HOW TO PREPARE A BUSINESS
PLAN THAT GUARANTEES BIG PROFITS...
Success in business comes as
a result of planning. You have to have a
detailed, written plan that shows you what the
ultimate goal is, the reason for the goal, and
each milestone that must be passed in order to
reach your goal.
A business plan is a written
definition of, and an operational plan for
achieving your goal. You need a complete
business 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
efforts 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. This 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 is to start
with a loose leaf notebook, plenty of paper,
pencils, pencil sharpener, and several erasers.
Once you get you mind "in gear" and begin
thinking about your business plan, "10,000
thoughts and ideas per minute" will begin racing
through 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
Business Location
Management
Current Financial Records
Explanation of Plans For
Growth
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
chapter 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 weaknesses 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 that 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 in all 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" offset to
the left about five spaces.
Example: ABC ACTION
1234 SW 5th Ave. Anywhere,
USA 00000
PRINCIPAL OWNER: Your Name
That's all you'll have on
that page, except the page number...
-1-
Following your title page is
the page for your statement of 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 two (2) sentences in length.
Then you should skip a few
lines, and from the left hand margin of the
paper, write out a subheading in all capital
letters, such as: EXPLANATION OF PURPOSE.
From, and within this
subheading, 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 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 such an explanation.
Point to remember: Keep it short. Very few
business purpose explanations are justifiably
more than a half page long.
Next comes your table of
contents page. Don't really worry about this one
until you've got the entire plan completed and
ready for final typing. It's a good idea though,
to list the subjects (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 the 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 of
purpose leaves off. Describe your product, the
production process, who has responsibility for
what, and most importantly, what makes you
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 alert 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
sect ion would then be an outline of your plans
and policies.
Moving into the chapter on
competition, identify who your competitors are
their weaknesses 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 backfilled 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 other help you might
need.
If you've been in business on
any kind of 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 past 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 plans 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. It'll
take a lot of research, and 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 a 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 comes
to ask for money. When you're researching these
money sources, you'll save time by noting the
"contact" to deal with when you want money, and
whenever possible, by developing a working
relationship with these people.
In 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 ant 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, it'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 and correct any
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 printed
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 it
together properly, go all the way and have it
duplicated properly.
Next, stop by a stationery
store, variety store or even a dimestore, 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 ant 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... |
RoDI
ISOC
IWA
ARTT
RTS
WQC 2003
ISAQ 2005