The following information was obtained from www.bplans.com
Project Kick-Start:
Start your business plan with a quick assessment. Even for an ongoing business, take the time to step away
from the business and look at the basics. Do your business numbers make sense? One of my business
school professors used to refer to this process as finding out “is there a there there?”
For a first look, consider your objectives, mission statement, market analysis and keys to success.
Objectives
Objectives are business goals. Set your market share objectives, sales objectives, and profit objectives.
Companies need to set objectives and plan to achieve them.
Make sure your objectives are concrete and measurable. Be specific, such as achieving a given level of
sales or profits, a percentage of gross margin, a growth rate, or a market share. Don’t use generalities like
“being the best” or “growing rapidly” as your objectives.
For example, “being the best” or “maximize customer satisfaction” cannot really be measured. Much better
objectives would set measurable goals, such as holding gross margin to 25 percent as a minimum, or selling
more than $3 million, or achieving six percent profit on sales and 10 percent return on equity.
If less tangible goals are critical to a plan, find a way to measure them. For example, if image and
awareness are vital, then plan for statistically valid surveys to measure the improvements in image and
awareness. You can also set goals for market share, and purchase research to measure the actual share.
Or, if you want to focus on customer satisfaction, plan for a survey to quantify satisfaction or specify
numerical objectives regarding returns or complaints.
Mission Statement
Use the mission statement to define your business concept. A company mission statement should define
underlying goals (such as making a profit) and objectives in broad strategic terms, including what market is
served and what benefits are offered.
What Business Are You In
Ask yourself what business you are in, and don’t narrow yourself down. One of the classic business
examples is the railroads, which lost a chance to expand in the twentieth century because they misdefined
themselves. They thought they were in the business of running trains on tracks. They didn’t understand they
were in the business of transporting goods and people. When trucks and buses and highways grew, the
railroads were left behind.
My company, Palo Alto Software, is not in the business of software development. It is in the business of
helping people do their own business plans, by providing business know-how through software and
documentation. The broader definition helps us understand what we’re up to.
Customer Satisfaction
Leading experts in developing customer satisfaction look to a mission statement to define customer
satisfaction goals. Developing customer care programs depends on spreading the idea and importance
within a company. That should normally start with a statement included in your mission statement.
Workplace Philosophy
Some mission statements also define internal goals such as maintaining a creative work environment and
building respect for diversity. Experts in employee relations look immediately to a mission statement for a
definition of a company’s stand on some of these fundamental issues.
Value-Based Marketing
Experts developed the value-based marketing framework to help companies understand their business
better. This framework starts with a business value proposition, which states what benefits a business offers,
to whom, and at what relative price level. For example:


This automobile manufacturer offers reliable, safe automobiles for families at a relative price
premium.
This fast food restaurant offers quick and consistent lunches at a low price.
Keys to Success
Focusing on what I call “keys to success” is a good idea for getting a better view of the priorities in your
business. Just about any business imaginable is going to depend a lot on three or four most important
factors. For example, in a retail business, the classic joke is that “location, location, and location” are the
keys to success. In truth, that might be, for example, location, convenient parking, and low prices. A
computer store’s keys to success might be knowledgeable salespeople, major brands, and newspaper
advertising.
Focus is very important, and the keys to success framework helps you develop focus. There is what I call a
law of inverse focus. I can’t prove it with detailed research but I’ve seen many times that, beyond three or
four key items, the more items on a priority list, the less chance of implementation. Thinking about keys to
success is a great way to focus on the main elements that make your business work.
Break-even Analysis
Next comes a simple Break-even Analysis table as shown in Illustration 1.
Illustration 1: Break-even Analysis
The Break-even Analysis table calculates a break-even point based on fixed costs, variable costs per unit of
sales, and revenue per unit of sales.
Make the following three simple assumptions:
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

Average per-unit sales price (per-unit revenue):
The price that you charge per unit. Take into account sales discounts and special offers. For nonunit based businesses, make the per-unit revenue $1 and enter your costs as a percent of a dollar.
Average per-unit cost:
The incremental cost of each unit of sale. If you are using a Units-Based Sales Forecast table (for
manufacturing and mixed business types), you can project unit costs from the Sales Forecast table.
