Jaxworks: Sample Business Plan

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A SAMPLE BUSINESS PLAN
A well-written business plan is a crucial ingredient in preparing for business success. Without a sound business plan, a firm merely drifts along without any real direction. Yet, entrepreneurs, who tend to be people of action, too often jump right into a business venture without taking time to prepare a written plan outlining the essence of the business. You should begin by writing down the answer to the very basic question, "What business am I in?" This may sound elementary, but answering this question with thought and consideration will help you focus on the major purpose of the business, which leads to establishing goals and objectives. In turn, these serve as aids in creating strategies, policies, and procedures. Every small business should have policies concerning credit, customers, product lines, image, prices, advertising, and so on. It is important to plan in writing; otherwise, the planning function either is ignored altogether or is conducted too informally. This sample has all of the ingredients to produce an excellent business plan. To print this page, set your browser to "do not print background colors". It prints about 10 pages depending on your printer.
Executive Summary
Key executives:	Mr. James K. Quadrant 978 Lakeside Drive Hamilton, New York 13346 (515) 555-5431			Mr. Isiah M. Gradient 113 Broughton Road Hamilton, New York 13346 (315) 555-6871

Business:	Quadrant Surveying & Equipment Company 600 Madison Drive Hamilton, New York 13346 (315) 555-4000

Business size:	$378,000 in billings in latest fiscal year. Qualify under SBA definition of a "small business."

Form of ownership:	S Corporation

Loan purpose:	To purchase 1 Zeiss total stage with data storage and transfer capabilities to improve the quantity and the quality of the surveying jobs performed for clients.

Amount requested:	$25,000
.
	Mr. James K. Quadrant 978 Lakeside Drive Hamilton, New York 13346 (315) 555-5431
.
Work experience:
1974-present	Quadrant Surveying & Engineering Company, Hamilton, New York. Manager-Partner. Created business and continues to actively manage technical aspects of field operations. Supervised project managers of six field crews.
.
1970-1974	Boise-Cascade Timber Co., Freeport, Maine. Survey project manager. Supervised field activities of a six-man survey crew. Planned weekly work schedules and monitored work quality.
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1965-1970	Hi-Tech Survey Co., Albany, New York Technician. Performed various surveying tasks as a part-time member of a field crew while attending college. Earned 80% of college expenses.
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Education: 1969-1970	Rensselaer Polytechnical Institute, Troy, New York Master of Science in Engineering Management. Grades in top 10% of class, GPR of 3.7/4.0.
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1965-1969	Rensselaer Polytechnical Institute, Troy, New York Bachelor of Science degree in Civil Engineering Graduated with honors.
.
References:	Mr. Frank Boland President, Hi-Tech Survey Co. Troy, New York 12180 (315) 555-1890				Mr. Jeff Anderson President, Sound Investment Co. Hamilton, New York 13346 (315) 555-3671
.
	Ms. Sally LeGrand Account Executive Merrill, Lynch, Pierce, Fenner, and Smith Portland, Maine 04111 (207) 555-1218

.
	Personal Financial Statement
	Assets			Liabilities
	Cash-Savings account	$12,000		Notes payable		$10,000
	Checking account	3,000		Mortgage		41,000
	Stocks	22,000		Miscellaneous		6,000
	Keogh contributions	31,000		Total liabilities		$57,000
	Home	96,000		Net worth		$135,000
	Autos	20,000		Total liabilities & net worth		$192,000
	Miscellaneous assets	8,000
	Total assets	$l92,000
.

	Mr. lsiah M. Gradient 113 Broughton Road Hamilton, New York 13346 (315) 555-6871
.
Work experience:
1976-Present	Quadrant Surveying & Engineering Co., Hamilton, New York. Managing partner. Supervises internal managerial operations, including financial, accounting, personnel, and planning duties.

1971-1975	New York Department of Health & Sanitation, Albany, New York. District Maintenance Engineer. Designed water and sewage projects for cities. Supervised staff of twelve.

