The most often question I hear from people who
want to start a business is, “Where can I get the money to fund it?” A friend
says the only free money comes from the three “Fs”--families, friends, or
fools. I submit you are in endangering your relationships if your dreams do not
come to fruition. The truth is, there is no free money. If the business is not
successful, you can expect a financial cost and/or a relationship cost.
For other sources of funds such as banks, you
will need a sound, complete business plan. This is where the rubber hits the
road; it demands that you think. The hardest part is getting started.
A good source to find guidance is to go to www.score.org where you can download business
plan templates for either startup or existing businesses.
The business plan according to SCORE should
consist of a combination of narratives and worksheets organized into sections.
They should look something like the following:
TABLE OF CONTENTS
This is done simply to make it easier for the
reader to find the section of most importance to them.
EXECUTIVE SUMMARY
This section should be written last after the
thought has gone into developing the other sections. It should be concise, one
page preferably, and positive.
GENERAL COMPANY DESCRIPTION
This defines the business that you are in, its
industry, your vision, mission, goals, objectives, and why you are positioned
to succeed. It will detail the strengths and core competencies of you and your
company. It will also include the type of ownership.
PRODUCTS AND SERVICES
Included here are details on what you plan to
provide, what need/want that it serves, competitive advantages, and pricing
logic.
MARKETING PLAN
No matter how good your service or products are,
you cannot succeed without effective marketing. The field of marketing is
changing rapidly, so you will need to do market research. Include both what you
learn from studying data from industry reports, library, etc. and what you
learn first hand from talking and listening. The economics of the industry
should be detailed including size of the market niche, your target percentage
and how you are going to become a market factor in that niche, growth
potential, barriers to entry and how you plan to overcome those barriers.
Detailed information on your competitors, strategy, promotion of your
products/services and distribution channels, and sales forecast are required.
OPERATIONS PLAN
Included here are your plans for how your
products/services will be produced, your location, legal environment, and
personnel.
MANAGEMENT AND ORGANIZATION
Here you will talk about the company personnel
and their credentials, board of directors or advisory board, attorney,
insurance agent, banker, accountant, and mentors.
PERSONAL FINANCIAL STATEMENT
This is key; any investor will want to see the
extent of your commitment.
STARTUP EXPENSES AND CAPITALIZATION
These are usually much higher than expected, so
plan accordingly.
FINANCIAL PLAN
The financial plan consists of a 12-month profit
and loss projection plus 2 years by quarter. In addition to revenue and
expenses, predict cash flow. This will probably prove the most effective
management tool that you will have if you update it every month and make it a
rolling 12-month forecast. You will be able to predict what will happen to your
cash flow if you make a change or alter plans along the way.
APPENDICES
Include bulk items such as brochures, studies,
contracts, and any other materials to support the assumptions made in the plan.
Always remember, the real value of creating a
business plan is not in having the finished product; rather the value lies in
what you learn through the process of researching and thinking about your
business in a systematic way. The act of planning helps you to think things
through thoroughly, make sure of your facts and assumptions, and look at your
ideas critically.
Knowing that you have done your homework and
have a sound plan, you will have the self-confidence to lead the organization
to a successful endeavor.
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