If you are using the basic Sales Forecast table for retail, service and distribution businesses, use a
percentage estimate. For example, a retail store running a 50% margin would have a per-unit cost
of .5, and a per-unit revenue of 1.
Monthly fixed costs:
Technically, a break-even analysis defines fixed costs as costs that would continue even if you
went broke. Instead, you may want to use your regular running fixed costs, including payroll and
normal expenses. This will give you a better insight on financial realities.
Illustration 2 shows a Break-even chart. As sales increase, the profit line passes through the zero or breakeven line at the break-even point.
Illustration 2: Break-even Chart
Illustration 2 shows that the company needs to sell approximately 1,200 units in order to cross the breakeven line. This is a classic business chart that helps you consider your bottom-line financial realities. Can
you sell enough to make your break-even volume?
Of course the break-even analysis depends on assumptions made for average per-unit revenue, average
per-unit cost, and fixed costs. These are rarely exact assumptions.
Market Analysis
You don’t need to do major market research for this initial market analysis. You may want to, and even need
to, do real research later on (nowadays that is almost all Internet research). For now, however, you want to
get a good educated guess about how many potential customers you might have.
What you want at this point is a reality check. You’ve already developed a quick break-even analysis that
ties your initial business numbers to your required sales. So now you’re going to look at how many
customers you might have, so you can think about the importance of breaking even.
Develop a basic Market Analysis table. This table gives you a simple list of market segments. Illustration 3
shows a Market Analysis table.
Illustration 3: Market Analysis Table
This analysis table lets you show the estimated total customer base and your projected growth rate for each
group.
Each segment is a group of customers. Define the groups according to what needs you supply,
demographic characteristics, buying habits, preferences, or whatever other classification system works for
your plan. Fill in the total potential customers estimated and the annual growth rate expected for each
segment.
You can also use a Market Analysis chart as a visual guide to your market segments.
Illustration 4: Market Analysis Pie Chart
This simple pie chart shows the potential market as the plan starts. The different segments of the pie show
the relative sizes of different target market groups.
Pause for Reflection
At this point, you’ve defined your business, your financial break-even point, and your total potential market.
How does your business look from this viewpoint? Does it make sense? Can you make the sales you need
to break even? Is the market big enough? Are your projections realistic? Can you bring together the keys to
success?
Especially for potential start-up companies, a moment of reflection is critical. Many people dream of starting
a business, but that dream turns into a nightmare if the new business isn’t successful.
Summary
If you think you can make your break-even numbers work, and you believe you have enough customers to
make it, then go on to develop the plan. If not, either do more research and revise the idea, or give up and
try something else.
1.
2.
3.
4.
5.
6.
7.
8.
Executive Summary: Write this last. It’s just a page or two of highlights.
Company Description: Legal establishment, history, start-up plans, etc.
Product or Service: Describe what you’re selling. Focus on customer benefits.
Market Analysis: You need to know your market, customer needs, where they are, how to reach
them, etc.
Strategy and Implementation: Be specific. Include management responsibilities with dates and
budgets. Make sure you can track results.
Web Plan Summary: For e-commerce, include disucssion of website, development costs,
operations, sales and marketing strategies.
Management Team: Describe the organization and the key management team members.
Financial Analysis: Make sure to include at the very least your projected Profit and Loss and Cash
Flow tables.
Writing a Project Plan
Standard Tables and Charts
There are also some business tables and charts that are normally expected in a standard business plan.
Cash flow is the single most important numerical analysis in a plan, and should never be missing. Most
plans will also have Sales Forecast and Profit and Loss statements. I believe they should also have
separate Personnel listings, projected Balance sheet, projected Business Ratios, and Market Analysis
tables.
I also believe that every plan should include bar charts and pie charts to illustrate the numbers.
Expanded Plan Outline
1.0 Executive Summary
1.1 Objectives
1.2 Mission
1.3 Keys to Success
2.0 Company Summary
2.1 Company Ownership
2.2 Company History (for ongoing companies) or
Start-up Plan (for new companies).
