suppliers in business plan example

How to write the suppliers section of your business plan?

Writing a business plan involves several crucial components, and one of them is the supplier section. It helps communicate the reliability and effectiveness of your supply chain to various stakeholders, addressing any potential concerns they may have. 

This section also highlights the efforts you have made to establish a diverse supply chain that aligns with your business's values and objectives.

In this guide, we’ll look further into the core objectives of the supplier section, deep dive into the information you should include, and cover the ideal length. We’ll also assess the tools that can help you write your business plan.

Ready? Let’s get started!

In this guide:

• What is the objective of the suppliers subsection of your business plan?
• What information should I include in the suppliers section of my business plan?

How long should the suppliers section of your business plan be?

• Example of suppliers in a business plan
• What tools can you use to write your business plan?

What is the objective of the suppliers section of your business plan?

The objective of the suppliers section in your business plan is to clearly communicate your business’s supply chain protocols to potential stakeholders like investors, business partners, or suppliers. This involves three key aspects:

Respectable counterparties

Highlight your intention to do business with reputable suppliers who are known for their reliability, quality products/services, and ethical practices. This lets the readers know what your expectations for working in a professional relationship are.

Dependency on a single supplier

This highlights your company's intention to avoid excessive dependence on a single supplier. In this section, you can present how you're actively broadening your supply chain. This reassures stakeholders that you're taking steps to minimize the potential risks linked with relying solely on one source.

Reasonable prices and payment terms

Demonstrate that you have secured reasonable prices and favorable payment terms with your suppliers. This exhibits your ability to manage costs and ensure that you will be able to afford the materials required to run your businesses in a sustainable manner.

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What information should I include in the suppliers section of my business plan? 

Remember that the supplier section precedes the financial section of your business plan and it is essential to provide specific details to give readers a comprehensive understanding of your supplier relationships. To do this, consider including the following points:

Main suppliers

Identify your primary suppliers and briefly explain their importance to your business. Note that this is likely to vary from business to business. For example, a business in construction may have a supplier for concrete and steel, whereas a business in fast-food may have a supplier for ingredients and packaging materials.

Goods or services 

Specify the goods or services that your business provides. Clearly outline how these suppliers contribute to your business operations and support your value proposition. Here you can focus on explaining how the materials provided by the supplier help you in producing quality products or services and adding value.

Supplier relationship

Outline your familiarity with each supplier. If you've had previous interactions with a particular supplier (i.e. they’ve provided you goods or services in the past), emphasize the positive outcomes. Moreover, elaborate on why you opted for each supplier, such as their alignment with social values or ethical practices that resonate with your business mission.

Purchase frequency and delivery time

Indicate how often you expect to purchase from each supplier. If relevant, mention the delivery time for goods. This information helps readers understand your supply chain's efficiency and the potential impact on your business operations.

Commercial terms

Provide details regarding the commercial terms agreed with your suppliers. This includes factors such as pricing, volume discounts, payment terms, and any commitments to minimum quantities. Mention if there are any setup costs associated with establishing the relationship.

Setup costs

Provide a breakdown of the specific costs involved in setting up the supplier relationship. This may include one-time expenses or recurring fees (or both), depending on the nature of the supplier and your business requirements. Give readers as much information as you can to give them an indication of the costs involved.

Supplier dependence 

Assess the criticality of each supplier to your business’ success. Clarify whether your operations are dependent on receiving goods or services from a specific supplier and discuss the potential consequences if a supplier fails to deliver (how big an effect might it have on your ability to meet customer demand?). 

In addition, you should outline whether you have backup suppliers or contingency plans to mitigate disruptions in the event of supplier issues. If you haven't finalized decisions on certain suppliers but have received quotes or proposals, it is important to mention this in the suppliers section. 

Now that you know what information needs to be included in the supplier section, let's look at the volume of information required. As a rule of thumb, aim to keep the supplier section of your business plan to one page. However, the level of detail mentioned in the supplier section will be determined based on the following factors:

Key supplier dependency

If your business heavily relies on one key supplier, you will need to provide additional information to explain the terms and risks associated with that particular supplier. For example, discuss the renewal of contracts and any contingencies in place.

Business complexity and logistics

If your business involves intricate logistics or relies on multiple suppliers, each aspect of your operations may require more detail. Ensure you adequately explain the various relationships and their impact on your business.

Business operations

If your business is small, offers a limited range of products/services, or sources them all from the same supplier (with easily replaceable alternatives), your supplier section can be relatively concise. Focus on the most critical supplier relationships in this case.

Reader familiarity with the industry

Consider how familiar your readers are with the field you represent. If you operate a complex manufacturing business with multiple suppliers, you may need to provide more explanations compared to a straightforward retail operation.

Remember, the information included in your supplier’s section should be relevant to your business's main activities. There is no need to list all the suppliers you trade with unless they significantly impact your operations.

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Example of a suppliers section in a business plan

Below is an example of how the suppliers section of your business plan might look like. As you can see, it coincides with the personnel plan as well as key assets and IP subsections and is part of the overall operations section.

The suppliers section of a business plan details the sources of goods, materials, or services essential for the company's operations. It highlights relationships, terms, and strategies for securing reliable and cost-effective supplies to sustain the business.

This example was taken from one of  our business plan templates .

What tools can you use to write a business plan?

In this section, we will review three solutions for writing a professional business plan:

• Using Word and Excel
• Hiring a consultant to write your business plan 
• Utilizing an online business plan software

Create your business plan using Word or Excel

Popular in the 1990s and early 2000s, writing a business plan using Word or Excel is quickly falling out of fashion, and for good reasons!

Using Word to draft the written part of the plan means starting from scratch and formatting the document yourself - a process that is both tedious and time consuming. There are also no instrcutions explaining what needs to be written in the plan, or examples to guide you through each section.

Creating an accurate financial forecast with Excel is only possible if you have expertise in accounting and financial modeling. As a result, investors and lenders tend to not trust the accuracy of a forecast created by entrepreneurs themselves on Excel.

Hire a consultant to write your business plan

Outsourcing a business plan to a consultant is another potential solution.

Consultants are used to writing business plans, and are good at creating financial forecasts without errors.

This means that they will be able to create an effective business plan with accurate financial estimates without much effort.

However, this will be an expensive endeavour: budget at least £1.5k ($2.0k) for a complete business plan, more if you need to make changes after the initial version (which happens frequently after the initial meetings with investors).

Use an online business plan software for your business plan

Another alternative is to use online business plan software .

There are several advantages to using specialized software:

• You are guided through the writing process by detailed instructions and examples for each part of the plan
• You can be inspired by already written business plan templates
• You can easily make your financial forecast by letting the software take care of the financial calculations for you without errors
• You get a professional document, formatted and ready to be sent to your bank
• The software will enable you to easily track your actual financial performance against your forecast and update your forecast as time goes by

If you're interested in using this type of solution, you can try our software for free by signing up here .

Also on The Business Plan Shop

• How to do a market analysis for a business plan
• 7 tips for writing an effective business plan

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Founder & CEO at The Business Plan Shop Ltd

Guillaume Le Brouster is a seasoned entrepreneur and financier.

Guillaume has been an entrepreneur for more than a decade and has first-hand experience of starting, running, and growing a successful business.

Prior to being a business owner, Guillaume worked in investment banking and private equity, where he spent most of his time creating complex financial forecasts, writing business plans, and analysing financial statements to make financing and investment decisions.

Guillaume holds a Master's Degree in Finance from ESCP Business School and a Bachelor of Science in Business & Management from Paris Dauphine University.

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Taking supplier collaboration to the next level

Companies with advanced procurement functions know that there are limits to the value they can generate by focusing purely on the price of the products and services they buy. These organizations understand that when buyers and suppliers are willing and able to cooperate, they can often find ways to unlock significant new sources of value that benefit them both.

Buyers and suppliers can work together to develop innovative new products, for example, boosting revenues and profits for both parties. They can take an integrated approach to supply-chain optimization, redesigning their processes together to reduce waste and redundant effort, or jointly purchasing raw materials. Or they can collaborate in forecasting, planning, and capacity management—thereby improving service levels, mitigating risks, and strengthening the combined supply chain.

Earlier work has shown that supplier collaboration really does move the needle for companies that do it well. In one McKinsey survey of more than 100 large organizations in multiple sectors, companies that regularly collaborated with suppliers demonstrated higher growth, lower operating costs, and greater profitability than their industry peers (Exhibit 1).

Despite the value at stake, however, the benefits of supplier collaboration have proved difficult to access. While many companies can point to individual examples of successful collaborations with suppliers, executives often tell us that they have struggled to integrate the approach into their overall procurement and supply-chain strategies.

Barriers to collaboration

Several factors make supplier collaboration challenging. Projects may require significant time and management effort before they generate value, leading companies to prioritize simpler, faster initiatives, even if they are worth less. Collaboration requires a change in mind-sets among buyers and suppliers, who may be used to more transactional or even adversarial relationships. And most collaborative efforts need intensive, cross-functional involvement from both sides, a marked change to the normal working methods at many companies. This change from a cost-based to a value-based way of thinking requires a paradigm shift that is often difficult to come by.

The actual value generated by collaborating can also be difficult to quantify, especially when companies are also pursuing more conventional procurement and supply-chain improvement strategies with the same suppliers, or when they are simultaneously updating product designs and production processes. And even when companies have the will to pursue greater levels of supplier collaboration, leaders often admit that they don’t have the skill, lacking the structures they need to design great supplier-collaboration programs, and being short of staff with the capabilities to run them. After all, what great supplier collaboration necessitates is much more than the mere application of a process or framework—it requires the buy-in and long-term commitment of leaders and decision makers.

A shared perspective

To understand more about the factors that hamper or enable supplier-collaboration programs, we partnered with Michigan State University (MSU) to develop a new way of looking at companies’ use of supplier collaboration. The Supplier Collaboration Index (SCI) is a survey- and interview-based benchmarking tool that assesses supplier-collaboration programs over five major dimensions (Exhibit 2).

