Guide to Starting and Operating a Small Business | 2018 Guide to Starting and Operating a Small Business - Page 71

Research and Development Plan (if applicable) Plan for your company’s future and growth. Whether you will be developing new products or expanding to additional locations, a growth plan is important. What are your goals and plans in this area? What obstacles do you foresee while trying to achieve your objectives? Will you require additional financing to obtain your research and development objectives? You may want to highlight the following elements within this section: • Research and Development objectives • Milestones and contingency plans • Difficulties and risks and how to overcome them • Special budget needs Section 4—Financials In a narrative, identify the financial goals and projections for your company. What do you need and how will you obtain it? Start by estimating your monthly costs, both fixed and variable. That total tells you at a minimum what you need to generate in revenue – and then you can work backwards and calculate how many products you’d need to sell, or how many hours of service you’d need to complete, to at least break even (income = expenses). The following elements should be included in this section: • Assumption page - A list of your explanations for the numbers in the financial projection. • Cash flow projections -This will compare the money coming in to the money going out on a month-by- month basis. Can you pay your monthly bills? • 2-5 years profit & loss statements – Different than cash flow, a P&L includes some different categories and will show if your company is projected to grow or is growing financially and according to your targeted goals. • Start-up or growth capital needed – An itemized or categorized list of how the money borrowed/invested will be spent (Sources and Uses). • Financing needed and equity/debt options - Ask for what you have assumed in the financial projection. For example, if the projection assumes a $50,000 at 5.0% for 10 years, that is what you ask for. • Terms and conditions of any previous financing – Include information on any existing debt and equity arrangements. • Commercialization/strategy (if applicable). Some business plans take an idea or invention from conception to the market place. One needs to address those issues as the timeframe for such a project is usually very long. • Exit strategy - How is the money going to be extracted from the business? Do you plan to sell the business? Will your children inherit it? Appendix Supporting documents related to content you have referenced in your plan, which you or another reader may wish to refer to for more detail or verification, may include the following: • Principal’s resumes and/or list of owners with over 20% of the stock • Personal income tax forms if required • Letters of recommendation, purchase orders, other • Site/floor plans Contracts 69