Business Plan Format

The Business Plan format is a systematic assessment of all the factors critical to your business purpose and goals.

Here are some suggested topics you can tailor into your plan:

• A Vision Statement: This will be a concise outline of your business purpose and goals.
• The People: By far, the most important ingredient for your success will be yourself. Focus on how your prior experiences will be applicable to your new business. Prepare a résumé of yourself and one for each person who will be involved with you in starting the business. Be factual and avoid hype. This part of your Business Plan will be read very carefully by those with whom you will be having relationships, including lenders, investors and vendors. Templates for preparing résumés are available in your library, Kinko's, bookstores and the Internet under "résumés."

However, you cannot be someone who you are not. If you lack the ability to perform a key function, include this in your business plan. For example, if you lack the ability to train staff, include an explanation how you will compensate for this deficiency. You could add a partner to your plan (discussed in Section 4) or plan to hire key people who will provide skills you don't have. Include biographies of all your intended management.

• Your Business Profile: Define and describe your intended business and exactly how you plan to go about it. Try to stay focused on the specialized market you intend to serve.
• Economic Assessment: Provide a complete assessment of the economic environment in which your business will become a part. Explain how your business will be appropriate for the regulatory agencies and demographics with which you will be dealing. If appropriate, provide demographic studies and traffic flow data normally available from local planning departments.
• Cash flow assessment: Include a one-year cash flow that will incorporate your capital requirements. Include your assessment of what could go wrong and how you would plan to handle problems.
• Include your marketing plan and expansion plans.
• Refer to helpful government Web sites such as the Small Business Administration. See "Resources" on the home page of this Web site.

Six Steps To A Great Business Plan

Start-up entrepreneurs often have difficulty writing out business plans. This discipline is going to help you in many ways so don't skip this planning tool! To make it easier, here are six steps that will produce a worthwhile plan:

1. Write out your basic business concept.
2. Gather all the data you can on the feasibility and the specifics of your business concept.
3. Focus and refine your concept based on the data you have compiled.
4. Outline the specifics of your business. Using a "what, where, why, how" approach might be useful.
5. Put your plan into a compelling form so that it will not only give you insights and focus but, at the same time, will become a valuable tool in dealing with business relationships that will be very important to you.
6. Review the sample plans we furnish and download the blank format to a MS Word document. Fill this in as you progress though the course.

Does Your Plan Include the Following Necessary Factors?

• A Sound Business Concept: The single most common mistake made by entrepreneurs is not selecting the right business initially. The best way to learn about your prospective business is to work for someone else in that business before beginning your own. There can be a huge gap between your concept of a fine business and reality.
• Understanding of Your Market: A good way to test your understanding is to test market your product or service before your start. You think you have a great kite that will capture the imagination of kite fliers throughout the world? Then craft some of them and try selling them first.
• A Healthy, Growing and Stable Industry: Remember that some of the great inventions of all time, like airplanes and cars, did not result in economic benefit for many of those who tried to exploit these great advances. For example, the cumulative earnings of all airlines since Wilber Wright flew that first plane are less than zero. (Airline losses have been greater than their profits.) Success comes to those who find businesses with great economics and not necessarily great inventions or advances to mankind.
• Capable Management: Look for people you like and admire who have good ethical values, have complementary skills and are smarter than you. Plan to hire people who have the skills that you lack. Define your unique ability and seek out others who turn your weaknesses into strengths.
• Able Financial Control: You will learn later the importance of becoming qualified in accounting, computer software and cash flow management. Most entrepreneurs do not come from accounting backgrounds and must go back to school to learn these skills. Would you bet your savings in a game where you don't know how to keep score? People mistakenly do it in business all the time.
• A Consistent Business Focus: As a rule, people who specialize in a product or service will do better than people who do not specialize. Focus your efforts on something that you can do so well that you will not be competing solely on the basis of price.
• A Mindset to Anticipate Change: Don't commit yourself too early. Your first plan should be written in pencil, not in ink. Keep a fluid mindset and be aggressive in making revisions as warranted by changing circumstances and expanding knowledge.
• Include Plans for Conducting Business Online: According to the January 2005 Trend/Forecasting Report of The Dilenschneider Group, in the U.S. alone, the 2004 holiday season online shopping jumped by more than 25% from 2003. (In 2005 it jumped another 25 %!) Consumer and business-to-business online sales are set to expand exponentially in the coming decade, and small retailers can reach an ever-increasing pool of customers. Be sure to see the how-to details in the following Session 10, E-commerce.

Formulate (and Reformulate) Your Business Plan

Donald N. Sull, associate professor of management practice at the London Business School, in an article in the MIT Sloan Management Review, offers some practical suggestions on managing inevitable risks while pursuing opportunities. Here is a capsulation of his suggestions on how to formulate (and reformulate) your business plan:

• Be flexible early in the process and keep it fluid. Don't commit too early. Expect your first plan to be provisional and subject to revision.
• Ask yourself if your experience or expertise gives you the right to an opinion on your specific opportunity.
• Identify your potential deal killers: variables that are likely to prove fatal to the venture.
• Clearly identify what you see as the key drivers of success. What are you betting on here?
• Raise money only in sufficient amount to finance the experiment or evaluation you next envision, with a cushion for contingencies.
• Delay hiring key managers until initial rounds of experimentation have produced a stable business model.
• At some point, take the plunge and test your product or service on a small scale in the real world through customer research, test marketing, or prototypes.
• Test and refine your business model before expanding your operations.

Top Ten Do's and Don'ts                         

TOP TEN DO'S

1. Prepare a complete business plan for any business you are considering.
2. Use the business plan templates furnished in each session.
3. Complete sections of your business plan as you proceed through the course.
4. Research (use search engines) to find business plans that are available on the Internet.
5. Package your business plan in an attractive kit as a selling tool.
6. Submit your business plan to experts in your intended business for their advice.
7. Spell out your strategies on how you intend to handle adversities.
8. Spell out the strengths and weaknesses of your management team.
9. Include a monthly one-year cash flow projection.
10. Freely and frequently modify your business plans to account for changing conditions.

TOP TEN DON'TS

1. Be optimistic (on the high side) in estimating future sales.
2. Be optimistic (on the low side) in estimating future costs.
3. Disregard or discount weaknesses in your plan. Spell them out.
4. Stress long-term projections. Better to focus on projections for your first year.
5. Depend entirely on the uniqueness of your business or the success of an invention.
6. Project yourself as someone you're not. Be brutally realistic.
7. Be everything to everybody. Highly focused specialists usually do best.
8. Proceed without adequate financial and accounting know-how.
9. Base your business plan on a wonderful concept. Test it first.
10. Skip the step of preparing a business plan before starting.