During 2019, researchers from McKinsey and MSU rolled out the Index in a pilot project involving a dozen leading consumer-goods companies in North America, along with ten to 15 of each company’s strategic suppliers. We collected more than 300 written responses from more than 130 organizations, and conducted in-depth interviews with around 60 buyer and supplier executives. The work provides some important insights on the state of supplier collaboration today, revealing the elements of collaboration that companies and suppliers believe are working well, and the areas that present the greatest challenges.

The results of our consumer-industry benchmark are summarized in Exhibit 3, with average buyer and supplier perceptions of their own collaboration programs rated from one (low) to ten (high) in each of the five dimensions.

Overall, the research reveals close alignment between buyers and suppliers on the relative strength of most dimensions. It also shows a clear drop in perceptions of strength as the discussion moves from theory (strategic alignment) to execution (value creation and sharing, organizational governance).

The in-depth interviews conducted with senior buyer and supplier personnel as part of the SCI data-collection process provide further insights into the challenges companies face in each of the five dimensions, while also revealing some examples of best practices that lower-performing companies can emulate.

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Achieving strategic alignment.

Benchmark participants understood who their strategic suppliers are, although they do not all use formal segmentation approaches to categorize their supply bases. Likewise, suppliers understood their strategic importance to their customers. Buyers and suppliers agreed that there was good alignment on the pursuit of sources of value beyond cost—but also agreed that their efforts to capture these value sources were not always successful.

The first step for an organization is to define what it wants to achieve from its collaboration efforts, and what it needs to do to realize those goals. Internal alignment and commitment by senior managers to ensure appropriate resources are available is also critical. For example, in a quest to develop more sustainable detergents, Unilever partnered with Novozyme—a major supplier of enzymes— to jointly develop new enzyme solutions. The collaboration leveraged each party’s strengths, merging Unilever’s understanding of which types of stains and materials were most relevant with Novozyme’s reagent-optimization capabilities. The partnership resulted in two enzyme innovations that improved product performance, increased market penetration, and allowed the company to target premium-branded competitors. Moreover, the new formulation performed well at lower temperatures, helping customers save energy and reduce CO2 emissions.

Joint business planning

Joint business planning is a collaborative planning process in which the company and its supplier align on short- and long-term business objectives, agree on mutual targets, and jointly develop plans to achieve set objectives (exhibit). It brings a formal approach to collaboration with suppliers and helps to engage stakeholders from different functions in the collaboration effort.

Joint business planning works best when companies have a clear understanding of the strategic suppliers with which they want to engage, and where they have strong core supplier management capabilities in place. The approach can be applied at several levels. At its simplest, joint planning can involve aligning on metrics and value sharing agreements. At its most advanced it can include joint investment to create new sources of value.

Other organizations participating in SCI have introduced formal methods to promote greater strategic alignment, such as by introducing a joint business-planning approach. The buyer and supplier align on short- and long-term business objectives, set out mutual targets, and jointly develop plans to achieve objectives. Areas of opportunity for collaboration include growth, innovation, productivity, quality, and margins (see sidebar, “Joint business planning”).

Communication and trust

Buyers and sellers both describe high levels of trust in relationships that they consider strategic. In most cases, that trust has been built up over time, based on longstanding business relationships. Companies involved in collaborations tend to appreciate each other’s capabilities, understand each other’s businesses, and believe that their partners will stick to the commitments they make.

Companies are less convinced, however, that their partners will be ready to put the interests of the collaboration above the interests of their own organization. Many interview participants noted that greater transparency over sensitive areas such as costs was key to attaining the highest level of collaboration, but said that this goal was often difficult to achieve.

Building trust takes time and effort. Often this means starting small, with simple collaboration efforts that deliver results quickly, building momentum. This way, companies can demonstrate a serious approach to collaboration and their willingness to share gains fairly. More importantly, companies should base their relationships on transparency and information sharing as a foundation, with the expectation that greater trust will follow.

Cosmetics company L’Oréal follows this approach to encourage collaborative innovation. Through open dialogs concerning company goals and long-term commitment, L’Oréal has been able to establish an effective codevelopment process. The company’s annual “Cherry Pack” exhibition, for example, offers suppliers a preview of the consumer trends that the company will be working on, and asks them to develop packaging solutions in harmony with these trends. During the exhibition, L’Oréal creates a trust-based forum for suppliers to present the ideas and products in development—including ideas that have yet to be patented. The forum thus gives suppliers access to practical short- and long-term ideas and projects that ultimately accelerate packaging innovation.

Cross-functional engagement

To generate value from changes in manufacturing methods, quality-assurance regimes, or supply-chain processes, representatives from the respective functions on both sides of the partnership will need to work together. Yet this type of cross-functional engagement is something most benchmark participants find extremely difficult. Executives reported that while traditional relationships—such as those between buyers and supplier sales teams, or suppliers and buyer R&D functions—were strong, wider cross-functional engagement was patchy and poorly managed at best.

Improving cross-functional engagement is a leadership issue. Organizations with the most successful collaboration programs use a formal approach to manage cross-functional teams, with clearly defined roles and responsibilities on both sides of the partnership, backed by changes to internal incentive systems to promote full participation in collaboration projects.

Some companies, such as P&G, have taken a step further in creating cross-functional teams solely focused on joint innovation with suppliers. By creating a practice of “open innovation,” P&G aimed to coordinate its efforts and leverage the skills and interests of people throughout the company to assess the competitive landscape, identify types of innovation that can help develop disruptive ideas, and identify appropriate external partners. For innovation to work, P&G has stressed the need to integrate cross-functional teams that, in turn, integrate business strategy with operations—which requires a broad network of interactions.

Unlocking enterprise efficiencies through zero-based design

Value creation and sharing.

The pursuit of shared value is the reason buyers and suppliers take part in collaboration projects, so unsurprisingly procurement executives consider it the most important dimension of their collaboration efforts. Yet few participants in our study track the impact of collaboration on sources of value beyond cost reductions. Where companies have tracked the impact of collaboration projects on revenues, margins, or other metrics, they have done so only for a handful of high-profile projects.

For buyers, additional volume remains the most common way that the extra value created by collaboration projects is shared. Some partnerships had made use of other types of value sharing, such as performance-based incentives for suppliers. Where these approaches were employed, both buyers and suppliers were happy with the results. That suggests significant opportunity for companies to expand their use of such approaches, provided they can reach agreement on cost baselines and incentive structures.

Cleansheet cost modeling

Many of the potential sources of value targeted by supplier-collaboration efforts depend upon a mutual understanding of the true costs of a product or service. Achieving that sort of transparency can, however, be difficult in buyer-supplier relationships. Suppliers may be reluctant to reveal too much about their own manufacturing processes and costs, fearing that this information will be used against them in negotiations, and buyers may not want to let suppliers know just how critical they are.

Cleansheet cost-modeling approaches have risen to prominence in recent years as a tool to allow an open, fact-based cost discussion between buyers and suppliers. A cleansheet calculates the cost of each step during the creation of a product, component, or service, using a database of information on the materials, labor, factory space, equipment, time, and energy required to complete each step—and the implications for the desired product volumes on the utilization of those resources.

Cleansheet cost transparency helps collaboration partners generate ideas for design and process improvements. The approach can also underpin value-sharing agreements, allowing organizations to establish clear cost baselines and measure improvements against them.

Cost transparency is a critical enabler here. Some companies have found cleansheet cost modeling to be a very effective way to conduct fact-based discussions on costs and improvement opportunities with their collaboration partners (see sidebar, “Cleansheet cost modeling”).

ASML, a lithography-equipment manufacturer for the semiconductor industry, operates a value-sharing mechanism for its suppliers. The company allows suppliers to maintain healthy margins (as a volatility buffer), provides financing for the infrastructure needed to make its products, and offers staggered purchase guarantees. In this way, ASML incentivizes and rewards its strategic suppliers for prioritizing its business, gains access to cutting-edge technology, and reduces costs and improves stability in an industry with short lifecycles affected by substantial swings in demand.

Throughout its long history of collaboration with suppliers, P&G has used a wide range of commercial models to partner with suppliers across the entire R&D chain. Its value-sharing models range from shared fund pools for codevelopment of products to licensing agreements for commercialization. The flexibility to employ different mechanisms has allowed P&G to tap into supplier innovation without the need to overinvest in the development of deep partnerships with every potential collaborator.

Organization and governance

Like cross-functional engagement, the organization and governance of supplier-collaboration programs suffers from a lack of formal structures and processes. Interviewees admitted that their companies, both buyers and suppliers, were relatively lax in tracking and valuing their supplier-collaboration efforts. Few organizations had done anything to align the incentives of project participants within their own organizations, and most relied on informal mechanisms to share feedback or review progress with partners.

Introducing a clearer governance structure for the overall supplier-collaboration program and for individual projects has the potential to significantly improve outcomes in most organizations. Two-way scorecards, for example, allow buyers and suppliers to let each other know if they are effectively supporting the goals of the program. Governance of collaboration projects should be cross-functional, with appropriate incentives introduced throughout the organization to encourage full participation and ensure both parties pursue long-term win-win opportunities, not just short-term savings.

Supplier advisory boards

A supplier advisory board (or council) serves as a neutral and collaborative forum for the exchange of ideas between the host company and a group of strategic suppliers. Such boards are widely used by companies with mature procurement organizations, and they do so for a variety of reasons. A board may advise on key industry trends, risks, and potentially disruptive threats in the supplier ecosystem. Or they may provide a place for companies to explore the potential impact of business decisions on sourcing strategy. Some boards act as a hub for projects to improve operational processes between the company and its suppliers. Others are assembled to support special projects, such as joint innovation programs or sustainability initiatives.

An advisory board is usually chaired by an executive business sponsor and sourcing lead. Buyer-side members include representatives of multiple functions, such as marketing, legal, and R&D. On the supplier side, companies usually nominate a lead strategic supplier, along with around a dozen supplier board members chosen from the strategic supplier base. Those suppliers are selected after evaluation against a matrix of criteria determined by the objectives of the board.