2.3 Company Locations and Facilities
3.0 Products and Services
3.1
3.2
3.3
3.4
3.5
3.6
Product and Service Description
Competitive Comparison
Sales Literature
Sourcing and Fulfillment
Technology
Future Products and Services
4.0 Market Analysis Summary
4.1 Market Segmentation
4.2 Target Market Segment Strategy
4.2.1 Market Needs
4.2.2 Market Trends
4.2.3 Market Growth
4.3 Industry Analysis
4.3.1 Industry Participants
4.3.2 Distribution Patterns
4.3.3 Competition and Buying Patterns
4.3.4 Main Competitors
5.0 Strategy and Implementation Summary
5.1 Strategy Pyramids
5.2 Value Proposition
5.3 Competitive Edge
5.4 Marketing Strategy
5.4.1 Positioning Statements
5.4.2 Pricing Strategy
5.4.3 Promotion Strategy
5.4.4 Distribution Patterns
5.4.5 Marketing Programs
5.5 Sales Strategy
5.5.1 Sales Forecast
5.5.2 Sales Programs
5.6 Strategic Alliances
5.7 Milestones
6.0 Web Plan Summary
6.1 Website Marketing Strategy
6.2 Development Requirements
7.0 Management Summary
7.1
7.2
7.3
7.4
Organizational Structure
Management Team
Management Team Gaps
Personnel Plan
8.0 Financial Plan
8.1
8.2
8.3
8.4
8.5
Important Assumptions
Key Financial Indicators
Break-even Analysis
Projected Profit and Loss
Projected Cash Flow
8.6 Projected Balance Sheet
8.7 Business Ratios
8.8 Long-term Plan
Marketing Plan
The Marketing Plan Text Outline
by Tim
Berry
The exact nature of your plan, and your marketing situation, dictates its contents. You add detail or take it
away to suit your needs.
In the real world you'll want to customize your outline according to whether you are selling products or
services, to businesses or consumers, or you're a nonprofit organization. Although the outline does change
in some respects as a result, this is a good standard sample outline for a basic marketing plan.
Expanded Plan Outline
1.0 Executive Summary
2.0 Situation Analysis
2.1 Market Summary
2.1.1 Market Demographics
2.1.2 Market Needs
2.1.3 Market Trends
2.1.4 Market Growth
2.2 SWOT Analysis
2.2.1 Strengths
2.2.2 Weaknesses
2.2.3 Opportunities
2.2.4 Threats
2.3 Competition
2.4 Services
2.5 Keys to Success
2.6 Critical Issues
2.7 Channels
2.8 Macroenvironment
3.0 Marketing Strategies
3.1 Mission
3.2 Marketing Objectives
3.3 Financial Objectives
3.4 Target Marketing
3.5 Positioning
3.6 Strategy Pyramids
3.7 Marketing Mix
3.7.1 Services and Service Marketing
3.7.2 Pricing
3.7.3 Promotion
3.7.4 Service
3.7.5 Channels of Distribution
3.8 Marketing Research
4.0 Financials, Budgets, and Forecasts
4.1 Break-even Analysis
4.2 Sales Forecast
4.2.1 Sales Breakdown 1
4.2.2 Sales Breakdown 2
4.2.3 Sales Breakdown 3
4.3 Expense Forecast
4.3.1 Expense Breakdown 1
4.3.3 Expense Breakdown 2
4.3.3 Expense Breakdown 3
4.4 Linking Sales and Expenses to Strategy
4.5 Contribution Margin
5.0 Controls
5.1 Implementation Milestones
5.2 Marketing Organization
5.3 Contingency Planning
Break Even Analysis
Break-even Analysis
by Tim
Berry
March 13, 2003
The Break-even Analysis lets you determine what you need to sell, monthly or annually, to cover your costs
of doing business—your break-even point. Illustration 1 shows the Break-even Analysis table from
Business Plan Pro 2003.
Illustration 1: Break-even Analysis
The Break-even Analysis table calculates a break-even point based on fixed costs, variable costs per unit of
sales, and revenue per unit of sales.
Understanding Break-even
The break-even analysis is not our favorite analysis because:
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It is frequently mistaken for the payback period, the time it takes to recover an investment. There
are variations on break-even that make some people think we have it wrong. The one we do use is
the most common, the most universally accepted, but not the only one possible.
