Your SlideShare is downloading. ×
This Special Report was developed from years of personal experience and in
talking and interacting with Angel Investors an...
To subscribe to Martco Biz Bits and Blog visit
http:// www.martcoassociates.com




Copyright 2008, Martco Associates a di...
2. Start with an Outline. This will be your road map to follow in
   developing your plan. You can find a sample outline a...
easier and better than in the past. Who is your current customer and
   who are the customers you are trying to add? What ...
followed and substantiated. If your plan is for a new business, do not
     over estimate. Many Angel Investors believe th...
so you adjust. That is how you need to look at and work with your
      Business Plan. If you keep your plan up to date, y...
decision-making process so that your business stays focused on
       achieving its long-term goals. How are you doing? Ar...
only on the financial numbers but they will validate the market and
        market size in your claims.

   20. 4 C’s of L...
20 Things You Need to Know when Writing a Business Plan
Upcoming SlideShare
Loading in...5
×

20 Things You Need to Know when Writing a Business Plan

2,506

Published on

Helps you to understand some of the MUST Do's in writing a business plan to secure outside funding

Published in: Business, Economy & Finance
0 Comments
1 Like
Statistics
Notes
  • Be the first to comment

No Downloads
Views
Total Views
2,506
On Slideshare
0
From Embeds
0
Number of Embeds
1
Actions
Shares
0
Downloads
61
Comments
0
Likes
1
Embeds 0
No embeds

No notes for slide

Transcript of "20 Things You Need to Know when Writing a Business Plan"

