Sunday, September 10, 2006

Profit with A Business Plan

If you're serious about the success of your business, then you need to find ways to give yourself every advantage you can over your competition.

A business plan can serve a couple of main purposes: In the world of banking and venture capital, 
business plans play a huge role for people who are trying to secure start-up funding from banks or
investors. The better the business plan, the better the chances of landing that big initial investment.

For smaller companies, who do not need to rely on outside funding to get started, a 
business plan serves more as a company blueprint. It identifies the company's purpose, products, market, and goals, as well as the steps the company plans to take to reach those goals.

There are 7 main sections that should be included in every business plan.

Section 1: The Executive Summary
The executive summary is basically your entire business plan condensed down into a page or two (at the most). If and when you show your business plan to others, this is the only part that 75% of them will actually read. For this reason, you need to make this section as clear, concise, and exciting as possible.

Your executive summary should contain a few key items. 
what your business does, 
who your market is,  
what opportunity you've identified 
what sets your company apart from others.
financial information 
projected revenues 
how much money you need.
company's achievements, 
milestones reached to date.
register a domain name, 
a web site, 
a patent application, 

Section 2: Description of Business
This section will contain an in-depth description of your company, including what products or 
services you sell, who your customers are, what your operating structure is (Are you a wholesaler?
A reseller? A manufacturer?), the legal details of your company (Is it a corporation? A partnership? 
A sole proprietorship?), and your distribution methods.


Section 3: Market Strategies
Think of this section as your marketing plan. This is where you'll want to go into detail regarding who your target market is and how you intend to sell to them. This section will contain information about how big your audience is, how fast it is growing, and how large you expect your market share to be.

Some great sites where you can start this research are: CyberAtlas, Nua Internet Surveys, MarketResearch.com 


Section 4: Competitive Analysis
The competitive analysis section of your business plan is where you explain, in detail, the 
strengths and weaknesses of your main competitors. This will allow you to realistically determine where you can position your business in the market in relation to your competition.

Make sure to do an honest appraisal of who your competition is. If your site is selling board games, 
your main competition is NOT Toys 'R' Us. Instead, your biggest competitors are other niche sites that focus on selling board games. 

A great tool for doing competitive analysis is http://www.alexa.com, 

Section 5: Development Plan and/or Operational Strategy
If your company is still in the developmental stage (with no product and/or no revenues).
The best way to do this is to write out a development timeline with the projected completion dates for various milestones your company will need to reach before it can start making sales.

This is the section where you must plan to profit! Failing to do so is one of the most common mistakes made by businesses. All too often, people just set up shop without ever really planning exactly HOW they are going to become profitable!


Section 6: Management
I can guarantee that after a prospective investor reads through your Executive Summary, they will flip directly to your Management section before reading anything else. They'll want to get a clear idea of
"who" your company is -- after all, a business idea is only as good as the people behind it!

Make sure to go into detail about what makes you uniquely qualified to operate this sort of business. 
What special skills do you bring to the company? How do your areas of expertise give you a distinct advantage over people operating similar companies?


Section 7: Financials
The last half of these documents are filled with balance sheets, earnings projections, capital requirements, depreciation estimates, and dozens of other highly detailed financial statements. 

Unless you are going to be trying to land big investors, I really don't recommend hiring a professional 
to write your business plan for you. You'll learn so much about your business and your competitors doing it yourself that it would be a shame to let someone else go through the process for you!
Instead, focus on your monthly income and monthly expenses. The best way to do this is to put together a simple 12-month cash flow forecast.

If you are going to be using your business plan as a tool to attract capital from banks or investors, 
then your business plan will need to be MUCH more detailed than if you are preparing it for personal use. 

Business Plan Resources:
The United States Small Business Administration has an excellent resource online at 
sba.gov/starting/indexbusplans.html. 
The Annual Moot Corp Competition challenges top MBAs from around the world to submit their business plans to be evaluated by a panel of investors. The winning entries from the past 
few years are online at businessplans.org/MootCorp.html.

Once you've written your business plan, you'll be amazed at how often you refer to it. It will 
become your "battle plan," as well as the tool you'll use to measure how close you are to meeting your goals. A professional-looking business plan will give you a TON of credibility simply because most businesses never take the time to prepare one.

Be sure to make your business plan a perpetual "work in progress." Go back and review it. 

I wish You Success.

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