{"id":2430,"date":"2010-07-06T13:24:26","date_gmt":"2010-07-06T17:24:26","guid":{"rendered":"https:\/\/extension.umaine.edu\/publications\/?page_id=2430"},"modified":"2025-04-11T11:21:41","modified_gmt":"2025-04-11T15:21:41","slug":"3005e","status":"publish","type":"page","link":"https:\/\/extension.umaine.edu\/publications\/3005e\/","title":{"rendered":"Bulletin #3005, A Fact Sheet for Small-Scale Business Owners: Your Business Plan"},"content":{"rendered":"\n

Developed by James C. McConnon, Extension Business and Economics Specialist, and Forest M. French, Extension Educator Emeritus.<\/em>
Reviewed by Louis V. Bassano, Extension Educator<\/em>.<\/p>\n\n\n\n

Reviewed by Jason Scott Entsminger, PhD, Assistant Professor and State Extension Specialist<\/em>, University of Maine Cooperative Extension<\/em> (2025).<\/p>\n\n\n\n

For information about UMaine Extension programs and resources, visit extension.umaine.edu<\/a>.<\/strong>
Find more of our publications and books at extension.umaine.edu\/publications\/<\/a>.<\/strong><\/p>\n\n\n\n

A business plan is your most important tool if you\u2019re considering starting a new business or expanding an existing one. Why is the business plan so important? The business plan is a comprehensive document that communicates to others the production and marketing intentions of the business operator, as well as the projected financial assumptions and facts, and provides the initial feasibility analysis\u2014both physical and financial\u2014of your proposed business. Business plans are used primarily as planning documents for operators, but financial institutions also use them for specific information to support loan applications.<\/p>\n\n\n\n

Key Elements of a Business Plan<\/strong><\/h3>\n\n\n\n

There are many acceptable formats for a business plan. The following outline describes a business plan format that has been used successfully in Maine.<\/p>\n\n\n\n

Outline for Developing a Business Plan1<\/sup><\/h4>\n\n\n\n

I. Cover Letter <\/strong>(if the business plan is submitted as part of an application for a loan or credit)<\/p>\n\n\n\n

A. Applicant name and address
B. Amount and purpose of loan
C. Term and source of repayment
D. Collateral offered<\/p>\n\n\n\n

II. Table of Contents<\/strong><\/p>\n\n\n\n

A. Executive Summary
B. Description of Business
C. Market Analysis
D. Competition
E. Market Strategy
F. Management Plan
G. Sources and Uses of Funds
H. Manufacturing Plan
I. Financial Data<\/p>\n\n\n\n

III. Executive Summary<\/strong><\/p>\n\n\n\n

A. Mission statement and goals (short-term and long-term)<\/p>\n\n\n\n

(1) Financial goals
(2) Nonfinancial goals<\/p>\n\n\n\n

B. Description of your proposed business<\/p>\n\n\n\n

(1) Describe your product or service.
(2) Support with diagrams, illustrations, or pictures (if available).<\/p>\n\n\n\n

C. Summary of your proposed marketing method<\/p>\n\n\n\n

(1) Describe the market segment (or submarket) you are aiming to reach.
(2) Outline the channel you plan to use to reach this market segment (retail, wholesale, distributors, mail order, other).<\/p>\n\n\n\n

D. Summary of your financial estimates<\/p>\n\n\n\n

(1) State the dollars in sales you aim for in each of the first three years.
(2) State the estimated profit for each of the first three years.
(3) State the estimated starting capital you will need.<\/p>\n\n\n\n

IV. Description of Business<\/strong><\/p>\n\n\n\n

A. Include your mission statement and goals.
B. State the type and form of your business.
C. Describe the location and plant description.
D. Describe the product(s) or service(s).
E. Develop a timetable for your business plan implementation.<\/p>\n\n\n\n

V. Market Analysis<\/strong><\/p>\n\n\n\n

A. Describe your market.
B. State your market size.
C. Estimate your market\u2019s growth potential.
D. Estimate industry trends.
E. Describe the pricing of your product(s) or service(s).
F. Develop a customer profile.<\/p>\n\n\n\n

VI. Competition<\/strong><\/p>\n\n\n\n

A. Identify your nearest competitors.
B. Assess their strengths and weaknesses.
C. Describe the advantages your business will have.
D. Describe how you will remain competitive.<\/p>\n\n\n\n

VII. Marketing Strategy<\/strong><\/p>\n\n\n\n

A. Identify your methods of selling products: direct, through distributors, retail chains, mail order, Internet, etc.
B. Describe how your products will be serviced.
C. Estimate the kind of advertising anticipated. Identify and estimate costs.<\/p>\n\n\n\n

VIII. Management Plan<\/strong><\/p>\n\n\n\n

A. Include personal histories of your business\u2019s owners (resumes).
B. Include your organizational chart.
C. List your duties and responsibilities and those of your employees.
D. List your staffing plan \u2014 include the number of employees, and their salaries, fringe benefits, training needs, etc.<\/p>\n\n\n\n

IX. Sources and Uses of Funds<\/strong><\/p>\n\n\n\n

A. List the items to be purchased, such as real estate, equipment, franchise, etc.
B. Include current contractor and supplier estimates, including installation, freight, and contingency costs.
C. List proposed sources of funds, including owner\u2019s cash injection, proposed bank financing, and funds from any other sources.
D. Include working capital needs, if applicable.<\/p>\n\n\n\n

X. Manufacturing Plan<\/strong> (if applicable)<\/p>\n\n\n\n

A. Production and operating functions<\/p>\n\n\n\n

(1) How will your production scheduling be accomplished?
(2) How will your product line and product inventory be accomplished?
(3) How will your resource acquisition be scheduled?
(4) Will you need to have a capital budgeting plan for equipment?<\/p>\n\n\n\n

XI. Financial Data<\/strong><\/p>\n\n\n\n

A. Historical Balance Sheets (three years, if available)
B. Current Balance Sheet (less than 90 days old)
C. Historical Profit and Loss Statements (three years, if available)
D. Personal Financial Statements of principals with more than 20 percent ownership in the business
E. Cash Flow for one year, month-by-month, for first year after receipt of loan or start of business (provide annual cash projections for three years and include assumptions)
F. Projected Balance Sheets for three years (include assumptions)
G. Projected Profit and Loss Statements for three years (include assumptions)
H. Deviation Analysis for price increases or decreases (three previous years if available)
I. Tax return forms:<\/p>\n\n\n\n