Do you want to write a small business plan?

Do you recognize that quote? It's pretty well known, and for good reason. It's true. According to the Small Business Administration (SBA), seven out of ten new businesses last at least two years. That means that 30% fail within the first two years. The reasons for failure are varied, but failure to plan is at the top.

Business plans impress bankers and investors. Creating a business plan teaches you things about your business you may not have known. A good plan is like a crystal ball - it tells you what type of year you're going to have.

Restaurants are one of the most popular small businesses. You may know someone who thought they were a good cook and wanted to open a restaurant. Among the expenses a restaurant will have are rent, utilities, equipment lease and repair, wages, cost of food and beverage, etc. Their monthly expenses could easily exceed $15,000. If the average meal sells for $10, that's 1500 meals a month they need to break even. That works out to fifty meals a day, every day of the month. Can they do it? Did they work out the numbers that way and ask themselves that question before opening? Probably not. Most small business owners simply start their business and hope for the best.

On the following pages, we will teach you how to write a small business plan. We'll look at your sources of revenue and build a revenue model. Then we'll look at your cost of sales. You'll learn how to predict fixed and variable operating expenses, as well as non-operating expenses, and develop a plan that you can use as a strategic model for your small business.

It's important that you adopt a realistic, not hopeful, approach to developing your plan assumptions. If you err on the conservative side, then the year will be better than you had planned.

Your plan can be used to predict cash flow too, and then you'll have a better understanding of your capital needs when it's time to seek financing.

After your plan is built, you can expand it to multiple years (e.g. five-year plan), and engage in sensitivity analysis, where you see how small percentage increases or decreases in your assumptions affect the bottom line.

Finally, you'll learn how to compare actual results with your planned results and what to do with that analysis.

Ready to start? Good, let's begin.

Start your business financial plan with the Revenue Model

Continue your planning with a Cost of Sales Model

Finally, model your Operating and Non-Operating Expenses

Compare actual results to plan with a Variance Analysis

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