Several leading organizations have created supplier advisory boards to provide high-level support and guidance for their supplier-management and supplier-collaboration programs. These boards act as a forum for the supplier base to advise on key issues and collaborate with the organization to further its business agenda. Companies use their supplier advisory boards to help manage risks and disruptive threats to the supplier ecosystem, and such boards also serve as a neutral space for the exchange of ideas between the host company and a group of strategic suppliers (see sidebar, “Supplier advisory boards”).

Toyota has been a prominent example of supplier collaboration, whose success can be explained in part by the use of clearly defined targets and supplier-performance metrics. These are built into contracts that hold suppliers accountable for continued improvements in quality, cost, and delivery performance. The company governs supplier relationships using a steering committee, staffed with relevant senior stakeholders from both organizations, to define the scope and objectives of the collaboration, review progress, and take action to remove roadblocks and resolve issues as they arise.

The Supplier Collaboration Index has already revealed several major opportunities for companies seeking to expand and improve their supplier-collaboration efforts. Some of those opportunities are quite straightforward, such as more proactive management of cross-functional teams involved in collaboration projects, or the introduction of formal governance systems to manage those projects. Others, such as greater cost transparency between buyers and suppliers, or the use of performance-based supplier-incentive mechanisms, may require more time and effort to achieve.

Excelling at supplier collaboration requires a more active and engaged working relationship with suppliers. It also calls for a change in mindset, encouraging both buyers and suppliers to commit to the long-term pursuit of value from their collaborative relationships. We end with eight steps that any organization can take to put its collaboration efforts on the right track.

• Start by identifying those suppliers that offer unique joint opportunities to create and retain significant value.
• Align strategically with these partners to define joint objectives and develop a compelling business case for both parties.
• Adopt a methodical and structured approach to define the scope, pace and targets for joint projects, including a clear methodology on how to measure value creation.
• Define simple, clear value-sharing mechanisms, and align incentives of the cross-functional team accordingly.
• Invest in allocating the appropriate resources and building the required infrastructure to support the program.
• Create a governance model focused on performance, implementation tracking, and hardwiring supplier collaboration into core operational processes.
• Foster a culture founded in proactive communication, transparency, consistency, and knowledge sharing, to strengthen long-term partnerships.
• Invest in building world-class organizational capabilities to ensure sustainability over time.

For any organization seeking to improve the performance of its procurement practices, supplier collaboration can no longer be considered a nice-to-have. As companies reach the limits of conventional purchasing practices, further progress will require a new approach based on close relationships, cross-functional engagement, and the shared pursuit of new value.

Agustin Gutierrez is a partner in McKinsey’s Mexico City office; Ashish Kothari is a partner in the Denver office, Carolina Mazuera is a consultant in the Miami office, and Tobias Schoenherr is the Hoagland-Metzler Endowed Professor of Purchasing and Supply Management at Michigan State University.

The authors wish to thank Juby Cherian, Pat Mitchell, and Valeria Saborio for their contributions to this article.

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Business Plan Template for Wholesale Suppliers

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Writing the ‘Suppliers’ section of your business plan

Now write up a short report for your business plan on the list of suppliers you plan to use, what they’ll supply you with, on what terms and at what price.

It’s useful to identify back-up suppliers in case you have any problems with your first choice.

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Sample Business Plan

Learn the Essential Elements of a Full Business Plan

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The following business plan for the fictional firm of "Acme Management Technology" (AMT) is an example of what a completed business plan might look like. This example is provided as part of the instructions and detailed descriptions included in the Components of a Business Plan.

Sample Business Plan for Acme Management Technology

1.0 executive summary.

By focusing on its strengths, its key customers , and the company's underlying core values, Acme Management Technology will increase sales to more than $10 million in three years, while also improving the gross margin on sales and cash management and working capital .

This business plan leads the way by renewing our vision and strategic focus of adding value to our target market segments—the small business and high-end home office users in our local market. It also provides a step-by-step plan for improving our sales, gross margin, and profitability.

This plan includes this summary, and chapters on the company, products & services, market focus, action plans & forecasts, management team, and financial plan.

1.1 Objectives

• Sales increased to more than $10 million by the third year.
• Bring gross margin back up to above 25% and maintain that level.
• Sell $2 million of service, support, and training by 2022.
• Improve inventory turnover to six turns next year, seven in 2021, and eight in 2022.

1.2 Mission

AMT is built on the assumption that the management of information technology for business is like legal advice, accounting, graphic arts, and other bodies of knowledge, in that it is not inherently a do-it-yourself prospect. Smart business people who aren't computer hobbyists need to find quality vendors of reliable hardware, software, service, and support and they need to use these quality vendors as they use their other professional service suppliers—as trusted allies.

AMT is such a vendor. It serves its clients as a trusted ally, providing them with the loyalty of a business partner and the economics of an outside vendor. We make sure that our clients have what they need in order to run their businesses at peak performance levels, with maximum efficiency and reliability.

Many of our information applications are mission-critical, so we assure our clients that we'll be there when they need us.

1.3 Keys to Success

• Differentiate from box-pushing, price-oriented businesses by offering and delivering service and support—and charging for it accordingly.
• Increase gross margin to more than 25%.
• Increase our non-hardware sales to 20% of the total sales by the third year.

2.0 Company Summary

AMT is a 10-year-old computer reseller with sales of $7 million per year, declining margins, and market pressure. It has a good reputation, excellent people, and a steady position in the local market, but has been having difficulty maintaining healthy financials.

2.1 Company Ownership

AMT is a privately-held C corporation owned in majority by its founder and president, Ralph Jones. There are six part owners, including four investors and two past employees. The largest of these (in percent of ownership) are Frank Dudley, our attorney, and Paul Karots, our public relations consultant. Neither owns more than 15%, but both are active participants in management decisions.

2.2 Company History

AMT has been caught in the vise grip of margin squeezes that have affected computer resellers worldwide. Although the chart titled "Past Financial Performance" shows that we've had healthy growth in sales, it also indicates declining gross margin and declining profits .

The more detailed numbers in Table 2.2 include other indicators of some concern: As can be seen in the chart, the gross margin percentage has been declining steadily, and nventory turnover is getting steadily worse as well.

All of these concerns are part of the general trend affecting computer resellers. The margin squeeze is happening throughout the computer industry, worldwide.

Balance Sheet: 2018

Short-Term Assets

• Cash—$55,432
• Accounts receivable—$395,107
• Inventory—$651,012
• Other Short-term Assets—$25,000
• Total Short-term Assets—$1,126,551

Long-Term Assets

• Capital Assets—$350,000
• Accumulated Depreciation—$50,000
• Total Long-term Assets—$300,000
• Total Assets—$1,426,551

Debt and Equity

• Accounts Payable—$223,897
• Short-term Notes—$90,000
• Other ST Liabilities—$15,000
• Subtotal Short-term Liabilities—$328,897
• Long-term Liabilities—$284,862
• Total Liabilities—$613,759
• Paid in Capital—$500,000
• Retained Earnings—$238,140
• Earnings (over three years)—$437,411, $366,761, $74,652
• Total Equity—$812,792
• Total Debt and Equity—$1,426,551

Other Inputs: 2017

• Payment days—30
• Sales on credit—$3,445,688
• Receivables turnover—8.72%

2.4 Company Locations and Facilities

We have one location—a 7,000 square-foot brick & mortar facility located in a suburban shopping center conveniently close to the downtown area. Along with sales, it includes a training area, service department, offices, and showroom area.

3.0 Products and Services

AMT sells personal computer technology for small business including personal computer hardware, peripherals, networks, software, support, service, and training.

Ultimately, we are selling information technology . We sell reliability and confidence. We sell the assurance to small business people that their business will not suffer any information technology disasters or critical downtimes.

AMT serves its clients as a trusted ally, providing them with the loyalty of a business partner and the economics of an outside vendor. We make sure that our clients have what they need to run their businesses at peak performance levels, with maximum efficiency and reliability. Since many of our information applications are mission-critical, we give our clients the confidence that we'll be there when they need us.

3.1 Product and Service Description

In personal computers , we support three main lines:

• The Super Home is our smallest and least expensive, initially positioned by its manufacturer as a home computer. We use it mainly as an inexpensive workstation for small business installations. Its specifications include: (add relevant information)
• The Power User is our main up-scale line and our most important system for high-end home and small business main workstations, because of (add relevant information) Its key strengths are: (add relevant information) Its specifications include: (add relevant information)
• The Business Special is an intermediate system, used to fill the gap in positioning. Its specifications include: (add information)

In peripherals , accessories and other hardware, we carry a complete line of necessary items from cables to forms to mousepads to... (add relevant information)

In service and support , we offer a range of walk-in or depot service, maintenance contracts, and on-site guarantees. We haven't had much success in selling service contracts. Our networking capabilities include... (add relevant information)

In software , we sell a complete line of... (add relevant information)

In training , we offer... (add relevant information)

3.2 Competitive Comparison

The only way we can hope to differentiate effectively is to brand the vision of the company as a trusted information technology ally to our clients. We will not be able to compete in any effective way with the chains using boxes or products as appliances. We need to offer a real alliance that feels personal.

The benefits we sell include many intangibles: confidence, reliability, knowing that somebody will be there to answer questions and help at critical times.

These are complex products that require serious knowledge and experience to use, which we have, while our competitors sell only the products themselves.

Unfortunately, we cannot sell the products at a higher price simply because we offer services; the market has shown that it will not support that concept. We must also sell the service and charge for it separately.

3.3 Sales Literature

Copies of our brochure and advertisements are attached as appendices. Of course, one of our first tasks will be to change the messaging of our literature to make sure we are selling the company, rather than the product.

3.4 Sourcing

Our costs are part of the margin squeeze. As price competition increases, the squeeze between the manufacturer's price into channels and the end-users ultimate buying price continues.

Our margins are declining steadily for our hardware lines. We generally buy at... (add relevant information) Our margins are thus being squeezed from 25% from five years ago to closer to 13 to 15% at present. A similar trend shows for our main-line peripherals, with prices for printers and monitors declining steadily. We are also starting to see that same trend with software...(add relevant information)

To hold costs down as much as possible, we concentrate our purchasing with Hauser, which offers 30-day net terms and overnight shipping from the warehouse in Dayton. We need to continue to make sure our volume gives us negotiating strength.

