by
Vadim
Kotelnikov, Founder,
The first-ever BUSINESS e-COACH for Innovative Leaders,
1000ventures.com
"A business plan is a document, a snapshot, of
an ever-changing strategy. Change is a certainty."
- John L. Nesheim
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The Business
Plan is not Just a Plan, but a Selling Document
Only one out of 20 business
plans are read by prospective investors beyond the executive summary and
only 6 out of 1000 business plans get funded in average. The quality of the
business plan is crucial for winning attention of investors, especially for
a first-time entrepreneur who has no track record in managing own business.
It is not only important for a business plan to have the right content, but
it also must be organized into logical and clearly defined sections and
presented in a way that is informative and maintains readers interest.
Your business plan should:
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provide a
roadmap showing how your company plans
to achieve its goals
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provide Strengths-Weaknesses-Opportunities-Threats (SWOT) analysis
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discuss your company's plans for the near and
long-term future.
In writing your plan, you
should keep it as short as possible while ensuring that you cover all the
important topics in sufficient detail to substantiate your proposal.
Investors only give you
one chance. Address every key aspect of your plan: value proposition,
financials, deal structure, marketing strategy, valuation and exit strategy
- everything investors consider when they decide which projects to invest
in.
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Chapters |
Content |
App.
length pp.
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Executive Summary
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The executive summary is the single, most
important part of the business plan. Describe the market opportunity, your
product to harvest the market opportunity, your strategy for
addressing and selling to that market, financial results in the first years
of operation, long term objectives, and the key personnel. This is a
commercial of your business plan as investors will read it first. It
should be written last ensuring that only vital information is included in
most clear and convincing way. As
a general rule, your first paragraph should include your business name, what
it sells, where it is located, and the nature and purpose of the plan. You
might also refer to the keys to success, or at least summarize them briefly.
The outline of the executive summary should
include:
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Disclaimer page
(registration number; return instructions; non-proprietary)
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The Purpose of the Plan
(attract investors; document an operational plan for controlling the
business; test the financial feasibility of a business concept)
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The Company (the needs your company
will satisfy; the products or services you will offer)
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Market Analysis (the characteristics and the size of your
target market)
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Product or Service Research and Development (major
milestones; ongoing efforts)
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Marketing and Sales Activities
(marketing strategy; sales strategy; keys to success in a competitive
environment)
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Organization and Personnel (key
managers and owners; key operations employees)
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Financial Data (funds required and their use; historical
financial summary; prospective financial summary, including brief
justification for sales projections; valuation and deal structure;
valuation summary and methods used)
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2-3 |
Background |
Describe the market
recent developments, market trends and the market niche for your
product. Your business plan must demonstrate clearly the commercial
viability of the proposed venture. |
1 |
Business Concept |
Provide detailed
description of the products or service
and implementation arrangements for the targeted types of customers:
-
if you are selling a product: key suppliers and
your terms and arrangements with them
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If you are selling a service: which services
will be provided at the business location and which will be delivered "in
the field"
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1-2 |
Market Analysis |
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Market research
(know
your customer, describe your target customers, provide an industry analysis and current
trends; market size, market segmentation, the market share you will capture, seasonality, unique
aspects)
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Competitive factors
(describe your competitors: list competitors by name, location, and their
strengths and weaknesses; your
competitive strategy - how you will succeed against them; how they will
react to your entry into the market)
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3 |
Objectives and
Strategies |
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General
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Mission, e.g. to
improve certain situation
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Objectives, e.g. to
develop products satisfying specific needs of your target customers
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Keys to success
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Marketing
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Objective, e.g. build a customer base to
support your financial management objectives
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Strategy,
including description of the "six P's" for your business:
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Product: how you will
design and package your product/service
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Price: how you will price your product/service
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Place: how products (and related services) are
distributed to the customer
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Positioning
tactics: explain how you are planning to position your product or service
against your competitors in your prospects' mind to retie the connection
that already exist
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Promotion or
marketing plan: what media and marketing methods you will use to
generate awareness and interest about your product/service; include
examples of your promotional materials (brochures, print ads, copy for
radio ads, calendar of special/regular promotional events)
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People: who will be
responsible for marketing your product/service
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Operations
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Objectives, e.g. to win customers by
offering superior services
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Strategy
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Legal structure and why you chose it; include
legal/governing documents (articles of incorporation and by-laws for
corporation, partnership)
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Management and personnel
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who the key managers/owners are and what
relevant expertise and background they bring to the business; include
synopsis (background, relevant employment and professional experience,
significant accomplishments, and educational background of each member);
detail rsums may be provided in the appendix
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describe non-management positions,
responsibilities/qualifications, personnel policies
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outside advisors (board of directors; legal council; accountants; bankers;
consultants)
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Customer service: procedures and policies
regarding your work and how you will treat customers
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Location and operations
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your facility, including a layout, description
of business image, hours of operation
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operations plan: how you will deliver your
product/service to the customer, from start to finish (who does what
tasks, how long it takes, etc.)
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renovations and equipment list (including
prices and condition - new or used)
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taxes to be paid, licenses required, and
insurance needed
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Key people: who will provide accounting and
legal services, technical assistance and support
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Financials
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Objective, e.g. generate certain gross
sales during the first year of operation
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Strategy
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Risk Management
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Objective, e.g. identify and act to
minimize risks to your company
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Strategy, e.g. to develop a responsive
system addressing the specific issues
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10-15 |
Financials |
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3-5 |
Technology / System
Summary |
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Innovativeness
(describe innovative aspects of
your technology with relation to the market needs)
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System Components
(describe major components of
the technology/system and how they satisfy specific customer requirements)
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Manufacturing
Methods
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Competition
(compare your development program with existing technologies)
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Intellectual Property Rights
(describe if your business is based on a proprietary technology and if the
proprietary position is adequately protected)
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2 |
Company Organization |
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Ownership
at the initial stage and plans for the near future
(see
slide
presentation)
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Management:
investors invest in people rather than products, so sell the management
team. Describe the management team
at the initial stage and plans for the near future, including coverage for
the owners unforeseen absence (sick time, etc.) during critical periods
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Location
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1 |
Appendices |
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Issues list
(acknowledge barriers to success - list important issues and solutions to
these issues)
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Issue,
e.g. the owner has management/technology
expertise, but no experience as a business owner; the proposed business
concept is unproven; equipment damage risk; longer than expected time to
the market; human resources shortage risk.
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Solution
to each issue, e.g. use experienced consultants; take training courses;
conduct preliminary field testing; sub-contract certain work; obtain
insurances and develop backup systems; limit number of projects and/or
develop contingency coverage partnerships.
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Marketing/promotional mechanisms
(list mechanisms you are planning to employ for initial marketing of your
product and provide their structure and brief description)
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Current
Balance Sheet
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Assets
(cash, bank accounts, other assets)
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Liabilities and
Equity (credits, other
liabilities, equity)
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Income Statement
(list all your expenses incurred so far and income generated)
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Startup Costs
(provide breakdown per cost components
e.g. business license, corporation filing, legal fees, equipment, office
expense, supplies, advertising, training, utilities, taxes, miscellaneous)
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Glossary
(provide definitions of the special terms used in the business plan)
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Rsums
of the owner and
the key members of the management team
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5-8 |
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