Hourly Based Fee
Only Advice
Call today to arrange a meeting.
1 (902) 393-1248
P.O. Box 1201     Charlottetown, PE     C1A 7M8
T: (902) 393-1248 (direct)     CorkumFinancial@pei.sympatico.ca     www.CorkumFinancial.ca

Business Plan Outline


A business plan is a document which provides its readers with an overview of an enterprise, highlighting its objectives, and providing summary information about its products or services, its management, its operations and its financial outlook. A plan serves as a management-planning tool and as a basis for potential investors or lenders to evaluate a business. A business plan is effectively a sales tool, but it is also your professional introduction to those to whom you present it. Therefore, you need to ensure it is professional in appearance and accurate with your facts and assumptions well supported by research. In addition, of utmost importance, you, personally, need to fully understand and be able to explain all of its contents and be able to present it as your own document. The business plan is for your business; consultants and accountants are only your support team.

i. Executive Summary

A short narrative should highlight the most important features of your business plan, including a clear statement of your objectives and support for your rationale. The potential return to investors will be highlighted here. Summarize the following:

  • The plan’s purpose.
  • An outline of your products or services, and other benefits.
  • An assessment of market potential and your marketing strategy.
  • Background and experience of the key management.
  • Timetable for the project.
  • Capital expansion requirements, and the amount and sources of financing needed.
  • Summary financial data, including profitability expectations.

ii. Business Description

This section of your business plan will stress the factors that set you apart from your competitors, and explain how your product will meet market needs. A description of your industry, the history of your business, details of your product and related technology involved, and your business objectives well be part of this section.

Your narrative should include:

  • A description of your industry and important factors and trends.
  • Your company’s history, ownership and related companies.
  • Your company’s short and long range goals.
  • Details of your product or service, and related technology; photographs, brochures or detailed descriptions in an appendix may be useful.
  • Your approach to responding to changes in the business environment.
  • The risks involved in your business and how you plan to cope with them.

iii. Marketing & Sales

In this section, an overview of your industry and the size of your potential market should be set out. Information on how you plan to penetrate and compete in this market and details of your customer base should be identified. Include the following:

  • A description of your industry from a market perspective – its current status, present trends.
  • The specific market segment in which you will compete.
  • Size of the potential market, and its ability to sustain another vendor.
  • Your projected market share, including an analysis of your competitors and similar products or services, how you will compete with them and how they will affect you.
  • Your intended sales territory.
  • A description of your existing and potential customers, and attach letters of interest wherever possible.
  • Your planned marketing methods, priorities and timing.
  • A description of your plans for advertising and promotion.
  • An analysis of any surveys or studies done to support your market strategy.
  • Your plans for contacting potential customers, including a description of your sales team, comprising a summary of their experience and your proposed remuneration method.
  • Product pricing policies.
  • Product distribution channels.
  • Details of warranties to be offered, or other customer service.
  • A summary of the effect of general economic changes on your sales volumes.

iv. Product Development

In this section, the technical considerations of your proposed products and then development or procurement should be detailed, indicating the various stages of development and the costs involved. Any benefits of your proposed technology and the advantages of your product development team would be highlighted here.

The following should be provided:

  • If your product must be developed, details of the current state of knowledge, description of research to be done, expected time periods involved, and risks involved. Are there competitors in the same field? What are the risks involved?
  • If your product is beyond the development stage, its source or origins and how you will ensure its continued supply or development.
  • The background and experience of your key development or procurement personnel.
  • The benefits of your technology, product, or service over those currently available.
  • Details of patents, copyrights, licenses or franchises.
  • Effects that changes in technology will have on your product; describe your method of keeping pace. How will you handle slow moving product and obsolescence?

v. Operations & Production

A review of your infrastructure, including premises, equipment and workforce, is appropriate here, including the present situation and the expansion requirements. The advantages of your specific form of operations should be highlighted. Provide the following:

  • Details of existing premises and equipment, and proposed acquisitions.
  • Product component analysis, describing required raw materials and direct labour, and details of related cost per unit of product.
  • An explanation of your production process or service delivery methods.
  • Sources of supply and supplier credit arrangements.
  • Expected inventory requirements. How will you control the purchasing and manage your inventory levels?
  • Workforce details by job category, including wage and benefit details.
  • The background and experience of key production personnel.
  • Diagram, where appropriate, of your production or retail layout, including proposed expansion.
  • Limits of your production and sales capacity.
  • Description of your quality controls.
  • Timeframe of proposed start-up or expansions, including details of acquiring and making facilities ready.

vi. Management Team

An explanation of your approach to management is very important and will require resumes from each of your key employees and yourself. Specifically, you should review how you plan to manage day-to-day responsibilities and decision making, while simultaneously developing and selling your product. You should fully describe details such as:

  • Related experience in businesses in the same or similar industries for all key management personnel. Ensure the areas of general management, finance, marketing, and production and personnel are all included.
  • Identification of those individuals with the leadership qualities necessary to deal with problems and ensure success; an organization chart may be appropriate.
  • Management’s understanding of the industry and the factors that will ensure success in this venture.
  • Remuneration plans for key people.
  • Expansion plans for additional staff as the company grows.
  • Details of proposed reporting and control technologies for management information systems. How will you and your team say informed about sales, production and finance issues, for example?
  • If your management team is lacking experience or knowledge in key areas, how will you compensate for this weakness?

vii. Financial Summary

In this section, highlights of your historical financial performance of your financial projection will be outlined, with reference to financial statements and projections in an appendix. (Typically, a three-year financial projection is appropriate, with the first year prepared on a monthly basis to show the seasonality of your business and the cash flow fluctuations expected. You should provide explanations and assumptions for all key figures in your projections, with supporting documentation in an appendix to the business plan supporting key quotations and estimates.) This financial summary should include:

  • A summary of the financial projections, including highlights from the statements of income and cash flows. Key information to highlight will include total figures for the following:
    • initial capital costs and the related financing, including your equity injection
    • sales and their projected growth
    • gross profit margin percentage, if applicable
    • net profit
    • line of credit peaks
    • working capital balance and debt to equity ratio at the end of three years.
  • Identification of the amount of financing sought. Describe your ability to repay it within a reasonable time period, which will be demonstrated in your projections.
  • Discuss the financial risks involved in the business and how you have dealt with them, if they have not been discussed elsewhere in the business plan. These risks include lower sales than budgeted, an increase in prices by your suppliers, changes in loan interest rates, etc.
  • Use a sensitivity analysis to determine the effect of changes in key assumptions and explain your contingency plans. For example, what will happen if your sales fall short of your budget by 10%? Explain how you will finance any unexpected contingencies. Do you have additional equity or sources of financing?

Blair Corkum, CPA, CA, R.F.P., CFP, CFDS, CLU, CHS holds his Chartered Professional Accountant, Chartered Accountant, Registered Financial Planner, Chartered Financial Divorce Specialist as well as several other financial planning related designations. Blair offers hourly based fee-only personal financial planning, holds no investment or insurance licenses, and receives no commissions or referral fees. This publication should not be construed as legal or investment advice. It is neither a definitive analysis of the law nor a substitute for professional advice which you should obtain before acting on information in this article. Information may change as a result of legislation or regulations issued after this article was written.©Blair Corkum