It depends on the concept of fixed costs, a hard idea to swallow. Technically, a break-even analysis
defines fixed costs as those costs that would continue even if you went broke. Instead, you may
want to use your regular running fixed costs, including payroll and normal expenses. This will give
you a better insight on financial realities. We call that “burn rate” these post-Internet days.
It depends on averaging your per-unit variable cost and per-unit revenue over the whole business.
However, whether we like it or not, this table is a mainstay of financial analysis. You may choose to leave it
out, but really, a business plan would not be complete without it. And, although there are some other ways to
do a Break-even Analysis, this is the most standard.
The Break-even Analysis depends on three key assumptions:
1.
2.
3.
Average per-unit sales price (per-unit revenue):
This is the price that you receive per unit of sales. Take into account sales discounts and special
offers. Get this number from your Sales Forecast. For non-unit based businesses, make the perunit revenue $1 and enter your costs as a percent of a dollar. The most common questions about
this input relate to averaging many different products into a single estimate. The analysis requires a
single number, and if you build your Sales Forecast first, then you will have this number. You are
not alone in this, the vast majority of businesses sell more than one item, and have to average for
their Break-even Analysis.
Average per-unit cost:
This is the incremental cost, or variable cost, of each unit of sales. If you buy goods for resale, this
is what you paid, on average, for the goods you sell. If you sell a service, this is what it costs you,
per dollar of revenue or unit of service delivered, to deliver that service. If you are using a UnitsBased Sales Forecast table (for manufacturing and mixed business types), you can project unit
costs from the Sales Forecast table. If you are using the basic Sales Forecast table for retail,
service and distribution businesses, use a percentage estimate, e.g., a retail store running a 50%
margin would have a per-unit cost of .5, and a per-unit revenue of 1.
Monthly fixed costs:
Technically, a break-even analysis defines fixed costs as costs that would continue even if you
went broke. Instead, we recommend that you use your regular running fixed costs, including payroll
and normal expenses (total monthly Operating Expenses). This will give you a better insight on
financial realities. If averaging and estimating is difficult, use your Profit and Loss table to calculate
a working fixed cost estimate—it will be a rough estimate, but it will provide a useful input for a
conservative Break-even Analysis.
Illustration 2 shows a Break-even chart. As sales increase, the profit line passes through the zero or breakeven line at the break-even point.
Illustration 2: Break-even Chart
The illustration shows that the company needs to sell approximately 1,222 units in order to cross the breakeven line. This is a classic business chart that helps you consider your bottom-line financial realities. Can
you sell enough to make your break-even volume?
The break-even analysis depends on assumptions made for average per-unit revenue, average per-unit
cost, and fixed costs. These are rarely exact. We recommend that you do the break-even table twice: first,
with educated guesses for assumptions, as part of the initial assessment, and later on, using your detailed
Sales Forecast and Profit and Loss numbers. Both are valid uses.
Budgeting is as Much About People as it is About Numbers
by Tim
Berry
April 08, 2003
Managing the budget numbers can be simple, but managing a budget takes people, not spreadsheets.
While budget numbers are simple, budget management isn't. To make a budget work, you need to add real
management:
1.
2.
3.
4.
Understand that it's about people: Successful budgeting depends on people management more
than anything else. Every budgeted item must be "owned" by somebody, meaning that the owner
has responsibility for spending, authority to spend, and the belief that the spending limit is realistic.
People who don't believe in a budget won't try to implement it. People who don't believe that it
matters won't worry about a budget either.
Budget "ownership" is critical: To "own" a budget item is to have the authority to spend and
responsibility for spending. Ideally a budget management system makes plan-vs.-actual results
visible to a group of managers, so that there is peer pressure that rewards budgeting successes
and penalizes budgeting failures.
Budgets need to be realistic: Nobody really owns a budget item until they believe the budget
amount is realistic. You can't really commit to a budget you don't believe in.
It's also about following up: Unless the people involved know that somebody will be tracking and
following up, they won't honor a budget. Publishing budget plan and actual results will make a world
of difference. Rewards for budget success and penalties for budget failures can be as simple as
peer group managers sharing results.
