As you start writing the business plan, it’s important to remember that despite what the people back in business school think, there really isn’t a single correct way of doing this. This section will outline some of the more common elements of a business plan, and one possible way of arranging them, but keep in mind that not all such plans will look like this, and if there’s a segment that doesn’t make sense to you then you don’t have to include it. The other thing to keep in mind is that the people reading it probably want to know why you expect to make a profit doing this – enough of one to not only survive but repay whatever money you’re trying to borrow from them. As you write the plan, try to imagine what you would want to know if you were sitting on the other side of the desk – if it was your money, and some unspeakably clever person wanted to borrow some of it…
The Executive Summary is the first piece you will present, but it’s the last one you’ll write. As you might expect from the name, this section summarizes the rest of the business plan, and may be the only part some people will actually read in its entirety. Consequently, you need to work through all of the details in each section before you select the key points to put in the summary. There’s no point to going into lengthy explanations of anything here; you can leave all of the diagrams, charts, graphs, patents and technical explanations for the parts that specify those things. At the same time, you need enough space to get your points across – count on two or three pages unless yours is a very simple undertaking…
The Operations or Management section is usually next, and it outlines what your new company will actually do (as discussed in our last segment). You’ll want to discuss what your inputs are going to require (raw materials, energy, intellectual properties, etc.), what your outputs will be, the hours and days you intend to operate, and how many people you will employ, and what their specialties are. Don’t worry about the costs or salaries involved; you’ll get to that later. What we’re looking for here is an overview of how the company will go about its daily (and monthly/yearly) operations; how many people, doing what tasks at how many workstations, producing how much product out of how much raw material. Take all of the time and length you need to get your point across, but unless your audience needs the step-by-step details of every manufacturing process for some reason, you don’t have to get into that much detail…
The Marketing Plan should take into account how you expect to reach potential customers; this can include advertising in any number of media, bidding on contracts, attending trade shows, direct mail or direct email advertising, or any number of other things. Some of these are relatively simple – if you expect that one out of every 500 people you spam will end up buying your product, and you need at least 1,000 sales each month to break even, you need to explain how you will reach 500,000 people with spam email each month (not impossible, but it won’t just happen by itself, either). Some of them will be more speculative, but in all cases make sure that you can back up your assumptions…
The Environmental Analysis covers all of the details about your industry and the community in which you intend to operate. This will include the numbers and relative positions of the competition, but it should also consider issues like local taxes and permit costs, size and composition of the workforce from which you will draw your employees, climate, customer demographics, cultural traditions, and anything else that might impact your operations. Keep in mind that no one has ever been able to account for everything that might fit into this category, and you probably won’t be the first, but take a good look at the things you’d want to know about a new business and its environment…
Budget and Future Projections: this section is actually two basic pieces; a written description and a spreadsheet or chart covering all of your expenses. If possible, you want to include your first year’s operations costs and project what your costs over the next few years will be. Some people like to combine income (and assets) with costs in order to create a balance sheet, but this isn’t strictly necessary; a lot of that information is going to be speculative, and your investors already know this…
Finally, you may want to include Supplementary or Miscellaneous information: product descriptions, packaging designs, patent documentations, licenses or contracts, pictures of your product (or anything else you think might be helpful), resumes of the key personnel who will be working for you, expert opinions, government awards, royal appointments, or any other documents that might help to establish your credentials. Of course, none of this is necessary – in fact, none of these sections is required by anybody, and if you tried you could almost certainly find sources that would contradict everything I’ve just written…
I’m not sure how many of them would just give this advice to you for free in a blog, though…
No comments:
Post a Comment