Sample Business Plan from Eurion Constellation

1. ABC International Inc.
Business Plan
November 2010

2. ABC International Inc.
Business Plan | Eurion Constellation Page 2
1. Executive Summary (2-3 pages)
Notes: Prepared Last
1.1. Strategy
A synopsis of the company’s strategy for succeeding
1.2. Management Team
A concise account of the management team’s qualifications that make the company successful (be
sure to include a description of your team’s contribution to previous successful business ventures)
1.3. Market
A brief description of the market (along with the ingredients for success that make your company
unique in that market)
1.4. Offerings
A brief description of the product or service
1.5. Key Financial Data
Key historical and forecasted financial data, such as annual revenue and net income, for five years
1.6. Funding Needs
An estimate of the amount of the funds you need - a statement of how you will use the money and
how lenders or investors will get their money back.
2. Company Description
2.1. Mission (approx. 30 words)
2.2. History
When was the company founded? Why was it founded? What have been its chief
accomplishments? How has its direction changed?
2.3. Current Status

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What are its existing product lines? How many employees does the company have? Where does it
stand in its industry and marketplace? Have there been any sales? Are sales on an upswing, level,
or in a decline? Equally important, what are the company’s failures and shortcomings?
2.4. Strategies
2.5. Future Plan
3. Management and Organization
3.1. Need for additional key people
3.2. Outside advisors/consultants
Notes: At the end of the business plan, in an appendix, provide complete and detailed resumes,
giving the information necessary to allow the prospective investor to check references. Each resume
should include exact employment information (positions, places employed, dates of employment,
and reasons for leaving), schools attended, degrees received, and dates. The resume should also
paint a personal picture of each executive for the prospective investor. You many want, for example,
to include references to industry and business affiliations, professional memberships, hobbies, and
leisure time activities.
You should describe the compensation packages that you offer to the key members of the
management team. Compensation packages can include salary, bonuses, profit sharing, stock
ownership opportunities (options or purchase), and deferred compensation to name the most
common. Be specific about the stock ownership opportunities available to each key employee.
4. Market and Competitors
4.1. Market
How buying decisions are made? What is the market segmentation?
Notes: The term market research suggests complex matters such as regression analysis and
academic studies. More often, it is a straightforward accumulation of data available from published
sources such as government or industry-association statistics and news articles, as well as from
executives’ inquiries. The most important aspect of market research, however, is feedback from
current and prospective buyers.
4.2. Industry

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4.3. Buyers: Current and Potential
4.4. Competitors
What is your aimed market position? What is your defensive strategy to fend off competition?
5. Products and Services
Notes: If you have already built a working model or a prototype of your product, you may want to
include a photograph of it. If it is small or inexpensive enough — such as a type of food or other
consumer product — you might even consider including a sample or sending one as a follow up to
receipt of the business plan.
If you have not built the product, it could be helpful to include an artist’s rendering or at least a
conceptual diagram. Furthermore, if your product or service is derived from a new technology or an
innovative application of an existing technology, you should explain this fully.
Investors seldom like to back “one-product” companies.
5.1. Features, components, and quality of products/services
5.2. R&D requirements and work remaining
5.3. How the product/service will be produced and at what cost?
5.4. Any crucial quality control measures and after-sales services
5.5. Regulations and laws applicable
6. Manufacturing and Operational Plan
6.1. Location and Space Requirements
Where is the planned location? Discuss the location's proximity to customers and suppliers. Discuss
tax rates and zoning requirements for the location. Discuss transportation issues. Discuss utility
costs. Will you rent, lease, or purchase the facility? Any additional information
6.2. Equipment
Will you rent or purchase equipment? Any additional information
6.3. Inventory Control

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How will you control quality, inventory, and production?
6.4. Purchasing Requirements
Will you make or purchase component parts to be assembled into the finished product?
6.5. Subcontractors and Suppliers
Who are your potential subcontractors and suppliers?
6.6. Labor Force
Notes: Discuss the local labor pool. Is there a sufficient quantity of skilled people to meet the
business's needs? Discuss wage rates and unionization issues.
Labor Requirements: How many employees are needed? Full-time or part-time? What are the job
qualifications? Will you have written job descriptions? What will you pay your employees? How
does that compare with the going rate in your region and industry?
Selection, Orientation, and Training: Do you have a job application form? What criteria will you use
in selecting employees? What orientation process will there be for new employees? How will new
employees be trained?
7. Sales and Marketing
Highlight the cost effectiveness of the current business and development strategy
Analysis of market research study
Unique selling proposition
Marketing through advertising and public relations
7.1. Selling methods
7.2. Staff training
7.3. Sales support
8. Financial Information (3-5 years forward)
Notes: Be conservative. Include funding request.
8.1. Revenue Statement

