How to Write a Perfect Business Plan?

8/14/2019 How to Write a Perfect Business Plan?

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EntrepreneurshipEntrepreneurship

Types of ownershipTypes of ownership

• Sole proprietorshipSole proprietorship• PartnershipPartnership• Corporation, or limited liabilityCorporation, or limited liability

company (LLC).company (LLC).

There's no one choice that fits every business; your job is to pick theThere's no one choice that fits every business; your job is to pick the

form that best meets your needsform that best meets your needs

• The potential risks and liabilities of your businessThe potential risks and liabilities of your business• The formalities and expenses involved in establishing andThe formalities and expenses involved in establishing and

maintaining the various business structuresmaintaining the various business structures• Your income tax situation, and your investment needs Your income tax situation, and your investment needs• Risks and LiabilitiesRisks and Liabilities




What’s a winning business name?What’s a winning business name?

A business name that draws A business name that draws

business in itself.business in itself.

• Memorable – but easy to spell.Memorable – but easy to spell.• Needs a visual elementNeeds a visual element• Has to have positive connotationHas to have positive connotation• Needs to include information about what your business does.Needs to include information about what your business does.

• Has to be fairly shortHas to be fairly short




Business networkingBusiness networking

Business networking is the process of establishing a mutuallyBusiness networking is the process of establishing a mutually

beneficial relationship with other business people andbeneficial relationship with other business people and

potential clients and/or customers.potential clients and/or customers.

The best business networking groups operate as exchanges of The best business networking groups operate as exchanges of

business information, ideas, and support. The most importantbusiness information, ideas, and support. The most important

skill for effective business networking is listening; focusing onskill for effective business networking is listening; focusing on

how you can help the person you are listening to rather thanhow you can help the person you are listening to rather than

on how he or she can help you is the first step to establishing aon how he or she can help you is the first step to establishing a

mutually beneficial relationship.mutually beneficial relationship.




What VCs want to hearWhat VCs want to hear

These days, cheery talk of IPO riches doesn't cut it. What investors seek areThese days, cheery talk of IPO riches doesn't cut it. What investors seek arestartups likely to be acquired by the major players.startups likely to be acquired by the major players.

When entrepreneurs go searching for venture capital, one of the firstWhen entrepreneurs go searching for venture capital, one of the firstquestions they must be prepared to answer is howquestions they must be prepared to answer is how

prospective investors will recoup their investments.prospective investors will recoup their investments.THINKI NG THI NG S THR OUG H.HINKI NG THI NG S THR OUG H.

To assure today's VC's that they will be able to exit with their investments andTo assure today's VC's that they will be able to exit with their investments andprofits, the correct answer -- or part of it -- is that the business theyprofits, the correct answer -- or part of it -- is that the business theyare being asked to back will be acquired by another, usually larger,are being asked to back will be acquired by another, usually larger,

entity. Unfortunately, it's not enough to simply talk about beingentity. Unfortunately, it's not enough to simply talk about being

acquired. An entrepreneur needs to envision the scenario in detail:acquired. An entrepreneur needs to envision the scenario in detail:

• How will it happen?How will it happen?

• What kind of acquirer will it be?What kind of acquirer will it be?

• How will valuations be determined?How will valuations be determined?

• What is the likely timetable?What is the likely timetable?




Possible Financing OptionsPossible Financing Options

Entrepreneur’sEntrepreneur’s

personalpersonal

resourcesresources

FinancialFinancial

institutionsinstitutions

Angel investorsAngel investorsUnusualUnusual

resourcesresources

FinancingFinancing

OptionsOptions

VentureVenture

capitalistscapitalists Public offeringPublic offering

BusinessBusiness

developmentdevelopment

programmeprogramme




Evaluating Financing OptionsEvaluating Financing OptionsPersonal Personal PotentialControl Risk Reward

Personal Resources H H H

Financial Institutions(Debt Financing) L - M L L – MVenture Capitalists(Equity-Debt Financing) L – M L L – MAngel Investors(Equity Financing) L – M L L – M

Public OfferingsEquity Financing) L L L – HBusiness Development

Program L – M L L – MUnusual Sources L – H L L- H

L – Low M – Medium H - High




Industry OverviewIndustry Overview

An overview of the industry sector that your business will be a part An overview of the industry sector that your business will be a part

of, including industry trends, major players in the industry, andof, including industry trends, major players in the industry, and

estimated industry sales. This section of the business plan will alsoestimated industry sales. This section of the business plan will also

include a summary of your business's place within the industry.include a summary of your business's place within the industry. • Industry OverviewIndustry Overview• What is the size of your industry?What is the size of your industry?• What sectors does this industry include?What sectors does this industry include?• Who are the major players in this industry?Who are the major players in this industry?

