NOTES: RE: BUSINESS PLANS

 Based upon a chapter excerpted from “Up Your Cash Flow” by Harvey Goldstein, Granville Publishing. Used here for educational purposes.

 WE MUST PLAN FOR THE PRESENT WITH AN EYE TOWARDS THE FUTURE

            “We used to be indecisive, no we’re not so sure.”

 So many businesses lack direction… They need a well thought out plan to guide their company’s future…In good or bad times, the old “seat of the pants” planning doesn’t work.

 =  > Need to MAKE TIME to plan for the future.

 What is needed is a written business plan that will allow us to measure our activities against established goals, and judge whether we are on the path to success or failure.

             Operational Business Plan – to establish the company’s goals and to guide the company.

             Develop the operational business plan:

 ·         Identify what business you are in.

·         Production issues

·         Marketing

·         Personnel

·         Facilities and Administration

·         Money = > cash budget and forecast

 Broader business plan to be used to generate financing and/or capital…

A WELL-PREPARED BUSINESS PLAN…

·         Helps management delineate objectives, directions and strategies.

·         Helps company officials reach a consensus about the company’s future.

·         Gains the confidence of existing and potential investors

·         Shows major suppliers you ability to pay.

·         Persuades potential customers to place orders by showing your ability to deliver.

·         Convinces bankers, investors and other capital sources that your company has planned for its financial success.

 A SUCCESSFUL BUSINESS PLAN…

·         Is prepared or reviewed by outside parties (such as a CPA, management consultant, or attorney).

·         Shows projected financing and how it will work for the company.

·         Contains a well-written narrative and set of financial projections showing the company’s projected financial condition, net income and cash flow.

·         Is prefaced by a concise summary which serves as an appetizer for the reader to continue reading.

·         Provides a tool for later comparison with actual operating results.

·         Contains all essential disclosures necessary for the reader’s decision about your company.

·         Is recognized as a dynamic planning tool, subject to change.

·         Is well written for the potential investor or creditor who is not familiar with the company’s past or future operations.

 OUTLINE OF A BUSINESS PLAN

The following outline of a typical business plan is intended only to serve as a skeleton guide. There is no such thing as a typical company; therefore any standard outline must be adapted to your specific needs. When preparing a business plan, carefully identify and describe the characteristics which make your company different. Highlight those characteristics, and be realistic.

            The heart of the business plan is a set of financial projections showing the bank or investor how effective you will be with their money.

THE COMPANY

·         This section whets the reader’s appetite and should be short and concise.

·         Incorporation and location (indicate number of employees, etc.)

·         Describe products and current stage of development.

·         Summarize activities to date.

·         Briefly outline the unrealized potential of the company. Be honest. Be realistic.

·         Required financing. Be realistic.

·         Use of the financing proceeds. Show where the money will go.

·         Return on investment.

·         Licensing or other agreements of value.

SELECTED FINANCIAL INFORMATION

·         Include a short, concise statement listing risks to be considered.

·         If the company is just starting operations, then a brief narration of it’s limited operations should be discussed.

·         Transactions entered into by the company and related parties should be disclosed, i.e., sales with stockholders, loans to shareholders, etc.

·         Operational losses to date (if appropriate).

·         Conflicts of interest.

·         Applicable government regulations.

·         Restrictions on stock transfers or the ability to trade equity securities.

·         Loan covenants.

·         Dependence on key individuals.

·         Requirements for additional financing.

·         Dilution of interest because original promoters invested at a lower per share amounts.

·         Other uncertainties and risks.

Note: While you may believe that citations of risks may negatively affect an investor’s or banker’s opinion of the company, it conveys an appearance of honesty and lends credibility to the business plan. Furthermore, if appropriate, the remainder of the business plan should mitigate the identified risks.

·         Competition in the field.

USE OF PROCEEDS

If the business plan is to be used to acquire capital (e.g.; sales of stock or bank loans), show a schedule of major areas of proceeds uses, followed by a brief textual discussion of each major use. For example, list uses for:

·         Marketing

·         Research and Development

·         Working capital (breakdown by account receivable, inventory, etc.)

·         Advertising and promotion

·         Equipment and facilities

·         Retirement of debt

·         Expansion of operations

·         Other important uses.

PRODUCTS OR SERVICES

·         Describe in detail products manufactured or sold to date by the company.

·         Show the historical expansion of product lines and other key operational activities.

·         Summarize your intended expansion of product lines.

·         List any license agreement related to products.

Note: Emphasize how your products differ from those of your competitors. Highlight quality, advanced engineering, product appeal to customers, and customer satisfaction.

MARKETING

·         Describe your marketing plans. Your marketing consultants may be able to assist in the writing of this section.

·         Outline your company’s economic base, who you serve and want to serve (by age, sex, industry, etc.)

·         Describe the image of your products and services in the eyes of the users.

·         Summarize marketing and promotion strategy to date.

·         Show how marketing has been performed to date (in-house, dealers, distributors, etc.)

·         Discuss briefly the market trends and other market data used in marketing decisions.

·         Note any intended changes in marketing and promotion strategy.

·         Show anticipated benefits of changes in marketing and promotion strategy.

·         Name competitors (on a national, regional or local basis) and the advantages or disadvantages you enjoy, after carrying you marketing plans.

·         Show reaction of customers.

MANAGEMENT

·         List the officers and directors of the company.

·         Describe their backgrounds, highlighting their experience in related fields.

FINANCIAL STATEMENTS

·         Historical operations

PROJECTIONS – A LOOK AT THE COMPANY’S FUTURE

Note: Although projections may be the last item in the package, they are the heart of the plan. They should be highlighted and referred to frequently in the text of the business plan/

PERSONAL PLANNING IS A MUST

            -Don’t ignore your most important “client”: yourself!

·         Estate plan

·         Business succession plan

Don’t ignore disability insurance, business overhead disability insurance and life insurance.

 Effective delegation is the key to managing effectively and training subordinates.