Have A Plan!
Become A Successful Digital Entrepreneur, Session 4 (Deep Dive Business Plan Outline)
In this session we will identify methods and procedures to assist in creating an Internet business plan.
Let’s get started!
Create Your Business Plan Outline
Your business plan represents the crucial foundation of your company. Regardless of how big or small this company is going to be, you need to put together some sort of plan for your future.
In the end, you want to create a roadmap that will accomplish two things:
1. It’s going to be specific enough to help you define what needs to be done over the next year, two years, or even 3-5 years.
2. It’s going to be open-ended enough to help you make adjustments no one could have accounted for earlier on.
Establishing a plan which incorporates both of these things is not impossible, or even that difficult. Nonetheless, it is still something that needs to happen, before you can move on to other aspects of establishing and launching your business.
Creating A Viable Business Plan Outline
Understand at this point, you’re simply crafting an outline. It needs to have some measure of detail, but it doesn’t have to account for every single little thing. You want to have something that will make it easy to define the next few steps.
A good business plan outline is going to offer the following:
• Executive summary: This element is going to summarize the plan as a whole.
• Company description: With this, you’re going to not only focus on what your company is going to do, but how your company is different from similar entities.
• Market analysis: Research your industry. This should include your marketing and your competitors.
• Organization/management: This is going to come down to discovering the optimal organization and management structures for your company.
• Service/product line: This is going to describe your product or products. What are the benefits? How about the lifecycle?
• Marketing/sales: Sales strategies and marketing plans are going to be discussed at this point.
• Funding: How much are you going to need? How is the money going to be spent? Transparency is key in this arena.
• Financial projections: If you do need funding, projections are going to be important.
• Appendix: Resumes, permits, and leases are just a few things one would include in an appendix, if this needs to be part of your business plan.
Different businesses are going to utilize the above facets differently. Some businesses will be able to disregard some of those facets entirely. This is something you will discover for yourself, over the course of putting together a plan for your business.
BUSINESS PLAN GUIDELINES
New and existing businesses benefit from preparation of a business plan.
The business plan is intended to:
- Create and structure the project to ensure you have identified and considered all relevant factors;
- To anticipate, plan for and resolve any potential difficulties.
- Convince lenders and investors that you are in control of the project and that their money will be safe with you.
- Serve as an operating guide as you turn your idea into a viable business.
- Furnish a standard against which to judge future business decisions and results.
Give your plan a businesslike appearance by using high quality bond paper;
Place your completed plan in a vinyl or cardstock binder or a 3-ring notebook binder.
REFINE YOUR BUSINESS PLAN
The final draft of your business plan outline should clarify your business type to those who will review your plan.
1. TO LOAN OR INVEST CAPITOL
For Bankers
Bankers want assurance of timely amortization of loans.
Assuming you will prepare the plan to present to lenders, include:
- Amount of loan
- How the funds will be used
- What will this accomplish (how will it make the business stronger?)
- Requested repayment terms (number of years to repay). You will probably not have much negotiating room on interest rate, but may be able to negotiate a longer repayment term, which will help cash flow.
- Collateral offered, and list of all existing liens against collateral
For Investors
Investors have a different perspective. They are looking for dramatic growth, and they expect to share in the rewards.
- Funds needed short term
- Funds needed in 2 to 5 years
- How company will use funds, and what this will accomplish for growth.
- Estimated return on investment
- Exit strategy for investors (buyback, sale, or IPO)
- Percent of ownership you will give up to investors
- Milestones or conditions you will accept
- Financial reporting to be provided
- Involvement of investors on the Board or in management
2. Refine for Type of Business
Manufacturing
- Present production levels
- Present levels of direct production costs and indirect (overhead) costs
- Gross profit margin, overall and for each product line
- Possible production efficiency increases
- Production/ Capacity limits of existing physical plant
- Of expanded plant (if expansion is planned)
- Production/ Capacity limits of existing equipment
- Of new equipment (if new equipment is planned)
- Prices per product line
- Purchasing and inventory management procedures
- Anticipated modifications or improvements to existing products
- New products under development or anticipated
Service Businesses
Service businesses sell intangible products. They are usually more flexible than other types of business, but they also have higher labor costs and generally very little in fixed assets.
- Prices
- Methods used to set prices
- System of production management
- Quality control procedures
- Standard or accepted industry quality standards
- How is labor productivity measured?
- What percent of total available hours are actually billed to customers?
- Breakeven billable hours
- Percent of work subcontracted to other firms
- Profit on subcontracting?
- Credit, payment, and collections policies and procedures
- Strategy for keeping client base
- Strategy for attracting new clients
High Technology Companies
- Economic outlook for the industry
- Does company have info systems in place to manage rapidly changing prices, costs, and markets?
- Is company on cutting edge with its products and services?
- What is the status of R&D? And what is required to:
- Bring product/service to market?
- Keep the company competitive?
- How does the company:
- Protect intellectual property?
- Avoid technological obsolescence?
- Supply necessary capital?
- Retain key personnel?
- If your company is not yet profitable or perhaps does not yet even have sales, you must do longer-term financial forecasts to show when profit take-off will occur. And your assumptions must be well document and well argued.
Retail Business
- Company image
- Pricing:
- Explain markup policies.
- Prices should be profitable, competitive and in accord with the company image.
- Calculate your annual inventory turnover rate. Compare this to industry average for your type store.
- Customer service policies: should be competitive and in accord with company image.
- Location: Does it give the exposure you need? Is it convenient for customers? Is it consistent with company image?
- Promotion: methods used, cost. Does it project a consistent company image?
- Credit: Do you extend credit to customers? If yes, do you really need to, and do you factor the cost into prices?