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It doesn't matter whether
you have had a college education, or years of
entrepreneurial experience under your belt -- Anyone
can write a business plan!
We want to help you write a quality
business plan. This guide gives you a good background of knowledge.
Business plans are needed for a
number of reasons:
To
raise capital |
To
attain business loans |
To
have anyone take
your venture seriously. |
To
give you a guide for
running your business. |
To
make sure you will
have a viable enterprise. |
To
expand your existing
business. |
Honestly,
money is why we all write the business plans!
You already know how
you are going to run your business, it's all in your head.
But, as soon as you realize you need money to do it right, a business plan
starts to sound better.
A few things before you get started:
Start your plan with the numbers.
Plot out your sales versus expenses, projecting forward up to seven years.
This is where spreadsheet programs come in handy. Don't be
intimidated, we have the solution that gives you real business plan
financial templates. More later on.
Don’t get
overwhelmed. Once you get going, you realize
that you already know what you need to say.
The business plan is a small
part of what will get you financed. A Private Placement Offering can be
crucial to money-raising in the venture capital world - We will show you
how to use our sample to create your own.
This guide briefly describes
the pieces you need to put together your business plan. Use it as a
reference tool in the writing process.
This following is
a brief description of each major heading required for a professional business
plan:
Executive Summary
This is your opening paragraph(s), the most important part of your
written plan! Most readers of your plan look to the Executive Summary to capture their
interest, and entice them to read on.
The Executive Summary will state your company
name, nature of your business and what you need to make it happen. This can be
done in a single paragraph, do not feel that you have to state your entire case
in this section. But, be specific... Your plan is not the place for
generalities. If you are unsure about the name of your new venture, don’t
worry, just pick something that sounds good. You will see that nothing you have
in your plan is etched in stone; things change! Once you are up and running, go
with the flow.
In closing your Summary, make sure you include the amount of money
needed, whether it be in the form of debt, equity or a combination of both. Generally,
debt financing is in the form of a loan from a bank or other means. Equity financing deals
with investors owning a portion or shares (more on financing later in the manual).
Background
This section works both for new start-ups, and existing businesses
looking to expand operations.
With a start-up situation, you want to explain the background of the
type of business you want to start and/or your new product or service. Do not take the
background literally, this is a catch-all section for anything you want to say. This is
not rocket science, it will all come naturally once you commit to writing your plan.
Now if you have an existing business, the
background is self-explanatory. You want to describe your business to-date. This
section can easily work as being listed as ‘History’ instead of ‘Background’.
Be factual, not long-winded. Always remember, you want to get your point across,
but try to be concise. Too much ‘blah, blah, blah’ will bore your
reader. You want the reader to have questions after reading the plan, or else,
he probably did not read it.
Objectives
The ‘Objectives’ section is not merely
there to boast: "We will be the best widget company in the history of
widgets". In this section, you want to clearly state the goals for your
company. You want to start with some bullet points, for example:
- Achieve $100,000 in sales by year’s
end
- Complete marketing campaign in first two months
- Begin construction by Summer 1999
- Hire sales team by April 2000
Once you give some bullet points, then expand
on them. Also, you will want to talk about other short term and long term goals.
Generally short term is 2 – 5 years out, and long term covers 5+ years. It
looks good to have a bigger picture in mind, although an investor is always
looking for that ‘exit strategy’. The exit strategy is the way out for your
investor (exit strategy is covered later in the manual).
The Experience
This section may or may not be appropriate.
There are a number of different headings you may use, but ‘The Experience’
allows you to paint a picture of your service/business idea. It can be called
‘The Product’, "the Concept’, ‘The Service’, etc. Simply, you are
describing, in detail, what your business is all about. What makes your product
or service better than the others.
Marketing Analysis & Advertising
Depending on the scope of your venture and target market, you may
want to split this into two separate sections; one dealing with your market analysis, the
other with advertising.
