Busines Plan Narrative

I.     Description of the Business 

Company or entrepreneur name, address, and phone number. Contact person, position,  phone number if different from the company's.  Explain how the name was developed and any information relevant to the name of the business; this begins to personalize your company to the reader.  A few lines on the nature of the business operations, market served, and whether a start-up or expansion of current operation.

        A.  Information on the Business
                1. Type of business and Product or Service- Explain clearly what type of business you are in.  Explain             what your product or service. When the reader is finished with this section, a clear understanding of your basic business should be evident.  This portion of your plan should also include the company's three or four mission statements.  The mission statements should define who the company is and state what the company wants to do within the next three years and should be quantitative.

        B.  History
              2.  If this is a start-up business, it will not have a history.  Instead, use this section to review your own accomplishments, experience, training, and education.  Remember, this is being written by you so that the lender will have a better understanding of how you will accomplish the successful operation of your business.  If the business has a history, tell it.  Explain when and why the company was started.  Provide sales and profit history.  Show how the company faced problems and what wads done to solve them.

        C.  Operational Hours
              3.  Explain when the business will be open and why. Include opening and closing times for both the weekdays and the weekend.  If you are a service or manufacturing company with multiple shifts, explain why the additional shifts are planned. 

        D.  Inventory, Supplies, Suppliers, and Equipment
              4.  This section of the business plan explains how you will hold in inventory, whay type of supplies you will keep on hand, what suppliers you will use and what type of equipment you will need to operate the business. If your company will hold inventory, you should explain: (1) what your starting inventory will be and its cost, and (2) the average inventory turn for your industry.  A review of your inventory will also be helpful.  You should provide information on your vendors and how you selected them as well as any terms you have with them.  Explain any supplies you will need to operate.  Include how often you  will use them up and what dollar amount of supplies you will need to operate.  Any equipment which your company will need to operate should be fully explained in this section; how the equipment will be used, how it will benefit the company, how much it will cost and who it will be purchased from.  Any literature which will help explain complicated equipment or processes can be added to the business plan as a supplement.  

       E.  Future Plans
            5.  No company can survive without change and growth.  You should have two plans at all times.  First, a short term plan to accomplish the company's mission statements.  Explain fully how the company will accomplish the mission statements and how this accomplishment will be measured.  Second, the company would have a long term plan for growth and survival for five to ten years in the future.  Explain what the company plans to do.  The more comprehensive a picture you can paint of your company's future, the more confidence your lender will have in the venture.

II.     Market Analysis

The Market Analysis is one of the most critical aspects of the business plan.  It identifies and defines the environment in which the business will operate.  It names competitors who may impact the operations of the business; identifies pricing or technical innovation strategies where appropriate.  It should review business cycles and practices that may be unique to the industry.  It also identifies key features of the product or service offered. that is, those features product buyers consider important. 

If relying on industry experience, you may have decided upon a product or service that the business can furnish to a specific group of buyers you have already identified.  If new to an industry, you will have to do some extensive work in both product and buyer identification.

• Which specific products or services do you intend to furnish?
• Which specific buyers do you intend to sell your products or services to?
• What is the buying cycle? Periodic? Seasonal?
• What are the pricing practices?
• What are the characteristics of the market? Growing, steady, declining? Aging? Relocating?
• What are the external influences on the market? Regulatory? Fad or Fashion conscious? Hurt or helped by government or industry changes?
• What is the entrepreneur's DIFFERENTIAL ADVANTAGE? Why should the market purchase from instead of the competition?
• What are you communication plans to reach your target market? What will be your primary message?

This is just a brief list of marketing information the entrepreneur must consider. Depending on the product and market selected, the entrepreneur can look forward to spending much time and energy to evelop answers to the above questions. The market analysis is the most important part of a business plan because it establishes the base upon which the business will be constructed.  All other parts of the business plan should support the entrepreneur's plan to service and communicate to the target market.

        A.  Product/Service Mix and Competition
             1.  Products or Service- Describe as completely as possible what product lines you will produce and sell.  If providing a service, tell what it is and how it will be accomplished.

        B.  Comparison to Competitor's Products
             2.  Make a complete comparison to your competitor's products.  Point out how the product is different and what it is about your product that is going to make customers want to purchase it.  If you are in retail or wholesale, compare your store and services to the competition.  Again, what are you going to do to capture market share.  "Me Too" business do not, as a rule, do well.

III.  Marketing Strategy

      A.  Promotion Strategy- This is an area where many new business firms suffer.  They do not have a promotions strategy.  This can be caused by several things, the most common, a belief that "word of mouth" is all the promotion the business will need and a lack of understanding concerning the importance of advertising.  Your promotion strategy should be based on your market analysis.  If in retail, determine when peak shopping periods are during the year.  In manufacturing, determine when demand occurs for your product.  Develop an advertising budget and allocate the advertising dollars so that they will provide the most effective delivery of your message.  Determine what mediums you are going to use, how much money will be spent with each and how often your business will be advertised.  Support this decision using information that you provide concerning your target market.  Don't guess-find out from advertising salespeople what your advertising is going to cost.  Show in your business plan how you arrived at your prommotional budget.

    B.  Pricing Policy- Demonstrate your pricing policy. If in retail or wholesale, indicate what your markup will be and why.  If in manufacturing or service, develop a cost analysis of your product and indicate how you arrived at the costing as well as the markup.

    C.  Sales Strategy- Demonstrate in your business plan that you know it takes more than a good oproduct to make a sale.  Discuss how you plan to make sales.  If sales will be made, indicate what type of presentation will be used.  If sales are dependent upon in-store sales personnel, discuss how they will be trained. 

IV.  Management Plan

• Directors and Officers- List names and positions of all directors, officers, and key employees in your firm.
• Owner/Investors- Describe your financing to date as it relates to the people involved: Indicate the name, amount of investment, and percent of ownership of each investor.
• Professional Help- List names of all lawyers, accountants and insurance agents who will support your business.

    A.  Organization Chart and Responsibilities- Provide a chart showing the organizational structure of the business.  Indicate who the key individuals are and what areas they will be responsible for. 

    B.  Resumes of Key Personnel- attach resumes of yourself and key employees.  This will assist you in showing your lender that you and uour staff have the experience and training to operate the business profitably.  

    C.  Staffing Plan- Indicate the number of employees you will have and the positions they will hold.  Provide information on pay rates and benefits.  It can be very helpful to develop a payroll budget at this point.  Indicate any expected additions during the first three years of operation.