| People often ask "What makes a good business plan? | | | | Using your research and analysis you will now tell your |
| Or, "How do I make my plan attractive to lenders and | | | | readers that "this is what will happen to the money". |
| investors?". | | | | You'll do it with accounting forecasts called "pro forma" |
| The simple answer is that lenders and investors (I'll call | | | | statements. Provide either three or five years of |
| them "readers" from here on out) are looking for "good | | | | statements with (generally) the first year done monthly, |
| deals". A "good deal" is one that offers the reader a | | | | the second and third done quarterly and (if included) |
| reasonable rate of return for the risk assumed. The | | | | the last two years done annually. In all events, include:a. |
| complete answer is that you should write a plan that a | | | | Operating statements.b. Cash flow forecasts.c. |
| reader will want to read and then get it to reader(s) | | | | Balance sheets. |
| who are looking for your type of project and levels of | | | | Optionally include:d. Various ratios (loan to value, debt |
| risk and return. This article deals with the first part of | | | | service coverage, etc.) |
| the equation - how to write a business plan that | | | | In addition to the above, you should usually include a |
| readers will want to read. | | | | "Source and Use of Funds" showing the sources of |
| Readers want plans that clearly, accurately and | | | | the initial capital and on what it will be spent. |
| completely allow them to make an initial determination | | | | By this point you're either sure you have a winner |
| about the project. Here are the steps needed to write | | | | (differing from "a sure winner" in that you recognize |
| that plan: | | | | the obstacles but are prepared to work through them) |
| To paraphrase a real estate expression, the three | | | | or you are going back to the drawing board to rethink |
| most important things about a business plan are | | | | your project. If you "have a winner", step four is: |
| research, research and research. While other things | | | | 4. Write the plan. Obviously, you need to be able to |
| are important (even critical), ultimately your plan will live | | | | use good grammar and spelling. You should be clear, |
| or die on the quality and completeness of your | | | | concise and complete. Fill your plan with compelling |
| information. For that matter, you're about to risk your | | | | facts gleaned from your research. Do not avoid the W |
| time and financial future on a project - how much | | | | and T from your SWOT analysis, rather, describe in |
| information do you want to have? Step one: | | | | detail how you will deal with them. Avoid platitudes and |
| 1. Become expert in your project. Learn everything | | | | your own opinions - everyone knows that you like the |
| possible about:a. The customers to whom you will sell | | | | idea, readers need facts to determine if they like it. Try |
| (your market).b. The competition.c. The actual costs of | | | | to keep your answers as short as possible while still |
| operating your business (get quotes).d. The actual | | | | giving complete information. With the exception of the |
| results of similar projects.e. Your industry.f. The | | | | Executive Summary, keep your answers somewhat |
| project's physical location(s) and it's impact (if any) on | | | | dry and factual - "short, sweet and to the point". |
| the project.g. The people who will be key to the | | | | The Executive Summary, on the other hand, is where |
| project. | | | | you "sell the sizzle". It is here that you make the claim |
| (You are welcome to use as a guide the questions | | | | that yours is a dynamic project that deserves full |
| that we use with FundablePlans to query a business | | | | consideration. You need to compel your reader to |
| plan. It is available via e-mail at ) | | | | read your plan and tell them why you are excited |
| If you've followed the above, you've now got a mound | | | | about the project. |
| of research - sticky notes, web pages, reports, quotes, | | | | There are likely as many ways to compile a business |
| etc., etc. But, what does it all mean? Step two: | | | | plan as there are authors of them. A sample outline is |
| 2. Analyze. (Hopefully) when you first got the idea for | | | | at . (It requires Adobe Reader to view and includes our |
| your project there was a sense of excitement and a | | | | logo which is not included in our plans.) You will want to |
| feeling that "this is a sure winner". Now is the time to | | | | attach to your plan copies of documents referenced in |
| see if your feelings were well founded. With a critical | | | | it and historical data on the business (if it is not a |
| eye, do a "SWOT" (strengths, weaknesses, | | | | startup). |
| opportunities, threats) analysis on your project. | | | | You've now done the lions share of the work leaving |
| Determine what you are able to do to capitalize on the | | | | only step five: |
| S and O and minimize the W and T. | | | | 5. Review and revise. The review should be first by |
| Steps one and two may have changed somewhat | | | | the author(s) and then by trusted advisors - the more |
| your "sure winner" feelings - which is good. (If not, you | | | | people that you can get to review your plan the more |
| either have hit upon the next "sliced bread" or you | | | | likely you are to find any problems before they are |
| need to redo the preceding steps). Presuming that | | | | found by a reader. |
| your research and analysis shows a worthwhile use | | | | Follow the preceding steps and you will have a |
| of your time and money (and that of your readers) | | | | business plan that will get read and, hopefully, funded. If |
| move to step three: | | | | you have questions about business plans, please feel |
| 3. Forecast. This is where the "rubber meets the road". | | | | free to contact me using the below e-mail link. |