In the market analysis, you describe who your customer is. This will
entail everything you know about who will purchase your product, your competition,
demographics, etc. This section is where you want to mention a few pertinent numbers,
including any market surveys. Surveys can be very powerful tools in showing the potential
of your venture.
The advertising section should not only
describe the means (direct mail, newspaper, cable, radio, internet, etc.) but
also cost analysis, your edge over the competition, public relations, guerilla
tactics, etc. In this section, you need to convince your reader of how you will
sell your product or service. Having an ‘in’ with an established
client base can be extremely helpful.
These days, just saying: ‘Make it and they
will buy’ does not work. If someone is considering loaning or investing money
with your venture, they must see that you can make sales. Whether you realize it
or not, you are a salesman; from the moment you began talking about your
business idea to friends and family, you became a salesman! Your business plan
is merely an in-depth sales brochure. The more you think of it as such, the
better the plan.
Competition
The Competition section will cover exactly
who you compete against. You want to compare every aspect of you versus them.
You must know your competition inside and out. This is where you make or break
your plan. And there is always competition… Maybe not in your town, but they
are out there. With the every increasing growth of the internet, competition can
be a keystroke away.
Also, there is indirect competition. These companies can include
those that have similar, but not the same as, your product or service.
Management Team
This section is important for overall
confidence in those who are to set forth the actions described in your plan.
Management can include, but not limited to, yourself, partners and key
employees. You want to briefly describe each person’s background, position in
the company and duties to be performed. Each person should fit like a piece of a
puzzle in the overall company structure, and be invaluable to the future success
of the company.
If there are key positions that have not been
filled, you must mention them. Describe the nature of the position and
qualifications required. Don’t worry if you have many openings, just know the
position and who you need to fill it.
Try to limit each person’s coverage to one
half of a page. Make them powerful, noting key and positive points.
Remember to back up this section, you must have resumes as part of
your attachments to the plan.
You may also want to list an advisory board. The advisory board
consists of friends or business contacts who can offer advice for your business. These
people do not have to have a stake in your company, just offer experience in areas that
compliment your venture.
Financials/Operating Performance
In the financial section, there is no need to be long winded.
Mention some gross sales and profits that you anticipate, throw in a graph or chart
(samples are included in our software package). You also want to re-iterate the money
needed to be raised, and by which means.
Now you are faced with the decision of the legal structure of your
company; Corporation, Limited Liability Company, Sole Proprietorship or Partnership.
Today, unless you are a one-man show, you need a Corp. or LLC. The main reason deals with
liability: In a Sole Prop. Or Partnership, the person(s) involved can be personally liable
for anything attached to the company. Anything you own can be fair game to repay company
debts and lawsuits.
Corp.’s allow you to defer some or most of
the liability to the Corp only; you are a shareholder and can loose only your
shares in the company. Another benefit is to register a Corp. in a state where
taxes are fewer, like Nevada, which has no state income tax.
In most cases, you will have a set Offering for your venture. When
you are dealing with a Corporation, there are a total of shares outstanding and those you
are offering for sale. The combination of all shares determines each person's percentage
of ownership in the company. The description of the offering should be detailed in an
Offering Memorandum, which includes risk, share breakdown, dilution, etc. The Offering
Memorandum should precede the business plan, and in most cases, will add more credibility
to your venture. It also covers the legal areas of your offering, a must for new ventures
seeking equity financing.
The exit strategy is important to some investors. List the potential
ways out of the deal once revenues are generated. You may want to leave an option to buy
out the investor after a certain length of time. Or, you may plan on a secondary offering
later in the life of your business, using some of the proceeds to buy back existing
shares.
At the end of this section, you want to direct the reader to your
financial attachments.
Attachments
You must include the following attachments with your plan:
- Projected Profit and Loss Statement
- Break-Even Analysis
- Balance Sheet (if applicable)
- Cash Flow Statement
- Return on Investment Statement
- Marketing Analysis/Demographic Report
- Advertising literature
- Photos and/or examples, clippings, diagrams
- Key person resumes
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