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Sales: Your market share should be consistent with your estimate of the total market and your
competitive advantage over others. Sales may be forecast on either a unit (earlier years) or a
percentage-of-volume (later years) basis (say, y-o-y).
Cost of Sales: Rather than merely assuming costs to be a percentage of sales, you should analyze
the material, labor, and overhead elements that go into making the product. Your forecast should
be based on the production plans that you have developed and should take into account all cost
components.
Marketing Expense: For the first two years, marketing expenses should be based on a detailed
marketing plan that builds on the marketing section of the business plan. Later, you can estimate
marketing expense as a percentage of sales.
Contingencies: Instead of including the possible cost overrides in other line items, use a separate
one – contingent costs.
8.2. Balance Sheet
Cash: Estimate a minimum amount of cash to be maintained over the forecast period. This will
affect the amount of cash you need to raise through either borrowings or the sale of stock. Most
business owners prefer to maintain enough cash (including cash investments) to cover three
month’s disbursements, to allow some cushion for unexpected problems and costs. This cushion
will also provide time to negotiate a good funding package when you are ready for a subsequent
round of financing.
Investments: The level of investment will depend on your monthly cash needs. Indicate the rate of
interest you expect to earn on excess funds. A good rule of thumb is to assume that interest will be
earned at the current money-market fund rate.
8.3. Cash Flows
8.4. Funds Flow
8.5. Sensitivity Analysis
Notes: You need not include prospective financial statements that use the changed assumptions.
Instead, provide a general discussion of the most critical assumptions used in preparing your
forecast and, in discussing the alternative results, focus on whether additional financing will be
required and on what income and return on equity will be at the end of the forecast period.
8.6. Funding Request
Notes: If your business is already in operation, explain the company’s capital structure and what
effect the anticipated funding will have on it. If you are a new company, explain how you have been
capitalized, who the stockholders are, what their positions in the company are, how much stock
they own, and how much they paid for it.

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You should explain any plans for obtaining financing besides the venture capital, private equity or
loan funds described in the immediate funding request. Many companies arrange a bank line of
credit, or a bank-term loan or equipment lease to finance their short-term working-capital needs
and capital-equipment expenditures, respectively.
8.7. Exit Strategy (Venture Funding)
How do you plan to get yourself (and your money) out of the business? Do you intend to grow the
business to the point of an IPO? Do you intend to sell the business?
9. Risks and Assumptions
9.1. Market Growth
What will you do if your market develops either more slowly or more quickly than anticipated?
9.2. Competition
How will you react to competitor challenges such as underpricing or new products that make yours
obsolete?
9.3. Industry
How will you react to favorable or unfavorable changes in the industry?
9.4. Labor
How will you react if there is a labor shortage or other labor-related issue?
9.5. Inputs
How will you react if there is an erratic supply of products or raw materials?
10. Notes
Loan application packages tended to consist of little more than past and current financial
statements.
Tailor the plan. The plan should be written and organized with the primary readers in mind. If the
plan is being used to secure a bank loan, it should emphasize such matters as collateral, previous
borrowing history, cash flow, receivables, and other matters of principal interest to bankers. If the
plan is intended to raise investment funds, it should concentrate more heavily on long-term market
trends and other issues affecting growth prospects. If the plan is to be shown principally to potential

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acquirers of the company, it should emphasize the company’s accomplishments within its industry,
along with its ability to continue long-term growth and improve cash flow over the coming five
years. [Different groups react in different ways to specific factors. For instance, it may be a mistake
to emphasize balance-sheet ratios to venture capitalists, because they understand that the ratios of
fast-growing and service companies can be easily distorted. It may also be a mistake to emphasize
explosive market growth to bankers, who many then worry about whether cash flow will be
sufficient to cover debt service requirements.]