In accessories and add-ons, we can still get decent margins of 25 to 40%.

For software, margins are: (add relevant information)

3.5 Technology

For years, we have supported both Windows and Macintosh technology for CPUs, although we've switched vendors many times for the Windows (and previously DOS) lines. We are also supporting Novell, Banyon, and Microsoft networking, Xbase database software, and Claris application products.

3.6 Future Products and Services

We must remain on top of emerging technologies because this is our bread and butter. For networking, we need to provide better knowledge of cross-platform technologies. We are also under pressure to improve our understanding of the direct-connect Internet and related communications. Finally, although we have a good command of desktop publishing, we are concerned about improving integrated fax, copier, printer, and voicemail technology into the computer system.

4.0 Market Analysis Summary

AMT focuses on local markets, small business, and home office, with a special focus on the high-end home office and the five-to-20 unit small business office.

4.1 Market Segmentation

The segmentation allows some room for estimates and nonspecific definitions. We focus on a small-medium level of small business, and it's hard to locate data to make an exact classification. Our target companies are large enough to require the kind of high-quality information technology management we offer but too small to have a separate computer management staff (such as an MIS department). We say that our target market has 10 to 50 employees, and requires five to 20 connect workstations in a local area network, however, the definition is flexible.

Defining the high-end home office is even more difficult. We generally know the characteristics of our target market, but we can't find easy classifications that fit into available demographics. The high-end home office business is a business, not a hobby. It generates enough money to merit the owner's paying real attention to the quality of information technology management, meaning that both budget and productivity concerns warrant working with our level of quality service and support. We can assume that we aren't talking about home offices used only part-time by people who work elsewhere during the day and that our target market home office needs powerful technology and sufficient links between computing, telecommunications, and video assets.

4.2 Industry Analysis

We are part of the computer reselling business, which includes several kinds of businesses:

• Computer dealers : storefront computer resellers, usually less than 5,000 square feet, often focused on a few main brands of hardware, usually offering only a minimum of software and variable amounts of service and support. Many are old-fashioned (1980s-style) computer stores that offer relatively few reasons for buyers to shop with them. Their service and support are not usually very good, and their prices are normally higher than those at larger stores.
• Chain stores and computer superstores : these include major chains such as CompUSA, Best Buy, Future Shop, etc. They almost always have a footprint of over 10,000 square feet of space, usually offer decent walk-in service, and are often warehouse-like locations where people go to find products in boxes with very aggressive pricing, but little support.
• Mail order/Online retailers : the market is served increasingly by mail order and online retailers that offer aggressive pricing of a boxed product. For the purely price-driven buyer, who buys boxes and expects no service, these are very good options.
• Others : there are many other channels through which people buy their computers, however, most are variations of the three main types above.

4.2.1 Industry Participants

• The national chains are a growing presence: CompUSA, Best Buy, and others. They benefit from national advertising, economies of scale, volume buying, and a general trend toward name-brand loyalty for buying in the channels as well as for products.
• Local computer stores are threatened. These tend to be small businesses, owned by people who started them because they liked computers. They are under-capitalized and under-managed. Margins are squeezed as they compete against chains, in a competition based on price more than on service and support.

4.2.2 Distribution Patterns

Small business buyers are accustomed to buying from vendors who visit their offices. They expect the copy machine vendors, office products vendors, and office furniture vendors, as well as the local graphic artists, freelance writers, or whomever, to visit their office to make their sales.

There is usually a lot of leakage in ad-hoc purchasing through local chain stores and mail order. Often the administrators try to discourage this but are only partially successful.

Unfortunately, our home office target buyers don't expect to buy from us. Many of them turn immediately to the superstores (office equipment, office supplies, and electronics) and mail order to look for the best price, without realizing that there is a better option for them at only a little bit more.

4.2.3 Competition and Buying Patterns

The small business buyers understand the concept of service and support and are much more likely to pay for it when the offering is clearly stated.

There is no doubt that we face stiffer competition from box pushers than from other service providers. We need to effectively compete against the idea that businesses should buy computers as plug-in appliances that don't need ongoing service, support, and training.

Our focus group sessions indicated that our target home office buyers think about the price but would buy based on quality service if the offering were properly presented. They think about the price because that's all they ever see. We have very good indications that many would rather pay 10 to 20% more for a relationship with a long-term vendor providing back-up and quality service and support, however, they end up in the box-pusher channels because they aren't aware of the alternatives.

Availability is also very important. The home office buyers tend to want immediate, local solutions to problems.

4.2.4 Main Competitors

Chain stores:

• We have Store 1 and Store 2 already within the valley, and Store 3 is expected by the end of next year. If our strategy works, we will have differentiated ourselves sufficiently to avoid competition against these stores.
• Strengths: national image, high volume, aggressive pricing, economies of scale.
• Weaknesses: lack of product, service and support knowledge, lack of personal attention.

Other local computer stores:

• Store 4 and Store 5 are both in the downtown area. They are both competing against the chains in an attempt to match prices. When asked, the owners will complain that margins are squeezed by the chains and customers buy based on price only. They say they tried offering services and that buyers didn't care, instead preferring lower prices. We think the problem is that they didn't really offer good service, and also that they didn't differentiate from the chains.

4.3 Market Analysis

The home offices in Tintown are an important growing market segment. Nationally, there are approximately 30 million home offices, and the number is growing at 10% per year. Our estimate in this plan for the home offices in our market service area is based on an analysis published four months ago in the local newspaper.

There are several types of home offices. For the focus of our plan, the most important are those that are real businesses offices from which people earn their primary income. These are likely to be people in professional services such as graphic artists, writers, and consultants, some accountants—and the occasional lawyer, doctor, or dentist. We will not be focusing on the market segment that includes part-time home offices with people who are employed during the day but work at home at night, people who work at home to provide themselves with a part-time income, or people who maintain home offices relating to their hobbies.

Small business within our market includes virtually any business with a retail, office, professional, or industrial location outside of the home, and fewer than 30 employees. We estimate there are 45,000 such businesses in our market area.

The 30-employee cutoff is arbitrary. We find that the larger companies turn to other vendors, but we can sell to departments of larger companies, and we shouldn't give up such leads when we get them.

Market Analysis . . . (numbers and percentages)

5.0 Strategy and Implementation Summary

• Emphasize service and support.

We must differentiate ourselves from the box pushers. We need to establish our business offering as a clear and viable alternative to the price-only kind of buying for our target market.

• Build a relationship-oriented business.

Build long-term relationships with clients, not single-transaction deals with customers. Become their computer department, not just a vendor. Make them understand the value of the relationship.

• Focus on target markets.

We need to focus our offerings on small business as the key market segment we should own. This means the five to 20 unit system, connected by a local area network, in a company with five to 50 employees. Our values—training, installation, service, support, knowledge—are more clearly differentiated in this segment.

As a corollary, the high end of the home office market is also appropriate. We do not want to compete for buyers who go to chain stores or buy from mail-order outlets, but we definitely want to be able to sell individual systems to the smart home office buyers who want a reliable, full-service vendor.

• Differentiate and fulfill the promise.

We can't just market and sell service and support; we must deliver as well. We need to make sure we have the knowledge-intensive business and service-intensive business we claim to have.

5.1 Marketing Strategy

The marketing strategy is the core of the main strategy:

• Emphasize service and support
• Build a relationship business
• Focus on small business and high-end home office as key target markets

5.1.2 Pricing Strategy

We must charge appropriately for the high-end, high-quality service and support we offer. Our revenue structure has to match our cost structure, so the salaries we pay to assure good service and support must be balanced by the revenue we charge.

We cannot build the service and support revenue into the price of products. The market can't bear the higher prices, and the buyer feels ill-used when they see the same product priced lower at the chains. Despite the logic behind it, the market doesn't support this concept.

Therefore, we must make sure that we deliver and charge for service and support. Training, service, installation, networking support—all of this must be readily available and priced to sell and deliver revenue.

5.1.3 Promotion Strategy

We depend on newspaper advertising as our main outlet to reach new buyers. As we change strategies, however, we need to change the way we promote ourselves:

• Advertising

We'll be developing our core positioning message: "24 Hour On-Site Service—365 Days a Year With No Extra Charges" to differentiate our service from the competition. We will be using local newspaper advertising, radio, and cable TV to launch the initial campaign.

• Sales Brochure

Our collaterals have to sell the store and visiting the store, not the specific book or discount pricing.

• Direct Mail 

We must radically improve our direct mail efforts, reaching our established customers with training, support services, upgrades, and seminars.

• Local Media

It's time to work more closely with the local media . We could offer the local radio station a regular talk show on technology for small business, as one example. We could also reach out to local news outlets to let them know we have experts who are able to address issues relating to technology for small business/home offices should the need arise.

5.2 Sales Strategy

• We need to sell the company, not the product. We sell AMT, not Apple, IBM, Hewlett-Packard, or Compaq, or any of our software brand names.
• We have to sell our service and support. The hardware is like the razor, and the support, service, software services, training, and seminars are the razor blades. We need to serve our customers with what they need.

The Yearly Total Sales chart summarizes our ambitious sales forecast. We expect sales to increase from $5.3 million last year to more than $7 million next year and to more than $10 million in the last year of this plan.

5.2.1 Sales Forecast

The important elements of the sales forecast are shown in the Total Sales by Month in Year 1 table. The non-hardware sales increase to about $2 million total in the third year.

Sales Forecast … (numbers and percentages)

5.2.2 Startup Summary

• 93% of startup costs will go to assets.
• The building will be purchased with a down payment of $8,000 on a 20-year mortgage. The espresso machine will cost $4,500 (straight-line depreciation, three years).
• Startup costs will be financed through a combination of owner investment, short-term loans, and long-term borrowing. The startup chart shows the distribution of financing.

Other miscellaneous expenses include:

• Marketing/advertising consultancy fees of $1,000 for our company logo and assistance in designing our grand-opening ads and brochures.
• Legal fees for corporate organization filings: $300.
• Retail merchandising/designing consultancy fees of $3,500 for store layout and fixture purchasing.
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Supplier Business Plan Template

Document description.