  1. 1. This Special Report was developed from years of personal experience and in talking and interacting with Angel Investors and Venture Capitalists. It is not designed to be the end all of Business Plans, but does give you some insight on what is expected of a Business Plan. About the Author Tom Martucci has been in his own business since he was 28 years old. He has started five companies and has built sales up to $10 million in one of the companies. He has been coaching and consulting clients for four years and has a very narrow niche on the type of clients he works with. The clients have to have sales of $10million or less and also have less than 20 employees. Tom’s philosophy is simple and direct. He feels you have to walk in a person’s shoes in order to understand and assist them in accomplishing their goals and objectives. Tom has developed many different Business Plans for his own companies, and Martco Associates has done many other plans for existing businesses and startup companies. He has made presentations to Venture Capitalists and Angel Investors on a one to one basis and in front of groups of 50 to 765 Angel Investors and Venture Capitalists on his own behalf and on the behalf of his clients. Note: You may reprint any item from this Special Report in your own print newsletter, Ezine, Blog or on your website as long as you reproduce the report in its entirety. You are welcome to pass this report on to your customers, friends and associates.
  2. 2. To subscribe to Martco Biz Bits and Blog visit http:// www.martcoassociates.com Copyright 2008, Martco Associates a division of Jancris International Top 20 Things to Know When Writing a Business Plan Overview The Business Plan is a planning process and document that every business (new or existing), regardless of size, needs to go through. It becomes a road map on how you plan to do business over the next year or two. Business Plans do not have to be 30 pages in length, but they should be complete and well thought out. If you develop and work your plan, you will be heading in the right direction to a successful business. However, it should be updated yearly and reviewed with your key staff quarterly. I would always have a current and updated copy of the Business Plan to review with my current lenders or potential new lenders. So much of what a lender or new lender wants to know is in the plan. If nothing else, we would be able to present ourselves in a professional manner. Most Business Plans are done when a new company is trying to find outside financing or an existing company is looking for additional financing. 1. A plan is critical to operating a successful business! Outsourcing the writing of your Business Plan is not the best approach. You are the expert of your business. By doing the Business Plan you need, you may uncover different strategies and understand your competition better. You will determine what is realistic based on your company’s strength and weakness in personnel and finance. If you are going to use it to try to secure financing, you no doubt will be challenged on some assumptions and only you can defend them. Yes, outsource the physical typing, proofing and layout of your plan and have someone such as your business coach or mentor go through it to get a second or third opinion, especially if you are seeking funding.
  3. 3. 2. Start with an Outline. This will be your road map to follow in developing your plan. You can find a sample outline almost anywhere or go to: www.martcoassociates/businessplanoutline to see one we have used for some of our clients. 3. Your Plan will take more than few hours to complete! The business planning process is very time-intensive. You must be prepared to spend adequate time researching, planning and preparing your Business Plan especially the first time. Get your key people involved in developing the plan. They are the ones who are going to have to help you implement the plan. I know you are saying to yourself this is a lot of work and lot of my key personnel’s time to develop a plan. Step back for a moment, you should be developing a sales and marketing plan for your business each year. This is one of the key elements of a Business Plan and key to a successful business. You have to determine if you can fund your business, your marketing plan, new services, or products and you should do a yearly financial plan. You should already know your competitors and your market, so you have completed the hardest section of the plan. We can go on and on, but I think you get the point. You no doubt are doing this either on a notepad or in your mind, etc. All you need to do is formalize those thoughts and notes. After you do each section, you will need to, as I say, “Make it look pretty” and correct the spelling and grammar. That aspect of the plan can easily be outsourced. 4. Answer the key questions: who, what, when, why and how much! Regardless of whether you are seeking outside financing or not, you should be asking this question constantly on all the issues in front of your business. The Business Plan should address these questions in every aspect of your business, then you are on your way. 5. Research and Then More Research! Whether the plan is for your ongoing business or you are trying to obtain additional financing, research every aspect thoroughly. The internet has made this so much
  4. 4. easier and better than in the past. Who is your current customer and who are the customers you are trying to add? What is the size of your targeted market and is it realistic? The plan needs to tell the story, so research all components and write a comprehensive, detailed plan. If you are going to use your Business Plan to obtain financing, the completed plan should "tell the story" of your business to a potential lender. The plan should serve as a stand- alone document, meaning that all business issues are addressed. 6. Sales and Marketing! I believe that this is the most important part whether you are seeking funding from a lending institution, Angel Investor or Venture Capital financing. If you do not have a clear and specific sales and marketing plan, the chances for the business to fail increase tenfold. I have always believed “nothing happens until something is sold”. If you are an ongoing business, the need for a well thought out sales and marketing plan is as critical to your success as financing. At a conference where panels of Angel Investors and Venture Capitalists were discussing Business Plans, three out of the four panelists agreed that the sales and marketing of a plan is a major factor in their decision. If that is not rock solid, they go no further in reviewing the plan. 7. Know your competition. If you are trying to fund a new business, the quickest way to kill any opportunity of seeking outside funding is to say you have no competition. Every company and every idea has competition. Research your competition and understand their strengths and weaknesses. It will demonstrate to you where opportunities lie and areas to avoid. You should not worry about your competition or stress over what or how they do things. If you have a well thought through plan that is funded, then worry about your business but always keep an eye on your competitors 8. Prepare a financial plan. If you are an ongoing business, this is a critical section. You have the history which is part of your plan. Use historical averages. The projections should match yours. Is your growth within the historical growth you have had in the past or is it much greater? If so, the reasons for the growth need to be easily
