3503

HOW TO PREPARE A BUSINESS PLAN THAT

GUARANTEES BIG PROFITS

Success in business comes as a result of planning. You have to

have a detailed, written plan that shows what the ultimate goal

is, the reason for the goal, and each milestone that must be

passed in order to reach your goal.

A business plan is written definition of, and operational plan

for achieving your goal. You need a complete but

success tool in order to define your basic product, income

objectives and specific operating procedures. YOU HAVE TO HAVE A

BUSINESS PLAN to attract investors, obtain financing and hold

onto the confidence of your creditors, particularly in times of

cash flow shortages--in this instance, the amount of money you

have on hand compared with the expenses that must be met.

Aside from an overall directional policy for the production,

sales effort and profit goals of your product--your basic "travel

guide" to business success--the most important purpose your

business plan will serve, will be the basis or foundation of any

financial proposals you submit. Many entrepreneurs are under the

mistaken impression that a business plan is the same as a

financial proposal, or that a financial proposal constitutes a

business plan. This is just a misunderstanding of the uses of

these two separate and different business success aids.

The business plan is a long range "map" to guide your business

to the goal you've set for it. The plan details the what, why,

where, how and when, of your business--the success planning of

your company.

Your financial proposal is a request for money based upon your

business plan--your business history and objectives.

Understand the differences. They are closely related, but they

are not interchangeable.

Writing and putting together a "winning" business plan takes

study, research and time, so don't try to do it all in just one

or two days.

The easiest way to start with a loose leaf notebook, plenty of

paper, pencils, pencil sharpener, and several erasers. Once you

get your mind "in gear" and begin thinking about your business

plan, "10,000 thoughts and ideas per minute" will begin racing

thru your mind...So, it's a good idea when you aren't actually

working on your business plan, to carry a pocket notebook and jot

down those business ideas as they come to you--ideas for sales

promotion, recruiting distributors, and any other thoughts on how

to operate and/or build your business.

Later, when you're actually working on your business plan, you

can take out this "idea notebook" evaluate your ideas, rework

them, refine them, and integrate them into the overall "big

picture" of your business plan.

The best business plans for even the smallest businesses run 25

to 30 pages or more, so you'll need to "title" each page and

arrange the different aspects of your business plan into

"chapters." The format should pretty much run as follows:

Title Page

Statement of Purpose

Table of Contents

Business Description

Market Analysis

Competition

Business Location

Management

Current Financial Records

Explanation of Plans For Growth

Projected Profit & Loss/Operating Figures

Explanation of Financing for Growth

Documentation

Summary of Business & Outlook for The Future

Listing of Business & personal References

This is a logical organization of the information every

business plan should cover. I'll explain each of these chapters

titles in greater detail, but first, let me elaborate upon the

reasons for proper organization of your business plan.

Having a set of "questions to answer" about your business

forces you to take an objective and critical look at your ideas.

Putting it all down on paper allows you to change, erase and

refine everything to function in the manner of a smoothly oiled

machine. You'll be able to spot weakness and strengthen them

before they develop into major problems. Overall, you'll be

developing an operating manual for your business--a valuable tool

which will keep your business on track, and guide you in the

profitable management of your business.

Because it's your idea, and your business, it's very important

that YOU do the planning. This is YOUR business plan, so YOU

develop it, and put it all down on paper just the way YOU want it

to read. Seek out the advice of other people; talk with, listen

to, and observe, other people running similar businesses; enlist

the advice of your accountant and attorney--but at the bottom

line, don't ever forget it has to be YOUR BUSINESS PLAN!

Remember too, that statistics show the greatest causes of

business failure to be poor management and lack of

planning--without a plan by which to operate, no one can manage;

and without a direction in which to aim its efforts, no business

can attain any real success.

On the very first page, which is the title page, put down the

name of your business-ABC ACTION--with your business address

underneath. Now, skip a couple of lines, and write it all in

capital letters: PRINCIPAL OWNER--followed by your name if you're

the principal owner. On your finished report, you would want to

center this information on the page, with the words "principal

owner" off-set to the left about five spaces.

Examples: ABC ACTION

1234 SW 5th Ave.

Anywhere, USA 00000

PRINCIPAL OWNER: Your Name

That's all you'll have on this page except the page number

-1-

Following your title page is the page for your statement

purpose. This should be a simple statement of your primary

business function, such as: We are a service business engaged in

the business of selling business success manuals and other

information by mail.

