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Tips and Tricks for a Successful Business Plan

Here are some useful tips, tricks and rules of thumb for every section of your business plan.

Cover Page and Table of Contents

  • Obtain a copyright on your business plan and mention that on the cover page and on all the other pages, preferably in the footer.
  • Reinforce the company identity with your company logo on this page. If you have a "by-line" for your business use it on this page.
  • If you can use any of the art-work developed for your marketing brochure without cluttering the page, use it here. This will convey the image and the positioning you are trying to develop for your business.
  • You may also display the amount of money that you are seeking to raise through the Business Plan, along with the stage of development your business is in (seed, start-up, etc). Some investors also like to see the highlights of the plan on the cover page as it helps them to make a quick assessment of what to expect from the business plan.

Executive Summary

  • Write this section after you have completed writing the entire plan.
  • The length of the executive summary should be limited - 2 to 4 pages.
  • Use charts, tables and diagrams to illustrate or emphasize your points. Summary financials should be presented in the form of bar charts and the like.
  • Use short sentences, simple language, and no jargon or cliches.

The Company and Product/Service

  • Start this section by describing what the company does and which industry it operates in.
  • Emphasize your key achievements in the past. Also explain the bottlenecks that may have limited your achievements; and how these constraints will be addressed in the future.
  • Demonstrate how the success you achieved in the past was based on certain factors which you will continue to exploit in the future.
  • State out what makes you and your services different from the others in the market.

The Market

  • Give a reference to all trade associations that cover your industry. Use material supplied by these organizations to support statements and assumptions you have made throughout your funding request.
  • Use numbers as well as trend information to describe the current market and its potential. Growth, declines, and new markets opening up are key information. Use Charts, tables and graphs for maximum impact.
  • For a seed stage business, a well documented market research report from a professional agency will go a long way in giving comfort to your potential investor.
  • Often a company's offerings compete in more than one market. For instance, a company that sells its proprietary software product may also deliver consulting services. In such cases, it is essential that the size and growth rates for the services market be separately noted from the size and growth projections for the product market.
  • Search out all companies who offer competitive or related products. Define those who offer complementary products in the same or similar industries. Explain how competitive relationships can be turned into joint ventures, strategic partnerships, buyouts, acquisitions, etc. in the future. Investors will take comfort in the fact that you have defined possible exit solutions if things don't go as planned.

Sales and Promotion

  • Do all necessary research to keep your prices competitive. Some trade associations provide benchmark prices in the industry. Review these prices to evaluate their suitability to your business.
  • Start-ups are more likely to be successful if they focus on a highly specific, very narrow target market. General markets are usually dominated by large, well-established firms.
  • Use flow charts to graphically depict how the service or product is delivered to the customer.
  • After you compute your annual advertising cost, compare it with that of your competitors. Advertising expense is one of the operating ratios (expenses as a percentage of sales) that industry associations gather. If your estimated advertising cost is out of sync with the average cost in your industry, you should take another look at your strategy.

Finances

  • In this section you need to show projected, income statements, balance sheets, and cash flow. Existing businesses should also show historical financial statements. The time frame for projections depends upon the complexity of the business, but three to five years is generally acceptable as the standard.
  • For each projection prepare a sensitivity analysis to produce the "best", "likely" and "worst "case scenarios.
  • Clearly state the assumptions on which your financials have been prepared.
  • Pro-forma income statements should show sales, cost of operation, and profits on both a monthly and annual basis for each plan year. For all but the largest businesses, annual pro-forma balance sheets are all that are necessary. Cash flow pro forms should be presented in both monthly and annual form. If your business is already established, past annual balance sheets and income statements should also be included.
  • Include information that will assist potential investors in understanding your projections.
  • It is important for you to understand how to compile each financial document and what they mean. Many entrepreneurs consider themselves more marketing and creativity-oriented than finance-oriented and they dislike studying financial statements. If that applies to you, remember that it is essential for you to learn the basics of business finance so that you can run your company successfully.
  • Provide separate schedules which make up the big ticket items like the capital expenditure and employee compensation costs (esp. for service businesses). Also provide a Statement of Sources and Application of Funds to explain clearly how the funds are being generated and used.

By Venture Ahead

 

 
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