  5. 5. followed and substantiated. If your plan is for a new business, do not over estimate. Many Angel Investors believe that all Business Plans are overzealous in their projections and under estimate their expenses. Taking the time to collect good and accurate cost estimates improves your chances for success. Determine all possible costs for starting and/or operating your business. Make a list of one-time and recurring costs. 9. Do not make them search or ask the amount of funds needed if you are using your plan to obtain financing. If you are going to use your plan to apply for a start-up loan or growth funding through traditional sources, specifically state the amount of funds requested, planned use of those funds, and demonstrate how those funds will be repaid. It is also important to state the amount of your planned owner's cash contribution to the project as well as identify the collateral available to secure the loan. If you are not willingly to gamble on your idea, why do you think someone else will? Nobody said being in your own business is for people with a weak heart or stomach. If you are seeking funding from Angel Investor or Venture Capitalists, you need to show them a return on their investment in the range of five to ten times their investment and an exit strategy. Usually they really want to be out after three to five years. 10. Revise and modify your plan. This is a flexible document. If you are a new business seeking funding as you present your plan, continue to research. You may discover that you need to make some changes. Keep the plan current and fresh. If you are an ongoing business, things happen that are unpredictable and totally out of your control that may cause you to adjust or change your plan. That is why you need to review the plan each quarter. So often I tell my clients that a Business Plan is like a road map or in today’s terminology a GPS. In getting from point A to Point B, you can go many different ways and you may encounter detours along the way
  6. 6. so you adjust. That is how you need to look at and work with your Business Plan. If you keep your plan up to date, you will always be ready to review it with a potential outside investor or funding institution. 11. Discuss your own and other key executives’ experience and skills in detail. Your business idea or current business strategy may be a viable one, but without good management skills to execute it, your chances for success are limited. Past experience within the industry is valuable and gives you credibility. Thoroughly describe your past experience with the business. Your key executives’ experience should also be detailed. If you are new to the business or do not have key executives, discuss your plans for training and hiring key personnel, etc. The investor looking at your company to invest in is really looking at you and your key management team. They see that as a critical element of the business because they are investing in you and your team to execute the plan. 12. What are the strengths and weaknesses of your business? Every business, new or old, has strengths and weaknesses. The preparation of a well thought out Business Plan will easily expose those weaknesses to you. You need to address what the corrective action is to solve these weaknesses. You need to determine how you can exploit your strengths to make your company better. I think determining your strengths and weaknesses should be one of the first things you do in preparing your Business Plan. It will help you to develop your sales and marketing plan and your financial plan (do you need to add personnel to correct a weakness). 13. Use your plan to benchmark actual performance and compare to your expectations. Your completed plan is a valuable tool in the management of your business. Review the progress and performance of your business against expectations and assumptions. Modify your plan when appropriate. Use your plan to guide the
  7. 7. decision-making process so that your business stays focused on achieving its long-term goals. How are you doing? Are you accomplishing your sales and financial objectives? 14. Don't assume you are required to use software. If your Business Plan is for internal use only, do not feel that you have to rush out and buy software. Use your Word and Excel to formulate a plan. If you are going to look for outside financing, the use of software is a good investment. We feel BP Plans.com is the best. 15. Forget those boilerplate plans. These are the plans you see offered for a variety of businesses. All you need to do is insert your name and data. Use the boilerplate plan outline or the outline we provide to you as a guide. It does not usually address your specific needs. If you are seeking outside financing, without a doubt the person(s) reading it will know very quickly if it is a “boilerplate plan” and it will be dealt with accordingly (trashed). 16. Misspelling and grammatical errors are killers. Misspelled words and grammatical errors point to a lack of detail. Use the spell and grammar check on your computer. If you are going to use your Business Plan to seek outside financing, definitely hire a proofreader. 17. Don't assume the reader of your plan is an expert in the industry. Typically, readers of Business Plans see many throughout the course of the year. Most likely, a lender or other reader will not be an expert on your business type. Therefore, you must explain all technical/operational details as well as avoid unnecessary use of industry jargon. It has to tell the story in an easy to understand way and needs to be all inclusive. Do not hide or leave out relevant facts. It will demonstrate that you did not do your homework. 18. Do Use Milestones. If this is a start-up, indicate what has to be done by a certain date and by whom in order to accomplish the objectives set out in the plan. 19. Due Diligences! If you are seeking outside funding from a Venture Capitalist and/or Angel Investor, realize they are very savvy business people. They will have an associate(s) perform “Due Diligence” not
  8. 8. only on the financial numbers but they will validate the market and market size in your claims. 20. 4 C’s of Lending – Small businesses securing funding or increasing credit lines need to have a well thought out plan. However, it always comes down to the 4 C’s of Lending • Character - what kind of “Financial Citizen” is this person or company • Capacity - ability to generate revenues to pay back the loan or give a significant return on their investment • Capital Assets - does the business have any equipment, fixtures, etc. that could be liquidated to repay the loan • Collateral - what cash and assets do you have that will be pledged to repay the loan? Small business owner seeking a loan in today’s world will without fail have to personally sign for the loan. What totally shocks me is how much time and effort small business owners put into a Business Plan and after it is completed and used to secure funding, the plan goes on the shelf never to be looked at again. On our website www.martcoassociates/articlestools in the Special Reports section you will find a multitude of articles and tools that can give you more insight on Business Plans. Martco Associates is a consulting and coaching firm that specializes in small businesses under $10 million, less than 20 employees and startup companies. Tom Martucci has been in his own business most of his adult life. This represents the size of the businesses he has owned and has had hands on experience with. Tom Martucci has worked on and developed hundreds of Business Plans and presented Business Plans to numerous Angel Investors and Venture Capitalists for his own firms and as a consultant. He can be reached at tmartucci@martcoassociates.com, To continue to get ideas to help you in your business sign up for Martco’s “Biz Bits”

×