The title of the page should be in all capital letters across

the top of the page, centered on your final draft--skip a few

lines and write the statement of purpose. This should be direct,

clear and short--never more than (2) sentences in length.

Then you should skip a few lines, and from the left hand margin

of the paper, write out a sub-heading in all capital letters,

such as: EXPLANATION OF PURPOSE.

From, and within this sub-heading you can briefly explain your

statement of purpose, such as: Our surveys have found most

entrepreneurs to be "sadly" lacking in basic information that

will enable them to achieve success. This market is estimated at

more than a 100 million persons, with at least half of these

people actively "searching" for sources that provide the kind of

information they want, and need.

With our business, advertising and publishing experience, it is

our goal to capture at least half of this market of information

seekers, with our publication. MONEY MAKING MAGIC! Our market

research indicates we can achieve this goal and realize a profit

of $1,000,000 per year within the next 5 years...

The above example is generally the way you should write your

"explanation of purpose," and in subtle definition, why you need

an explanation. Point to remember: Keep it short. Very few

business purpose explanations justify more than a half page long.

Next comes your table of contents page. Don't really worry

about this until you've got the entire plan completed and ready

for final typing. It's a good idea though, to list the subject

(chapter titles) as I have, and then check off each one as you

complete that part of your plan.

By having a list of the points you want to cover, you'll also

be able to skip around and work on each phase of your business

plan as an idea or the interest in organizing that particular

phase, stimulates you. In other words, you won't have to make

your thinking or your planning conform to the chronological order

of the "chapters" of your business plan--another reason for the

loose leaf notebook.

In describing your business, it's best to begin where your

statement purpose leaves off. Describe your product, the

production process, who has responsibility for what, and most

importantly, what makes your product or service unique--what

gives it an edge in your market. You can briefly summarize your

business beginnings, present position and potential for future

success, as well.

Next, describe the buyers you're trying to reach--why they need

and want or will buy your product--and the results of any tests

or surveys you may have conducted. Once you've defined your

market, go on to explain how you intend to reach that market--how

you'll these prospects to your product or service and induce them

to buy. You might want to break this chapter down into sections

such as..publicity and promotions, advertising plans, direct

sales force, and dealer/distributor programs. Each section would

then be an outline of your plans and policies.

Moving into the next chapter on competition, identify who your

competitors are--their weakness and strong points--explain how

you intend to capitalize on those weaknesses and match or better

the strong points. Talk to as many of your "indirect" competitors

as possible--those operating in different cities and states.

One of the easiest ways of gathering a lot of useful

information about your competitors is by developing a series of

survey questions and sending these questionnaires out to each of

them. Later on, you might want to compile the answers to these

questionnaires into some form of directory or report on this type

of business.

It's also advisable to contact the trade associations and

publications serving your proposed type of business. For

information on trade associations and specific trade

publications, visit your public library, and after explaining

what you want ask for the librarian's help.

The chapter on management should be an elaboration on the

people operating the business. Those people that actually run the

business, their job, titles, duties, responsibilities and

background resume's. It's important that you "paint" a strong

picture of your top management people because the people coming

to work for you or investing in your business, will be "investing

in these people" as much as your product ideas. Individual

tenacity, mature judgement under fire, and innovative

problem-solving have "won over" more people than all the AAA

Credit Ratings and astronomical sales figures put together.

People becoming involved with any new venture want to know that

the person in charge--the guy running the business knows what

he's doing, will not lose his cool when problems arise, and has

what it takes to make money for all of them> After showing the

"muscle" of this person, go on to outline the other key positions

within your business; who the persons are you've selected to

handle those jobs and the sources as well as availability of any

help you might need.

If you've been in business of any kind scale, the next chapter

is a picture of your financial status--a review of your operating

costs and income from the business to date. Generally, this is a

listing of your profit & loss statements for the six months, plus

copies of your business income tax records for each of the

previous three years the business has been an entity.

The chapter on the explanation of your plans for the future

growth of your business is just that--an explanation of how you

plan to keep your business growing--a detailed guide of what

you're going to do, and how you're going to increase your

profits. These plans should show your goals for the coming year,

two years, and three years. By breaking your objectives down into

annual milestones, your plan will be accepted as more realistic

and be more understandable as a part of your ultimate success.

