You need to prepare a business plan for your company.
Anxious to start, you immediately open your favorite word processing program.
But now you are staring at a blank screen and a blinking cursor that appears to be mocking you.
Not sure where to start or what to write first, you flip the computer off and decide that tomorrow is a much better day to work on your plan.
After all, the weather is much too nice to be sitting inside on a day like today.
Many entrepreneurs and business owners have faced this situation before, but what to do when waiting until tomorrow to start your plan is unacceptable?
Follow these 10 tried and true tips to help you complete outstanding business plan.
Decide why you are writing your plan
Are you raising money? Clarifying your future? Launching a new venture?
Searching for strategic partners?
Game-planning to destroy your competition?
Whatever the reason , it is important to get committed to
the business plan writing process.
Prepare for yourself a short paragraph that outlines (why you are writing a business plan and why it will be great.)
Call it your business plan mission , it will keep you motivated and help you clarify the message you send your readers.
Get the big picture
Before accumulating mountains of research and information, take a look at your business plan through a wide-angle lens to get the big picture.
Visit your local library or bookstore and bring home a few business plan books.
Take a look at Internet resources, consider business plan software programs and review the SBA's business planning outline.
Your goal is to get a feel for what a business plan is, what it is not and what to expect from your business plan.
With this new insight, prepare an outline that includes the major sections and subsections that you believe should appear in your business plan.
Grab everything that is already handy
Dig through every computer file, box and file cabinet you have to unearth the information that is already available to you.
You will surprise yourself with what you find and with how nicely this step will move you forward.
Consider marketing pieces you have prepared, press releases, related articles, industry journals, historical financials, important web sites and notes or ideas you have accumulated over time.
Do not rate the quality of this information , just gather it.
At this point quantity is the name of the game, and the more you can find the better.
Start typing thoughts, ideas, words, questions and to-dos into each section of your business plan outline.
Put rough thoughts on paper and empty your brain.
Don ot worry about complete sentences or proper grammar , just type.
Approach this step like a brainstorming session, the more powerful the storm, the more potent your business plan.
Jot down any ideas that demand further consideration, areas that present a challenge and topics that require the input of others.
Strive to place your thoughts in the most appropriate section of your business plan outline and rearrange the outline if it will be more logical for your readers.
Prepare a rough draft
Now it is time to take your outline, the information you have got handy and your brainstormed ideas and shape them into a useable rough draft.
Move through your entire outline, section by section and begin writing complete sentences and paragraphs.
As you work, start a Biz Plan To-Do List to keep track of topics that require in-depth research, statistics or back-up information.
When you are done, print out a copy and read it a few times, revising lightly as you go.
Your plan should be rather sparse, but when you have completed this step, you have truly made business planning progress.
It is research time
Now is the time to think like a lawyer and build a case for your business plan.
Your goal is to compile information and research to support the claims and assertions you make in your plan.
Drop by the library and ask the librarian if they know of any sources of information that can help your cause.
Schedule a meeting with a local SBA representative or a Small Business Development Center counselor.
Call your local and national industry associations and track down annual reports for companies in your industry.
Request product and service information from your competitors.
In short, talk to anyone and everyone that might be able to help you collect information for your business plan.
Start thinking about the numbers
It is advisable to begin developing your pro-forma financial statements at this point.
If you start any sooner, one of two things is likely to occur:
1) Your numbers will be based on pure fantasy and you will have to change them anyway, or
2) You will attempt to write your plan, do the research, revise your plan and complete your financial statements all at once , and none of it will get done.
If you prepare your financial statements at this stage, your numbers have a much better chance of matching and supporting the text in the body of your business plan.
For example, if you mention a specific marketing medium in your marketing section, you will need to include the corresponding costs somewhere in your financials.
Write a final draft and finish the numbers
Sometimes finishing is the hardest part of completing large projects like a business plan.
But if you follow the steps leading up to this one, success is just around the corner.
Avoid the mistake many business planners make at this stage , it is important to check, double-check and triple-check your writing for grammatical and spelling errors.
Think of it this way, bankers and investors will assume that you will manage your business and protect their money with the same level of care and attention that you demonstrate in your business plan.
Go all out and create a document that sends a powerful message about the quality of your work.
Set a deadline
To ensure that you complete your plan, set a deadline for yourself that you can not ignore.
We suggest calling a few people you respect to ask if they would be willing to read your plan and offer suggestions.
Make this arrangement with someone whom you are not particularly close with, possibly a professional acquaintance, so it is more difficult and uncomfortable to call and delay.
Ask for feedback and make it clear that honesty is what you are after.
If you do not explain this up-front, you may hear 'looks good to me' , essentially a waste of time for both of you.
If you feel tears coming on as they serve up their advice , things are gong well.
Take detailed notes and refrain from crying until after the phone is back on the receiver.
10. Polish your plan to perfection
The comments you receive from your readers will help you to beef-up the sections of your plan that need attention.
Track down any additional information you may need, incorporate the ideas that your readers offered and clarify sections or points that were not clearly conveyed.
Put together an appendix if necessary, create a clean cover page and table of contents and include a non-disclosure form.
Lastly, prepare a one-page executive summary that encapsulates the highlights of your entire business plan and place it up front.
Walk into your local print shop like you own the place and professionally print and bind as many copies of your plan as you need.
Congratulations , you are the proud owner of an excellent business plan.
You know what you sell. But has your business plan clearly and concisely described those products and services?
Too many business plan writers make the incorrect assumption that the
reader is as familiar with their business as they are.
Unfortunately, this assumption leads to a quick and final "no" from lenders and investors.
Instead, define and describe your product for someone
who knows nothing about your industry.
Be sure to include not only the features of your offering, but also the benefits.
Tell the reader what need it fills, why it's better, faster, or cheaper or how it can improve their life.
