| 1. Whether you are raising money, borrowing it, or | | | | business idea represents. |
| financing a new business yourself, you should force | | | | 7. The financial statements you include in your business |
| yourself to put into writing a detailed business plan for | | | | plan should span three years with Year 1 broken down |
| what you have in mind. Without one, you most likely will | | | | into 12 months and Years 2 & 3 broken down into |
| be unsuccessful at obtaining money. With one you can | | | | quarters. They should contain both profit and loss and |
| guide yourself and your management team through | | | | cash flow statements. Two important elements you |
| the entire start-up process in an organized and | | | | should include in the financial section of your business |
| successful manner. That being said, having a written | | | | plan is a clear statement of the assumptions that |
| business plan is a must. | | | | underlay your projected numbers and the obvious use |
| 2. If you are raising money for your business, you | | | | of a conservative approach in projecting those |
| should first carefully think about who potentially will be | | | | numbers. Be thoughtful in your assumptions. Make |
| providing the funds to start the business. For example, | | | | them easy for your reader to understand. Base them |
| if you are hoping to borrow from a bank, your plan | | | | on facts gleaned from your research that appear |
| should clearly address the risks involved in the business | | | | elsewhere in your business plan. Always take the |
| with emphasis on the new business's ability to pay | | | | lower side of any range of figures. |
| back any loans obtained. If you are soliciting funds | | | | The important thing is for the numbers to work ie |
| from investors or venture capitalists, your plan should | | | | payoff the loans or give a reasonable return on |
| emphasize the business's growth potential and it's | | | | investment. Bankers and investors are not impressed |
| subsequent return on invested capital. At every step | | | | by big, optimistic numbers. They see them all the time. |
| of the way, you should be conscious of writing FOR | | | | They are usually persuaded by that "compelling |
| and TO the targeted reader of your business plan. | | | | reason" why the business has a good chance of |
| 3. Making a detailed outline of what you have in mind is | | | | succeeding and reassured that the projected numbers |
| probably the most important thing you can do before | | | | are achievable because they are obviously |
| you actually start writing your plan. Take your time and | | | | conservative. Let their imaginations take your financial |
| give your outline a lot of thought. Organize your | | | | projections to higher, exciting levels on their own time. |
| thoughts in simple phrases or sentences and number | | | | 8. Your business plan should contain detailed resumes |
| and letter each phrase or sentence. Break down big | | | | of the principal people who will be involved in and/or |
| topics into smaller, detailed lists of specific things that | | | | running the new business. The resume section is often |
| must be researched or said. Composing a detailed | | | | the second place venture capitalists go when they pick |
| outline can be tedious, but don't slack off on this crucial | | | | up a business plan. They first read the executive |
| part of the process. Writing from a carefully written | | | | summary to get a general idea of what the business is |
| outline will give your business plan a definite beginning, | | | | all about, and then they go to the resume section to |
| middle, and end. | | | | see who the players are. If they don't see competent, |
| 4. A business plan will achieve its objectives only if it is | | | | proven people with direct, related industry experience, |
| credible. Credibility is established by the people who will | | | | they often discard the business plan right then and |
| be involved in the venture and how various verifiable | | | | there. So be thoughtful on who you bring into the |
| facts and statistics are used to support the proposed | | | | business and carefully design their resumes to highlight |
| business idea. The industry or market niche in which | | | | past experience and accomplishments that directly |
| the business will compete must be extensively | | | | relate to your proposed business idea. |
| researched. So too must the targeted customers of | | | | 9. The Executive Summary should appear as the first |
| the business be analyzed and discussed. Much effort | | | | section of your business plan and should be the last |
| should be expended to thoroughly research these | | | | section you write. It is a synopsis of the business idea |
| subjects by using information found in libraries, on the | | | | you have already carefully organized and written. It |
| Internet, and from companies with pertinent databases | | | | should give a broad overview of what the idea is, and |
| for sale. | | | | should, in a page or two, give the reader a clear |
| Another source of credible information can be | | | | understanding of what the proposed business |
