Intro – What Is A Business Plan
Success in any business is all
about planning and execution of a well thought out plan. So if you are to succeed in the ever-changing marketplace you must
craft a document that gives a detailed, written plan of the goals you have for your business, the reasons for those goals,
and each milestone your business must pass in order to reach your final goal.
A business plan is written definition
of, and operational plan for achieving your goal. You need a complete but success tool in order to define your basic product,
income objectives and specific operating procedures. YOU HAVE TO HAVE A BUSINESS PLAN to attract investors, obtain financing
and hold onto the confidence of your creditors, particularly in times of cash flow shortages--in this instance, the amount
of money you have on hand compared with the expenses that must be met.
Aside from an overall directional
policy for the production, sales effort and profit goals of your product--your basic "travel guide" to business success--the
most important purpose your business plan will serve, will be the basis or foundation of any financial proposals you submit.
Many entrepreneurs are under the mistaken impression that a business plan is the same as a financial proposal, or that a financial
proposal constitutes business plan. This is just a misunderstanding of the uses of these two separate and different business
The business plan is a long range
"map" to guide your business to the goal you've set for it. The plan details the what, why, where, how and when, of your business--the
success planning of your company.
Your financial proposal is a request
for money based upon your business plan--your business history and objectives.
Understand the differences. They are closely related, but they are not interchangeable.
Writing A Competent Business Plan
Writing and putting together a
"winning" business plan takes study, research and time, so don't try to do it all in just one or two days.
The easiest way to start with
a loose-leaf notebook, plenty of paper, pencils, pencil sharpener, and several erasers. Once you get your mind "in gear" and
begin thinking about your business plan, "10,000 thoughts and ideas per minute" will begin racing thru your mind...So, it's
a good idea when you aren't actually working on your business plan, to carry a pocket notebook and jot down those business
ideas as they come to you--ideas for sales promotion, recruiting distributors, and any other thoughts on how to operate and/or
build your business.
Later, when you're actually working
on your business plan, you can take out this "idea notebook" evaluate your ideas, rework them, refine them, and integrate
them into the overall "big picture" of your business plan.
The best business plans for even
the smallest businesses run 25 to 30 pages or more, so you'll need to "title" each page and arrange the different aspects
of your business plan into "chapters." The format should pretty much run as follows:
Statement of Purpose
Table of Contents
Current Financial Records
Explanation of Plans For Growth
Projected Profit & Loss/Operating Figures
Explanation of Financing for Growth
Summary of Business & Outlook for The Future
Listing of Business & personal References
This is a logical organization
of the information every business plan should cover. I'll explain each of these chapters’ titles in greater detail,
but first, let me elaborate upon the reasons for proper organization of your business plan.
Having a set of "questions to
answer" about your business forces you to take an objective and critical look at your ideas. Putting it all down on paper
allows you to change, erase and refine everything to function in the manner of a smoothly oiled machine. You'll be able to
spot weakness and strengthen them before they develop into major problems. Overall, you'll be developing an operating manual
for your business--a valuable tool that will keep your business on track, and guide you in the profitable management of your
Because it's your idea, and your
business, it's very important that YOU do the planning. This is YOUR business plan, so YOU develop it, and put it all down
on paper just the way YOU want it to read. Seek out the advice of other people; talk with, listen to, and observe, other people
running similar businesses; enlist the advice of your accountant and attorney--but at the bottom line, don't ever forget it
has to be YOUR BUSINESS PLAN!
Remember too, that statistics
show the greatest causes of business failure to be poor management and lack of planning--without a plan by which to operate,
no one can manage; and without a direction in which to aim its efforts, no business can attain any real success.
Business Plan Contents
On the very first page, which
is the title page, put down the name of your business-ABC ACTION--with your business address underneath. Now, skip a couple
of lines, and write it all in capital letters: PRINCIPAL OWNER--followed by your name if you're the principal owner. On your
finished report, you would want to center this information on the page, with the words "principal owner" off-set to the left
about five spaces.
Examples: ABC ACTION
1234 SW 5th Ave.
Anywhere, USA 00000
PRINCIPAL OWNER: Your Name
That's all you'll have on this page except the page number -1-
Following your title page is the page for your statement purpose. This should be a simple statement of
your primary business function, such as: We are a service business engaged in the business of selling business success manuals
and other information by mail.
