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Article #5: How to create a bussiness plan

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It doesn't matter whether you have had a everything you know about who will
college education, or years of purchase your product, your competition,
entrepreneurial experience under your demographics, etc. This section is where
belt -- Anyone can write a business plan! you want to mention a few pertinent
We want to help you write a quality numbers, including any market surveys.
business plan. This guide gives you a Surveys can be very powerful tools in
good background of knowledge. showing the potential of your venture.
Business plans are needed for a number of The advertising section should not only
reasons: To raise capital To have anyone describe the means (direct mail,
take your venture seriously. newspaper, cable, radio, internet, etc.)
To make sure you will have a viable but also cost analysis, your edge over
enterprise. the competition, public relations,
To expand your existing business. guerilla tactics, etc. In this section,
To attain business loans To give you a you need to convince your reader of how
guide for running your business. you will sell your product or service.
Honestly, money is why we all write the Having an 'in' with an established client
business plans! You already know how you base can be extremely helpful.
are going to run your business, it's all These days, just saying: 'Make it and
in your head. But, as soon as you realize they will buy' does not work. If someone
you need money to do it right, a business is considering loaning or investing money
plan starts to sound better. with your venture, they must see that you
A few things before you get started: can make sales. Whether you realize it or
1.Start your plan with the numbers. Plot not, you are a salesman; from the moment
out your sales versus expenses, you began talking about your business
projecting forward up to seven years. idea to friends and family, you became a
This is where spreadsheet programs come salesman! Your business plan is merely an
in handy. Don't be intimidated, we have in-depth sales brochure. The more you
the solution that gives you real business think of it as such, the better the plan.
plan financial templates. More later on. Competition The Competition section will
2.Don't get overwhelmed. Once you get cover exactly who you compete against.
going, you realize that you already know You want to compare every aspect of you
what you need to say. versus them. You must know your
3.The business plan is a small part of competition inside and out. This is where
what will get you financed. A Private you make or break your plan. And there is
Placement Offering can be crucial to always competition- Maybe not in your
money-raising in the venture capital town, but they are out there. With the
world - We will show you how to use our every increasing growth of the internet,
sample to create your own. competition can be a keystroke away.
4.This guide briefly describes the pieces Also, there is indirect competition.
you need to put together your business These companies can include those that
plan. Use it as a reference tool in the have similar, but not the same as, your
writing process. product or service.
This following is a brief description of Management Team This section is important
each major heading required for a for overall confidence in those who are
professional business plan: Executive to set forth the actions described in
Summary This is your opening your plan.
paragraph(s), the most important part of Management can include, but not limited
your written plan! Most readers of your to, yourself, partners and key employees.
plan look to the Executive Summary to You want to briefly describe each
capture their interest, and entice them person's background, position in the
to read on. company and duties to be performed. Each
The Executive Summary will state your person should fit like a piece of a
company name, nature of your business and puzzle in the overall company structure,
what you need to make it happen. This can and be invaluable to the future success
be done in a single paragraph, do not of the company.
feel that you have to state your entire If there are key positions that have not
case in this section. But, be specific... been filled, you must mention them.
Your plan is not the place for Describe the nature of the position and
generalities. If you are unsure about the qualifications required. Don't worry if
name of your new venture, don't worry, you have many openings, just know the
just pick something that sounds good. You position and who you need to fill it.
will see that nothing you have in your Try to limit each person's coverage to
plan is etched in stone; things change! one half of a page. Make them powerful,
Once you are up and running, go with the noting key and positive points.
flow. Remember to back up this section, you
In closing your Summary, make sure you must have resumes as part of your
include the amount of money needed, attachments to the plan.
whether it be in the form of debt, equity You may also want to list an advisory
or a combination of both. Generally, debt board. The advisory board consists of
financing is in the form of a loan from a friends or business contacts who can
bank or other means. Equity financing offer advice for your business. These
deals with investors owning a portion or people do not have to have a stake in
shares (more on financing later in the your company, just offer experience in
manual). areas that compliment your venture.
Background This section works both for Financials/Operating Performance In the
new start-ups, and existing businesses financial section, there is no need to be
looking to expand operations. long winded. Mention some gross sales and
With a start-up situation, you want to profits that you anticipate, throw in a
explain the background of the type of graph or chart (samples are included in
business you want to start and/or your our software package). You also want to
new product or service. Do not take the re-iterate the money needed to be raised,
background literally, this is a catch-all and by which means.
section for anything you want to say. Now you are faced with the decision of
This is not rocket science, it will all the legal structure of your company;
come naturally once you commit to writing Corporation, Limited Liability Company,
your plan. Sole Proprietorship or Partnership.
Now if you have an existing business, the Today, unless you are a one-man show, you
background is self-explanatory. You want need a Corp. or LLC. The main reason
to describe your business to-date. deals with liability: In a Sole Prop. Or
This section can easily work as being Partnership, the person(s) involved can
listed as 'History' instead of be personally liable for anything
'Background'. Be factual, not attached to the company. Anything you own
long-winded. Always remember, you want to can be fair game to repay company debts
get your point across, but try to be and lawsuits.
concise. Too much 'blah, blah, blah' will Corp.'s allow you to defer some or most
bore your reader. You want the reader to of the liability to the Corp only; you
have questions after reading the plan, or are a shareholder and can loose only your
else, he probably did not read it. shares in the company. Another benefit is
Objectives The 'Objectives' section is to register a Corp. in a state where
not merely there to boast: "We will be taxes are fewer, like Nevada, which has
the best widget company in the history of no state income tax.
widgets". In this section, you want to In most cases, you will have a set
clearly state the goals for your company. Offering for your venture. When you are
You want to start with some bullet dealing with a Corporation, there are a
points, for example: Achieve $100,000 in total of shares outstanding and those you
sales by year's end Complete marketing are offering for sale. The combination of
campaign in first two months Begin all shares determines each person's
construction by Summer 2006 Hire sales percentage of ownership in the company.
team by April 2007 Once you give some The description of the offering should be
bullet points, then expand on them. Also, detailed in an Offering Memorandum, which
you will want to talk about other short includes risk, share breakdown, dilution,
term and long term goals. Generally short etc. The Offering Memorandum should
term is 2 - 5 years out, and long term precede the business plan, and in most
covers 5+ years. cases, will add more credibility to your
It looks good to have a bigger picture in venture. It also covers the legal areas
mind, although an investor is always of your offering, a must for new ventures
looking for that 'exit strategy'. The seeking equity financing.
exit strategy is the way out for your The exit strategy is important to some
investor (exit strategy is covered later investors. List the potential ways out of
in the manual). the deal once revenues are generated.
The Experience This section may or may You may want to leave an option to buy
not be appropriate. There are a number of out the investor after a certain length
different headings you may use, but 'The of time. Or, you may plan on a secondary
Experience' allows you to paint a picture offeringlater in the life of your
of your service/business idea. It can be business, using some of the proceeds to
called 'The Product', "the Concept', 'The buy back existing shares.
Service', etc. Simply, you are At the end of this section, you want to
describing, in detail, what your business direct the reader to your financial
is all about. What makes your product or attachments.
service better than the others. Attachments You must include the
Marketing Analysis & Advertising following attachments with your plan:
Depending on the scope of your venture Projected Profit and Loss Statement
and target market, you may want to split Break-Even Analysis Balance Sheet (if
this into two separate sections; one applicable) Cash Flow Statement Return on
dealing with your market analysis, the Investment Statement Marketing Analysis
other with advertising. Demographic Report Advertising literature
In the market analysis, you describe who Photos and/or examples, clippings,
your customer is. This will entail diagrams Key person resumes






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