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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