• What are the markets and customers for this industry?What are the markets and customers for this industry?• What are the industry's estimated sales this year? Last year?What are the industry's estimated sales this year? Last year?

The year before?The year before?• What national/economic trends have affected this industry andWhat national/economic trends have affected this industry and

how?how?• What national/economic trends might affect it in the futureWhat national/economic trends might affect it in the future

and how?and how?




Management PlanManagement Plan

An outline of your business' legal structure and management resources, An outline of your business' legal structure and management resources,

including your internal management team, external managementincluding your internal management team, external management

resources, and human resources needs.resources, and human resources needs.

The Management Plan section describes your management team andThe Management Plan section describes your management team and

staff and how your business ownership is structured. People reading yourstaff and how your business ownership is structured. People reading your

business plan will be looking to see not only who's on your managementbusiness plan will be looking to see not only who's on your managementteam but also how the skills of your management and staff willteam but also how the skills of your management and staff will

contribute to the bottom line.contribute to the bottom line.




Market AnalysisMarket Analysis

This is an examination of the primary target market for your product orThis is an examination of the primary target market for your product or

service, including geographic location, demographics, your targetservice, including geographic location, demographics, your target

market's needs and how these needs are being met currently.market's needs and how these needs are being met currently.

The competitive analysis section can be the most difficult section toThe competitive analysis section can be the most difficult section to

compile when writing a business plan. Before you can analyze yourcompile when writing a business plan. Before you can analyze your

competitors, you have to investigate them.competitors, you have to investigate them.

You need to know: You need to know:• What markets or market segments your competitors serve;What markets or market segments your competitors serve;• What benefits your competition offers;What benefits your competition offers;• Why customers buy from them;Why customers buy from them;• And as much as possible about their products and/or services, And as much as possible about their products and/or services,

pricing, and promotion.pricing, and promotion.




Marketing PlanMarketing Plan

This is a detailed explanation of your sales strategy, pricing plan,This is a detailed explanation of your sales strategy, pricing plan,

proposed advertising and promotion activities, and product or service'sproposed advertising and promotion activities, and product or service's

benefits.benefits.

The Marketing Plan section explains how you're going to get yourThe Marketing Plan section explains how you're going to get your

customers to buy your products and/or services.customers to buy your products and/or services.

The marketing plan, then, will include sections detailing your:The marketing plan, then, will include sections detailing your:

• Products and/or Services and your Unique Selling PropositionProducts and/or Services and your Unique Selling Proposition• Pricing StrategyPricing Strategy• Sales/Distribution PlanSales/Distribution Plan• Advertising and Promotions Plan Advertising and Promotions Plan




Operating PlanOperating Plan

A description of your business' physical location, facilities and equipment, A description of your business' physical location, facilities and equipment,

kinds of employees needed, inventory requirements and suppliers, andkinds of employees needed, inventory requirements and suppliers, and

any other applicable operating details, such as a description of theany other applicable operating details, such as a description of the

manufacturing process.manufacturing process.

Keeping focused on the bottom line will help you organize this part of Keeping focused on the bottom line will help you organize this part of

the business plan; think of the operating plan as an outline of thethe business plan; think of the operating plan as an outline of the

capital and expense requirements your business will need to operatecapital and expense requirements your business will need to operate

from day to day.from day to day. You need to do two things for your readers in the operating section of You need to do two things for your readers in the operating section of

the business plan: show what you've done so far to get your businessthe business plan: show what you've done so far to get your business

off the ground (and that you know what else needs to be done) andoff the ground (and that you know what else needs to be done) and

demonstrate that you understand the manufacturing or delivery processdemonstrate that you understand the manufacturing or delivery process

of producing your product or service.of producing your product or service.




Financial PlanFinancial Plan

Basically, the financial plan section of the business plan consists of threeBasically, the financial plan section of the business plan consists of three

financial statements:financial statements:

The income statementThe income statement

The cash flow projection andThe cash flow projection andThe balance sheet,The balance sheet,

and a brief explanation/analysis of these three.and a brief explanation/analysis of these three.

