Starting a business can be so exhilarating that there is a natural tendency to shortcut key issues.

A clear, basic and easy to understand business plan is critical to the success of your business. Many businesses do not succeed because they do not begin with a plan as to how they are going to get their ideas from thought to execution.

Having a basic plan also keeps you focused, which as you get busier with your startup; this often becomes increasingly more difficult to do.

From a bank or investors their perspective, they receive a multitude of loan applications on a daily basis. As professionals, they are looking for a simple and clear plan so they can make a quick decision. The more detailed and lengthy a business plan is, the higher probability that in the process of reviewing your document, they will see this as too much work!

It is recommended that you prepare a business plan for a number of reasons:

• Provides an excellent tool, which you can use to provide possible business contacts with a clear and concise description of your business
• Shows investors and banks that you take your business seriously
• Forces you to put your thoughts down on paper, which often allows you to think through the multiple facets that you will need to consider
• Tendency to be more concise, focused and specific when you need to show this to a third party –instills some discipline to force you to think through your ideas
• Process will make meetings more efficient with your core group of advisors, as they can take 15 minutes to have a good grasp of your business plan
• Saves you from having to explain your business plan to each vendor that you meet with.

IMPORTANT: have parties sign a Non-Disclosure Agreement (NDA) if you are going to show them this document.

For assistance on an NDA, please review Non-Disclosure Agreements.

Business Plan Headings:

Your business plan should be no more than 10 to 12 pages long, plus any required exhibits. Standard recommendations include the use of simple, plain language; and the use of points is also acceptable. The plan should be concise so it is reasonably easy to prepare and to read.

Headings should (at a minimum) include:

1. Executive Summary
2. Market Analysis
3. Description of services or goods to be sold
4. Marketing strategy
5. KEY or Critical success factors
6. Management
7. Legal information
8. Future Plans
9. Financial Summary
10. Planned Use of Funds (if applicable)

The following is a list of salient points, grouped by heading, to give you a better idea as to what type of information should be included in the business plan:

1.  Executive Summary

• This should be a 1 to 2 page summary of what your business is all about, the market it is going to service, and ideas regarding the timelines and perhaps financial objectives

• Consider doing this in point form, as it is easier to prepare and to read!

• It should be short and concise

• Consider doing this section last, once you have completed all of the other sections. This approach enables you to just copy/paste to create a summary from the highlights of the other sections.

• KEY – mention two or three areas that are going to be critical to the success of your business

• State exactly what the business is going to do, and what market you are going to service and why

• Include some high level financial information and consider including a note on any financing or loans that you may have secured

3.  Product/Goods or Service Summary

• This identifies how your product or idea will address or solve a need, problem or gap in the market that you have identified.

4.  Marketing Strategy

This should articulate how you are going to position your product or service relative to the competition in the marketplace, or if it is a new product, how you are going to reach your customer.

• If your product or service is already provided in the market place, how are you going to be different? {We compiled a useful decision tree in our report: 7 Common Mistakes that will kill your StartUp. We strongly recommend you review it.}
• Why are people going to come to your business?
• What is your niche?
• How are you going to reach your target market – advertising and Public Relations (PR)?This identifies how your product or idea will address or solve a need, problem or gap in the market that you have identified.

5.  Key/Critical Success Factors

There are often a handful of key or critical factors one needs to be aware of in a business that will “make or break” it.

In real estate, they say the 3 most important factors are: Location, location, location!

Identify these factors in your business plan and tell the reader how you plan to focus on ensuring these KEY factors are both understood and being managed.

6.  Management

Include brief professional biographies on your management, with an emphasis on skills, experience or qualifications relevant to your startup.

Remember that Poor Management is listed as one of the 7 Common Mistakes for startups. Be sure to address what your core competencies are and what steps you are going to take to build a management or business support team to help you successfully launch your business.

Consider taking our Business Personality Profile test for some insight on this.

How will your past work or business experience be perceived in your new venture?

Remember that the 3 KEY Skills you need are: Marketing, Sales and Financial.

7.  Legal Items

It is important to include notes on any possible legal items that may prompt questions. Common ones include:

• patents
• licensing agreements
• trademarks

8.  Plans for the Future

Some readers want to get a sense as to what your plans are for the business over the next two to five years. If you have a sense of this, include it. Otherwise limit projections to 2 years.

9.  Financial Summary

Summary of your “back of the napkin” math – just a guide to provide readers with some context for the financial performance of your startup.

10. State what you Require

Customize this last section to target the specific audience that you are sending your business plan to.

For example:

• To a Bank for an equipment term loan – include some wording to that effect:
• i.e. we are seeking $250,000 to finance the purchase of equipment
• If you are looking for money from a prospective investor – your words should indicate how much you are looking for and what approximate percentage of the company you are willing to forgo for this investment. i.e.: $250,000 for 50%.
• Keep the overall valuation of your business in mind when looking to raise money from investors. For example, $250,000 for 50% implies the business is worth $500,000. $100,000 for 10% implies a valuation of $1 Million.

With the conclusion of our Phases I & II, you should have all of the raw ingredients to compile a basic business plan.

Should you require us to either review your plan or assist you in preparing it, please do not hesitate to contact us.