"An ounce of prevention is worth a pound of cure."
- Benjamin Franklin
All emerging businesses face similar issues in their start-up years. Whether you have been through the process of starting a new business or not, we can help you find your way in this exciting process.
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SAMPLE BUSINESS PLAN OUTLINE
PLANNING TO PLAN
STEPS IN THE PLANNING PROCESS
BASES TO COVER IN THE PLANNING PROCESS
QUESTIONS WHICH MUST BE ANSWERED
GAINING FOCUS—WHERE ARE THE PROFITS COMING FROM?
CHECKLIST FOR ORGANIZATION OF A LIMITED LIABILITY COMPANY
SAMPLE BUSINESS PLAN OUTLINE: 'Your Successful Company, Inc.'
The following outline is just a sample plan. There are numerous books on the "How To's" of writing a business plan; there is no right or wrong way. The sample below is provided to give some idea of one way to proceed. Although a business plan may vary in length and depth, it is essential to consider, even briefly, each one of the issues outlined below:
- Table of Contents
- The Business Plan Executive Summary
- The product and its market
- Uniqueness and proprietary feature of the product
- The management team and the company's strategy
- Profitability potential and the financing request
- Date and State of sole proprietorship, incorporation, partnership, or Limited Liability Company
- Principals and roles each of them played in bringing the business where it is today
- Business purpose and highlights of progress to date
- Presentation of your view of the current status and prospects for the industry
- Principal industry participants and their performance
- Affect of major economic, social, technological and regulatory trends on the industry
- Difference between your product and similar products
- Proprietary features—uniqueness
- Future product development—positioning
- CUSTOMER AND MARKET
- Who is the customer?
- Market size
- Market trends
- Sales and distribution
- Service and warranty policies
- Advertising, public relations, and promotion
- Facilities and equipment
- Design and production process
- Key management team members
- Management strengths of the team
- Board of directors
- Future management and technical talent needs
- MAJOR EVENTS SCHEDULE—ACTION AGENDA
- CRITICAL RISKS AND PROBLEMS
- Financial, product liability, regulatory, etc.
- FINANCIAL INFORMATION AND FUNDING REQUEST
- Financial history
- Current financial statements
- The funding request
- Financial projections
- Resumes of key employees
Repeated research shows that people who plan are consistently more efficient and effective than people who do not plan. While planning is hard work, it has the highest rate of return of any activity in business.
The business plan has two major functions:
- It is a communications devicefrom you to your potential incorporation investor, bank or venture capitalist. It should tell who you are, where you want to go, and how you want to get there.
- It is a management tool to help you manage your business day in and day out. In some firms, there may be two versions of the business plan, each addressed to one of these two separate functions.
You do not have to go by a "cookbook"; let your style show through—it is an important part of the communication.
STEPS IN THE PLANNING PROCESS
The basic key to the planning process is to do it yourself! Nothing turns off a potential investor more than a plan that has been fabricated, published, packaged and presented that obviously does not have the commitment, the in-depth knowledge, and understanding of the management team. It takes several hundred hours to prepare a good business plan; that is part of the price of admission to success in getting financial backing.
Early planning steps start with:
- The Vision- For example, in 1961, President Kennedy said that before the decade was out, the United States would put a man on the moon. He did not specifically know how this would be done—only that it would be done.
- Realistic Assessment- of where you are now in relation to how you are going to get there.
- Tactics and Resources Allocation - The vehicle—how you are going to get to your goal.
BASES TO COVER IN YOUR PLANNING PROCESS
While developing your business plan, be sure to address the following aspects—for the benefit of both yourself and the financing source capitalist:
- Integration- of major activities including R & D, manufacturing, marketing, delivery, and finance. Each of these functions must support and complement the others.
- Stages and Phases- How much can be accomplished over what period of time? What conditions, or objectives, must be met to proceed on to following stages? Clearly define major benchmarks.
- Time Lines- Set time targets, due dates, requirements for achieving them.
- Reports and Controls- Environments are not static, there is always change. You must have an early warning mechanism to keep you in touch with your own internal situation as well as the external environment.
- Provide for Contingencies- Not all will go as planned. What will you do if revenue or costs vary 10%, 20% or more from what you expected? Do not write several integrated alternative plans. But when you state an assumption about the market or customer behavior, give some idea of how you will test that assumption. Tell how you see the main activities needing to be adjusted given different sets of results. In this way you will be able to communicate to the investor about your ideas of risk and of your ability to manage, assess and respond to it.
- Change the Plan Continually - As your environment and circumstances change, remember to keep the plan current. The vision may remain the same, but the tactics and allocation of resources may need revision.
Dynamic growth demands dynamic planning. A business plan can be too detailed, or it can be not detailed enough. Use the simplest, most straight forward way you can to make the plan communicate with investors and be of use as a management tool. The plan is not just a theoretical exercise. Visible, measurable benchmarks with defined time lines throughout your plan will provide the best foundation for your company.
QUESTIONS WHICH MUST BE ANSWERED
Before you start writing the business plan, remember that investors are very concerned with management, market and customer, product, and protection.
Write out a list of basic questions that an investor will likely ask you. Then develop solid, credible answers; the analysis should be clear and easy to understand. Some "must" questions would include the following:
- How do you define your product or service? What are its "attributes"? What makes it unique? What is the product's "unfair" competitive advantage?
- Who is your customer?
- How big is the market?
- How do you get the product to market?
- How much does it cost to get it to market?
- Who is the competition going to be?
- Who is going to execute the business plan? Will they be bright, experienced, and with good track records?
GAINING FOCUS—WHERE ARE YOUR PROFITS COMING FROM?
The key question you need to answer is, "Where are your profits coming from?" To be effective, you must be specific in describing the customer and the demand for your product or service, rather than "the market". The investor wants to know much more than just, "There is this huge market out there and we are going to capture X percent of it."
The investor wants to know, "Just who is going to buy it—give me a name." Give them a name that they can call who, in one way or another, will give the investor an opinion. In this way they can test whether or not there is a buyer for the product.
If you can come in with a customer-in-hand strategy, do so. You make a very convincing argument if you have a commitment from a customer for your product or service. The most successful business plans are "customer driven". Focus on the profits, the desired and necessary outcome of this whole approach.