This supplier business plan template has 38 pages and is a MS Word file type listed under our business plan kit documents.

Sample of our supplier business plan template:

[COMPANY NAME] Business [NAME] [ADDRESS] [CITY, STATE ZIP] Phone: XXX-XXX-XXXX Fax: XXX-XXX-XXXX Email: [EMAIL] Website: [WEBSITE]

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What is a supplier?

A supplier is a person or business that provides a product or service to another entity. Acting as intermediaries, suppliers bridge the gap between manufacturers and retailers by offering the raw materials, products, or services that businesses require for their operations.

The relationship between a business and its suppliers is symbiotic. Businesses rely on suppliers for the necessary inputs for their products or services, and suppliers depend on businesses to purchase their offerings. This interdependence forms the basis of the supplier-customer relationship in the business world.

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Types of suppliers.

Suppliers come in various forms, each serving a unique role within the supply chain . Here are some common types of suppliers:

• Manufacturers: These are the entities that produce goods from raw materials. They are often the first link in the supply chain, supplying products to wholesalers or retailers.
• Wholesalers: Wholesalers buy goods in large quantities from manufacturers and then resell them in smaller batches to retailers. Selling wholesale is crucial in the supply chain as it facilitates the distribution of goods from manufacturers to various retailers.
• Distributors : Distributors, like wholesalers, buy products from manufacturers. However, they often offer additional services such as marketing and after-sales support. They play a significant role in reaching out to the market and promoting the products.
• Independent craftspeople: These are individuals who produce and supply their own goods. They might sell directly to consumers, to retailers, or through a distributor.
• Importers and exporters: These suppliers operate on an international scale, importing goods from manufacturers in one country and exporting them to retailers in another. They play a critical role in global trade and the international supply chain.

Understanding the different types of suppliers helps businesses choose the right ones based on their specific needs and operational requirements.

Importance of suppliers to the product life cycle

Suppliers play a vital role at every stage of product development , from conception to distribution. Their influence extends beyond the provision of raw materials or services and impacts the quality, cost, and delivery of the final product. 

Here's a look at how suppliers contribute at each stage:

• Sourcing raw materials: Suppliers provide the essential raw materials needed to create a product. The quality and cost of these materials can significantly influence the final product's quality, cost, and profitability.
• Ensuring quality control: Suppliers are often responsible for the initial stages of quality control. They ensure that the materials or components provided meet the required standards and specifications.
• Facilitating production process: By delivering materials or components on time, suppliers enable smooth production processes. Delays in supply can lead to production hold-ups, affecting the product's time to market.
• Assisting in distribution logistics: Some suppliers, particularly distributors, play a role in getting the product to the market. They help in transporting the goods from the production site to various retail outlets.

Through their significant contribution to the product lifecycle, suppliers have a direct impact on a product's success in the market. Therefore, maintaining a good relationship with suppliers is crucial for any business.

What is supplier relationship management?

Supplier relationship management (SRM) is a systematic approach for developing and managing partnerships with suppliers to achieve a competitive advantage. It involves creating closer, more collaborative relationships with key suppliers in order to uncover and realize new value and reduce risk.

SRM is crucial in business as it helps in managing supplier interactions effectively, ensuring a steady supply of goods or services, and fostering strong, mutually beneficial relationships. It is a key component of supply chain management and a determinant of its success.

Benefits of SRM

• Cost savings: Effective SRM can lead to significant cost reductions through improved process efficiency and reduced waste.
• Improved quality: By fostering closer relationships with suppliers, businesses can work collaboratively to improve product quality.
• Better supplier performance: SRM allows businesses to monitor supplier performance, identify issues early, and work together to implement improvements.
• Risk mitigation: Through SRM, businesses can identify potential supply chain risks and work with suppliers to develop mitigation strategies.

Best practices for SRM

Implementing SRM effectively requires a strategic approach that focuses on building and nurturing relationships with suppliers. Here are some best practices that can guide businesses in their SRM efforts:

• Regular communication: Maintain open lines of communication with suppliers to address issues promptly and foster mutual understanding.
• Performance evaluation: Regularly assess supplier performance against agreed-upon metrics to ensure they meet expectations.
• Long-term relationship building: Focus on building long-term relationships with suppliers, rather than short-term, transactional interactions.
• Collaboration: Work collaboratively with suppliers to identify and implement improvements, rather than imposing demands.

Through effective SRM, businesses can optimize their supply chain, improve product quality, and achieve better business outcomes.

Supplier vs. Distributor: What’s the difference?

While the terms "supplier" and "distributor" are often used interchangeably in the business world, they represent different stages in the supply chain and perform distinct roles.

A supplier is a person or business that provides a product or service to another entity, often a distributor. Suppliers can be manufacturers who provide raw materials or finished goods, or they can be businesses that supply services. They are typically responsible for ensuring the quality of the products and delivering them to the next link in the supply chain.

On the other hand, a distributor is an entity that buys products from suppliers and sells them to the retailer or the end customer. Distributors often provide added services such as product promotion, market research, and after-sales services. They play a crucial role in getting the product from the supplier to the market.

While both suppliers and distributors play critical roles in the supply chain, the focus of suppliers is more on the production and provision of goods or services, whereas distributors are concerned with getting these goods or services to the market.

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Porter’s Five Forces

Porter’s Five Forces analysis is a framework that helps analyzing the level of competition within a certain industry. It is especially useful when starting a new business or when entering a new industry sector. According to this framework, competitiveness does not only come from competitors. Rather, the state of competition in an industry depends on five basic forces: threat of new entrants, bargaining power of suppliers, bargaining power of buyers, threat of substitute products or services, and existing industry rivalry. The collective strength of these forces determines the profit potential of an industry and thus its attractiveness. If the five forces are intense (e.g. airline industry), almost no company in the industry earns attractive returns on investments. If the forces are mild however (e.g. softdrink industry), there is room for higher returns. Each force will be elaborated on below with the aid of examples from the airline industry to illustrate the usage.

Figure 1: Five Forces Model

Threat of new entrants

New entrants in an industry bring new capacity and the desire to gain market share. The seriousness of the threat depends on the barriers to enter a certain industry. The higher these barriers to entry, the smaller the threat for existing players. Examples of barriers to entry are the need for economies of scale , high customer loyalty for existing brands, large capital requirements (e.g. large investments in marketing or R&D), the need for cumulative experience, government policies, and limited access to distribution channels. More barriers can be found in the table below.

The threat of new entrants in the airline industry can be considered as low to medium. It takes quite some upfront investments to start an airline company (e.g. purchasing aircrafts). Moreover, new entrants need licenses, insurances, distribution channels and other qualifications that are not easy to obtain when you are new to the industry (e.g. access to flight routes). Furthermore, it can be expected that existing players have built up a large base of experience over the years to cut costs and increase service levels.  A new entrant is likely to not have this kind of expertise, therefore creating a competitive disadvantage right from the start. However, due to the liberalization of market access and the availability of leasing options and external finance from banks, investors, and aircraft manufacturers, new doors are opening for potential entrants. Even though it doesn’t sound very attractive for companies to enter the airline industry, it is NOT impossible. Many low-cost carriers like Southwest Airlines, RyanAir and EasyJet have successfully entered the industry over the years by introducing innovative cost-cutting business models, thereby shaking up original players like American Airlines, Delta Air Lines and KLM.

Porter’s Five Forces Video Tutorial

Bargaining power of suppliers

This force analyzes how much power and control a company’s supplier (also known as the market of inputs) has over the potential to raise its prices or to reduce the quality of purchased goods or services, which in turn would lower an industry’s profitability potential. The concentration of suppliers and the availability of substitute suppliers are important factors in determining supplier power. The fewer there are, the more power they have. Businesses are in a better position when there are a multitude of suppliers. Sources of supplier power also include the switching costs of companies in the industry, the presence of available substitutes, the strength of their distribution channels and the uniqueness or level of differentiation in the product or service the supplier is delivering.

The bargaining power of suppliers in the airline industry can be considered very high. When looking at the major inputs that airline companies need, we see that they are especially dependent on fuel and aircrafts. These inputs however are very much affected by the external environment over which the airline companies themselves have little control. The price of aviation fuel is subject to the fluctuations in the global market for oil, which can change wildly because of geopolitical and other factors. In terms of aircrafts for example, only two major suppliers exist: Boeing and Airbus. Boeing and Airbus therefore have substantial bargaining power on the prices they charge.

Bargaining power of buyers

The bargaining power of buyers is also described as the market of outputs. This force analyzes to what extent the customers are able to put the company under pressure, which also affects the customer’s sensitivity to price changes. The customers have a lot of power when there aren’t many of them and when the customers have many alternatives to buy from. Moreover, it should be easy for them to switch from one company to another. Buying power is low however when customers purchase products in small amounts, act independently and when the seller’s product is very different from any of its competitors. The internet has allowed customers to become more informed and therefore more empowered. Customers can easily compare prices online, get information about a wide variety of products and get access to offers from other companies instantly. Companies can take measures to reduce buyer power by for example implementing loyalty programs or by differentiating their products and services.

Bargaining power of buyers in the airline industry is high. Customers are able to check prices of different airline companies fast through the many online price comparisons websites such as Skyscanner and Expedia. In addition, there aren’t any switching costs involved in the process. Customers nowadays are likely to fly with different carriers to and from their destination if that would lower the costs. Brand loyalty therefore doesn’t seem to be that high. Some airline companies are trying to change this with frequent flyer programs aimed at rewarding customers that come back to them from time to time.

Threat of substitute products

The existence of products outside of the realm of the common product boundaries increases the propensity of customers to switch to alternatives. In order to discover these alternatives one should look beyond similar products that are branded differently by competitors. Instead, every product that serves a similar need for customers should be taken into account. Energy drink like Redbull for instance is usually not considered a competitor of coffee brands such as Nespresso or Starbucks. However, since both coffee and energy drink fulfill a similar need (i.e. staying awake/getting energy), customers might be willing to switch from one to another if they feel that prices increase too much in either coffee or energy drinks. This will ultimately affect an industry’s profitability and should therefore also be taken into account when evaluating the industry’s attractiveness.

