Chapter 8

The The MechanicsMechanics of of Writing an Writing an

Effective Business Effective Business PlanPlan

This Week’s KEY This Week’s KEY ResourcesResources

Resources

Resources

Resources

Resources

Resources

• The understanding you get from the planning process required to write the plan is invaluable

• Details every major characteristic of the business

• Critical for TWO TWO reasons:– External legitimacyExternal legitimacy: when somebody requires it– Internal understandingInternal understanding: getting everything clear

in your mind

• Telling a story about your future business

The Planning Process

• Vision (10 words)• Mission (25-50 words)• Elevator Pitch (60-100 words)• Executive Summary (250-500 words)• Business Plan (40 pages)

Levels of Involvement

• Expresses the fundamental idea or goal of the business.

• It tells everyone where your organization wants to go to.

• Tagline, slogan or mantra:– Our Vision is to…“Help You Achieve Your

Dream Job”

Vision Statement

cesces

• Related to the vision statement• Adds competitive advantage information• Written from the perspective of what

will make a difference for a customer– Our mission is to: “Help you to find your life’s Help you to find your life’s

passion, and make it your careerpassion, and make it your career.”

• Keep it Simple, short, and direct

Mission Statement

• “Sell” your firm in the time it takes to make a ride in an elevator, around 30 seconds.

• Approximately 100 words.• Provide memorable information about

your business.• The “HOOK”… your business purpose -

the what and where, and the delivery.

Elevator Pitch

• One to two pages (250-500 words minimum) overview of the business.

• Describes the business, market, expectations, and goals.

• The #1 item to send to anyone who enquires about your business.

Executive Summary

Resources

• Mantra: 3-6 words (Quality is Job 1.)• Mission: co. name, product/service,

customer, and market.• Measures: business goals given as

measurable results.• Method: the activities that will turn your

business into a success.• Mechanics: the tasks that are required

to accomplish what’s listed in the method.

5-M Model

• 1st paragraph: Introduce yourself and your business.

• 2nd paragraph: Explain your company in greater detail.

• 3rd paragraph: describe the current situation of your business and explain what you are looking for from the recipient.

• 4th paragraph: Close and thank them for their consideration.

Cover Letter

• Co. Name• Contact information• Date the version was completed• Proprietary statement to protect your

ideas

Title Page

• T.O.C• Executive Summary• The Company

– Co. Description: 1-2 pages– Product/Service & Industry: 1-8 pages

Other Stuff

The MarketThe Market

• It’s all about your customers – who they are, where they are, how to find them and keep them

• The total population of people or businesses you aim to serve, defined by size and scope (where they are)

• Target customer: the ideal customer to buy your product or service

• Competition and Competitive Advantage: who are they, what do they offer, how much do they charge, what makes them unique

The Market

• Focus on 1) overall business strategy to pursue your market 2) sales plan, and 3) longer term plan to protect your company against competitors:– Business Strategy discusses your general strategy

with respect to differentiation, cost, and focus– Sales plan: Addresses how you are going to generate

sales. Show how you will convert the value benefits your clients are looking for into your pricing, promotional activities, advertising, etc.

– Long term plans to protect against competitors using R&D to develop new offerings, key partnerships, superior service, intellectual property, etc.

Your Marketing Strategy

• The legal form of the business (LLC, sole proprietorship)

• Use org charts for larger firms• Key personnel: owners, managers, salespeople,

influential outsiders, service providers• Location: home-based business?

The Organization

FinancialsFinancials

$ $ $$ $ $

• Be CONSERVATIVE• Income Statement (Profit & Loss) and

assumptions• Cash flow and assumptions• Balance sheet and assumptions• Past two years of actuals (for existing

businesses) and 3 years worth of projections

• New businesses require 1.5-2 years of projections

Financials

  JAN FEB MAR APR

Revenue $2,630 $1,898 $0 $0

Variable Expenses $164 $1,667 $400 $0

Gross Profit $2,466 $231 -$400 $0

Expenses/Fixed Costs $0 $0 $0 $0

Owner Salary $0 $0 $0 $0

Net Profit $2,466 $231 -$400 $0

Equity Inflow $0 $0 $0 $0

Cash Position $2,466 $231 -$400 $0

• Product pictures• Industry reports• Price lists• Floor plans• Marketing collateral: logos, ad copy, DMs,

websites, blogs, PR, case studies• Testimonials

Appendices

• AKA Screening Plan.• Used to send to professional funders like

private banks, angels, VC firms, investment clubs

• Include your price lists.• Very brief overview of the firm and the

financials.• Includes cover letter, title page,

executive summary & your financials• Informational plan: include everything

EXCEPT the financials.

The Mini Business Plan