Your Budget and Milestones Work Together
As you develop your budget, keep in mind your business plan milestones. That's where you set specific
goals, dates, responsibilities, and budgets for your managers. It makes a plan concrete. Make sure your
budget matches your milestones.
Ideally, every line in a budget is assigned to somebody who is responsible for managing that budget. In most
cases you'll have groups of budget areas assigned to specific people, and a budgeting process that
emphasizes commitment and responsibility. You'll also need to make sure that everybody involved knows
that results will be followed up.
The ideal plan relates the budgets to the Milestones table. The Milestones table takes all the important
activities included in a business plan and assigns them to specific managers, with specific dates and
budgets. It also tracks completion of the milestones and actual results compared to planned results.
Milestones Table
Another source of plan information
http://www.businesstown.com/planning/creatingoutline.asp
Developing a Business Plan
http://www.businesstown.com/planning/creatingoutline.asp
SoYouWanna.com
http://www.soyouwanna.com/site/syws/bizplan/bizplan.htm
l
Writing a High-Tech Business Plan
http://www.users.cloud9.net/~kvivian/html/business_plan__high_tech.html
The following information found at
http://www.nolo.com/lawcenter/ency/article.cfm/o
bjectID/8AE4F799-0038-4471B573659C196695D2/catID/E67C08E9-9FAE-4AD8840371947878E573
The Essentials of a Business Plan
All business plans must show two things: a winning idea and a clear shot at a profit.
A good business plan has two basic goals: It should describe the fundamentals of your
business idea and provide financial data to show that you will make good money. Beyond
that, the content of your business plan depends on how you intend to use it.
How Will You Use Your Business Plan?
Depending on whether you're trying to attract investors or are creating a blueprint for
your own use, a business plan can take somewhat different forms.
Attracting Investors
If you will use your business plan to borrow money or interest investors, you should
carefully design your plan so that it sells your vision to skeptical people. Normally this
means your business plan should include:
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a persuasive introduction and request for funds
a statement of the purpose of your business
a detailed description of how the business will work (including what your product
or service will be, whether you'll have employees, who will supply your goods
and where you will be located)
an analysis of your market (who your customers are)
an evaluation of your main competitors
a description of your marketing strategy (how your business will reach plenty of
customers and fend off your competitors)
a résumé setting forth your business accomplishments, and
detailed financial information, including your best estimates of start-up costs,
revenues and expenses, and your ability to make a profit.
Together, all the parts of your plan should reveal the beauty of your business idea. You
want to show potential lenders, investors or people you want to work with that you've hit
upon a product or service that customers really want. In addition, you should prove that
you are exactly the right person to make your fine idea a roaring success.
Get Help If You Need It
Because your business plan will be submitted to people you don't
know well, the writing should be polished and the format clean and
professional. Your numbers must also be accurate and clearly presented.
But not all business people are great writers or mathematicians. Consider
paying a freelance writer with small business savvy to help you polish
your plan. Similarly, if you are challenged by numbers, find a
bookkeeper or accountant to provide needed help.
Funding the Venture Yourself
If you're not looking for outside money, your financial projections will be the most
important part of your business plan. These projections will tell you the cost of your
products or services, the amount of sales revenue and profit you can anticipate and,
perhaps most importantly, how much you'll have to invest or borrow to get your business
off the ground.
Because you won't use your plan to ask for money, you can create an informal business
plan that omits some of the elements listed above. For example, you don't need to worry
so much about making a sales pitch or a slick presentation, and you may decide to skip
the résumé of your own business accomplishments. But think twice before leaving out
too much. Any new business will need to introduce itself to people -- for example,
suppliers, contractors, employees and key customers -- and showing them part or all of
your business plan can be a great way to do it.
Financial Projections
Forecasting the finances of your business may seem intimidating or difficult, but in
reality it's not so bad. Good planning consists of making educated guesses as to how
much money you'll take in and how much you'll need to spend -- and then using these
estimates to calculate whether your business will be profitable. Here are the financial
projections you should make:

A break-even analysis. Here you'll use income and expense estimates to
determine whether, in theory at least, your business will bring in enough money to
meet its costs. (To learn how to perform a break-even analysis, read Will Your
Business Make Money?)