In terms of the airline industry, it can be said that the general need of its customers is traveling. It may be clear that there are many alternatives for traveling besides going by airplane. Depending on the urgency and distance, customers could take the train or go by car. Especially in Asia, more and more people make use of highspeed trains such as Bullet Trains and Maglev Trains. Furthermore, the airline industry might get some serious future competition from Elon Musk’s Hyperloop concept in which passengers will be traveling in capsules through a vacuum tube reaching speed limits of 1200 km/h. Taken this altogether, the threat of substitutes in the airline industry can be considered at least medium to high.

Rivalry among existing competitors

This last force of the Porter’s Five Forces examines how intense the current competition is in the marketplace, which is determined by the number of existing competitors and what each competitor is capable of doing. Rivalry is high when there are a lot of competitors that are roughly equal in size and power, when the industry is growing slowly and when consumers can easily switch to a competitors offering for little cost. A good indicator of competitive rivalry is the concentration ratio of an industry. The lower this ration, the more intense rivalry will probably be. When rivalry is high, competitors are likely to actively engage in advertising and price wars, which can hurt a business’s bottom line. In addition, rivalry will be more intense when barriers to exit are high, forcing companies to remain in the industry even though profit margins are declining. These barriers to exit can for example be long-term loan agreements and high fixed costs.

When looking at the airline industry in the United States, we see that the industry is extremely competitive because of a number of reasons which include the entry of low cost carriers, the tight regulation of the industry wherein safety become paramount leading to high fixed costs and high barriers to exit, and the fact that the industry is very stagnant in terms of growth at the moment. The switching costs for customers are also very low and many players in the industry are similar in size (see graph below) leading to extra fierce competition between those firms. Taken altogether, it can be said that rivalry among existing competitors in the airline industry is high.

(Source: United States Department of Transportation, 2016)

By looking at each competitive force individually, you are able to roughly map out the focal industry and its attractiveness. Note that industries might differ in terms of attractiveness depending on the country you are looking at. Government policies are for example likely to be different in each country and also the amount of suppliers and buyers might vary from nation to nation. Porter’s Five Forces is a good starting point to evaluate an industry but should not be used in isolation. You could for example combine it with a Value Chain Analysis or through the VRIO Framework in order to get a better sense of where your company’s competitive advantage is coming from and to better position your company between the rivals. Moreover, Porter’s Five Forces is often combined with the PESTEL analysis to give a good overview of the organization’s environment. Lastly, it should be said that the framework also received some criticism from several authors. Some authors have for instance argued that the model needs a 6th force called the ‘complementors’, in order to explain the reasoning behind strategic alliances and joint ventures. This extended model is also known as the Value Net Model . However, even though the criticism it got, Porter’s Five Forces is still one of the most used frameworks for strategy development and is likely to remain that way in the near future.

Figure 2: Porter’s Five Forces Factors

Full list of Porter’s Five Forces factors:

• Economies of scale
• Product differentiation
• Brand identity/loyalty
• Access to distribution channels
• Capital requirements
• Access to latest technology
• Access to necessary inputs
• Absolute cost advantages
• Experience and learning effects
• Government policies
• Switching costs
• Expected retaliation from existing players
• Number of suppliers
• Size of suppliers
• Supplier concentration
• Availability of substitutes for the supplier’s products
• Uniqueness of supplier’s products or services (differentiation)
• Switching cost for supplier’s products
• Supplier’s threat of forward integration
• Industry threat of backward integration
• Supplier’s contribution to quality or service of the industry products
• Importance of volume to supplier
• Total industry cost contributed by suppliers
• Importance of the industry to supplier’s profit
• Buyer volume (number of customers)
• Size of each buyer’s order
• Buyer concentration
• Buyer’s ability to substitute
• Buyer’s switching costs
• Buyer’s information availability
• Buyer’s threat of backward integration
• Industry threat of forward integration
• Price sensitivity

Threat of substitute products or services

• Number of substitute products available
• Buyer’s propensity to substitute
• Relative price performance of substitutes
• Perceived level of product differentiation
• Substitute producer’s profitability & aggressiveness
• Number of competitors
• Diversity of competitors
• Industry concentration and balance
• Industry growth
• Industry life cycle
• Quality differences
• Intermittent overcapacity
• Informational complexity
• Barriers to exit

Further Reading:

• Porter, M.E. (1979). How Competitive Forces Shape Strategy. Harvard Business Review
• Porter, M.E. (2008). The Five Competitive Forces That Shape Strategy. Harvard Business Review

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Examples of effective supplier management plans for procurement, introduction.

Welcome to our blog post on effective supplier management plans for procurement! In today’s rapidly evolving business landscape, having a robust supplier management plan is crucial for the success of any procurement function. Whether you’re a small start-up or a multinational corporation, effectively managing your suppliers can significantly impact your bottom line and overall operational efficiency. In this article, we will explore examples of effective supplier management plans that can help optimize your procurement processes and drive long-term value. So let’s dive in and discover the secrets to building strong relationships with your suppliers!

Supplier management plan template

Supplier Management Plan Template

Creating an effective supplier management plan is crucial for successful procurement. It provides a structured framework to manage and maintain relationships with suppliers, ensuring reliability and quality in the supply chain. While each organization may have specific requirements, here are some key components that can be included in a supplier management plan template:

1. Supplier Evaluation: Begin by identifying the criteria for evaluating potential suppliers. This could include factors such as financial stability, product quality, ethical practices, and delivery performance.

2. Supplier Onboarding: Clearly define the process for onboarding new suppliers into your procurement system. This includes gathering necessary documentation, conducting site visits or audits if required, and setting expectations regarding performance metrics.

3. Performance Monitoring: Establish metrics to measure supplier performance regularly. These could include on-time delivery rates, product quality inspections, customer satisfaction surveys, and adherence to contractual obligations.

4. Relationship Management: Define how you will cultivate strong relationships with your suppliers through regular communication channels like meetings or email updates.

5. Risk Mitigation Plan: Identify potential risks that could impact your supply chain and develop strategies to mitigate them effectively.

6. Continuous Improvement Initiatives: Encourage collaboration with suppliers to drive innovation and continuous improvement efforts within your procurement processes .

By utilizing this supplier management plan template as a starting point, organizations can develop customized plans tailored to their unique needs while ensuring efficient procurement operations!

Benefits of an effective supplier management plan

A well-designed and implemented supplier management plan offers numerous benefits for procurement departments. It enhances the efficiency of the procurement process by ensuring that suppliers are reliable and consistently deliver high-quality goods or services. By carefully selecting and managing suppliers , organizations can minimize disruptions in their supply chain and maintain a steady flow of products.

An effective supplier management plan allows organizations to reduce costs . By negotiating favorable contracts with suppliers, monitoring pricing trends, and seeking opportunities for volume discounts or long-term agreements, businesses can achieve significant cost savings. This not only improves their bottom line but also enhances their competitiveness in the market.

Furthermore, an efficient supplier management plan promotes collaboration between organizations and suppliers. By establishing open communication channels and fostering strong relationships with key vendors, businesses can gain access to valuable insights on market trends, technological advancements, and potential cost-saving measures.

Additionally, a robust supplier management plan enables risk mitigation strategies. It helps companies identify potential risks associated with suppliers such as financial instability or delivery delays before they become major issues. With proactive risk assessment processes in place, businesses can develop contingency plans to address these challenges swiftly.

An effective supplier management plan contributes to overall business growth by driving innovation. Close collaboration with suppliers encourages knowledge sharing and facilitates joint efforts towards developing new products or improving existing ones.

In conclusion An effective supplier management plan brings numerous benefits to organizations engaged in procurement activities – from increased efficiency and cost reduction to improved collaboration with key vendors and enhanced risk mitigation strategies – all leading towards sustainable growth for businesses operating in today’s competitive landscape.

Key components of an effective supplier management plan

Key Components of an Effective Supplier Management Plan

Building and maintaining strong relationships with suppliers is crucial for effective procurement. A well-structured supplier management plan ensures that you have a clear roadmap to manage your suppliers efficiently . Here are some key components of an effective supplier management plan:

1. Supplier Evaluation and Selection: The first step in the process is evaluating potential suppliers based on criteria such as quality, reliability, cost, and responsiveness. Once selected, creating a contract that clearly outlines expectations and deliverables is essential.

2. Performance Metrics: Establishing performance metrics helps track the performance of your suppliers effectively. Key areas to measure include delivery times, product quality, service levels, and adherence to contractual agreements.

Supplier Development: Encouraging continuous improvement from your suppliers is vital for long-term success. This can involve providing training opportunities or collaborating on innovation projects.

Risk Management: Identifying risks associated with each supplier helps mitigate any potential disruptions in the supply chain. Developing contingency plans for possible scenarios ensures business continuity.

Communication Channels: Open lines of communication enable efficient collaboration between you and your suppliers. Regular meetings or check-ins help address any issues promptly.

Periodic Reviews: Conducting regular reviews allows you to assess whether your current suppliers still meet your requirements or if changes need to be made.

By incorporating these key components into your supplier management plan, you can optimize procurement processes while fostering productive relationships with your suppliers.

How to create an effective supplier management plan

Creating an effective supplier management plan is crucial for successful procurement. By having a well-defined plan in place, businesses can ensure that they are working with reliable suppliers, maintaining strong relationships, and optimizing their supply chain.

To begin creating your supplier management plan, start by identifying your goals and objectives. What do you hope to achieve through your supplier relationships? Are you looking to reduce costs, improve quality, or increase efficiency? Clearly defining your goals will help guide the rest of the planning process.

Next, assess your current suppliers and potential new vendors. Evaluate their capabilities, track records, and financial stability. Consider factors such as delivery times, product quality, customer service responsiveness – all essential criteria for selecting the right partners.

Once you have selected your suppliers carefully based on these criteria,you need to establish clear communication channels with them. Establish regular meetings or check-ins to discuss any issues or concerns that may arise.

