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 a
business plan. This is just a misunderstanding of the uses of
these two separate and different business success aids.
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 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:
Title Page
Statement of Purpose
Table of Contents
Business Description
Market Analysis
Competition
Business Location
Management
Current Financial Records
Explanation of Plans For Growth
Projected Profit & Loss/Operating Figures
Explanation of Financing for Growth
Documentation
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
which will keep your business on track, and guide you in the
profitable management of your business.
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.
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, 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 resume'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 judgement 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 business.
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" 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 licenses 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 proof-read 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 photo-copying..Have it printed!
Photo-copying 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!!!
