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A Business Plan That
Guarantees Big Profits
Success in business comes as a result of planning. You must
have a detailed, written plan that states your ultimate goal,
the purpose behind your goal, and each milestone that must be
passed in order to reach your destination. A business plan is
a written definition and series of operational instructions for
achieving your goal. This list of instructions will form a complete
business tool with which to define your basic
product, income objectives, and specific operating procedures.
You must have a business plan if you hope to attract investors,
obtain financing, or preserve the confidence of your creditors.
Your plan for business success will serve as the background information
and supporting details of any financial proposals you submit
to lenders, creditors, or investors. Many entrepreneurs are under
the mistaken impression that a business plan is the same as a
financial proposal, or that a financial proposal constitutes
a complete business plan. This is a misunderstanding of these
two separate and different business success aids. Let's describe
the difference between them. The business plan can be considered
a long-range map to guide your business toward the goals you've
set. This plan details the what, why, where, how, and when of
your business - the steps to ultimate success for your company.
Your financial proposal is a request for money based upon your
business plan. It describes your business history and objectives,
recounting those details that make you an especially attractive
investment for a creditor. The financial proposal draws information
from the complete business plan to develop an attractive offer
to the investor. Understand the differences
between these two important terms. They are closely related,
but are not interchangeable.
Writing and putting together a winning business plan takes
study, research, and time. Don't try to do it all in one or two
days. The easiest way to begin your plan is with a loose leaf
notebook, plenty of paper, pencils, a pencil sharpener, and several
For your first session, choose a quiet place to work, away from
the distraction of ringing telephones, the interruptions of others,
and the incessant droning of the television set. Focus your thoughts
on your business - your hopes, dreams, and ambitions. Let your
mind race through the myriad of possibilities that you could
accomplish given the capital investment, personnel, location,
etc. Jot all these ideas, thoughts, questions, etc. on the paper
in your notebook. Over the course of the next several days, it
will be a good idea to carry a pocket notebook and jot down those
business ideas as they come to you - ideas for sales promotion,
and any other thoughts on how to operate and build your business.
Later, when you actually sit down again and begin working on
your business plan, you can compile all your notes by category
- financing, sales, distribution, advertising, etc. Then evaluate
your ideas, rework them, refine them, and integrate them into
the overall picture of your business plan. Title a separate page
with each subject area of your plan and describe each thoroughly.
The subjects must identify your present position, present your
ultimate goal in clear, concise language; include a step-by-step
description of how you will
proceed; and have a specific date set for the attainment of the
Developing a set of questions to answer about your business
forces you to take an objective and critical look at your ideas.
Putting it all down on paper allows you to change, remove, and
refine everything into a form that will best meet your needs.
You'll be able to spot weaknesses and strengthen them before
they develop into major problems. Overall, you'll be developing
an operating manual for your business - a valuable tool which
will keep your business on track and guide you in its profitable
Because the plan contains your ideas for your business, it's
very important that you do the planning. You must be the one
to develop the plan and put it all down on paper just the way
it should read. Seek out the advice of other people. Talk with,
listen to, and
observe others who are operating similar businesses. Enlist the
advice of your accountant and attorney. At the bottom line, however,
don't ever forget that this must be your business plan! Statistics
show the greatest causes of business failures are poor management
and lack of operational planning. No one will ever succeed without
a clear-cut knowledge of where to focus their attentions.
The best business plans for even the smallest of businesses
run twenty-five to thirty pages or more. The suggested outline
below is a logical organization of the information every business
plan should cover, and should serve as as guide for the development
your own plan:
Statement of Purpose
Table of Contents
Current Financial Records
Explanation of Plans For Growth
Projected Profit, Loss, and Operating Figures
Explanation of Financing for Growth
Summary of Business
Outlook for The Future
Listing of Business
On the very first page of your plan, the title page, place the
name of your business with the business address underneath. Skip
a couple of lines and write in all capital letters: PRINCIPAL
OWNER followed by your name (if you're the principal owner).
1234 SW 5th Avenue, Anytown, USA 12345
PRINCIPAL OWNER: Jack Jones
That's all you'll have on that page except the page number.
Following the title page will be your "Statement of Purpose."
The page title should be in all capital letters, centered across
the top of the page. Skip a few lines and write the statement
of purpose. This should be a simple sentence or two summarizing
your primary business function, such as: "We are a service
business engaged in the direct marketing of business success
manuals, books, audio cassettes, and other information by mail."
Make the statement direct, clear, and concise.
