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, obtaining 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 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,
when, where and how of your business - the success planning og
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, and erasers. Once you get your mind "in
gear" and begin thinking about your business plan, hundreds of
thoughts and ideas will begin racing through your mind.
Later, when you're actually working on your business plan, you
can take out this "idea" notepad, and 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 for Plans of
Growth, Projected Profit and Loss/Operating Figures, Explanation
of Financing for Growth, Documentation, Summary of Business and
Outlook for the Future Listing of Business and 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 organisation 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
to read it. 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 cause of
business failure to be poor management, and lack of planning -
without a plan by which to operate, no one can manage, and
withïut 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: PROPRIETOR - followed by your name if you're
the proprietor. On your finished report, you would want to
center this information on the page, with the words "Proprietor"
offset to the left about five spaces.
Example:
&&& ABC ACTION
&&&1 The Avenue Somewhere
&&& Proprietor: A. Smith
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, centerd on your final draft - drop 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 drop 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 4 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 realise a
profit of $50,000 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 purposes explanations are justifiably more than
half a 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, 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 be able
to skip around and work on each phase nf your business plan as
the idea or the interest in organising 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 "chapter" 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 your product or service unique - what
gives it an edge in qour 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
of 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 section 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 capitalise 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 towns.
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
questions 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,0ask 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, responsibilities, and background
details. 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 and 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 going.
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 itemise 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 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 to as stockholders in your
company. Make a list of relatyves and friends that might help
you with an outright loan to furnish money for the development
of your business.
Also look for venture capital organisations, visit high street
banks, insurance companies, anyone who offers loans and
development capital.
With a listing of all the options available to your needs, all
that's meft 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 ask your bank for the
address of one of the credit reporting agencies. 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 revised copy of your report and
include a copy of that in your business plan.
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've 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
so. Take care of any changes or corrections, and it may be a
good idea to have it looked at by your accountant.
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 and get corrected any mistakes or typing
errors - read it through for clarity and the perfection you want
of it.
Now you're ready to have it printed and published for whatever
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.
Next, go to a stationery store, and buy a binding cover for each
copy of your business plan.
Now you can relax, take a break and feel good about yourself.
You have a complete and detailed business plan with which to
operate successfully your own business. 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 best wishes for the complete fulfilment of
all your dreams of success! ation.
