Business Planning Guide

Seven questions that need to be answered about any new business:

1. Why this business? What does it do? How does what you do differ from others? Why would I want to invest in it? How does it make money? Why is it attractive to a customer? How is what you charge different than others? 2. How does this business work? Who is the customer? What is the product? What capital is needed to develop the business? How does the business stay profitable? Who runs the business? What amount of staff is required? What qualifications? Are they readily available? 3. How long until the business is profitable? What is the typical project profit margin? How many projects/sales are available to you? Immediate? Over 12 months? Can you project revenue and costs over 5 years? What are the risks to profitability? What is key to sustaining the business? 4. How does an investor get his investment back? How long does it take? What will they get back? How will the return on investment proceed? (dividend payments, preferred distribution, follow on investors, sale of company, public offering, etc.) 5. What is at the heart of this business (i.e. what motivates the founders)? What is your vision? What are you passionate about? Why do you think that you will succeed? How are you and your team qualified? (i.e. what is the experience level of those involved?) 6. How do you grow and expand the business? Do you want to grow? How large can the organization grow and continue to be effective? How should you grow? 7. What is the exit strategy? (for the founders and for the investors) What is the timeframe, if any? What happens if the founders exit?

The following Model contains key, seemingly simple questions, which are the forerunners to the development of a formalized Business Plan.

Business Concept Development Model:

1. 2. 3. 4. 5. 6. 7. 8. 9. What are you selling/marketing (in 25 words or less)? Who are you selling/marketing to? (Describe your Target Market/Segments) Why will they buy from you? (What is your niche/competitive advantage?) How many prospects can you reach? (What is the size of your addressable target market/Segments?) How do you market to them (reach them with awareness information) cost effectively? What is your pricing strategy? (Up front one time price/usage/subscription service?) Who else is doing this? (Who is your competition?) How do you process your product/service orders and how much does that cost? Can you make a profit buy subtracting all your costs from your forecasted annual sales?

10. Do you have the experience and education to be successful at doing this? What experiences/skills are needed to complement what you have?

Food for Thought, Detailed: (note: a Service can be your Product)

SALES/MARKETING PLAN
-Target Market Defined and Sized -Product Availability/Order Intervals/Order Process -Sales Channel Alternatives for Target Market -Product Positioning to Competitive offerings -Product Feature, Functions & Benefits Detailed -Advertising Campaign Plan and Budget -Sales Channel Collateral Material Design Req. -Sales Channel Support Details -Operational Support for Product: Channel/Consumer -Service/Warranty Support for Product -Channel Product Training Material -Pricing Plans to Channels/MSRP for Consumer -Product Promotional Plans -Incentive Plans by Channel -Forecast Sales by Channel -Channel Management Team Needs Specifications

PRICING PLAN
-Pricing Strategy -Product Price Points defined, Price Lists (Volume Discounts Plan) by Channel -Product Pricing Competitive Comparisons -Promotional Incentives -Return Policy and Costs

Answers to these questions feed into a 20-25 page Business Plan, organized as follows:
1.0 Executive Summary (generally prepared last) 1.1 Business Concept 1.2 Current Situation 1.3 Key Success Factors 1.4 Vision 1.5 Objectives / Milestones 2.0 Company Summary 2.1 Company Structure (C-Corp, S-Corp, LLC, etc.) and Ownership 2.2 Company History (for ongoing companies) or Startup Plan (for new companies). 2.3 Company Locations and Facilities (actual and/or planned) 3.0 Products and Services 3.1 Product/Service Description 3.2 Product/Service Positioning 3.3 Competitive Analysis 3.3.1 Industry Overview 3.3.2 Primary Competitors 3.3.3 Comparison of Offerings 3.3.4 Opportunities 3.3.5 Threats and Risks 3.4 Sales Literature 3.5 Sourcing and Fulfillment 3.6 Technology 3.7 Future Products and Services 4.0 Market Analysis Summary 4.1 Market Segmentation 4.2 Target Market Segment Strategy 4.2.1 Market Needs (Drivers) 4.2.2 Market Trends 4.2.3 Market Growth 4.3 Industry Analysis 4.3.1 Industry Participants 4.3.2 Competition and Buying Patterns 4.3.3 Main Competitors

5.0 Strategy and Implementation Summary 5.1 Strategy Pyramid (Strategy-Tactics-Programs) 5.2 Value Proposition 5.3 Competitive Edge 5.4 Marketing Strategy 5.4.1 Positioning Statements 5.4.2 Pricing Strategy 5.4.3 Promotion Strategy 5.4.4 Distribution & Logistics 5.4.5 Marketing Programs 5.5 Sales Strategy 5.5.1 Sales Forecast 5.5.2 Sales Tactics 5.5.3 Advertising & Promotion 5.6 Strategic Alliances 5.7 Milestones 6.0 Operations 6.1 Organizational Structure 6.2 Management Team / Key Personnel 6.3 Management Team Gaps 6.4 Personnel Plan 6.4.1 Product/Service Delivery 6.4.2 Customer Service/Support 7.0 Financial Plan (developed in an Excel Spreadsheet) 7.1 Important Assumptions (Driving Market, Product and G&A Cost Forecasts) 7.2 Sales Projection (Revenue and Costs by year) 7.3 Income Statement 7.3.1 Projected Profit and Loss 7.3.2 Break-even Analysis 7.4 Balance Sheet 7.5 Projected Cash Flow 7.6 Funding Requirements / Use of Proceeds 7.7 Ratios 7.8 Long-term Plan (10 year projection) 7.9 Analyses supporting Company Valuation