trends may be important to watch in
relation to the targeted market segment? What
C What benefits, if any, can you afford at
this point?
The Financial Management Plan
The financial section of the business plan should
include any loan applications, capital equipment and
supply list, balance sheet, breakeven analysis, proforma income projections, and pro-forma cash flow.
The income statement and cash flow projections
should include a three-year summary, detail by
month for the first year, and detail by quarter for the
second and third years.
Sound financial management is one of the best ways
for your business to remain profitable and solvent.
How well the finances are managed is critical to
every successful business venture. Polices will
need to be implemented that will lead to and ensure
that you will meet your financial obligations. The
feasibility study answers questions regarding the
start-up budget. This section deals more with the
operating budgets. The following are ideas to start
with in the budgeting process:
Accounting and inventory systems should also be
addressed in this section of the business plan.
Answer questions such as:
loan payments
miscellaneous expenses
outside services (contracting a hauling
payroll expenses
growth expenses
• What type of accounting system will the
business use?
• What will the sales goal and net income
goals for the coming year be?
• What financial projections will be needed
to include in the business plan?
• What kind of inventory control system
will be used?
Prepared by Tim Woods and Heath Hoagland, Department of Agricultural Economics at the University of
Kentucky. Revised: October 2000