INTRODUCTION

What is a business plan? A business plan is a document that is designed to outline the product or service to be offered and the potential of the business to be successful. There are a great deal of reasons for the plan, including: (1) a realistic pre-view for yourself; (2) to attract investors or financing; (3) to obtain alliances; (4) to secure product or service contracts, (5) to interest employees; (6) to facilitate acquisitions or mergers; and (7) to motivate and direct the management team. The business plan will represent the business; and depending on the particulars of the business, different aspects of the plan will be more important and require more attention.

1. Realistic Business Preview

The realistic business preview, as I like to refer to it, is the act of writing out the entire business plan including a market needs analysis, marketing strategy, the projected investment versus the projected return on that investment, as well as an analysis of the entrepreneur's abilities (education, experience, and any managerial staff support) needed to carry the business venture forward. I guess you could say the business plan will represent a means of reinforcing your confidence in the business venture's prospect of becoming successful.

2. Investors and Financial Support

Many business ventures will need investors or a bank loan to provide the needed start-up capital to launch the venture. The business plan will facilitate this by providing an analysis of the market demand for the product or service, the strategies to implement and maintain the business, as well as resume information relative to the entrepreneur and any management team members. The business plan will need to convince any prospective investors or financial institutions that the business has enough potential to risk their involvement.

3. Alliances

Over the last ten (10) or more years alliances have become a common part of an entrepreneur's start-up. Research and development (R&D) and marketing efforts have become increasingly more common between large and small companies. The larger companies tend to have the financial ability and facilities to help develop the ideas of the entrepreneur. The larger firms have more resources and the entrepreneur brings new or innovative ideas to the table. The business plan can be very helpful when attempting to gain the interest of an alliance.

4. Securing Business Contracts

Corporate executives or business contacts that may be interested in your service or product must be sold on the idea that your business will be successful and that they can count on you to be there for their needs. The business plan can aid you in this respect. The business plan itself can be a selling tool, but in addition the plan will give you a storyboard to present yourself and the business to potential contacts and help you obtain needed contracts. Thus, the business plan can be very important to help establish business contracts.

5. Recruiting a Management Team

A very big hurdle for the entrepreneur is attracting key managerial personnel, skilled laborers, or experienced sales professionals to help implement the start-up. The business plan can be a helpful tool when recruiting needed employees. The business plan can help convince potential employees that the business start-up is a sound entrepreneurial venture.

6. Aquisitions or Mergers

If you are interested in selling the business after its inception, trying to convince another company that a partnership would be ideal for both parties, or trying to buy an existing company, the business plan can help; the business plan can serve as a resume.

7. Motivating and Focusing the Team

The business plan can also serve to motivate and direct the entrepreneurial team. The plan will include information about the market, the product or service, and the overall strategic plan to spearhead the business start-up into the marketplace. The process of developing and writing the business plan should include all the key managerial employees that are on board at the onset of the entrepreneurial venture. Their participation is motivational and helps focus the team. It ensures that everyone has the same understanding of the goals and direction of the business venture. The business plan should be updated periodically and the team should be a part of the process.

WRITING THE BUSINESS PLAN

How long should a business plan be? There are three primary business plans: (1) the summary business plan, (2) the full business plan, and (3) the operational business plan. The summary plan is very popular and I believe can be used for an entrepreneurial start-up. The summary plan is generally between 10-12 pages. The full business plan is used for well established businesses that have accumulated a lot of information to report on the progress of the company. Generally the full plan is used to acquire substantial financing, or when looking for a strategic partner; the full plan is generally between 15-40 pages. The last type of business plan is the operational business plan and it is 40 or more pages, it is not uncommon for this type of plan to have as many as 100 pages. This type of business plan is very detailed and includes all aspects of the operation of the business. Large franchises often have this type of business plan.

This article will be directed at writing a business plan for an entreprenuerial start-up venture.

There are generally nine (9) features to a business plan: (1) cover page, (2) table of contents, (3) executive summary, (4) company profile, (5) marketing, (6) product(s) or service(s), (7) sale and promotion, (8) financing, and (9) appendix.

1. Cover page

The cover page is very important and shall include the company's name and address, the main contact, usually the president or chief administrator, and the contact phone number. The cover page should advise the reader that the information in the business plan is confidential and is not to be copied or transmitted. The cover page should also include a copy number to keep track of each copy and where it went.

2. Table of Contents

The table of contents is just below the cover page and identifies the contents of the plan beginning with the executive summary and designates what page each section of the plan can be found on.

3. Executive Summary

The executive summary is very important.  I cannot stress enough how important this section is. It is not an introduction or mere summary, it is actually the business plan absent the elaboration of details. The executive summary should be no longer than two (2) pages. The executive summary should capture what the business is all about and how and why it will be successful. The executive summary will need to be revised, probably more than once or twice, after the other sections are completed. The executive summary should be concise and free of generalities. The executive summary should sell the entrepreneur venture, the remaining sections merely support the summary.

