Preparing a business plan

Sunday, August 15, 2004

Just the sound of the words, "business plan," is enough to make anyone quiver. But if you're planning to start a business, you will definitely need a business plan. While you could hire someone to write the plan for you, you would be better off doing it yourself. The more you know about your business, the better prepared you'll be to answer a lender's or investor's questions and the more likely you'll receive capital.

Most business plans generally answer the questions, "What is your business, who are your customers, what are you planning to sell and how much money will you make?" As you answer these questions and more, your objectives will become clear and you will have a defined sense of the direction you want your business to take.

There are several parts of a business plan, and each requires detail and clarity. Most business plans are organized in this way:

* Cover sheet. Includes basic business information, contact names and phone numbers.

* Table of contents. Outlines the features of the business plan.

* Executive summary. Briefly describes the business plan, focusing on selling advantage, future projections, cash requirements, payback timetable and business mission.

* Business context. Analyzes the larger market at play, concentrating on growth potential, new products and economic trends.

* Business profile. Describes the business in detail, including trends, organizational structure, influential factors in the market, patterns of research and development, contracts and operational procedures.

* Marketing analysis. Identifies customers, geographical range, growth potential and customer service procedures.

* Challenges and responses. Explores what could happen to the current market and how the business will respond. Focuses on handling the competition, correcting the business's weaknesses and coping with staff and legal issues.

* Marketing plan. Discusses marketing strategy and budget, pricing scheme, timetable for growth and development, guarantee policies, packaging and presentation, marketing effectiveness and certain media marketing costs.

* Financials. Presents all the information a lender needs to know about a potential business, including Profit and Loss Statements, Balance Sheets and Cash Flow Statements for the next three years.

* Timetable. Determines when financing will be needed. Lays out marketing campaign and provides scheduled dates of production.

* Summary of needed capital. Lists expenses for which the business will need financing.

* Appendix. Includes any other pertinent material, such as footnotes, reports, biographies, graphs, contract copies, glossaries and other references.

Most business plans are very detailed. Fortunately there are several resources available to help you formulate yours. One of the first places you can look is your local library. Pick up some books on writing business plans and look through the samples provided. If you're still hesitant, you can hire a business consultant to help.

Writing a business plan isn't easy, but if you take the time to do it right, you can learn a lot. You will be better informed and you will have a clearer sense of the direction you want your business to take.

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