Success in business comes as a result of planning. You have to have
a detailed, written plan that shows 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 written definition of,
and operational plan for achieving your goal. You need a complete but success
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
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!!!
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