Sell To Everyone!"
More than likely, you sell to a very specific group with
the need and desire to purchase your product or service.
Understanding your target market can be the difference between success and failure.
It allows you outline the benefits important to your clients, enables you to focus your marketing efforts to reach the right audience, and forces you to determine the most cost effective channel to get your product in the hands of paying customers.
Define your customer in as much detail as possible, including demographic traits as well as more subjective items such as lifestyle and personality types.
Your Competitors Know You Exist
A business plan lacking a comprehensive competitive analysis is destined for the trash can of most investors.
In order to avoid this fate your business plan should include a thorough analysis of your competition.
Experienced capital sources know that competition exists, but they also know that competitive forces can have a very positive effect on a company's attitude and performance.
Remember, Coke has Pepsi, Nike has Reebok, etc.
Be sure your business plan identifies who your competitors are, what they sell, what market share they hold and their strengths and weaknesses.
Even Batman Had Robin
No one ever said running a company was easy, and with the lack of hours in a day
(only 24 hours as far as we cant tell), a well rounded TEAM of people is often critical to the success of a company.
Most capital sources view one-person operations as limited in terms of time, experience and core business skills necessary to launch and grow a serious business.
They also expect a team of professionals that are highly competent in each business function
(marketing, sales, operations, finance, manufacturing, engineering, etc.).
Once you have assembled your team, be sure to provide your reader a thorough description of the background and job responsibility for each, along with a discussion of your board of directors, board of advisors and key consultants.
Exit Strategy - Without An Exit, Or A Strategy
A business plan is an excellent tool to plan a business or to raise capital.
However, when seeking capital don't forget that an investor's commitment hinges upon their ability to recoup their initial investment and a healthy profit.
The lack of a solid and realistic exit strategy demonstrating how investors will accomplish this goal can immediately turn off many sources of capital.
When deciding upon an exit strategy, be sure to take
into account your particular industry, business life-cycle, competitive
environment, and management needs.
It's also important to consider your personal and financial goals, and how they relate to the future of your business - without forgetting that an exit strategy must meet the needs of the person who will ultimately write you a check.
Most owners of small businesses believe that banks
only lend money to companies that do not need it.
This is not true.
However, what is true is that bankers and the banks they represent will not typically make an effort to understand a business when an owner has not made a concerted effort to explain, in an organized and concise manner:
The following hints will help any small business owner ensure that a banker sees their business in the best possible light.
Rule #1 For The Banker: "Know Your Customer"
The first rule of every banker is "Know your customer."
This means that before a bank can make a loan, the bank must have an in-depth understanding of the business, including its history, its future, its products, its customers, its suppliers and its owners.
The company's business plan will normally include these topics.
For smaller business, the bank will rarely distinguish
between a company and its owner.
This means that the bank will want to understand the personal financial circumstances of the owner, including the details of the owner's net worth and cash flow, just as the bank needs to understand the finances of the business.
The bank will also want to understand the owner's character.
The bank will want to examine the owner's personal credit history on the premise that the owner will manage the company's debt similar to the way he manages his personal debt.
Also, personal guarantees will always be required.
A bank will never consider taking on the risk of lending money to a small business whose owner will not accept the same risk.
Helpful Business Plan Tips
Following are some helpful tips to make a loan request package stand above the crowd:
Also Need To Know
To ensure that you help make the bankers life easier, consider including the following supporting documents in your loan request:
In Conclusion . . .
A business plan is the company's plan for the future.
The bank will want to know if the company intends to grow and how it will achieve its growth objectives.
The bank will want to know how the company will compete.
The bank will want to know how the company will function in bad times.
Who will manage the business in the event of death or illness?
prepared with the answers to the banker's most likely questions and you
have increased your chances of raising banking financing.
You may have never considered writing a business plan
on the back of an envelope (or on any other handy and reasonably portable
Well in fact you can. In order to reach a target or achieve a goal in business or any other endeavor for that matter, you must have a plan of attack, a.k.a., a business plan.
First, A Quick Warning
If your goal is to convince lucky investors or lenders to quickly provide serious capital for your new idea -- you needn't read any further, because the format and presentation of your business plan really must be more formal than the back of an envelope.
In fact, you should probably immediately discard this article and contact BizPlanIt.
However, if your objective is less grand (not less
important) and your audience does not have to be impressed, an informal
plan can help you organize and communicate your strategy just as
effectively as 35 pages of brilliant business literature.
Ok, enough with the yak, yak, yak. You are probably asking yourself so how do I go about writing this plan on the back of an envelope?
Well here the five easy steps:
Step One: Clarify Your Goal
The first step is to begin with a very precise, quantifiable statement of not more than one or two sentences that clarifies the goal you are trying to achieve.
The big shots might call this a Mission Statement - but never mind the big shots.
For example "Acme Cleaning Company will increase its revenue from repeat customers from 8% of total yearly sales to 20% of total yearly sales by the end of calendar year 2002."
Step Two: Outline Your Strategies
The second step is to list in bullet form (there is probably not enough space for full sentences) the things that you can do to entice people to buy from Acme again, and therefore reach your goal. For example:
Step Three: Identify Your Tactics
Step three is to write one or two bullets with specific steps to make each of these six activities above happen.
Step Four: Perform a Quick Cost/Benefit Analysis
Step four, write a two-sentence assessment of the financial costs and consequences of executing the plan.
For example.. The cost of executing this plan including the pricing discount and the cost of the other initiatives is $37,000.
The financial reward for executing this plan, assuming that the level of new customers remains unchanged, is an increase in annual sales of $875,000.
Not a bad return on your money actually!
Step Five: Get Buy-In
The final and possibly most important step is to show the envelope to everyone at your company and gain their buy-in to the advantages of implementing your plan.