1966-1970	Hi-tech Survey Co., Albany, New York Technician. Worked part-time as field crew member performed various surveying duties.

Education: 1975-1976	University of Virginia, Charlottesville, Virginia. Master of Business Administration. GPR of 40/4.0.

1966-1970	Clemson University, Clemson, South Carolina. Bachelor of Science degree, in Civil Engineering.

References:	Mr. John Molooney Assistant Vice President Con-Edison New York, New York 10014 (212) 555-2268		Dr. Fred Target Professor of Engineering Rensselaer Polytechnical Institute Troy, New York 12181 (518) 555-3196

	Mr. Sam Hough Certified Public Accountant Charlottesville, Virginia 22201 (804) 555-3241


	Personal Financial Statement
	Assets			Liabilities
	Cash-Savings account	$6,000		Notes payable		$14,000
	Checking account	4,000		Mortgage		59,000
	Mutual funds	27,000		Miscellaneous		6,000
	Stocks	18,000
	Keogh contributions	24,000		Total liabilities		$79,000
	Home	94,000		Net worth		$138,000
	Real estate	17,000		Total liabilities & net worth		$217,000
	Autos	19,000
	Miscellaneous assets	8,000
	Total assets	$217,000

	COMPANY HISTORY
	James K. Quadrant created Quadrant Surveying & Engineering Company in 1974 as a part-time business venture designed to serve the surveying needs of the local community. Mr. Quadrant began part-time operation of the business in 1975, and Mr. Gradient joined the firm in 1976 to manage the internal operations of the business, while Mr. Quadrant's major responsibilities remained in the area of surveying operations. The two principals' skills, abilities, and areas of concentration are complementary. Annual sales have increased steadily to a record high of $378,000 in the latest fiscal year, and profits peaked at $48,965.

	INDUSTRY TRENDS AND THE STATE OF THE ART
	Demand for surveying and engineering services should continue to climb during the next decade for three important reasons. First, the rapid escalation of property values during the 1980s has increased the need for these services by several customer groups. Second, greater mobility among the general public has increased the number of land transfers. Third, the trend of larger financial institutions to buy and sell residential and commercial mortgages translates into more work for surveyors, who must provide closing plats showing property boundaries, location of permanent fixtures, encroachments, and easements. There has been an extremely rapid growth in golf course communities in the last two years, with new development announced to begin in the next three years. The development of "state of the art" equipment in the surveying industry has paralleled the expansion in the service's demand. The surveyor's tools have undergone a major transformation in the last ten years; they are more sophisticated, more accurate, and more refined than ever before. Technological advances have manifested themselves in two important forms: (1) the development of speedy, accurate computational equipment (e.g., microcomputers, programmable calculators, etc.) that allows the surveyor to perform complex calculations on field data, and (2) the introduction of electronic distance meters (EDMs), which yield more accurate survey measurements faster and facilitate data processing.

	KEY SUCCESS FACTORS
	The principals see the following factors playing a critical role in the success of the company: Providing services in a timely fashion. Accuracy of work. "Guaranteed satisfaction." Professional image. Capable work force.

	MARKET ANALYSIS
	Quadrant has been extremely successful in carving out a specialty niche for itself as well as in meeting the surveying needs of the general public. The company has earned a reputation as the expert in surveying and planning golf courses. After completing work on two local courses, Quadrant obtained a contract on a large, "upscale" golf course 125 miles west of Hamilton. The work is progressing on schedule and will be finished on time and within budget.

	TARGET MARKET
	The principals of Quadrant have identified their primary target market (in descending order of importance) as: (1) golf courses; (2) realtors; (3) attorneys; (4) private landowners. The firm's marketing strategy is designed to attain the return customer by providing quality surveying and engineering service with prompt turnaround. The firm has built its reputation by focusing on quality, and its pricing policy reflects this professional image. General strategy is to tailor pricing to the "cream of the crop."

