Initiative for the Development of Entrepreneurs in Agriculture

A business plan is the who, what, when, where, and how of running your own business. The person reading your plan should be able to understand the nature of your business, what your vision for that business is, how you plan to run it and why it will succeed.

Although there are no strict rules about what goes into a business plan, most plans contain the following:

Executive Summary: About one page in length, the executive summary explains the business idea as briefly as possible and should include only the highlights of the business plan. Its purpose is to capture the attention of the intended reader. If it is a banker, you may want to include your lending requirements and brief summary of collateral and your payback strategy. If you are attracting investors, the emphasis should be on potential return on initial investment and the growth potential of your product or service. Remember to be brief, supporting detail should be provided in later sections.
Description of the Business: This is the opportunity to give important background information on your business. It should include a description of the business itself, an overview of the industry in which you will be competing, a summary of your background and relevant experience and if you are already in business, a history of the business. If you are just getting started, extra attention should be paid to your personal strengths and qualifications since that will be the greatest indicator of your chances for success.
Marketing Summary: This section covers three basic areas:
- Overview of the market place-This would answer the questions like who are the customers, where are they located and how much are they spending. It should also profile the competition. How many competitors are there and what are competitive strengths and weaknesses in the marketplace? You may also want to share what the future outlook is for this market. Are there new growth opportunities? Most of this will require some market research but the information is usually available through public and community college libraries. There are also excellent online sources for market information.

Market niche-for your business. Explain who your targeted customers are and why they will buy from you instead of one of your competitors. This part is most important. Every customer needs a good reason to buy from you. If you are just starting out they will also have to have a fairly convincing reason to leave the business they are presently using and give an unknown like you a chance. Every business must have a competitive edge.
Market Strategy-Describe how you intend to reach the customers you've identified as your target market. What media will you use and how much? Will you direct market on-line or will you contract through a wholesaler? This is an opportunity to be creative.

Financial Information: This section is probably the one which new businesses struggle with the most because it requires the most technical detail. It usually contains the following information:
- Start up costs-A summary of the cash required to start the business and from where that money is coming. How much do you need to borrow and how much will you personally invest? If you are borrowing, include a detailed list of what you will pledge as collateral. Provide a schedule of how the start up capital will be used. Include a list of equipment purchases, deposits, licenses and fees, the cost of start up inventory and any building purchases or remodeling costs.
- Cash budget-(usually called a cash flow statement) This is your best estimate of how much money will be coming in and how much will be going out for each of the first twelve months of operation.
- Personal financial statement-This is the same information that is required when you apply for a credit card. Forms for these are usually available through your local bank.
Business financial statements:This information is presented in the form of a balance sheet and income statement. The format for these statements is fairly standard. Unless you have some accounting background you will probably want to get some help for these statements.

If you are interested in finding out more, contact University of Illinois Extension Quad Cities Center at 309/792-2500.

Frequently Asked Questions