"The dictionary is the only place where success comes before work." Mark Twain
A comprehensive, well researched business plan provides a strong foundation for the success of a business practice. Unfortunately, many business plans are done haphazardly, or as a quick-fix to attract necessary financial support. Numerous other businesses fail to write a business plan, citing lack of knowledge as the reason for not writing a plan. Too many small business hope that by running their business “by the seat of their pants”, or “as they go”, they can overcome the lack of a well founded plan
Many people mistakenly assume that to write a successful start-up business plan they should dazzle their readers with complicated technical jargon, complex corporate structures and fierce non-disclosure pledges. Yet the truth is that this type of approach can actually alienate potential investors, business plan is not to show how sophisticated you are as a writer, but how practical and attainable your goals are.
Whether you are attempting to raise $20,000 or
$2,000,000, you should be sure to address certain
crucial areas that convince investors your business
is a good risk.
Following is a general approach that you can
use as a foundation. However, you should tailor your
plan to meet the specific circumstances of your
business, emphasizing its strengths and addressing
the potential problems and challenges to be faced.
successful person makes a habit of doing
what the failing person doesn't like to do.
The summary should concisely describe the key elements of the business plan. For the firm seeking financing, the summary should convince the lender or venture capitalist that it is worthwhile to review the plan in detail. The summary should briefly cover at least the following:
* Name of your business;
* Business location (virtual and/or Physical Brick & Mortar)
* Discussion of your product, market and competition;
* Expertise of the management team;
* Summary of financial projections;
* Amount of financial assistance requested (if applicable);
* Form of and purpose for the financial assistance (if applicable);
* Purpose for undertaking the project (if financial assistance is sought);
* Business goals.
Note: Even if you are writing this plan only to help you identify your business idea, each of these points is essential. Many entrepreneurs mistakenly overlook the financial projections, silently hoping it will all work out. The more focus you put into the foundation of your business plan, the easier it will be to see your route.
For some this process of putting their idea into writing is easy, and others need assistance. Whether you need short term coaching or assistance with your full written plan, there are coaches, business consultants and workshops available. Some offer discounts and free initial consultations. Call us today for a referral 866-226-9741 or email us with your request
2. The Company
This section provides background information on your company and usually includes:
* A general
description of your business, including the product
* Historical development of your business, including:
- Name, date and place (state) of formation;
- Legal structure (proprietorship, partnership, corporation);
- Significant changes (including dates) in ownership, structure, new products or lines, and acquisitions;
- Subsidiaries and degree of ownership, including minority interests;
- Principals and the roles they played in the formation of the company.
Product or Service
Describe the present or planned product or service lines, including:
* Relative importance of each product/service including sales projections;
* Product evaluation (use, quality, performance);
* Comparison to competitors' products/ services and competitive advantages over other producers;
* Demand for product or service and factors affecting demand other than price.
If financing is sought for a specific project, describe the project, the purpose for which it is undertaken, its cost and the amount, and the form and use of the financial assistance.
* Organizational chart;
* Key individuals:
- Personal resumes (describing skills and experience as they relate to activities of the business);
- Present salaries (include other compensation ,ie: stock options, bonuses);
-Planned staff additions.
* Other employees:
- Number of employees at year end, total payroll expenses for each of previous five years broken down by wages and benefits;
- Method of compensation;
- Departmental or divisional breakdown of work force.
* Planned staff additions.
* Names, addresses, business affiliations of principal holders of subject's common stock and other types of equity securities (include details on holdings);
* Degree to which principal holders are involved in management;
* Principal non-management holders;
* Names of board of directors, areas of expertise and role of board when business is operational;
* Amount of stock currently authorized and issued.
7. Marketing Strategy/Market Analysis
* Description of the industry. Include:
- Industry outlook;
- Principal markets (commercial/industrial, consumer, government, international);
-Industry size - current as well as anticipated in the next 10 years (explain sources of projections);
- Major characteristics of the industry.