First, you need to gather together some of the financial data you'll needFirst, you need to gather together some of the financial data you'll need

to prepare these financial statements for your business plan byto prepare these financial statements for your business plan by

examining your expenses.examining your expenses.

Think of your business expenses as broken into two categories:Think of your business expenses as broken into two categories:

You r sta rt u p exp ensesou r sta rt u p exp enses andand

You r o peratin g expen sesou r o peratin g expen ses ..




All the costs of getting your business up and running go into the All the costs of getting your business up and running go into the starttart

up ex pense sp ex pense s category.category.

These expenses may include:These expenses may include:

Business registration feesBusiness registration fees

Business licensing and permitsBusiness licensing and permits

Starting inventoryStarting inventory

Rent depositsRent depositsDown payments on propertyDown payments on property

Down payments on equipmentDown payments on equipment

Utility set up fees.Utility set up fees.

This is just a sampling of start up expenses; your own list will probablyThis is just a sampling of start up expenses; your own list will probably

expand as soon as you start writing them down.expand as soon as you start writing them down.





Operatin g exp ensesperatin g exp enses are the costs of keeping your business running.are the costs of keeping your business running.

Think of these as the things you're going to have to pay each month.Think of these as the things you're going to have to pay each month.

Your list of operating expenses may include: Your list of operating expenses may include:

Salaries (yours and staff salaries)Salaries (yours and staff salaries)

Rent or mortgage paymentsRent or mortgage payments

Telecommunications utilitiesTelecommunications utilities

Raw materials storageRaw materials storage

DistributionDistributionPromotionPromotion

Loan paymentsLoan payments

Office suppliesOffice supplies

Maintenance.Maintenance.





Once again, this is just a partial list to get you going. Once you haveOnce again, this is just a partial list to get you going. Once you have

your operating expenses list complete, the total will show you what ityour operating expenses list complete, the total will show you what it

will cost you to keep your business running each month.will cost you to keep your business running each month.

Multiply this number by 6, and you have a six-month estimate of yourMultiply this number by 6, and you have a six-month estimate of your

operating expenses. Then add this to the total of your start upoperating expenses. Then add this to the total of your start up

expenses list, and you'll have a ballpark figure for your complete startexpenses list, and you'll have a ballpark figure for your complete startup costs.up costs.





Appendices And Exhibits

Any additional information that will help establish the credibility of your Any additional information that will help establish the credibility of your

business idea, such as marketing studies, photographs of your product,business idea, such as marketing studies, photographs of your product,

and/or contracts or other legal agreements pertinent to your business.and/or contracts or other legal agreements pertinent to your business.






Therefore, your business plan’s executive summary will includeTherefore, your business plan’s executive summary will include

summaries of:summaries of:

• A description of your company, including your products and/orservices

• Your mission statement

• Your business’s management

• The market and your customer

• Marketing and Sales• Your competition

• Your business’s operations

• Financial projections and plans

The Executive Summary of the Business Plan




The executive summary will end with a summary statement, a

“last kick at the can” sentence or two designed to persuade thereaders of your business plan with a clinching closing sentence ortwo that answers the reader’s question “Why is this a winningbusiness?”





Tip s for Writi ng th e Busin ess Plan’s Ex ecuti veSumm ary

Focus on providing a summary. The business plan itself willprovide the details and whether bank managers or investors,the readers of your business plan don’t want to have theirtime wasted.

Keep your language strong and positive. Don’t weaken the

executive summary of your business plan with weak language.Instead of writing, “…might be in an excellent position to wingovernment contracts”, write “…will be in an excellent

position...”





The executive summary should be no more than two pages long.Resist the temptation to pad your business plan’s executivesummary with details (or pleas). The job of the executive

summary is to present the facts and entice your reader to readthe rest of the business plan, not tell him everything.


Polish your executive summary. Read it aloud. Does it flow or doesit sound choppy? Is it clear and succinct? Once it sounds good to

you, have someone else who knows nothing about your businessread it and make suggestions for improvement.




Tailor the executive summary of your business plan to youraudience. If the purpose of your business plan is to enticeinvestors, for instance, your executive summary should focus onthe opportunity your business provides investors and why theopportunity is special.


Put yourself in your readers’ place... and read your executivesummary again. Does this executive summary generate interest orexcitement in the reader? If not, why?

Remember, the executive summary of the business plan will bethe first thing the readers of the business plan read. If yourbusiness plan’s executive summary is poorly written, it will also bethe last, as they set the rest of your business plan aside unread!

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How to Write a Perfect Business Plan?