Next, skip several lines and flush with the left hand margin
of the paper write out a sub-heading in all capital letters,
such as: EXPLANATION OF PURPOSE. Beneath this sub-heading briefly
explain your statement of purpose. Keep your "Explanation
of Purpose" short- no longer than one paragraph. Very few
business purpose explanations are justifiably more than a half
page long. Example:
"Our surveys have found most entrepreneurs to be sadly
lacking in basic information that will enable them to achieve
success. This market is estimated at more than 25 million, with
at least half of these actively seeking sources that provide
the information they need and want. Combining our business, advertising,
and publishing experience, it is our goal to capture at least
half of this market of information seekers by utilizing our publication
Entrepreneurs' Reports. Our market research indicates we can
achieve this goal and realize a profit of $1,000,000 per year
within the next five years."
Now you will present the "Table of Contents." Don't
really worry about this one until you've got the entire plan
completed and ready for final typing. It's a good idea, however,
to list the subjects (chapter titles) as we have above, and to
check off each one as you complete that portion of your plan.
By having a list of the points you want to cover, you'll be able
to move around and work on each phase of your business plan as
the ideas or interest in organizing that particular phase stimulate
you. Thus, you won't have to make your thinking or your planning
conform to the chronological order of the individual chapters
of your business plan.
Your "Business Description" will begin where your
"Statement of Purpose" leaves off. Describe your product,
the production or procurement process, who has responsibility
for what division of the work, and, most importantly, what makes
your product or service unique and gives it an edge in your market.
You can also briefly summarize your business beginnings, present
position, and potential for future success.
Next, your "Market Analysis" will describe the buyers
you're trying to reach, why they need, want, or will buy your
product, and the results of any tests or surveys you may have
conducted. Once you've defined the market, go on to explain how
you intend to reach the buyers - how you'll alert these prospects
to your product or service and induce them to buy. You might
want to break this chapter down into sections such as "Publicity
and Promotions," "Advertising Plans," "Direct
Sales Force," and "Dealer / Distributor Programs."
Each section would then be an outline of your plans and policies
for that subject area.
The chapter on "Competition" will identify who your
competitors are, their weaknesses, and strong points. Explain
how you intend to capitalize on those weaknesses and match or
better their strong points. Talk with as many of your indirect
competitors as possible
- those operating in different cities and states. One of the
easiest ways of gathering a lot of useful information about your
competitors is by developing a series of survey questions and
sending these questionaires out to each of them. As they respond
you will be able to develop a perspective on the market forces
aligned against you. As an indirect result, you will later be
able to compile the answers to these questionaires
into some form of directory or report on this business that you
can sell. It is advisable to contact the trade associations and
publications serving your proposed type of business. For information
on these associations and specific publications, visit your public
library. Ask for the librarian's help, explaining exactly what
you are seeking.
Reading through the available publications in the field will
give you an idea of what additional sales angles your company
can take to reach an increased share of the market.
The chapter entitled "Business Location" simply states
the present location of your business, the size of the operating
area, number of offices, floor plans or designs, types of furnishings,
machinery, tools or materials necessary for operation, proposed
expansion plans, possible sites for building new headquarters,
and future possibilities
for growth in present location. This chapter will help you determine
if the available space of your present location will satisfy
your future needs or if a moveto a different location will be
"Management" should be a description of the necessary
jobs for successful operation of your business. Describe the
management hierarchy that actually runs the business, names of
individuals, their job titles, duties, responsibilities, and
include a resume for each. It's important that you paint a strong
picture of your top management because the
people coming to work for you or investing in your business will
be investing their time, money, and lives in these individuals
as much as in your product ideas. The individual tenacity, mature
judgement under fire, and innovative problem-solving characteristics
of good managers have won over more people than all the AAA Credit
Ratings and astronomical sales figures put together. People becoming
involved with any new venture want to know that the person in
charge knows what he's doing, will not lose his cool when problems
arise, and has what it takes to make money for all involved.
After demonstrating the strengths of the top person, go on to
outline in descending order the other key positions within your
business. If you've been in business for a while, the next chapter,
"Current Financial Records," is a picture of your current
financial status and a review of your operating costs and income
from the beginning of the business to the present date. Generally,
this is a listing of your profit and loss statements for the
past six months, plus copies of your business income tax records
for each of the previous three years the business has been an
Entitled "Explanation of Plans For Growth," Chapter
Nine is simply an explanation of how you plan to keep your business
growing - a detailed guide of precisely what you're going to
do and how you're going to increase your profits. These plans
should show your goals for periods covering the coming year,
the next two years, and a complete
three year cycle. By breaking your objectives down into annual
milestones, your plans will be accepted as more realistic and
will be more understandable as a part of your ultimate success.
