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  The Second Step: Writing the Business Plan Why is a Business Plan Needed? A quality business plan is an important key to convincing investors that the management team has the experience to build a successful enterprise. The plan also provides measurable operating and financial objectives for management and potential investors to measure the company's progress. Executive Summary Business plans should be summarized into a short two to three page synopsis called the executive summary. The summary is used to capture the essence of the plan and generate interest. It is the most important section of the business plan and should be written last, to ensure that only vital information is included. Less than 5% of the hundreds of plans that venture capital firms received are reviewed beyond the executive summary. Most often, because the summary is not written convincingly or clearly enough. The summary must stand out and be noticed, quality is key. Effort taken in researching investor preferences and preparing a quality summary will set the plan apart and assure that it receives full consideration. Business Plan DOs & DON'Ts - Do be brief. Begin with a two to three page executive summary. Limit the body of the plan to seven to ten typewritten pages. - Do let the reader know, early on, what type of business the company is. - Do state the company's objectives. - Do describe strategy and tactics to reach those objectives. - Do cite clearly how much money the company will need, over what period of time and how the funds will be used. - Do have a clear and logical explanation about the investor's exit strategy. - Do be realistic in making estimates and assessing market potentials. - Do be specific. Substantiate statements with underlying data. - Do summarize and structure properly. - Do enclose the proposal in an attractive, but not overdone, cover. - Do provide extra copies of the plan to speed the review process. - Don't make vague or make unsubstantiated statements. - Don't use highly technical descriptions of products, processes or operations. Executive Summary Outline - Company Overview and Products & Services Product description, company profile, market/industry it serves, brief history, milestones completed, future plans, vision, profile end users, status of patents, copyrights and trade secrets, beta product test results. - Management Team and Ownership Team Key members' resumes, emphasize proven track record, note experience and talents in the key disciplines: technological development, marketing, sales, manufacturing and finance, note unfilled positions, list board of directors/advisors. - Market Analysis and Marketing Plan Be specific, focus on believable verifiable data, and analyze company's industry and potential customers. Industry data including growth rates, size of market, recent advances, government regulations, future trends and customer research. Sell your company/product, include pricing, distribution, and promotion. - Operations and Competition Detail location and size of facility. Justify location, including factors such as: availability of labor, accessibility of materials, proximity to distribution channels, and tax considerations. Describe equipment and facilities. Include plans for financing. Include prototype production data, including budget and timetable. Discuss competition, include how and why the company will beat competition. Anticipate competitive response to product. Analyze competition based on price, quality, and warranties. - Funds Requested and Uses State the amount of money required and be specific in the description of the uses of the funds sought. Avoid such general terms as "working capital". - Summary of Five Year Financial Projections Summarize key financial projections through break-even. Only projected revenues, net income, assets and liabilities should be listed. Note additional expected rounds of financing needed. Continue to Step 3 of 3 > |
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