Building a Business Plan

Building A Business Plan

Why do I need one? What do I put in it? Who sees it? Will I ever use it again? How do I build a business plan?

Why do I need a business plan?

If you don't know where you are going you may end up somewhere else

You never get a second chance to make a first impression

You need a coherent vehicle to present to investors and/or bankers

You need a plan (See case study)

What goes in a business plan?

After your table of contents comes your Executive Summary. Although it comes first, it is written last

It must be concise (no more than 4 pages) It must be SMART (Specific, Measurable,

Attainable, Realistic and Time sensitive)

What Goes in a Business Plan?

Next comes a general company description. Mission Statement Company Goals and objectives (SMART) To whom will you market your product (Briefly) Business Philosophy Describe your industry Core strengths & competencies Legal Form of ownership

Products and Services

Describe in depth your products or services What factors will give you competitive

advantages or disadvantages? Include examples of level of quality or

proprietary features What are the pricing, fee or leasing structures

of your product or services?

Marketing Plan

Begins with careful, systematic thorough research

Secondary research (Industry profiles, trade journals, libraries, chamber of commerce, internet etc.

Primary Research (Traffic counts on site, identify competitors, research consumer preferences)

Be as specific as possible, give statistics, numbers and sources.

Marketing Plan

Total Size of Market VS your realistic share? Define your target market, growth trends and

customer demographic. Who buys it & why? What Barriers do you face? How will you

overcome these barriers? Product Features and Benefits (Why should

the customer want to buy your products?) Competition. Analyze their strengths and

weaknesses and compare them to your own

Marketing Plan

In one short paragraph describe your unique niche in the market

Design a marketing strategy consistent with your niche

Promotion (How will you get the word out to the customers?)

Advertising (What media, why, how often. Advertising on a shoe string budget What image do you want to project?

Marketing Plan

Promotional Budget Pricing (explain how you arrived at it. What's

your profit level?) What are your customer service policies? Proposed location Distribution channels Sales Forecast (do two - “best guess” and

“worst case” Be thorough and realistic)

Operational Plan

How and Where are your products produced? Location (Where? How big? Access, Zoning) Licensing, Permits, Regulations, Insurance Personnel, Pay structure, training, job

descriptions, schedules etc. Inventory (what kind, turns, seasonal, Lead

Time, Average value of stock?) Suppliers (credit & delivery policies) Credit Policies, Receivables & Payables

Management and Organization

Who will manage the business & what are their qualifications?

Personal Financial Statements Start up Expenses and Capitalization What is your 12 month Profit and Loss

Projection. Projected Cash Flow for start up, preliminary

expenses, operating costs and reserves

Funding

• How is your start up being funded?

• How much money is in your contingency fund?

• Do you need more funding?

• What is your “Ask”?

• What will you use it for?

• How and when will you pay it back?

Appendix• Contains proofs and examples

• Pictures or brochures of equipment to be purchased

• Business License, Name registration, Partnership Agreement (if any), Incorporation papers (if any)

• Cash Flow Projections

• Market Research Sources

• Resumes of owner, partners and key staff

WHO SEES MY BUSINESS PLAN?

• Members of your advisory board

• Family Members and friends

• Key Employees

• Partners

• Suppliers

• Potential Investors

Will I ever use it again?

• You will use it continually

• Compare projections with actual results monthly

• Revise it to reflect reality every 3 months and extend it out an additional 3 months

• Use it to red flag cost increases, lower than expected revenues or insufficient margins

• Keep it current in case you need interim financing for a big deal or an expansion.

How do I build a Business Plan?

• Do the research.

• Identify your market niche

• Define your ideal customer

• Calculate your costs and overhead expenses

• Identified suppliers and lead times for delivery

• Determined your distribution channels

• Set Goals and objectives

Building your Business Plan

• SWOT Analysis (Strengths, Weaknesses, Opportunities and Threats)

• SWOT your business idea

• SWOT the owner and partners and key staff

• SWOT each and every competitor

• SWOT each of your products and services

Building Your Business Plan

• Visit several financial websites looking for downloadable Business Plan Templates

• Create a 1 page Business Plan to act as an outline for your full Business Plan

• Identify your core personal values

• Write a Mission Statement for your business

• Write a Vision Statement for your business

• Make sure both reflect your core values

Building Your Business Plan

• What is your marketing plan? (Write one)

• What are the best social media marketing tactics?

• How much will you budget for marketing (Where, how often, at what cost?)

• Identify your sales strategies

• Identify the benefits of your product or service from the customer point of view

Building Your Business Plan

• Put all of your gathered research into the Business Plan Template from the Financial Institution you are most likely to seek funding from.

• Spell check and Proof read it.

• Get other people to proof read it for you

• Revise it, edit it and check the spelling again

• Proof read the revisions

Building Your Business Plan

• Get an accountant or book keeper to review your cash flow projections

• Find a professional proof reader or editor to edit your 3rd draft before you make it final

• Get a professional to format and print the final draft on high quality paper

• Bind each copy into a presentation folder and number it for tracking purposes

What Now?

• Make an appointment with your potential investor(s)

• If you get turned down, ask for feedback and advice from the potential lender.

• Make all suggested revisions and prepare to submit it to a different funder (maybe several different funders)

• Look for alternate methods of finance

Summary

• A well written business plan is not a magic bullet.

• You might not get funding even with a great business plan. You have a 10% chance.

• You will NOT get funding without a well written Business Plan

• You need to have at least 25% of your $$ “ASK” in cash on hand or assets to qualify for most business loans

Fraser Valley Training Group

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