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A profit-and-loss forecast. Next you'll refine the sales and expense estimates that
you used for your break-even analysis into a formal, month-by-month projection
of your business's profit for the first year of operations.
A cash flow projection. Even if your profit-and-loss forecast tells you that your
business will have higher revenues than expenses -- in other words, that it will be
profitable -- those numbers won't tell you if you'll have enough cash on hand from
month to month to pay your rent or buy more inventory. A cash flow projection
shows how much money you'll have -- or how much you'll be short -- each month.
This lets you know if you'll need a credit line or other arrangement to cover
periodic shortfalls.
A start-up cost estimate. This is simply the total of all the expenses you'll incur
before your business opens. If you need to pay off these costs during the first year
or two of business, they should be included in your month-to-month cash-flow
projection.
Again, no matter who your audience is, you should be as thorough as possible when
calculating your break-even analysis and profit-and-loss forecast. The last thing you want
is to experience the very real misery of starting a business that never had a chance to
make a solid profit.
The following information obtained from
http://www.ncpleasing.com/startup/bpcoach.html
Writing An Effective Business Plan
Introduction
A good business plan is not just for others to see. It is also a valuable tool for managing
your business, and for comparing your expectations with what you have actually
accomplished. If the material that follows is too detailed, or if you feel it does not fit well
with your needs, you can create a completely original plan.
However, your plan will be more effective if it resembles those produced by others. So,
whether you follow our guidelines or not, please consider following a standard outline.
Also, you are more likely to include all the necessary financial details if you download
our forms spreadsheet.
The Four Main Sections Of A Business Plan
1.
2.
3.
4.
the description of the business
the marketing plan
the management plan
the financial management plan
In addition, a business plan must include supporting documents and financial
projections.
Description of the business
1. General Description
Start the first section with a cover sheet. It should include the name, address, telephone
number, fax number and email of the business and the names of all principals. We also
recommend an executive summary that immediately follows the cover sheet. Follow that
with the description itself.
When describing your business, you should explain (in whatever order you feel is
logical):
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The form of the business: proprietorship, partnership, corporation
Your primary services and products and their main applications
Your inception (a new business, a takeover or an expansion)
Your expectations regarding profit and growth
What distinguishes your business from other, similar ones
If there is recognized support for your idea (e.g., published articles)
A key point: The description of your business should clearly identify your goals and
objectives and it should clarify why you are, or why you want to be in business.
2. Services and Products
Try to describe the benefits of the service and products you will offer from your
customers' perspective. Describe:
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What you are selling
How your services and products will benefit the customer
Which services and products will have the greatest demand
What is special or unusual about your services and products
The Marketing Plan
A successful marketing plan demonstrates that you know your customers: their needs,
their likes, their dislikes and their expectations:
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Who are your customers?
Are your markets growing? steady? declining?
How will you attract, hold, increase your market share?
What pricing strategy, if any, give you an advantage?
Four Special Topics You Should Explore:
Competition, Pricing, Sales and Advertising
1. Competition
Competition is a way of life. It is important to know your competitors and their
capabilities.
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Who are your five most direct competitors?
Who are your indirect competitors?
How are their businesses: steady? increasing? decreasing?
What have you learned about their operations?
What do you know about their marketing and advertising?
What do you know about their participation in trade shows and similar events?
What are their strengths and weaknesses?
How does their services and products differ from yours?
A bit of advice: Start a file on each of your competitors. Save their advertising and
promotional materials and any pricing information you can gather. Review these files
periodically, determining when and how often they advertise, how they participate at
industry gatherings and anything else you can about the way they bring in business.
2. Pricing
Your pricing strategy is another marketing technique you can use to improve your overall
competitiveness. Although your pricing will be based on whatever is customary in the
RP industry (or your segment), it may be a good idea to get a feel for the pricing
strategies your competitors are using. That way you can determine if your prices are in
line and see if you can either do better or provide more value at the same price.
The key to success is to have a well-planned strategy, to establish your policies and to
constantly monitor prices and operating costs to ensure profits. It is a good practice to
keep abreast of the changes in the marketplace or in the underlying technologies you
use, because these changes can affect your competitiveness and profit margins.