The title of the page should be
in all capital letters across the top of the page, centered on your final draft--skip a few lines and write the statement
of purpose. This should be direct, clear and short--never more than (2)
sentences in length.
Then you should skip a few lines,
and from the left hand margin of the paper, write out a sub-heading in all capital letters, such as: EXPLANATION OF PURPOSE.
From, and within this sub-heading
you can briefly explain your statement of purpose, such as: Our surveys have found most entrepreneurs to be "sadly" lacking
in basic information that will enable them to achieve success. This market is estimated at more than a 100 million persons,
with at least half of these people actively "searching" for sources that provide the kind of information they want, and need.
With our business, advertising
and publishing experience, it is our goal to capture at least half of this market of information seekers, with our publication.
MONEY MAKING MAGIC! Our market research indicates we can achieve this goal and realize a profit of $1,000,000 per year within
the next 5 years...
The above example is generally
the way you should write your "explanation of purpose," and in subtle definition, why you need an explanation. Point to remember:
Keep it short. Very few business purpose explanations justify more than a half page long.
Next comes your table of contents
page. Don't really worry about this until you've got the entire plan completed and ready for final typing. It's a good idea
though, to list the subject (chapter titles) as I have, and then check off each one as you complete that part of your plan.
By having a list of the points
you want to cover, you'll also be able to skip around and work on each phase of your business plan as an idea or the interest
in organizing that particular phase, stimulates you. In other words, you won't have to make your thinking or your planning
conform to the chronological order of the "chapters" of your business plan--another reason for the loose leaf notebook.
In describing your business, it's best to begin where your statement purpose leaves off. Describe your
product, the production process, the person who has responsibility for what, and most importantly, what makes your product
or service unique—what gives it an edge in your market. You can briefly summarize your business beginnings, present
position and potential for future success, as well.
Next, describe the buyers you're
trying to reach--why they need and want or will buy your product--and the results of any tests or surveys you may have conducted.
Once you've defined your market, go on to explain how you intend to reach that market—how you'll these prospects to
your product or service and induce them to buy. You might want to break this chapter down into sections such as publicity
and promotions, advertising plans, direct sales force, and dealer/distributor programs. Each section would then be an outline
of your plans and policies.
Moving into the next chapter on
competition, identify who your competitors are--their weakness and strong points--explain how you intend to capitalize on
those weaknesses and match or better the strong points. Talk to as many of your "indirect" competitors as possible--those
operating in different cities and states.
One of the easiest ways of gathering
a lot of useful information about your competitors is by developing a series of survey questions and sending these questionnaires
out to each of them. Later on, you might want to compile the answers to these questionnaires into some form of directory or
report on this type of business.
It's also advisable to contact the trade associations and publications serving your proposed type of business.
For information on trade associations and specific trade publications, visit your public library, and after explaining what
you want ask for the librarian's help.
The chapter on management should
be an elaboration on the people operating the business. Those people that actually run the business, their job, titles, duties,
responsibilities and background résumé’s. It's important that you "paint" a strong picture of your top management people
because the people coming to work for you or investing in your business, will be "investing in these people" as much as your
product ideas. Individual tenacity, mature judgment under fire, and innovative problem solving have "won over" more people
than all the AAA Credit Ratings and astronomical sales figures put together.
People becoming involved with
any new venture want to know that the person in charge--the guy running the business knows what he's doing, will not lose
his cool when problems arise, and has what it takes to make money for all of them> After showing the "muscle" of this person,
go on to outline the other key positions within your business; who the persons are you've selected to handle those jobs and
the sources as well as availability of any help you might need.
If you've been in business of
any kind scale, the next chapter is a picture of your financial status--a review of your operating costs and income from the
business to date. Generally, this is a listing of your profit & loss statements for the six months, plus copies of your
business income tax records for each of the previous three years the business has been an entity.
The chapter on the explanation
of your plans for the future growth of your business is just that--an explanation of how you plan to keep your business growing--a
detailed guide of what you're going to do, and how you're going to increase your profits. These plans should show your goals
for the coming year, two years, and three years. By breaking your objectives down into annual milestones, your plan will be
accepted as more realistic and be more understandable as a part of your ultimate success.
