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Writing a Knockout Business Plan for Your Startup

With preparation, knowledge and these insider tips, you'll be able to create a business plan built for success.
March 4, 2005
URL: http://www.entrepreneur.com/article/76442

Editor's note: This article is excerpted from Rule's Book of Business Plans for Startups , from Entrepreneur Press

For a startup business, creating a business plan is like creating a game plan in sports. You need to scout out all the information to create a winning strategy for the game. While business plans for existing companies may have a special focus, such as setting overall goals, reviewing specific operations, evaluating new products, assessing new technology in the industry, or some other specific purpose, the business plan for a startup company is the blueprint for its formation, its operation, and its success. A business plan exposes a new company's strengths and weaknesses. It reveals ways to capitalize on the strengths and minimize the weaknesses, uncovers every facet of the business that can be developed, and points to the best method for that development. It provides a structure for the company's pursuit of the winner's trophy.

Even though creating a business plan takes time, thought and effort, and may seem like an impediment to getting on with opening or growing your new business, it is imperative in today's competitive business climate for you to have all relative information available and evaluated before opening your doors. With a thoughtfully prepared business plan you will enter the business world prepared, ready to run your business and ready to compete.

Although researching and writing your business plan may seem like a monumental task, with preparation it can be quite painless. As you go through the process, you will develop your knowledge and understanding of your business, improve your chances of success, and diminish your risks of failure as a startup owner.

Prior to writing your business plan, there are several issues you must resolve. It is beyond the scope of this text to cover all of these in depth; however, a basic checklist with a few recommended reference books is provided, so you can explore some of the subjects more thoroughly. As an entrepreneur of a startup company:

Before going forward, it is assumed you have done the basic homework for each of the elements above and that:

While you may have already explored the following business concepts during your startup stage, you will be reconsidering and reevaluating these as you develop your business plan:

Don't be concerned if you aren't familiar with all of these concepts. Writing a business plan for your new business is a straightforward process that you can move through step by step to completion. The whole process can be accomplished in two to four weeks, depending on your business.

A Professional Presentation

In surveying many successful business plans, you will find that no one format fits them all. Depending upon the nature of the business, certain topics take precedence over others. Often the owners write their business plans, since they know the most about their business operation and management and they have learned what elements to include to make the best impression.

A complete business plan for a startup company is best organized according to the logical development of the business and is comprised of at least 12 basic components.

1. Executive Summary: By definition, to summarize the elements of your business

2. Company Description: For identification, to introduce your readers to your company and your business concept

3. Industry analysis: To provide a picture of your industry and of the position of your business within the larger framework

4. Market and Competition: To evaluate what you are getting into. While some business plan proponents separate market and competition, it takes an examination of both, together, to come to one very important final conclusion: your market share. Consequently, it is best to examine and present them together.

5. Strategies and Goals: To analyze the market and your competition in order to determine how and where your company or products or services fit and to maximize your position with your target market

6. Products or Services: To describe your products or services and how they match your findings of your strategies and goals

7. Marketing and Sales: To market your products or services with the best positioning and to forecast your sales based on the findings of categories four, five, and six, in that order

8. Management and Organization: To present the management and personnel who will run the show. This section can be separated into two sections for more complex companies.

9. Operations: To explain how the business is run

10. Financial Pro Formas: To forecast successful financial performance for all activities

11. Financial Requirement: To present the type and amount of financing needed, based on the previous sections, to accomplish the whole plan

12. Exhibits: By definition, to close the plan and separate any supporting materials that would otherwise interrupt the flow of the story

A professionally written startup business plan has all 12 of these basic sections presented in the order of the outline. Most of the segments listed will also be reflected in the same order of presentation, although there may be slight variances depending on your type of business. When your business plan is written to obtain financing, the financial requirement section may be tailored either as a loan request or as an investment offering proposal, and then titled accordingly.

A Winning First Impression

The saying, "There's no second chance to make a good first impression," is highly appropriate when it comes to the opening sections of your business plan and its overall appearance. With current desktop publishing, business plans are looking more professional--prospects are competing for neatness and an impressive presentation that sets them apart.

Using the latest software printing design tools, such as boxes, borders, shadow lines, and enlarged and bold characters, can add a professional look if correctly done without drawing attention to their use and stealing the show from the material itself. Color printing, judiciously placed, is being used more all the time.

Within each section, set off subsections or segments with crossheads usually set bold in a sans-serif font. When these are justified to the right or left margin, they are referred to as sideheads.

Important Points to Remember

Excerpted from Rule's Book of Business Plans for Startupsby Roger Rule, from Entrepreneur Press