3. Sales
RP services can have a long selling cycle and fast turnaround requirements. By this, we
mean that is can take quite a while to get new customers, or to win a participation in a
series of projects that are undertaken by one of your established customers. By
contrast, once you win business, it is very likely that your customer will want rapid
response and instant reaction to any changes he requests. This "hurry up and wait"
characteristic of the business can be tough on nerves and tougher on budgets. You
must show that you are prepared to cope with this aspect of the business.
Specifically, you must show that you are prepared to locate more prospects than you will
actually need to succeed, because not all the prospects will become customers and not
all the customers will bring you work as quickly as you would like. You must also show
that you can provide customers with excellent support no matter how demanding they
are . . . and do so without losing sales momentum at any accounts. Finally, it will
sometimes be necessary to redo work at your expense, or to do more than you included
in your estimate (at no additional charge) to satisfy your customers. Your sales plan and
your overall financial plan must include allowances for the costs in sales time and
production resources that might be consumed by an intensive and supportive marketing
effort. It is up to you whether you include any work done to prove your competency
during the sales cycle in the sales budget or elsewhere, but you should make your
reckoning explicit and explain how you arrived at your estimate.
4. Advertising and Public Relations
How you advertise and promote your business is very important. You may do all your
selling by direct contact. But there are many additional opportunities to make yourself
known, including Yellow Pages listings, industrial reference listings, Internet sites, trade
shows and trade press articles and ads. Some of these options (e.g., the Internet) can
be very inexpensive.
The Management Plan
Your management plan must demonstrate that you have the requisite skills in your firm
to compete and succeed. It also should show that you understand how to retain
personnel as your business grows and changes. Your management plan should answer
questions such as:
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How does your background and business experience help you in this business?
What are your weaknesses and how can you compensate for them?
Who will be on the management team?
What are their strengths and weaknesses?
What are their duties?
Are these duties clearly defined?
What are your current personnel needs?
What are your plans for hiring and training personnel?
If additional training is needed, how will you accomplish this?
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What salaries, benefits, vacations, holidays will you offer?
The Financial Management Plan
To effectively manage your finances, plan a sound, realistic budget by determining the
actual amount of money needed to open your business (start-up costs) and the amount
needed to keep it open (operating costs). The first step to building a sound financial
plan is to devise a start-up budget. Your start-up budget will usually include such onetime-only costs as major equipment, utility deposits, down payments, etc. The start-up
budget should allow for these expenses, among others:
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personnel (costs prior to opening)
legal and professional fees
occupancy costs
business licenses and permits
equipment
insurance
supplies
startup promotion and advertising
accounting fees
utilities
payroll expenses
Once you are open, you will control your costs with an operating budget. The operating
budget will reflect your priorities in terms of the expenses you will incur and how you will
meet those expenses (income). Your operating budget should include sources of funds
sufficient to cover the first three to six months of operation. It should allow for the
following expenses:
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personnel
insurance
rent
depreciation
loan payments
sales, advertising and promotion
legal and accounting fees
supplies
payroll expenses
utilities
taxes
repairs and maintenance
The financial section of your business plan should include any loan applications you've
filed, a capital equipment and supply list, balance sheet, breakeven analysis, pro-forma
income projections (profit and loss statement) and pro-forma cash flow. The income
statement and cash flow projections should include a three-year summary, detail by
month for the first year, and detail by quarter for the second and third years.
If operational factors loom large in your plan, for example if you expect to handle many
small accounts, describe the accounting system and controls you will put in place to
keep overhead to an acceptable level. Other questions that you will need to consider
are:
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What are your sales goals and profit goals for the coming year?
What financial projections will you need to include in your business plan?
What kind of inventory control system will you use?
Your plan should include an explanation of all projections. Unless you are thoroughly
familiar with financial statements, get help preparing your cash flow, income statements
and balance sheet. Your aim is not to become a financial wizard, but to understand
financial tools well enough to gain their benefits. Your accountant or financial advisor
can help you accomplish this.
Source:
http://www.wcpm.co.uk/epmbook/planning.htm