Furthermore,it is important to set performance metrics for each supplier.

This will allow you to objectively evaluate their performance over time.

Setting clear expectations from the beginning will help maintain accountability on both sides,and identify areas needing improvement early on.

Finally,don’t forget about continuous improvement.

Your supplier management plan should be dynamic and adaptable as market conditions change.

Evaluate its effectiveness regularly,and make necessary adjustments when needed.

Stay open-minded,to new opportunities or different approaches that could lead to better outcomes.

In today’s complex business environment, effective supplier management plans are crucial for successful procurement. By implementing a well-designed plan, organizations can ensure they have reliable and high-quality suppliers that meet their needs.

A robust supplier management plan template provides a framework for effectively managing suppliers throughout the procurement process . It helps businesses identify and assess potential suppliers, establish clear expectations and requirements, monitor performance, and address any issues or risks that may arise.

The benefits of an effective supplier management plan are numerous. It allows organizations to reduce costs by negotiating favorable terms with suppliers and leveraging economies of scale. It also improves quality control by ensuring that only qualified and capable suppliers are selected.

Key components of an effective supplier management plan include clearly defined objectives, comprehensive supplier evaluation criteria, regular performance reviews, proactive risk assessment strategies, open communication channels with suppliers, and continuous improvement initiatives.

Creating an effective supplier management plan involves several steps. Start by conducting a thorough analysis of your organization’s procurement needs and identifying key supply chain risks. Then develop criteria to evaluate potential suppliers based on factors such as price competitiveness, product quality, delivery capabilities, financial stability, and sustainability practices.

Next, establish clear expectations in terms of service levels, quality standards,and compliance requirements through well-defined contracts or agreements. Regularly monitor supplier performance against these metrics using key performance indicators (KPIs) tailored to your specific needs.

Maintain open lines of communication with your suppliers throughout the relationship to foster collaboration and address any issues promptly. Periodically review your supplier base to identify areas for improvement or explore new partnerships that may offer additional value.

By following these steps and implementing best practices outlined in this article,you can create an effective supplier management plan that optimizes your organization’s procurement processes while mitigating risks associated with the supply chain operation overall

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How to Write a Food and Beverage Business Plan + Sample Business Plan PDF

Elon Glucklich

7 min. read

Updated February 17, 2024

Free Download: Sample Food and Beverage Business Plan Templates

The food and beverage sector is booming. Restaurant openings rose 10% in 2023 compared to 2022 — even higher than in pre-pandemic years.

From fine dining to food trucks, farmers to brewers, and wholesalers to coffee makers, there are opportunities across the food and beverage industry. 

But starting a business without covering the basics — your operations plan, marketing tactics, financial strategy, and more — carries huge risks. 

That’s why we recommend you write a business plan.

• Why write a food and beverage business plan?

Writing a business plan is an easy first step that you can start for free. Plus, businesses that take time to plan are significantly more successful than those that don’t.

Many food and beverage establishments fail because of one of the following:

• Poor inventory management
• Underestimated expenses
• High employee turnover
• Misjudged the size of their market

Writing a business plan can help you:

• Develop processes for managing inventory and logistics
• Understand your cash flows and create a realistic expense budget
• Budget for competitive employee pay that increases worker retention
• Analyze your competition and determine how big your market is  

If you’re looking for funding from investors for your business, you’ll definitely need a business plan.

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• How to write a food and beverage business plan

Many business plans follow a standard format and you can use it as a starting point when writing your own plan. Here’s what that includes:

Executive summary

• Company summary and funding needs
• Products and services
• Marketing plan
• Management team

Financial plan

For food and beverage companies, you must give extra attention to your market analysis, operations plan, and financial forecasts.

If you’re ready to start, download a free business plan template and fill it out as you read this article.

Every business plan should include an executive summary . It’s a brief outline summarizing the plan, no more than one or two pages.

We recommend that you write the executive summary last after fleshing out the details of your plan. 

Just summarize the vision for your business, describe your offerings and target market , and touch on your management team and financials. Don’t go into tons of detail — just provide a high-level sense of what you want your business to accomplish.

Opportunity: problem and solution

This section of your food and beverage business plan describes the opportunity you hope to capture.

Maybe you’re a farmer looking to diversify your revenue streams by distributing to grocery stores. Or a bar owner with high-end liquor that competitors in the market aren’t serving. 

Whatever your business is, describe the gap in the market and how you aim to fill it.

If you’re operating a more common type of business, like a restaurant , you can probably keep this section short. But it’s useful to document what makes your business unique and it will help focus your sales and marketing efforts later on.

Market analysis

In a field as crowded with competitors as the food and beverage space, a detailed market analysis is essential. 

Your focus should be on identifying the specific customer segments you aim to serve. 

Maybe you’re a butcher with connections to fresh livestock. Will you be more successful selling directly to consumers, or should you focus on selling to grocery stores and markets in your area?

Or, you’re opening  a diner. Should your menu focus on healthy meals or easy-to-make child-friendly options?

These are the types of questions that market research helps you answer. This section should detail the defining characteristics of your target market, including the demographics and preferences of your ideal customer and the size of the market you’re targeting. Market research questions specific to a food and beverage business could include:

• Business location and characteristics
• Area income
• Local food and beverage preferences
• Existing food and beverage options 

Elaborate on how your food and beverage offerings align with that target market ’s needs. Remember, you can’t please everyone, so focus on a specific group of people or type of person and build out from there.

Marketing and sales

For food and beverage businesses promotions are how you stand out and seize a share of your market.

The marketing and advertising chapter of your business plan is where you’ll detail your strategies for capturing the attention — and loyalty — of the customers you identified as your target market in the previous section.

With so many options for consumers in the food and beverage space, you’ll likely have to rely on multiple marketing channels , including::

• Advertising on websites, television, and in relevant publications.
• Content marketing — developing an engaging website and writing blog content that’s search engine optimized to drive traffic to your site.
• Engaging with your customers on social media.
• Offering discounts and customer loyalty programs.
• Appearing at food and beverage industry trade shows and community events.

It doesn’t matter how delicious your recipes are, how fresh your crops are, or how innovative your cocktails are — if you don’t operate efficiently, your business probably won’t last long.

The operations strategy may be the most detailed section of your business plan, especially if you’re writing it for a bank loan or investment. This section describes how you will run your business day to day.

When writing the operations section, describe the following:

Physical space

Whether it’s a restaurant, a farm, or a food transportation business, describe the space you’re operating in, and all of the physical assets and equipment you’ll need to be successful. 

If it’s a sit-down restaurant, consider including a floorplan mockup in your appendix.

Supply chain 

List the suppliers and partners that get your product to customers. Think about the businesses you purchase ingredients from, the warehouses that goods are stored in, and the trucking companies that deliver your products to grocery stores. 

These are your supply chain partners. It’s crucial that you maintain good relationships with them.

Production processes

How long it takes to make your product, and what materials and equipment are required. Documenting how you produce your goods or services demonstrates that you understand the costs of making them. 

You may also uncover ways to produce them more quickly, or at a lesser cost.

Detail how you’ll handle matters of efficiency like order fulfillment, storage, shipping, and returns, as well as customer satisfaction. If you provide delivery services, document how you will handle the process of getting your product to customers’ homes or businesses.

List your staffing needs, training, and experience requirements for key staff. Also, document the management structure of your business. 

This helps ensure that important tasks you don’t have time to monitor are being done and that workers are being supervised.

Describe investments in payment processing systems, inventory management software, and other tools that support sales or operations in your business. Cataloging your technology systems will help you determine where it might make sense to invest in upgrades for efficiency.

Take some time to write a financial plan . Create detailed financial projections, including sales , expenses , and profitability .

If that sounds intimidating, take a deep breath, and remember that financial forecasts are really just best guesses. If you’re running an existing business, you can start with your previous year’s numbers. If you’re starting, make an educated guess about where you hope to be financially a year from now.

Investors will want to see a: 

• Sales forecast
• Income statement (also called a profit and loss statement )
• Cash flow statement
• Balance sheet 

If you use a tool like LivePlan , you’ll be able to build out your financial forecasts relatively quickly, even if you don’t have experience with business numbers.

Even if you aren’t seeking investment, the financial plan is crucial for understanding the viability of your business. It allows you to adjust your business model based on projected performance, and make informed decisions about where to spend your money.

• Food and beverage business plan templates and examples

If you want to see how other food and beverage businesses have created their plans, check out our free library of food and beverage business plans . 

You can download all of them in Word format and jump-start your own business plan.

See why 1.2 million entrepreneurs have written their business plans with LivePlan

Elon is a marketing specialist at Palo Alto Software, working with consultants, accountants, business instructors and others who use LivePlan at scale. He has a bachelor's degree in journalism and an MBA from the University of Oregon.

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Delivery Service Business Plan Template

Written by Dave Lavinsky

Delivery Service Business Plan

Over the past 20+ years, we have helped over 500 entrepreneurs and business owners create business plans to start and grow their delivery service companies. 

If you’re unfamiliar with creating a delivery service business plan, you may think creating one will be a time-consuming and frustrating process. For most entrepreneurs it is, but for you, it won’t be since we’re here to help. We have the experience, resources, and knowledge to help you create a great business plan.

In this article, you will learn some background information on why business planning is important. Then, you will learn how to write a delivery service business plan step-by-step so you can create your plan today.

Download our Ultimate Business Plan Template here >

What Is a Business Plan?

A business plan provides a snapshot of your delivery service business as it stands today, and lays out your growth plan for the next five years. It explains your business goals and your strategies for reaching them. It also includes market research to support your plans.  

Why You Need a Business Plan

If you’re looking to start a delivery service business or grow your existing delivery service company, you need a business plan. A business plan will help you raise funding, if needed, and plan out the growth of your delivery service business to improve your chances of success. Your business plan is a living document that should be updated annually as your company grows and changes.  

