Click here for printable version of the Business Plan Outline.
The Center for Community Development
Cottage Industry
Loan Program
Cottage Industry
Loan Program
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I. Introduction
The introduction will summarize what the business is, highlight how you are the person that can make it profitable and what you are requesting.
Describe:
Type of business: Is it retail, wholesale, manufacturing or service
Age: Is it a proposed start-up, an expansion or the purchase of an existing business? (If you are buying an existing business, state how long it has operated in that location).
Legal Structure: Is it a sole proprietorship, partnership (limited or general), or corporation (C, S, or Limited Liability-LLC)? If the business is a partnership, it is necessary to prepare and include partnership agreement in the attachments section of your plan.
Owners: List all owners, the percent of ownership of each, their investment and their current or proposed compensation plan.
Sources and proposed uses of funds: Include a list of what will be purchased with the loan, from whom you will purchase these items listed and the benefits that will result.
Proposed Collateral: This may include inventory, machinery, equipment and real estate. Don't forget to include the appraised or market value of each item listed. List separately proposed purchases and assets you already own if they are going to be used in this business. If you have mortgages on any item submitted in this section include the balances owed on each.
II. Business Activities
This section describes what the business does and how it will succeed in its location. Provide an evaluation of the industry in general (is it growing or in decline), an objective description of the competition and a discussion of who, what, where, when and how it will be done.
Describe:
Products or services: A specific list of items you will sell.
Market area and your potential customers: Any sales claims listed in your financial statements are best substantiated here. It is a good ida to use letters of support from potential customers or a survey that might strengthen your claim.
Competition: Define your competitive advantage. List your competition, their location, their strengths and weaknesses and how that will affect your sales.
Sales Strategy: How will you attract and keep your customers? How will you turn your product or service into sales?
Employees: Include yourself if you work in the business and list all responsibilities that each employee will have. Don't forget any part-time help and their proposed schedules.
III. Management
This section will show why you will be able to do what it is you say you are going to do. Include what management services will be provided by you or your employees and what services will be provided by outside professionals.
Describe:
Your experience: How is it related to the line of work that will be needed in the business?
The management team: If anyone else will be working in the businesses and have management responsibilities, include their resume, a list of their responsibilities and their proposed salaries or wages.
IV. Financial Information
Here is where you demonstrate to the lender your need for a loan and your ability to repay. It is important that the financial information be consistent throughout the plan as well as on the Personal Financial Statement, and the Loan Application. If yours is an existing business, it will be necessary to provide up to three years of previous business and/or personal tax returns. This shows your business trends and how well you have manage and marketed your business. The proposed owners of a start-up should submit their personal tax returns for the past three years.
Projections are necessary for either an existing business or a start-up and must be based on realistic and verifiable assumptions from your local market area. For an existing business, projections will be compared to past performance. Significant differences between your actual business performance and projected future performance should be explained.
Include:
Historical business or personal financial statements for the past three years.
A monthly cash flow projection for up to three years, depending on the terms of the loan.
Existing businesses should include:
Most recent Balance Sheet and the Profit/Loss Statement.
If you are purchasing an existing business:
An appraisal or verification of value anticipated purchases and financial statements from the prior owner will be required.
V. Supporting Documents
Attach any documents that will strengthen your plan by supporting the borrower and the borrower's capabilities. You may want to include any information that will further substantiate your claim. Examples could include surveys, letters, contracts, and purchase orders.
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NOTE: For items underlined, you will need to provide additional verification along with your business plan.
