Preparing Your Business Plan

May 3
18:39

2006

Alan L. Olsen

Alan L. Olsen

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"Other things being equal, a well prepared business plan will increase your chances of obtaining the venture capitalist's financial commitment."

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Introduction

A business plan is a description of your business. To be complete your plan should describe:

  • Your company and industry
  • The product
  • The market and marketing approach
  • How the product will be made
  • Who is involved it) the company,Preparing Your Business Plan Articles and
  • How much money the company needs and what it will do with it

You should consider that a well-prepared business plan plays two important roles. First, it is a useful management tool that can help you to plot a course for your company. Second, it is a sales tool that will impress venture capitalists with your planning ability and general competence as a manager. Other things being equal, a well prepared business plan will increase your chances of obtaining the venture capitalist's financial commitment.

Organization & Content Business Plan Outline

These are the sections of a business plan.

  1. Summary
  2. Company
  3. Industry
  4. Product
  5. Market
  6. Marketing
  7. Operations
  8. Management
  9. Overall Schedule
  10. Critical Risks and Problems
  11. Financial Information
  1. Summary
    • A brief description of your product and market
    • A brief description of the management team
    • A summary of your financial projections
    • The amount of money you now seek, in what form, and for what purpose

  2. Company
    • Date and state of incorporation
    • Principals and what roles each of the principals played in bringing the business where it is today
    • Business purpose and highlights of progress to date

  3. Industry
    • Present your view of the current status and prospects for the industry
    • Describe the principal participants and how they are performing
    • Describe the affect of major economic, social, technological, or regulatory trends

  4. Product
    • Description
    • Research and development
    • Proprietary features
    • Future development

  5. Market
    • Market definition
    • Market size
    • Market trends
    • Competition

  6. Marketing
    • Estimated sales and market share
    • Strategy
    • Pricing
    • Sales and distribution
    • Service and warranty policies
    • Advertising, public relations and promotion

  7. Operations
    • Location
    • Plant and equipment
    • Manufacturing processes
    • Labor

  8. Management
    • Organization
    • Key management
    • Board of Directors
    • Professional services

  9. Overall Schedule
    • Should be realistic
    • Completion dates for major aspects of the plan

  10. Critical Risks and Problems
    • Negative factors
    • Plans to minimize impact of the negative factors

  11. Financial Information
    • Funding request
    • Desired financing
    • Capitalization
    • Use of funds
    • Future financing
    • Current financial statements
    • Financial projections
Writing the Executive Summary

Many venture capitalists like to review a short summary of a business plan so they can quickly decide if it is worth their time to review the whole plan. Therefore, your objective in the summary is to convince venture capitalists to study your plan further.

The summary should describe all of the key elements of your business plan in just one or two pages. It should include the following information:

  • A brief description of your product and market
  • A brief description of the management team
  • A summary of your financial projections
  • The amount of money you now seek, in what form, and for what purpose
Company

The purpose of this section is to provide venture capitalists with background information on your company and to describe the nature and current condition of your industry. It should include the following information:

  • Date and state of incorporation
  • Principals and what roles each of the principals played in bringing the business where it is today
  • Business purpose and highlights of progress to date, including major developments such as the introduction of a new product
Industry
  • Present your view of the current status and process for the industry
  • Describe the principal participants and how they are performing, including growth in sales, profits, and current market share
  • Describe the affect of major economic, social, technological, or regulatory trends
Product

Your objective in this section is to completely, yet concisely, describe your product, along with any proprietary features and future development plans. It should include the following information:

  • Description - Describe the company's product in detail indicating its nature and application. Include material such as engineering studies, photographs, and selling brochures.f the principals played in bringing the business where it is today

  • Research and development - Describe the nature and extent of research and development work that must be completed before your product is placed on the market. The costs and time required to achieve a marketable product should be indicated.

  • Proprietary features - Describe any patents, trade secrets, and other proprietary features. Discuss any other factors that have allowed, or could allow you to obtain an advantageous position in your industry.

  • Future development - Discuss plans for extension of your present product, and development of new or related products.

  • Present your view of the current status and process for the industry
  • Describe the principal participants and how they are performing, including growth in sales, profits, and current market share
  • Describe the affect of major economic, social, technological, or regulatory trends