Sources of Funding for Delivery Businesses

With regards to funding, the main sources of funding for a delivery service business are personal savings, credit cards, bank loans, and angel investors. When it comes to bank loans, banks will want to review your business plan and gain confidence that you will be able to repay your loan and interest. To acquire this confidence, the loan officer will not only want to ensure that your financials are reasonable, but they will also want to see a professional plan. Such a plan will give them the confidence that you can successfully and professionally operate a business. Personal savings and bank loans are the most common funding paths for delivery service companies.

How to Write a Business Plan for a Delivery Service Business

If you want to start a delivery service business or expand your current one, you need a business plan. The sample below details the necessary information for how to write each essential component of your delivery service business plan.  

Executive Summary

Your executive summary provides an introduction to your business plan, but it is normally the last section you write because it provides a summary of each key section of your plan.

The goal of your executive summary is to quickly engage the reader. Explain to them the kind of delivery service business you are running and the status. For example, are you a startup, do you have a delivery service business that you would like to grow, or are you operating a chain of delivery service businesses?

Next, provide an overview of each of the subsequent sections of your plan. 

• Give a brief overv iew of the delivery service industry. 
• Discuss the type of delivery service business you are operating. 
• Detail your direct competitors. Give an overview of your target customers. 
• Provide a snapshot of your marketing strategy. Identify the key members of your team. 
• Offer an overview of your financial plan.

Company Overview

In your company overview, you will detail the type of delivery service business you are operating.

For example, you might specialize in one of the following types of delivery service businesses:

• Courier Delivery Services : This type of business provides air, ground, or combined courier delivery services.
• Express Messenger Services : This type of business provides express messenger and delivery services.
• Package Delivery Services : This type of business delivers parcels, documents. and packages.
• Packing and Sorting Services : This type of business prepares items to be delivered.
• Transporting and Trucking Services : This type of delivery business transports items via truck. 

In addition to explaining the type of delivery service business you will operate, the company overview needs to provide background on the business.

Include answers to questions such as:

• When and why did you start the business?
• What milestones have you achieved to date? Milestones could include the number of delivery drivers you employ, the number of items delivered, reaching X number of clients served, etc.
• Your legal business structure. Are you incorporated as an S-Corp? An LLC? A sole proprietorship? Explain your legal structure here.

Industry Analysis

In your industry or market analysis, you need to provide an overview of the delivery service industry.

While this may seem unnecessary, it serves multiple purposes.

First, researching the delivery service industry educates you. It helps you understand the market in which you are operating. 

Secondly, market research can improve your marketing strategy, particularly if your analysis identifies market trends.

The third reason is to prove to readers that you are an expert in your industry. By conducting the research and presenting it in your plan, you achieve just that.

The following questions should be answered in the industry analysis section:

• How big is the delivery service industry (in dollars)?
• Is the market declining or increasing?
• Who are the key competitors in the market?
• Who are the key suppliers in the market?
• What trends are affecting the industry?
• What is the industry’s growth forecast over the next 5 – 10 years?
• What is the relevant market size? That is, how big is the potential target market for your delivery service business? You can extrapolate such a figure by assessing the size of the market in the entire country and then applying that figure to your local population.

Customer Analysis

The customer analysis section of your delivery service business plan must detail the customers you serve and/or expect to serve.

The following are examples of customer segments: individuals, schools, families, and corporations.

As you can imagine, the customer segment(s) you choose will have a great impact on the type of delivery service business you operate. Clearly, individuals would respond to different marketing promotions than corporations, for example.

Try to break out your target customers in terms of their demographic and psychographic profiles. With regards to demographics, including a discussion of the ages, genders, locations, and income levels of the potential customers you seek to serve.

Psychographic profiles explain the wants and needs of your target customers. The more you can recognize and define these needs, the better you will do in attracting and retaining your customers.

Finish Your Delivery Service Business Plan in 1 Day!

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With Growthink’s Ultimate Business Plan Template you can finish your plan in just 8 hours or less!

Click here to finish your business plan today.

Competitive Analysis

Your competitive analysis should identify the indirect and direct competitors your business faces and then focus on the latter.

Direct competitors are other delivery businesses. 

Indirect competitors are other options that customers have to purchase from that aren’t directly competing with your product or service. This includes other third-party delivery services, ship-to-store services, and other types of delivery services. You need to mention such competition as well.

For each such competitor, provide an overview of their business and document their strengths and weaknesses. Unless you once worked at your competitors’ businesses, it will be impossible to know everything about them. But you should be able to find out key things about them such as

• What types of customers do they serve?
• What type of delivery service business are they?
• What is their pricing (premium, low, etc.)?
• What are they good at?
• What are their weaknesses?

With regards to the last two questions, think about your answers from the customers’ perspective. And don’t be afraid to ask your competitors’ customers what they like most and least about them.

• Will you provide options for local and long distance delivery?
• Will you offer products or services that your competition doesn’t?
• Will you provide better customer service?
• Will you offer better pricing?

Think about ways you will outperform your competition and document them in this section of your plan.  

Marketing Plan

Traditionally, a marketing plan includes the four P’s: Product, Price, Place, and Promotion. For a delivery service, your marketing strategy should include the following:

Product : In the product section, you should reiterate the type o f delivery service company that you documented in your company overview. Then, detail the specific products or services you will be offering. For example, will you provide express delivery, air transit courier services, or long distance delivery services? 

Price : Document the prices you will offer and how they compare to your competitors. Essentially in the product and price sub-sections of yo ur plan, yo u are presenting the products and/or services you offer and their prices.

Place : Place refers to the site of your delivery service company. Document where your company is situated and mention how the site will impact your success. For example, is your delivery service business located in a busy retail district, a business district, a standalone office, or purely online? Discuss how your site might be the ideal location for your customers.

Promotions : The final part of your delivery service marketing plan is where you will document how you will drive potential customers to your location(s). The following are some promotional methods you might consider:

• Advertise in local papers, radio stations and/or magazines
• Reach out to websites 
• Distribute flyers
• Engage in email marketing
• Advertise on social media platforms
• Improve the SEO (search engine optimization) on your website for targeted keywords

Operations Plan

While the earlier sections of your business plan explained your goals, your operations plan describes how you will meet them. Your operations plan should have two distinct sections as follows.

Everyday short-term processes include all of the tasks involved in running your delivery service business, including answering calls, scheduling pick up and delivery of items, managing drivers, etc. 

Long-term goals are the milestones you hope to achieve. These could include the dates when you expect to reach your X number of deliveries made, or when you hope to reach $X in revenue. It could also be when you expect to expand your delivery service business to a new city.  

Management Team

To demonstrate your delivery service business’ potential to succeed, a strong management team is essential. Highlight your key players’ backgrounds, emphasizing those skills and experiences that prove their ability to grow a company. 

Ideally, you and/or your team members have direct experience in managing delivery businesses. If so, highlight this experience and expertise. But also highlight any experience that you think will help your business succeed.

If your team is lacking, consider assembling an advisory board. An advisory board would include 2 to 8 individuals who would act as mentors to your business. They would help answer questions and provide strategic guidance. If needed, look for advisory board members with experience in managing a delivery service business.   

Financial Plan

Your financial plan should include your 5-year financial statement broken out both monthly or quarterly for the first year and then annually. Your financial statements include your income statement, balance s heet, and cash flow statements.  

Income Statement

An income statement is more commonly called a Profit and Loss statement or P&L. It shows your revenue and then subtracts your costs to show whether you turned a profit or not.

In developing your income statement, you need to devise assumptions. For example, will you schedule 5-10 deliveries per driver per day and have 6 drivers ? And will sales grow by 2% or 10% per year? As you can imagine, your choice of assumptions will greatly impact the financial forecasts for your business. As much as possible, conduct research to try to root your assumptions in reality.

Balance Sheets

Balance sheets show your assets and liabilities. While balance sheets can include much information, try to simplify them to the key items you need to know about. For instance, if you spend $50,000 on building out your delivery service business, this will not give you immediate profits. Rather it is an asset that will hopefully help you generate profits for years to come. Likewise, if a lender writes you a check for $50,000, you don’t need to pay it back immediately. Rather, that is a liability you will pay back over time.  

Cash Flow Statement

Your cash flow statement will help determine how much money you need to start or grow your business, and ensure you never run out of money. What most entrepreneurs and business owners don’t realize is that you can turn a profit but run out of money and go bankrupt. 

When creating your Income Statement and Balance Sheets be sure to include several of the key costs needed in starting or growing a delivery service business:

• Cost of equipment and office supplies
• Payroll or salaries paid to staff
• Business insurance
• Other start-up expenses (if you’re a new business) like legal expenses, permits, computer software, and equipment

Attach your full financial projections in the appendix of your plan along with any supporting documents that make your plan more compelling. For example, you might include your office location lease or a list of geographic locations you serve.   

Writing a business plan for your delivery company is a worthwhile endeavor. If you follow the template above, by the time you are done, you will have an expert delivery service business plan; download it to PDF to show banks and investors. You will understand the delivery service industry, your competition, and your customers. You will develop a marketing strategy and will understand what it takes to launch and grow a successful delivery service business.  

Delivery Service Business Plan FAQs

What is the easiest way to complete my delivery service business plan.

Growthink's Ultimate Business Plan Template allows you to quickly and easily write your delivery service business plan.

How Do You Start a Delivery Service Business?

Starting a delivery service business is easy with these 14 steps:

• Choose the Name for Your Delivery Service Business
• Create Your Delivery Service Business Plan
• Choose the Legal Structure for Your Delivery Service Business
• Secure Startup Funding for Your Delivery Service Business (If Needed)
• Secure a Location for Your Business
• Register Your Delivery Service Business with the IRS
• Open a Business Bank Account
• Get a Business Credit Card
• Get the Required Business Licenses and Permits
• Get Business Insurance for Your Delivery Service Business
• Buy or Lease the Right Delivery Service Business Equipment
• Develop Your Delivery Service Business Marketing Materials
• Purchase and Setup the Software Needed to Run Your Delivery Service Business
• Open for Business

Learn more about how to start your own delivery service business . 

OR, Let Us Develop Your Plan For You

Since 1999, Growthink has developed business plans for thousands of companies who have gone on to achieve tremendous success.

Click here to see how Growthink’s business planning advisors can create your business plan for you.  

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