Following this explanation, you'll
need to itemize the projected cost and income figures of your three-year plan. I'll take a lot of research, an undoubtedly
a good deal of erasing, but it's very important that you list these figures based upon thorough investigation. You may have
to adjust some of your plans downward, but once you've got these two chapters on paper, your whole business plan will fall
into line and begin to make sense.
You'll have a precise "map" of
where you're headed, how much it's going to cost, when you can expect to start making money, and how much.
Now that you know where you're
going, how much it's going to cost and how long it's going to be before you begin to recoup your investment, you're ready
to talk about how and where you're going to get the money to finance your journey. Unless you're independently wealthy, you'll
want to use this chapter to list the possibilities and alternatives.
Make a list of friends you can
approach, and perhaps induce to put up some money as silent partners. Make a list of those people you might be able to sell
as stockholders in your company in many cases you can sell up to $300,000 worth of stock on a "private issue" basis without
filing papers with the Securities and Exchange Commission. Check with a corporate or tax attorney in your area for more details.
Make a list of relatives and friends that might help you with an outright loan to furnish money for the development of your
Then search out and make a list
of venture capital organizations. Visit the Small Business Administration office in your area--pick up the loan application
papers they have—read them, study them, and even fill them out on a preliminary basis--and finally, check the costs,
determine which business publications would be best to advertise in, if you were to advertise for a partner or investor, and
write an ad you'd want to use if you did decide to advertise for monetary help.
With listing of all the options
available to your needs, all that's left is the arranging of these options in the order you would want to use them when the
time come to ask for money. When you're researching these money sources, you'll save time by noting the "contact" you deal
with when you want money, and whenever possible, by developing a working relationship with these people.
If your documentation section,
you should have a credit report on yourself. Use the Yellow Pages or check at the credit department in your bank for the nearest
credit reporting office. When you get your credit report, look it over and take whatever steps are necessary to eliminate
any negative comments. Once these have been taken care of, ask for a revised copy of your report and include a copy of that
in your business plan.
If you own any patents or copyrights,
include copies of these. Any license to use someone else’s patent or copyright should also be included. If you own the
distribution, wholesale or exclusive sales rights to a product, include copies of this documentation. You should also include
copies of any leases, special agreements or other legal papers that might be pertinent to your business.
In conclusion, write out a brief,
overall summary of your business- when the business was started, the purpose of the business, what makes your business different,
how you're going to gain a profitable share of the market, and your expected success during the coming 5 years..
The last page of your business
plan is a "courtesy page" listing the names, addresses and phone numbers of personal and business references--persons who
have known you closely for the past five years or longer--and companies or firms you've had business or credit dealings with
during the past five years.
And, that's it--your complete
business plan. Before you send it out for formal typing, read it over once a day for a week or ten days. Take care of any
changes or corrections, and then have it reviewed by an attorney and then, an accountant. It would also be a good idea to
have it reviewed by a business consultant serving the business community to which your business will be related. After these
reviews, and any last-minute changes you want to make, I'll be ready for formal typing.
Hire a professional typist to
type the entire plan on ordinary white bond paper. Make sure you proofread it against the original. Check for any corrections
and typographical errors--then one more time--read it through for clarity and the perfection you want of it.
Now you're ready to have it printed
and published for whatever use you have planned for it--distribution amongst your partners or stockholders as the business
plan for putting together a winning financial proposal, or as a business operating manual.
Take it to a quality printer in
your area, and have three copies printed. Don't settle for photocopying. Have
it printed! Photocopying leaves a slight film on the paper, and will detract
from the overall professionalism of your business plan, when presented to someone you're trying to impress. So, after going
to all this work to put together properly, go all the way and have it duplicated properly.
Next, stop by a stationery store,
variety store or even a dime store, and pick up an ordinary, inexpensive bind-in theme cover for each copy of your business
plan. Have the holes punched in the pages of your business report to fit these binders and then slip each copy into a binder
of its own.
Now, you can relax, take a break
and feel good about yourself. You have a complete and detailed business plan with which to operate a successful business of
your own. A plan you can use as a basis for any financing proposal you may want to submit and a precise road map for the attainment
of real success.
Congratulations, and my best wishes
for the complete fulfillment of all your dreams of success!!!