First-time entrepreneurs can expect to encounter a steep learning curve when they hear the free-flowing jargon of the financial world. As it is, small business owners are likely to find that running a business is an education in itself.

Fortunately, advice on business startup abounds, and a great deal of information is free for the asking. The trick often is figuring out where to turn for help, how to ask for it, and how to apply the newly acquired knowledge once you've digested it; particularly when it comes to developing an effective business plan.

Developing a comprehensive business plan is the most important step for a fledgling firm to take. It is an essential tool, not only for seeking commercial financing, but as a map for plotting future strategies. A good business plan helps small companies avoid mistakes by providing standards against which to judge decisions, according to "Planning and Financing for the Entrepreneurial Company," a guide published by accounting firm Price Waterhouse.

A plan should include most or all of the following sections:

• The executive summary, highlighting the company's goals. This portion should be written last, but presented first.
• The summary should detail the business and target markets, distinguishing product characteristics, the financial projections, and , if used in loan request, funding requirements.
• A description of the management team, and its strengths and weaknesses, also is critical.
• Definition of the business, products and services.
• Analyses of markets, competition, and industry, including a specific description of how the fledgling firm will win market share away from competitors.
• Description of business strategy, including an implementation plan.
• Description of potential risks and pitfalls, as well as the firm's responses.

Advisers differ on whether this section should be included in a loan request, but most agree that it's a valuable thought process for business owners to go through.

Financial statements and projections, including past and current financial statements; monthly income statements for the next two years; quarterly or annual income statements for the third and fifth years; and projected cash flow and balance statements.

Sensitivity analysis, or a study of "what-if" scenarios. If basic certain assumptions change, how will they affect financial statements? Price Waterhouse recommends detailing the financial data in table form to illustrate best, worst and "realistic" scenarios.

Five-year plans should be revised every year, several planning consultants said.

If the above seems rather daunting, take heart. Most companies need help in translating the raw data of their business into the language of bankers and accountants.

Making accurate projections.

Market research will take up a significant portion of the business plan. Consultants urge entrepreneurs to know their businesses inside and out, and whether they plan to seek outside financing, so that they can make reasonably accurate projections.

Determine the trends in your industry. Standard and Poor's Industry Surveys, U.S. Industrial Outlook, marketing journals, trade magazines and general business magazines are good sources.

Determine target markets and collect information on how competitors are serving these markets.

Develop revenue projections. Also determine how much the competition is likely to spend.

Other sources: estimates from industry experts, surveys and test marketing. Accurate market projections are critical to ensure that sales revenue will exceed expenses. Depending on the nature of the business, product research may be necessary.

ABCs

The ABCs of Plan Review

A business plan will carry more clout if it's been reviewed by the "ABCs" --an attorney, a banker and a certified public accountant. In many instances, these professional services representatives already have been involved in various phases of business plan development.

Most people don't make full use of the valuable resources their advisers represent. For example, an entrepreneur's network of support professionals also can serve as potential board members.

It's good for small firms to have an advisory team in place even if they don't plan to seek financing immediately.

Friends and Family

Who are some of the startup company's potential friends? Customers. Depending on the product or service being offered, eager customers may provide advance payments or loans to secure the work they need. Suppliers. Some will provide limited credit, even to new firms. It's possible that the terms can be extended. Also, assets such as equipment can be leased from suppliers. Although more costly than bank financing, leasing may provide you with the equipment you need at the crucial time.

Individual investors. There are people out there who are interested in financing new or expanding business, as well as providing guidance that can be invaluable. The trick, of course, is finding them. Consider retired or former employers, or others whose business could be furthered by yours. Ideally, a small business will be up and running for a couple of years before seeking bank financing. During that time, the entrepreneur should develop a relationship with a banker. Like anyone else, bankers prefer to work with people they already know. About half the people who apply for small?business loans choose their commercial bank based on where they do their own personal banking -- often a wise strategy.