Next, itemize the projected cost and income figures of your
three year plan in the chapter "Projected Profit, Loss,
and Operating Figures." It will take a lot of research (and
most likely a good deal of writing, editing, and rewriting),
but it's very important that you list these figures based upon
thorough investigation. You may have to adjust
some of your plans downward, but once you've got these two chapters
on paper, your complete business plan will fall into line and
begin to make sense. You'll have a precise map of where you're
headed, how much it's going to cost, when you can expect to start
making money, and what percentage you can expect that profit
Now that you know where you're going, how much it's going
to cost and how long it's going to be before you begin to recoup
your investment, you're ready to talk about how and where you're
going to get the money to finance your journey. Title this chapter
"Explanation of Financing for Growth." Unless you're
independently wealthy, you'll
want to use this chapter to list the possibilities and alternatives
of future financing. Make a list of possible investors you can
approach and induce to put up some money as silent partners.
Compile a prospect sheet of those people you might be able to
sell as stockholders in your company. In many cases, a company
can sell up to $300,000 worth of stock on a private issue basis
without filing papers with the Securities and Exchange Commission.
Check with your corporate or tax attorney for more details.
To further prepare for future financial needs, this chapter
may also contain a list of relatives and friends who might help
you with a non-collateralized loan for the development of your
business. Next, search out and identify possible venture capital
organizations that will lend money to a business such as yours.
Visit the Small
Business Administration office in your area and pick up the application
papers for an SBA loan. Read and study them carefully, even fill
them out on a preliminary basis - then compare the costs on such
a loan with other sources of financing. Determine in which business
publications your advertising would be best displayed if you
seeking a partner or investor. Write an example of the ad you'd
want to use if you did decide to advertise for monetary help.
With a listing of all the options available to meet your needs,
all that's left is to arrange these options in the order you
would follow when the time came to seek additional capital. While
you're researching these money sources, you'll save time by noting
the name of the contact person to deal with when you want money.
If possible, develop a working relationship with these resources
In your "Documentation" chapter place a copy of
all legal papers relative to your business. You should include
a credit report on yourself. Use the yellow pages or check at
the credit department in your bank for the nearest credit reporting
office. When you get your credit report, look it over and take
whatever steps are necessary to eliminate any negative comments.
Once these have been taken care of, ask for a revised copy of
your report to include in your plan. This will help insure potential
investors of your credit worthiness. If you own any patents or
copyrights be sure to include copies of these in the chapter.
Any licenses to use someone else's patent or copyright should
also be included. If you own the distribution, wholesale, or
exclusive sales rights to a product, include copies of this information
as well. You should also place copies of any state county, or
city business licenses, all leases, special agreements, or other
legal papers that might be pertinent to your business.
In conclusion, write out a brief, overall summary of your business.
Entitled "Summary of Business and Outlook for The Future,"
include in this chapter a summation of each of the preceding
chapters. Briefly recap when the business was started, the purpose
of the business, what makes your business different, how you're
going to gain a profitable
share of the market, and your expected success during the coming
The last page of your business plan is a courtesy page listing
the names, addresses, and telephone numbers of personal and business
references - persons who've known you closely for the past five
years or longer, and companies or firms you've had business or
credit dealings with during the same period. This will provide
resources with whom
potential investors or creditors can check to verify your financial
statements and personal integrity.
That's it: your complete business plan. Before you have a final
draft typed out, read the entire plan over once a day for a week
or ten days. Make any changes or corrections to the plan, rewrite
portions that seem unclear or weak. Finally, have each chapter
reviewed by an attorney and an accountant. It would also be a
good idea to have it reviewed by a business consultant serving
your business field. After these reviews and any last-minute
changes, the report will be ready for its final typing.
Hire a professional typist or word processor to type the entire
plan on ordinary white bond paper. Make sure you proof-read it
against the original. Check for and correct any typographical
errors, then re-read it through for clarity and the perfection
you desire. Now you're ready to have it printed and published
for whatever use you have planned: for distribution to your partners
or stockholders, as the business plan for putting together a
winning financial proposal, or as a business operating manual.
Take it to a quality printer in your area and have three copies
prepared. If it was typeset on
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a computer, print your copies on a laser printer for greater
clarity. Have a copy professionally bound if you wish, place
one in a file for safe keeping and as a master from which to
make any future copies, and one to use to periodically reassess
your goals or use as a daily and weekly guide to business operation.
Make the plan as useful
a tool as possible for complete business success. Now you can
relax, take a break, and feel good about yourself. You have a
complete and detailed business plan with which to operate successful
business of your own. You have developed a plan you can use as
the basis for any financing proposal you may want to submit.
You have formulated a precise road-map for the attainment of
real success, marking out the milestones to pass on the way.
Congratulations. Best wishes for the total fulfillment of all
your hopes, dreams, and ambitions!
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