Putting a Business Plan together

A business plan can help you detail your goals and objectives, and serve as an operational plan for achieving them.

CEDA Business Plan (Right Click, Save as) allows you to:

• Forecast different operational scenarios to see how it will affect your bottom line;
• Compare scheduled vs. actual business growth;
• Update sales, marketing, operating, and financial plans;
• Providing your business with a tool to monitor your progress and communicate your vision.

Qualities of a good Business Plan

A business plan should be a clear and precise document. Written in part to fulfill a need within the business but strongly oriented towards financial institutions. As an overview of the business proposal, it presents a realistic assessment of the investment and target market.

Like the company itself, the business plan should change and develop over time in accordance with basic business rules.

Overview

By writing the business plan, the business executive can assemble the basic concepts of his or her corporate project. In order to hold the reader's attention, the focus must either be on a strategic orientation that will distinguish this company from its competitors, or on the new need the company executive intends to fulfill.

A business plan should:

• Catch the reader's attention by demonstrating a sound approach;
• Explain how past experience should guarantee the success of the project;
• Highlight the entrepreneur's managerial skills;
• Describe the marketing strategy chosen to penetrate the target market;
• Justify the technical, financial, human resources, and if need be, research and development choices that have been made, in order to convince the financial institutions.

Information Required

A business plan should include the following elements:

• A description of the business proposal and accompanying elements, such as the product to be launched;
• The company's organizational structure (organization charts and production teams);
• An assessment of the company's human resources requirements;
• An assessment of the company's requirements with regard to premises and capital goods (machinery, technological equipment);
• A statement of projected operating expenses and revenue, cash flow requirements, and investment budgets, with budgeted balance sheets;
• An assessment of the requirements for capital and its use;
• The market prospects for the product or service;
• The expected return;
• The legal structure;
• An overview of development projected for the next 3 to 5 years.

Market Analysis

The market survey is an important component of a business plan and uses statistical tools. A market survey describes the company's competitors, explains how the business will distinguish itself from them, and pinpoints the market segment to be targeted.

The market survey provides detailed information on the marketing methods to be used, depending on the nature of the product (general dealer, wholesale, professional, institutional, etc.) and on the main method of distribution (in-store, market, trade shows, Internet, locally, nationally, internationally, etc.).

Financial Plan

Lenders need guarantees. You must supply them with facts and figures that enable them to judge the appropriateness of a financial request.

A business plan should indicate how much money is allocated to:

• Purchase or rental of basic equipment i.e. machines, stock, start-up costs;
• Payment of fixed costs such as rent, electricity, taxes, and salaries;
• Payment of related costs such as advertising and transportation;
• Cash flow required for the first twelve months;
• Build in a contingency fund.

The entrepreneur should estimate as precisely as possible the revenues and losses the business will experience until it becomes profitable, as well as set realistic goals that take into account such aspects as payment periods.

This exercise will help the entrepreneur avoid investment loans, except when absolutely necessary, as well as more precisely assess the returns to investors and the terms of withdrawal.

Investors expect a return that is proportionate to the risk they are taking, and these parameters are specified within the shareholder agreement.

In order to reassure the investors, it is in the business executive's interest to put up as much security as possible (property or other assets), in case events take a turn for the worse.

Corporate Structure

It is important to choose the appropriate corporate structure, keep the following facts in mind:

• In a sole proprietorship or general partnership, the owner is liable for all debts and obligations incurred personally and by the business;
• In a corporation, each associate is liable, personally and without limit, for debts and obligations incurred in the name of the corporation;
• In a limited company, each shareholder is liable for debts pro rata with the capital invested;
• In a cooperative, all members have equal voting rights.

A transparent business plan is one of your best assets in gaining the trust of bankers and investors, whether they are your associates or people outside the company.