Business Coach |
Start-up Business Plan:
Structure and Content |
by
Vadim Kotelnikov, Ten3
 |
"A business plan is a document, a snapshot, of
an ever-changing strategy. Change is a certainty." (John L. Nesheim)
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. 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. |
Chapters |
Content |
App.
length pp.
|
Executive Summary |
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. The outline of the executive summary includes
|
2.0 |
Background |
Describe the market
recent developments, market trends and the market niche for your
product |
0.5 |
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
-
If you are selling a service: which services
will be provided at the business location and which will be delivered "in
the field"
|
0.5 |
Market Analysis |
-
Market research
(describe your target customers, provide an industry analysis and current
trends; market size and the share you will capture, seasonality, unique
aspects)
-
Competitive factors
(describe your competitors: list competitors by name, location, and their
strengths and weaknesses; how you will succeed against them; how they will
react to your entry into the market)
|
3.0 |
Objectives and
Strategies |
-
General
-
Mission, e.g. to
improve certain situation
-
Objectives, e.g. to
develop products satisfying specific needs of your target customers
-
Marketing
-
Objective, e.g. build a customer base to
support your financial management objectives
-
Strategy, including
description of the "five P's" for your business:
-
Product: how you will
design and package your product/service
-
Price: how you will price your product/service
-
Place: how products ( and related services are
distributed to the customer
-
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)
-
People: who will be
responsible for marketing your product/service
-
Operations
-
Objectives, e.g. to win customers by
offering superior services
-
Strategy
-
Legal structure and why you chose it; include
legal/governing documents (articles of incorporation and by-laws for
corporation, partnership)
-
Management and personnel
-
who the key managers/owners are and what
relevant expertise and background they bring to the business (include
résumés)
-
describe non-management positions,
responsibilities/qualifications, personnel policies
-
Customer service: procedures and policies
regarding your work and how you will treat customers
-
Location and operations
-
your facility, including a layout, description
of business image, hours of operation
-
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.)
-
renovations and equipment list (including
prices and condition - new or used)
-
taxes to be paid, licenses required, and
insurance needed
-
Key people: who will provide accounting and
legal services, technical assistance and support
-
Financials
-
Objective, e.g. generate certain gross
sales during the first year of operation
-
Strategy
-
Risk Management
-
Objective, e.g. identify and act to
minimize risks to your company
-
Strategy, e.g. to develop a responsive
system addressing the specific issues
|
3.0 |
Financials |
-
Financial Forecasts
(provide full set of cohesive
financial statements:
balance sheet,
income statement and
cash flow forecast, for a period of 3 to 5 years, including loan
amortization schedule, and detailed assumptions for each line item;
breakeven analysis; personal financial statement for all owners,
co-signers)
-
Sources of Capital
(if the business plan is aimed
to attract investors, explain clearly the investor’s exit strategy and
how you expect to provide them with a return on their investment; note
additional expected rounds of financing needed)
|
1.0 |
Technology / System
Summary |
-
Innovativeness
(describe innovative aspects of
your technology with relation to the market needs)
-
System Components
(describe major components of
the technology/system and how they satisfy specific customer requirements)
-
Manufacturing
Methods
-
Competition
(compare your development program with existing technologies)
-
Intellectual Property Rights
(describe if your business is based on a proprietary technology and if the
proprietary position is adequately protected)
|
1.0 |
Company Organization |
-
Ownership
at the initial stage and plans for the near future (see
slide
presentation)
-
Management
at the initial stage and plans for the near future, including coverage for
the owner’s unforeseen absence (sick time, etc.) during critical periods
-
Location
|
0.5 |
Appendices |
-
Issues list
(acknowledge barriers to success - list important issues and solutions to
these issues)
-
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.
-
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.
-
Marketing/promotional mechanisms
(list mechanisms you are planning to employ for initial marketing of your
product and provide their structure and brief description)
-
Current
Balance Sheet
-
Assets
(cash, bank accounts, other assets)
-
Liabilities and
Equity (credits, other
liabilities, equity)
-
Income Statement
(list all your expenses incurred so far and income generated)
-
Startup Costs
(provide breakdown per cost components
e.g. business license, corporation filing, legal fees, equipment, office
expense, supplies, advertising, training, utilities, taxes, miscellaneous)
-
Glossary
(provide definitions of the special terms used in the business plan)
-
Information about
the Owner
|
3.0 |
Read also:
Twenty General Tips on
Business Plan Preparation, by Osnabrugge, M.V., and Robinson, R.J.
Business Plan Dos and DON’Ts , by PricewaterhouseCoopers
How to Write a Great
Business Plan, by W.A. Sahlman, Harvard Business School
Investment
Criteria and Business Plan Evaluation by Business Angels and Venture Capitalists
Company Assessment
by Prospective Investors, by
Blue Rock Capital
|