Effects of major social, economic, technological or regulatory trends on the industry.
* Description of major customers. Include:
- Names, locations, products or services sold to each;
- Percentage of annual sales volume for each customer over previous five years (if applicable);
- Duration and condition of contracts in place.
* Description of market and its major segments. Include:
- Principal market participants and their performance;
- Target market;
- Customer requirements and ways of filling those requirements;
- Buying habits of customers ;
- Impact on customers using your product/service.
* Description of competition: companies with which your business competes and how your business compares with these companies. This section is a more detailed narrative than that contained in the description of the product or service above.
* Description of prospective customers. Include reaction to your firm and any of its products or services they have seen or tested.
* Description of firm's marketing activities. Include:
- Overall marketing strategy;
- Pricing policy;
- Method of selling, distributing and servicing the product;
- Geographic penetration, field product support, advertising, public relations and promotions, and priorities among these activities.
* Description of selling activities. Include the method for identifying prospective customers and how and in what order you will contact the relevant decision-makers. Also describe your sales effort--sales channels and terms, number of salespersons, number of sales contacts, anticipated time, initial order size--and estimated sales and market share.
* Describe technical status of your product--idea stage, development stage, prototype--and the relevant activities, milestones and other steps necessary to bring the product into production.
* Present patent or copyright position (if applicable). Include how much is patented and how much can be patented (how comprehensive and effective the patents or copyrights will be). Include a list of patents, copyrights, licenses or statements of proprietary interest in the product or product line.
* Describe new technologies that may become practical in the next five years that may affect the product.
* Describe new products (derived from first generation products) the firm plans to develop to meet changing needs.
* Describe regulatory or approval requirements and status, and discuss any other technical and legal considerations that may be relevant to the technological development of the product.
* Describe research and development efforts and future plans for research and development.
* Explain how your firm will perform production or delivery of service. Describe in terms of:
- Virtual and/or Brick & Mortar Physical facilities--owned or leased, size and location, expansion capabilities, types and quantities of equipment needed. Include a facilities plan and description of planned capital improvements, and timetable for those improvements.
-Suppliers: names and locations, length of lead time required, usual terms of purchase, contracts and subcontractors.
- Labor supply (current and planned): number of employees, unionization, stability (seasonal or cyclical), and fringe benefits.
- Technologies/skills required to develop and manufacture the products.
- Cost breakdown for materials, labor and manufacturing overhead for each product, plus cost versus volume curves for each product or service.
- Manufacturing process.
* Describe production or operating advantages of the firm; discuss whether they are expected to continue.
* Specify standard product costs at different volume levels.
* Present a schedule of work for the next one to two years.
If financing is
sought, most lenders and venture capitalists
* A funding request indicating the desired financing, capitalization, use of funds and future financing;
* Financial statements for the past three years, if applicable;
* Current financial statements;
* Monthly cash flow financial projection, including the proposed financing, for two years;
* Projected balance sheets, income statement and statement of changes in financial position for two years including the proposed financing.
HOW MUCH MONEY DO YOU NEED?
To help you estimate the amount of financing you will need to get your venture off the ground, use the following checklist. Keep in mind, however, that not every category applies to all businesses. Estimate monthly amount.
owner-manager (if applicable) $_______
All other salaries and wages _______
Delivery expenses _______
Taxes, including Social Security _______
Maintenance (facilities/equipment) _______
Legal and other professional fees _______
Lease (equipment/furniture/etc.) _______
Inventory purchases _______
One-Time Start-Up Costs:
Decorating and remodeling _______
Installation of fixtures/equipment/furniture _______
Starting inventory _______
Deposits with public utilities _______
Legal and other professional fees _______
Licenses and permits _______
Advertising and promotion for opening _______
Accounts receivable _______
Cash reserve/operating capital _______
Your total amount will depend on how many months of preparation you want to allow for before actually beginning operations.