The Anatomy of a Winning Business Plan
A well-organized, detailed business plan is a must if you're serious about making it in business. Not only does it provide potential lenders and investors with information they'll need to make a sound, financial investment, but it will also provide you with a concise outline of what's needed to turn your dream into a profitable reality. Here are the six elements of a winning plan:
1. The executive summary
This is not simply an introduction to the plan-it is a capsule version of the entire plan. And, it is a sales pitch-you want to convince the reader of the merit of your idea and your ability to carry out the plan. Outline your strengths and experience, as well as your technical ability and management skills: be confident without being pompous. Be sure to touch on the following:
- An overview of the company-what consumer need will you fulfill
- The market analysis-size of your potential market and characterization of your potential buyer or client
- A plan for managing the business
- Explanation of your business structure
- Profile of your management team
- The marketing and sales approach
- Revenue projections and future plans
2. Business description
Write a terse, but fully descriptive abstract for the type of business you're planning to enter. Include name, location, physical facilities, and
- A description of the product or services you'll be offering (keep language simple-technical jargon is a turn-off if the reader doesn't understand)
- An account of how your customers will obtain this product or service
- An explanation of how your business meets customer needs in a way that differentiates you from your competitors
3. Marketing analysis
Demonstrate demand for your product or service by discussing industry trends. Establish market parameters in which you profile the typical consumer. Show that you know what the competition is doing and have a strategy to deal with it. Also, be sure to include:
- Plans for selling space and store design
- An in-depth description of your pricing policy
- Plans for advertising and promotion
This is probably the most critical and most difficult part of the plan to write. You need to convey what financial resources are necessary for the business to succeed. Potential investors will be looking for:
- How much of your own money are you putting in, and how much additional debt or equity financing you might need and when
- A projected income statement for at least five years, with monthly projections for the first year, quarterly projections for the second and third, and annual projections for the fourth and fifth. Be sure to validate all your revenue, and other assumptions
- A break-even analysis showing when and at what sales volume you expect to turn a profit
- A statement outlining sources of funds and use of funds (when describing use of funds, make sure to include how much you will need for the following: working capital, inventory purchase, legal and accounting fees, advertising, equipment, shelves and displays, deposits, lease hold improvements, and rent.)
- An opening day balance sheet
State if the business will be a sole proprietorship with yourself as the only employee. If your business will be staffed, provide:
- Organizational form and structure (state whether the business is a partnership, giving names of your partners as well as their legal and financial relationship with you. If forming a corporation, describe capitalization and shareholders. If you're planning on hiring employees, provide an organizational chart that outlines chain of command as well as duties and responsibilities.)
- Resumes of management personnel (since this will most likely be you, make sure it reads more like a biography than the usual dry-as-dust style associated with résumés. But keep it simple and modest.)
- Staffing projections (if you imagine your business growing within the next three years, outline the number of employees you anticipate you'll need, their salaries, expected time of hire, and skills you expect them to possess.)
- A listing of your professionals, including your accountants, attorneys, etc.
These might include:
- Customer and employee policy programs
- Any additional patents, contracts, or market research studies you care to include
- A logo or designs for your business
- A sample of the product, if it actually exists. If this isn't feasible, photographs (not mock-ups)
- Any letters of intent, or proposed offers that support the contents of the plan
- A copy of commercial real estate lease, and equipment leases, if any
Your plan should be concise, straightforward, and reader-friendly. It should appear as professional as possible: typed, bound, without a typo or grammatical error in sight. Personalize the plan to the reader; each investor should be made to feel he or she is the only one being approached.
Finally, design the plan from both your perspective as well as that of the investors (investors want to know not only how you intend to grow your business, but how they'll be rewarded financially).
Here's an example of a business plan, so you can see this "anatomy" fleshed out.
Simulated Biz Plan
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DISCLAIMER: We hope whatever you find on this site is helpful, but be cautioned that it may not apply to your own situation, or be totally current at any given time. Idea Cafe Inc. and all of its current and past experts, sponsors, advertisers, agents, contractors and advisors disclaim all warranties with regard to anything found anywhere on this family of websites, quoted from, or sent from Idea Cafe. and its related sites, publications and companies. We also take no responsibility for comments published by others on these pages.
TRADEMARKS: The following are Registered Trademarks or Servicemarks of DevStart, Inc.: Idea Cafe®, Online Coffee Break®, The Small Business Gathering Place®, Take out Info®, Biz Bar & Grill®, Complaint-O-Meter®, A Fun Approach to Serious Business, CyberSchmooz, and BizCafe.