	COMPETITOR ANALYSIS
	Quadrant Surveying & Engineering Company faces no direct competition in its hometown, Hamilton, New York, but there are three primary competitors conducting similar operations in towns within a fifty-mile diameter of Hamilton. Geodetic Survey, Inc. A small corporation (three principals) whose primary focus is surveying large land tracts for timber companies. Serves 28% of local markets. Photogrammetry Engineers, Ltd. A small partnership that performs all types of surveying jobs and specializes in surveying by aerial photography. Controls 22% of local market. Land Surveyors, Inc. A relatively new, aggressive company that also performs all types of surveying jobs and specializes in surveying for local architectural firms, Controls 18% of the local market.

	PLAN OF OPERATION
	Quadrant employs the S Corporation form of ownership primarily for tax reasons. The organizational chart is attached on a separate form.

	KEY PERSONNEL
	In addition to the principals, whose experience and network of contacts is crucial to the company's success, two long-term field managers play major roles in the firm. As Quadrant grows over the next year, another field manager will be hired.

	FINANCIAL DATA
	The following audited financial statements summarize Quadrant's latest operations:

	Quadrant Surveying and Engineering Company
	Balance Sheet

	Assets		Liabilities
	Current assets:		Current liabilities:
	Cash	$ 5,000	Accounts payable	$2,500
	Accounts receivable	4,700
	Total current assets	$ 9,700	Long term liabilities:
	Fixed assets:		Notes payable	11,500
	20 vehicles	40,500	Mortgages On real
	3 computers	30,000	property	43,000
	6 sets EDM equipment	48,000	Total L-T liabilities	$54,500
	4 transits	6,000	Total liabilities	57,000
	4 levels	4,800	Owner’s equity	127,500
	Misc. field equipment	20,000	Total liabilities &
	Office fixtures & equip.	18,000	Owners' equity	$184,500
	leasehold improvements	7,500
	Total fixed assets	$174,800
	Total assets	$184,500

Income Statement

	Net sales		$378,000
	Operating expenses:
	Labor expense		$219,800
	Gas expense		29,993
	Telephone expense		6,270
	Equipment repair expense		5,600
	Insurance' expense		9,025
	Rent expense		5,400
	Depreciation expense		9,200
	license expense		1,500
	Payroll taxes		11,050
	Office supplies expense		7,200
	Field supplies expense		10,900
	Miscellaneous expenses		4,700
	Total operating expenses			$320,638
	Net operating profit			57,362
	Income taxes			8,397
	Net profit			$ 48,965

	Quadrant Surveying & Engineering Company
	Break-Even Analysis

			total fixed expenses
	Break-even sales =
			1.00 - variable expenses expressed as percentage of sales

	Total expenses		$329,035
	Fixed		88,122
	Variable		240,913

			240,913
	variable expenses as a % of sales =
			378,000

	=		0.6373

			88,122
	Break-even sales=
			1.00 - 0.06373

	Break-even sales=		$242,961

Projected Cash Budget


Cash Receipts	Jan	Feb	Mar	Apr	May	June	July	Aug
SALES COLLECTIONS:	20,000	25,000	28,000	33,000	47,000	54,000	58,000	55,000
20% same month			5,600	6,600	9,400	10,800	11,600	11,000
60% first month after sale			15,000	16,800	19,800	28,200	32,400	34,800
18% second month after sale Other cash receipts			3,600	4,500	5,040	5,940	8A60	9,720
TOTAL CASH RECEIPTS			250	50	380	160	400	100
CASH DISBURSEMENTS			24,450	27,950	34,620	45,100	52,860	55,620
Wages			15,680	18,480	26,320	30,240	32,480	31,147
Taxes
Payroll			532	628	987	1,011	1,375	1,163
Property			0	0	400	0	0	0
Transportation			790	840	1,380	1,525	1,780	1,645
Repairs & maintenance			375	450	575	625	700	675
Field supplies			650	800	1,050	1,240	1,500	1,375
Rent			500	500	500	500	500	500
Utilities			100	110	130	140	150	140
Telephone (including yellow			450	575	800	950	1,075	990
Entertainment			200	200	200	200	200	200
Insurance
Malpractice			0	9,000	0	0	0	0
Tenant's			0		1,500	0	0
Auto			0	0		500	0
Licenses			0	0		1500	0
Miscellaneous			210	340	425	490	510	500
TOTAL CASH DISBURSEMENTS			19,487	31,923	34,267	38,921	40,270	38,335

