* Description of your Product or Service – This is a brief section that provides a detailed description of the product or service you will be marketing. The key to this section is to ensure that a person who knows nothing about your venture could read this section and have a complete understanding of what you are offering.
* Overall Business Strategy – This is a one-paragraph statement of the goals of the business and the strategic approach to achieving this goal. The implementation of the plan would be a direct outgrowth of the strategies from this paragraph. The following would be an example of a business strategy for a new dry-cleaning business:
The overall objective for the XYZ dry cleaning business is to be the leading supplier in ABC County in terms of both volume and profitability. To achieve this objective our strategic focus will be:
-To provide a level of quality and professionalism that is unique to the industry
-To be the premium price dry cleaner in the area, justifying the higher price by offering a much higher level of service than is currently offered
-To generate customers by offering convenience via multiple drop-off outlets and free pick-up and delivery
-To execute a marketing plan unique to the industry involving both awareness generating advertising and trial and repeat promotional programs
* Keys to Success - This is an essential section of the business plan as it identifies the key elements of your program that will lead to the success of your product or service. This section would consist of a description of the element(s) of the marketing program that will determine the success or failure of your program. It is based on an in-depth analysis of the market in which you determine that the real leverage in the category and reason you will succeed will depend on being able to deliver on the key(s) to success you have identified. Some examples of potential keys to success might be:
-The ability to obtain in-depth distribution in independent toy stores
-The ability to generate substantial traffic to our web site
-The capability to communicate that we offer a superior service, at a justifiably higher price
-Our ability to deliver on the promise of providing 12-hour service for our equipment in the event of failure.
* Marketing Plan - The marketing plan is the tactical part of the business plan, and it identifies the programs you have developed that will make you successful in the marketplace. It consists of several sub-sections as identified below:
-Description of the USP for the product or service - This consists of a clear articulation of why your product or service is different (and hopefully more appealing) than the others in your category. Does it meet a need that others do not, or does it fulfill a wish that customers have but cannot get from the other items in the category.
-Positioning of your product in the category - Positioning is essentially how you would like your target customers to view your product or service. It will be covered in greater detail in a later chapter of this book.
-Description of your target audience - This is a brief description of the market segment to which you will direct your marketing effort, and from which you anticipate your sales.
-Program(s) to generate awareness of your offering - If your target customers are not aware of the item you have available it cannot succeed. Therefore, you should identify what programs you will be implementing to create awareness of your offering. This would include a discussion of any of the following:
--Media advertising
--Social media
--Networking
--Speaking engagements
--E-mail blasts
--etc.
-Program(s) to generate trial and usage of your product or service - Once you have created some awareness of your offering, it is necessary to do something to motivate the target customer to become a buyer/customer/client. In some product categories, this consists of offering coupons or refund offers, in others it might be a free consultation and in a third it could be a storewide promotion offering a special event to draw in customers.
* Management and Organization - This is a section where you will identify your plans for operating the company for the first three years. It should include a discussion of your legal structure (i.e., “C” Corp, “S” Corp, LLC, PC, etc.), and an overview of the personnel requirements of the organization. For example, if you will require a sales effort to generate revenues, how will you achieve this in terms of using employees, brokers, distributors or just yourself as the selling entity for the organization.
The section should also outline the organizational structure in terms of reporting relationships for employees who will work for the company for the initial three years.
* Start-up Expenses - This is a section that will identify all the expenses that will be required to get you into the business. It will include only the ONE-TIME expenses such as the purchase of computers, office equipment, supplies, etc. that are needed to get the operation started.
* Financial Projections - This is the most important part of the entire business plan, as it outlines your sense of the revenue and cash flow that will be coming to the company for the first three years. It should consist of four documents:
-Proforma P&L – This is a projected profit and loss statement for the initial three-year period of operations. It is a very difficult worksheet to create, as most new ventures do not have a clear path as to their revenues for the initial 12-18 months. Therefore, it is important to make assumptions (which you will keep as an Appendix to the plan), so they can be revisited as the business begins operating. Do not make the mistake of assuming your revenues will be flat for the first 12 months. Every business experiences a ramp-up time as you get started so the revenues in the early months will be significantly less than in the later months. It should be relatively easy to project expenses, as most of the expenses you will incur will probably be easily identified. These are items such as rent, utilities, staff salaries, product cost of goods, etc. A sample P&L for a company is shown at the end of this chapter.
-Cash Flow Statement - This is an essential document that most business plans do not include. It shows the monthly flow of cash for the first year of the business. The intent is to identify cash needs of the business during the early stages of operation. It starts with the opening balance of your business account and reflects both the revenues and the expenses each month, showing the cash balance each in the company each month. A sample cash flow statement for a hypothetical company is shown at the end of this chapter.
-Balance Sheet - This is a statement of the assets, liabilities and net worth of the organization and is a vital document when seeking funding for the organization. The balance sheet is covered in detail in the next chapter.
-Sources & Uses Report – This is a document that identifies the amount of money that the organization will use to start the business (before it opens) and then the money needed to fund the business during the first year. Then it identifies the sources of funds that will be obtained to operate the business. This could include both sales of products/services and loans/investments from outside resources.
If a business plan is being developed for applying for a loan, then it also must include a personal financial statement. This is essentially a statement of the assets you own, the income you have coming in from work or investments, and the liabilities you currently have such as mortgages or car loans. Virtually every loan to a small business will be secured based on the assets of the individual. Generally, this is the equity in the home. For this reason, it is very important that new businesses carefully think through their needs for start-up monies, as there is considerable risk in putting your house up as the collateral for obtaining operating cash for your business.
SUMMARY - It is almost impossible to do too much planning when starting a new business. While