o Equipment The equipment needed should be listed with its F0092 The Business

O equipment the equipment needed should be listed

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o Equipment . The equipment needed should be listed, with its
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F0092 The Business Plan *Property of STI Page 8 of 19 cost and whether it will be purchased or leased. o Labor skills . Each unique skill needed, the number of personnel in each skill, pay rate, and an assessment of where and how these skills will be obtained should be determined. o Space . The total amount of space needed should be determined, including whether the space will be owned or leased. o Overhead . Each item needed to support manufacturing— such as tools, supplies, utilities, and salaries—should be determined. Most of the above information should be incorporated directly into the business plan. Each item may require some research, but each is necessary to those who will assess the business plan and consider funding the proposal. Financial Information Needs Before preparing the financial plan section of the business plan, the entrepreneur will need to prepare a budget that includes a list of all possible expenditures in the first year and a list of all revenue sources including sales and any external available funds. Thus, the budget includes capital expenditures, direct operating expenses, and cash expenditures for non-expense items. The revenues from sales must be forecast from market data, as discussed above. To prepare the actual budget, the entrepreneur will need to identify benchmarks in the industry that can be used in preparing the final pro forma statements in the financial plan. These benchmarks or norms establish reasonable assumptions regarding expenditures based on industry history and trends. This is a very acceptable method to arrive at the necessary projected costs for the new venture. For example, if we need to project our costs for operating the food cart business, we can consider the many secondary sources that provide percentage norms for such costs. These sources would provide percentage norms in the industry for such costs as food, beverages, equipment, personnel, and licenses. Expenditures such as rent, utilities, insurance, and personnel costs can also be ascertained from newspapers or advertisements, or from phone conversations with real estate agents, insurance agents, equipment suppliers, and the utility companies in the area. The benchmarks or financial ratios needed to prepare financial statements can be found in such sources as Financial Studies of the Small Business (Financial Research Associates), Industry Norms and Key Business Ratios (Dun & Bradstreet), Annual Statement Studies (Robert Morris Associates), and the Almanac of Business and Financial Ratios (Prentice-Hall). It is also possible to find benchmarks by reviewing financial statements of similar public competitors through the Securities and Exchange Commission (SEC) for partnerships and corporations. Trade associations and trade magazines also may publish valuable data that can supplement the above sources to prepare the financial statements in
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F0092 The Business Plan *Property of STI Page 9 of 19 Writing the Business Plan Pages 7-11 of 13 the business plan.
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