4. Company Profile

The company profile should include management team resumes and the business strategy. Keep in mind that the strategy outlined here, and identified in the executive summary, must be supported in the following sections.

A. Managment Team Resumes

It is very important that the management team is capable of running the business. The resume(s) of the sole proprietor, partners, and management team, should target educational achievements and/or prior managerial accomplishments that will support the probability that the management of the start-up will be successful. Be sure to identify the responsibilities of each member and be sure that their experience or education supports their position. If any consultants or mentors are going to be involved provide their resume as well.

B. Business Strategy

The business strategy should include the overall approach to producing and selling the product or service offered. There are three (3) areas to cover in the business strategy, (1) the past, (2) the present, and (3) the future.

i. The Past

For an entrepreneurial start-up venture the past will be best served by outlining the managerial teams experience and accomplishments that would support the ability to launch a successful venture.

ii. The Present

The present can discuss any test marketing campaigns and any trends that indicate that the product or service will likely be embraced by consumers. In addition, if there are any present external factors, economic, governmental, etc., that could effect the product or service be sure to identify what is being done or what strategy is being implemented to address the factor(s).

iii. The Future

When addressing the future goals and strategies of the company try to identify some trends that seem to be developing and how they will be dealt with if in fact they materialize. Be thoughtful and provide some alternative strategies to deal with potential problems that might develop, i.e., substitute products in case of a shortage of materials from vendors. In addition, try to analyze how technological changes are likely to effect the industry, your service or product, and how your business strategy it focused on dealing with it, i.e., training, hiring IT personnel, etc..

5. Marketing

Marketing and sales are two distinct and different efforts. Marketing involves identifying who your customers are and what will be the best way to reach them, or inform them about your product or service. Sales is the efforts you put forth to convince the consumer to buy from you. This section of the business plan will identify who your target market is and how you plan to advertise your product or service to target your prospective consumers, newspaper, TV, radio, etc..

Keep in mind it will be necessary to do some market research to identify the levels of competition and consumption to determine the best location to target with your marketing campaign. Competition should be objectively analyzed in this section on sales revenue, number of employees, product or service offered and any future goals. Learn from the competition, analyze their strengths and weaknesses.

6. Products or Services

In this section you will identify what you are offering the marketplace, what is it you are selling. Be sure to include features that may set you apart from the competition.  If the product or service will include warranties or guarantees be sure to explain them and how they will be administered. However, remember warranties or guarantees can cut into profit margins.

7. Sales and Promotion

i. Sales Approach

No matter how good your marketing or product/service strategies may be, if you cannot convince the target market to buy, the business venture will fail. I believe that selling the product or service is a very big task for the start-up; thus, it is important to invest in experienced salespeople and develop a sound promotion strategy.

There are a few different approaches to selling, including an in-house sales force, sales representatives, executive sales or direct mail. Your sells strategy may be to sell to wholesalers who will then sell to retailers, or you may sell directly to the consumers. It is noteworthy to mention that an in-house sales force will generally cost more than a representative sales force. Of course, representative sales usually represent different companies and you may not get the sales attention needed for the start-up.

It is always a good idea to use at least two selling approaches. The sales section of the business plan should outline the start-up strategies to be used and any plans to implement other sales approaches after launching the start-up venture.

ii. Promoting Product/Service

Initially you will need to identify the target market. The sales personnel can then make calls and send brochures or letters to these individuals or businesses.  In addition to this strategy you will want to do some advertising or public relations activities to generate product/service awareness among the target market area.  Advertising is generally more expensive than public relations, but advertising gives you more control over the message you are conveying to the market. Public relations, like newspaper articles or radio interviews, have a great deal of credibility and can be very effective. Of course, there are advertising opportunities on-line via the internet that can be very cost effective.

8. Financing

The financial section of the business plan will identify your financial ability to support the business start-up, your personal investment, and identify any needed capital. This section of the plan will be very important if you are using the plan to interest investors or obtain financing from a bank. This section should include a financial forecast, a moderately detailed outline of the projected cost to start-up and run the business versus the projected return on investment.

The business plan, depending on the financial status of the business, may include a cash flow sheet, income statement and a balance sheet

9. Appendix

The appendix, if needed, will identify any attachments, i.e., documents, reference letters, patents, copyrights, photos, etc., and will chronologically set forth the order of any such attachments (Cash Flow Statement .....Exhibit 1; Balance Sheet......Exhibit 2, etc.).

SUMMARY

In a nutshell, the business plan can have many purposes, internal and external, and the level of detail or the concentration of a particular section will vary. One thing is for certain, every entrepreneurial venture needs one.

This article is a basic overview and anyone planning to write a business plan should do extensive research to learn more detailed information about financial forecasting, marketing analysis, recruiting employees, etc.. Remember, plan, plan, and plan some more.