Business Plan Guidelines and 10 ways to ruin it

Writing a Business Plan will probably take a lot of time. Up to 100 hours or more is not uncommon for a new business that requires a lot of research.

A typical plan will have three sections. Section one is a written section describing Management and Marketing aspects of the business. Section Two includes financial projections. Section Three is supplemental information.

A short (3-5 pages) Executive Summary is often added at the beginning of more complex business plans.

• Section One should be thorough, but concise and to-the-point. Use headlines, graphs and "bullets" to improve readability. Length of this section is usually 10 - 20 pages.

• Section Two describes in numbers the outcome of your business strategies and plans. Your financial projections should be based on facts and research, not “wild guesses.” Be prepared to justify your numbers.

• Section Three contains supporting information to reinforce the first two sections. This section’s contents will vary with your type of business. Owners should be very involved in the planning process. Hiring someone to do it or delegating it to someone who is not a key member of the company will result in an inferior plan.

No plan (or a poor plan) is a leading cause of business failure. You can improve your chances of success with a good Business Plan.

Ten Ways to Ruin Your Business Plan

These errors in business plan preparation and presentation will undermine the credibility of the plan and hurt your chances to receive funding:

1. Submitting a “rough copy,” (with coffee stains and typos) tells the reader that management doesn’t take the planning process seriously.

2. Outdated historical financial information or unrealistic industry comparisons will leave doubts about the entrepreneur’s planning abilities.

3. Unsubstantiated assumptions can hurt a business plan; the business owner must be prepared to explain the “why” of every point in the plan.

4. Too much “blue sky” - a failure to consider prospective pitfalls - will lead the reader to conclude that the idea is not realistic.

5. A lack of understanding of financial information. Even if someone else prepares the projections, the owner must be able to explain them.

6. Lack of specific, detailed strategies. A plan that includes only general statements of strategy (“We will provide world class service and the lowest possible price.”) without important details will be dismissed as fluff. Especially important if the business plan is prepared for a lender:7 No indication that the owner has anything at stake. The lender expects the entrepreneur to have some equity capital invested in the business.

7. Unwillingness to personally guarantee any loans. If the business owner isn’t willing to stand behind his or her company, then why should the bank?

8. Starting the plan with unrealistic loan amounts or terms. Do your homework and propose a realistic structure.

9. Too much focus on collateral. Even for a cash-secured loan, the banker is looking toward projected profits for repayment of the loan. Cash flow should be emphasized as the source of repayment.

OUTLINE OF SAMPLE BUSINESS PLAN
I. Executive Summary
[This is a short summary of the contents of the Business Plan, so it might be easier to write Section
I after completing all the other sections.]
A. Business Concept – what you are planning to do, the what of your business
B. Current Profile
C. Key Success factors
D. Financial Needs, Sources and Projections
II. Company Description
A. Vision Statement, Mission and Values
B. Primary, Secondary Objectives
C. Location, Physical Facilities
D. Organizational Structure
III.Market Analysis
A. Overview of Business Landscape (Local, National, International)
B. Changes in Your Industry
C. Market Segments
D. Target Market, Target Customers
E. Customer Characteristics
1. Demographics (Age, Gender, Education, Familial Structure, etc.)
2. Income and Spending Habits
3. Geographical Location
4. Current Behavior and Trends that Will Drive Future Behavior
5. Other Unique Attributes
IV. Competitive Analysis
A. Primary Competitors and Nature of Competition
B. Competitive Products/Services
C. Key Competitive Strengths and Weaknesses
D. Key Industry Threats [to Your Company]
The Basics on How to Develop a Business Plan: NCCED – Page 3
V. Products and Services
A. Product/Service Description
B. Pricing and Positioning
C. Growth Possibilities
VI. Strategy
A. Key Competitive Capabilities
1. Company strengths or market niches?
2. What is unique about your product or services?
3. Investors/Supporters/Members/Employees
4. Technological Efficiencies
B. Key Competitive Opportunities
1. Products or services not currently available
2. New or unmet needs of target customers
3. New or emerging issues, trends or innovations
4. Prospective B2B Networks, PublicPrivate
Collaborations, etc.
5. Technological Efficiencies
C. Implementation Strategies
1. Seasonal and/or Cyclical Considerations
2. Program, Policy and/or Regulatory Considerations
VII. Marketing and Projected Growth
A. Company/Product/Service Branding
B. Marketing and Sales Strategies
C. Advertising
D. Customer Promotions/Incentives
E. OTHER Considerations
VIII. Operations
A. Organizational Structure
B. Key Personnel
C. Product/Service Delivery/Cycle
D. Customer Service Plan/Membership Services
E. Quality Assurance/Emergency Preparedness
F. Facilities
IX. Financials
A. Assumptions and Comments
B. Starting Balance Sheet
C. Profit and Loss Projections
D. Cash Flow Projections
X. Appendix/Supporting Documentation
A. Market Studies
B. Resumes of Partners
C. Signed Contracts
D. Articles
E. OTHER

references

1. http://www.ncced.org/documents/BusinessPlanArticle.pdf

2. http://www.va.gov/vetbiz/library/busplan.pdf

3. http://www.unctad.org/en/docs/iteiia5_en.pdf