Following this explanation, you'll need to itemize the

projected cost and income figures of your three year plan. I'll

take a lot of research, an undoubtedly a good deal of erasing,

but it's very important that you list these figures based upon

thorough investigation. You may have to adjust some of your plans

downward, but once you've got these two chapters on paper, your

whole business plan will fall into line and begin to make sense.

You'll have a precise "map" of where you're headed, how much it's

going to cost, when you can expect to start making money, and how

much.

Now that you know where you're going, how much it's going to

cost and how long it's going to be before you begin to recoup

your investment, you're ready to talk about how and where you're

going to get the money to finance your journey. Unless you're

independently wealthy, you'll want to use this chapter to list

the possibilities and alternatives.

Make a list of friends you can approach, and perhaps induce to

put up some money as silent partners. Make a list of those people

you might be able to sell as stockholders in your company--in

many cases you can sell up to $300,000 worth of stock on a

"private issue" basis without filing papers with the Securities

and Exchange Commission. Check with a corporate or tax attorney

in your area for more details. Make a list of relatives and

friends that might help you with an outright loan to furnish

money for the development of your business.

Then search out and make a list of venture capital

organizations. Visit the Small Business Administration office in

your area--pick up the loan application papers they have--read

them, study them, and even fill them out on a preliminary

basis--and finally, check the costs, determine which business

publications would be best to advertise in, if you were to

advertise for a partner or investor, and write an ad you'd want

to use if you did decide to advertise for monetary help.

With listing of all the options available to your needs, all

that's left is the arranging of these options in the order you

would want to use them when the time come to ask for money. When

you're researching these money sources, you'll save time by

noting the "contact" deal with when you want money, and whenever

possible, by developing a working relationship with these people.

If your documentation section, you should have a credit report

on yourself. Use the Yellow Pages or check at the credit

department in your bank for the nearest credit reporting office.

When you get your credit report, look it over and take whatever

steps are necessary to eliminate any negative comments. Once

these have been taken care of, ask for a revised copy of your

report and include a copy of that in your business plan.

If you own any patents or copyrights, include copies of these.

Any licenses to use someone else's patent or copyright should

also be included. If you own the distribution, wholesale or

exclusive sales rights to a product, include copies of this

documentation. You should also include copies of any leases,

special agreements or other legal papers that might be pertinent

to your business.

In conclusion, write out a brief, overall summary of your

business - when the business was started, the purpose of the

business, what makes your business different, how you're going to

gain a profitable share of the market, and your expected success

during the coming 5 years..

The last page of your business plan is a "courtesy page"

listing the names, addresses and phone numbers of personal and

business references--persons who have known you closely for the

past five years or longer--and companies or firms you've had

business or credit dealings with during the past five years.

And, that's it--your complete business plan. Before you send it

out for formal typing, read it over once a day for a week or ten

days. Take care of any changes or corrections, and then have it

reviewed by an attorney and then, an accountant. It would also be

a good idea to have it reviewed by a business consultant serving

the business community to which your business will be related.

After these reviews, and any last-minute changes you want to

make, I'll be ready for formal typing.

Hire a professional typist to type the entire plan on ordinary

white bond paper. Make sure you proof-read it against the

original. Check for any corrections and typographical

errors--then one more time--read it through for clarity and the

perfection you want of it.

Now you're ready to have it printed and published for whatever

use you have planned for it--distribution amongst your partners

or stockholders as the business plan for putting together a

winning financial proposal, or as a business operating manual.

Take it to a quality printer in your area, and have three

copies printed. Don't settle for photo-copying..Have it printed!

Photo-copying leaves a slight film on the paper, and will

detract from the overall professionalism of your business plan,

when presented to someone you're trying to impress. So, after

going to all this work to put together properly, go all the way

and have it duplicated properly.

Next, stop by a stationery store, variety store or even a dime

store, and pick up an ordinary, inexpensive bind-in theme cover

for each copy of your business plan. Have the holes punched in

the pages of your business report to fit these binders and then

slip each copy into a binder of its own.

Now, you can relax, take a break and feel good about

yourself..You have a complete and detailed business plan with

which to operate a successful business of your own. A plan you

can use as a basis for any financing proposal you may want to

submit..And a precise road-map for the attainment of real

success...

Congratulations, and my best wishes for the complete

fulfillment of all your dreams of success!!!