Real Business Plans

BUSINESS PLAN
GUIDE

 

 
   

 

Writing Your Own Business Plan

 

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! 

 

Business plans are needed for a number of reasons:
 

To raise capital     To attain business loans
To have anyone take your venture seriously.   To provide a map for running your business.
To insure a viable enterprise.   To expand your existing business.

 

A few things before you get started:

  1. 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.

  2. Don’t get overwhelmed. Once you get going, you realize that you already know what you need to say.

  3. Very Important! The business plan is a small part of what will get you financed. A Private Placement Offering and Subscription Agreement are crucial to money-raising for your business.  The Offering Memorandum (17 - 20 pages long)  lays out the risks involved and the ownership of the company.  This is important because the Offering protects you by describing in detail the nature of the investment.  The Subscription Agreement is completed by the investor to show their investor status and how much they wish to invest.

  4. 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 sales and profits that you anticipate' throw in a graph or chart. 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 lower, like Nevada, which has no state income tax.

 

In most cases, you will have to provide an Offering Memorandum and a Subscription Agreement 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 Offering Memorandum 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

 

See our Services page for more on financial projections, offering memorandums, business plans, etc.

 

 

 

 

   

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