END OF MONTH BALANCE
Beginning cash balance			5,000	9,963	5,990	6,343	12,522	25,112
+ cash receipts			24,450	27,950	34,620	45,100	52,860	55,620
- cash disbursements			19,487	31,923	34,267	38,921	40,270	38,335

CASH END OF THE MONTH			9,963	5,990	6,343	12,522	25,112	42,397
(REPAYMENT)			0	0	0	0	0	0
or
(BORROWING)			0	0	0	0	0	0

CASH END OF THE MONTH			$ 9,963	$ 5,990	$ 6,343	$12,522	$25,112	$42,397
Minimum Cash Balance = $5,000

Pro Forma Income Statement


Net sales	$480,000
Operating expenses:
Labor expense	$272,000
Gas expense	30,305
Telephone expense	10,650
Equipment repair expense	6,500
Insurance expense	11,000
Rent expense	6,000
Depreciation expense	10,000
License expense	1,500
Payroll expense	12,750
Office supplies expense	7,400
Field supplies expense	11,200
Miscellaneous expenses	5,100
Total operating expenses	$384,405
Net operating profit	95,595
Income taxes	13,995
Net profit	$81,600


	STRATEGIC ACTION PLAN
	Goals, Objectives, and Strategies
	The principals of Quadrant recognize the importance of quality management in successfully meeting their competition. To focus the firm's activities, the principals define its mission: "To meet the spectrum of surveying and engineering needs of private landowners, large tract owners, financial institutions, attorneys, realtors, and timber companies with high-quality service, rapid turnaround, and unparalleled professionalism, at a profit." The overall mission of Quadrant is more clearly defined by dissecting it into the following objectives: To boost annual sales to $480,000. To increase market share from 31 percent to 36 percent of the local market. To obtain a contract for another golf course. To increase by 10% the number of engineering jobs performed for local towns and districts (e.g., water and sewage systems design). To improve profit margin from 13 percent to 17 percent. To obtain these objectives, Quadrant will employ a business strategy designed to exploit the four key factors for success in the surveying business-to maintain: (1) a prompt turnaround time on jobs; (2) a professional image with the clientele; (3) a continuous relationship with "return customers"; and (4) a healthy customer mix to ensure a steady flow of work. The following key points illustrate this strategy: To utilize equipment offering the latest technological advances. To train employees in implementing advanced survey techniques into their work. To provide the opportunity for clients to consult with project managers (or principals, if desired) on all projects. To keep the customer informed of the job's progress on a timely basis. To "crack the engineering market" by obtaining small jobs with cities, districts, and subdivisions. To increase the number of government contracts bid on. To acquire and to develop "regional accounts"-clients with large land holdings (e.g., large timber companies). loan purpose: To purchase a Zeiss total station with data storage and transfer capabilities that will facilitate taking angular and distance measurements in the field and performing survey computations. Amount requested: $25,000 (see attached vendor's estimate) Terms: One year and no prepayment penalty. Interest rate: Prime Collateral: Personal guarantees of principals' title to Zeiss total station. Repayment: Quadrant's ability to repay is illustrated on the accompanying proforma financial statements. The cash budget projected for the upcoming year shows the company will be able to repay the loan within one year. Benefits accruing from the purchase of this EDM equipment include the ability to: Reduce the number of field personnel by one-third. Reduce office personnel by the immediate transferring field data to the home office via telephone. Minimize the number of return trips to the job site, a significant cost of doing business. Improve productivity by performing more jobs in less time. Improve the firm's professional image with its clientele by employing the latest, most advanced equipment. Obtain golf course that requires a level accuracy attainable only with EDM devices.