Start or Grow a Company with an Effective Plan
Entrepreneurs Can Create a Business Plan Cheaply with PC Software
Nov 9, 2009
The structure of the business can be a single proprietorship, a partnership or a corporation. But whatever its structure or size, the operator intends to use the plan for arranging the financing to continue in business or commence a new venture. This article describes the preparation of an effective plan for a small business, prepared by an operator who probably has run its affairs individually, or jointly, in an informal arrangement with others.
Probably the schedule and scope of products or services offered for sale have been dictated by resources available. When the proprietor senses he or she needs more capital to operate or expand, it’s time for a business plan.
At the other end of the spectrum, a visionary who sees a market for a completely new product or service also needs an effective business plan to raise money.
Walter B. Wriston Followed His Business Plan Every Day
Walter B. Wriston, the ex-chair of Citicorp/Citigroup a few years back, in a speech before securities analysts said, “I use my business model every day, for I simply do not know any other way to run a business.”
One of the most innovative bankers of the 20th century depended on a business plan constantly. He must have used a good one, for he was instrumental in developing Automatic Teller Machines (ATMs) and Certificates of Deposit (CDs). He also helped create interstate banking regulations. Presidents Kennedy, Nixon and H.W. Bush each named him to an advisory position.
Business Plan Should be Designed for the Job
Business plans can vary from simple outlines of an entrepreneur’s view of his or her business prospects, and how to achieve them, to a full-blown Wall Street investment study. But whatever the scope, they must all satisfy the curiosities of the intended audience as to the prospects for making money in a legitimate way and the risks involved.
They can be displayed as printed copies, power point slides, interactive email or PDF, just so they are not scribbled on a napkin; although, the first draft might begin there, spontaneously, over lunch or dinner.
Fashion the Plan for the Pace of Intended Audience
The importance of knowing the audience for a plan is paramount. Overwhelming an unsophisticated investor with high-toned statistics and terminology or underwhelming a sophisticated one with grammar school prose could lose prospects, on the very first page.
Think of the plan as a selling tool. A well-developed one should be attractive in style, use active voice as much as possible and be written in a clear precise vocabulary. If so, the plan accomplishes two positives for an entrepreneur:
(1) It provides clarity through step-by-step planning of goals, problems and financial potential of the enterprise, enabling the businessperson to realistically appraise the idea in all facets and present it to others.
(2) It is cheaper than one professionally done.
Excellent Do-It-Yourself Templates are Available
Although there are excellent professional preparers, a planner can save money by learning how to do it in-house, using some very slick effects available in Windows MS Office or other software. Professional design and preparation can cost from $250 up to several thousand dollars. While certainly reasonable, considering its importance, the outlay represents money that could be used in launching the business. (See exhibit below for a cost schedule of a professional business plan consultant.)
Microsoft Office provides templates of business plans covering many purposes. Besides start-up plans, a click of the mouse can bring forth templates for an established business plan, marketing plan, and Web site plan, for example. Also, the Small Business Administration (SBA) displays online a very thorough outline for a model plan.
Create a Winning Plan with Ten Building Blocks
The following ten building blocks for preparing a starter’s business plan are a blend of several sources found on the Web, and referenced below.
However, first prepare a list of prospective investors, carefully screened as persons interested in financial gain and with reasonable expectations. In this regard, make certain to communicate the time frame of the investment, in the formal plan.
- Outline the goals and objectives in an Executive Summary of 300 or so words, prepared last but appearing at the beginning.
- Include a brief account of how the business began.
- Explain the business structure the company will take, whether a single proprietorship, partnership, limited partnership, or corporation.
- Outline the main goals for the company, making them realistic and transparent.
- Show biographies of the management team, if the scope is that ambitious.
- Discuss the service or product to be offered, with illustrations if available.
- Go over the potential market for service or product(s), using industry trade data, Census Bureau reports, library research, Chamber of Commerce information, internet sites, etc.
- Focus on the strategy to market product(s) or service, based on past experiences, consumer polls and success of similar businesses.
- Tabulate three to five years of financial projections, including balance sheet, cash flow statement, income statement and charts, prepared as simply as possible on Excel or another spreadsheet program, and included in an appendix.
- Conclude with an exit strategy, which is important to investors with different investment horizons and tax strategies.
Although a complete and well-organized model is essential, in the final analysis the entrepreneur is the best salesman of the project. His or her integrity and enthusiasm, tempered with transparency as to what investors can expect financially, is the icing on the cake of a solid business plan.
References:
US Small Business Administration (SBA)
Howard University Small Business Development Center
eHow.com
myownbusiness.org
AT&T smallbusinessInsite
businessconfidant.com
The writer is a Chartered Financial Analyst (CFA).
 |
 |
 |
 |
 |