| obtained by interviewing industry experts, suppliers, | | | | specifically does, into what industry it falls, what broad |
| competitors, and even potential customers themselves. | | | | economic climate and competitive conditions exist |
| The depth of knowledge and insight that can be | | | | within that industry, and what general elements of the |
| conveyed in the business plan as a result of thorough | | | | business idea give the proposed business a chance of |
| research will go far to solidify the needed aura of | | | | being successful. |
| credibility. Remember to keep track of where you | | | | It should contain summary figures on the return on |
| sourced your information so that it can be properly | | | | investment or the loan payback. The Executive |
| footnoted in your business plan. Footnotes add to | | | | Summary is the first section the reader will examine |
| credibility. | | | | so take your time with it, be concise and |
| 5. Be organized from the start. You will be surprised at | | | | comprehensive, and consider it to be almost like an |
| how much information you can collect in a very short | | | | advertisement for your business idea. It should have a |
| period of time. It is imperative that you collect and | | | | ton of optimism as opposed to the factual and |
| organize your information in a manner that conforms | | | | objective tone you want the rest of your business plan |
| with your outline. Set up labeled files at the onset. Have | | | | sections to have. The Executive Summary is often the |
| a separate, secure place to store them. Plan up front | | | | only shot you have at capturing the reader's attention, |
| how you will collect and organize information gathered | | | | so be thoughtful when writing it. |
| from the Internet on your computer. And don't just | | | | Remember, most venture capitalists and bankers have |
| copy information from the Internet. | | | | stacks of business plans filling their offices waiting to |
| Keep track of the addresses from where the | | | | be read. Often junior members of the firm are given |
| information came, in the likely event that you may | | | | the task of doing the initial sort before a plan will reach |
| want to revisit some sites for clarification or additional | | | | the eyes of a decision making partner or officer. The |
| information. It sounds old fashioned, but keep paper | | | | person who first reads your Executive Summary thus |
| and pen on your person and on your nightstand at all | | | | has the power to reject your proposal but usually not |
| times. Write down every fleeting thought that comes | | | | the power to approve it. He only passes it on, and if |
| into your head. In the busy pursuit of information, it's | | | | the Executive Summary can catch his eye and make |
| easy to forget an idea that popped into your head the | | | | him read further, it's done its job. |
| day before or in the middle of the night. | | | | 10. Subconscious impressions are very important to the |
| 6. The body of the business plan must contain the | | | | success of a business plan document. How the |
| usual descriptive elements such as a clear statement | | | | document is organized, what type style is selected, the |
| of the business, the planned marketing strategies, a | | | | sparing use of italics or bold type, how varying |
| thorough analysis of the competition, a description of | | | | paragraph indentations are used all make for either a |
| operational procedures, an honest list of perceived | | | | positive or negative impression. Misspelled words are |
| risks, and other written sections pertinent to the | | | | death as are serious violations of the proper use of |
| business idea. But what will set your business plan | | | | grammar. Short concise sentences will communicate |
| apart from others will be the insertion of a "compelling | | | | better than long rambling ones. Your objective is |
| reason" why your business idea is unique. To just say | | | | produce a professional looking and reading document |
| "this business is different and therefore it will be | | | | that clearly communicates that you and your team are |
| successful" probably will be ignored or discounted by a | | | | professionals and thus know what you are talking |
| sophisticated reader. | | | | about. |
| But if you build a story through the presentation of | | | | Pass your draft business plan by people you respect |
| your researched facts and take the reader to a logical | | | | and have them proof read it and critique it. Determine if |
| point where the uniqueness or cleverness of you | | | | they clearly understand the points described in it. If they |
| business idea becomes apparent, he will be more than | | | | don't, go back to the drawing board and rewrite the |
| receptive to your idea when you state the "compelling | | | | sections in question. Take a lot of time on this final |
| reason" why your business idea is truly unique and will | | | | review and edit process. It is the last and probably |
| work. You will have drawn him in and captured his | | | | most important step you can take for creating a |
| imagination. The "compelling reason" will make him | | | | successful business plan. |
| receptive to all the other positive attributes your | | | | |