Professional Documents
Culture Documents
Presentation 11.01
http://articles.bplans.com/write-company-overview/#structure
http://articles.bplans.com/writing-a-mission-statement/
http://articles.bplans.com/the-key-elements-of-the-financial-plan/
Model- http://www.investor.jnj.com/company-overview.cfm
A company overview needs to detail what the business is, which
marketplace needs it is aiming to satisfy and how the products and
services meet consumer needs. In addition, the report should
include which consumers the business serves and what its
competitive advantages are.
A good company description should include:
What the nature of the business is and which marketplace needs it
aims to fulfill.
It should detail what the products or services are, and how they can
satisfy consumer needs.
The description should include which consumers or businesses it
aims to serve.
It should finish with a description that details the business'
competitive advantages. This could mean delivering goods and
services at a lower cost, unique aspects of the services offered or
its efficiency in delivering products.
A good business description is usually concise. As well as detailing
what the business does, it gives an overview of its future outlook.
When making observations, base them on reliable data. This is
especially important when writing a business plan that seeks
funding, as it lets the investor know that the business' owners have
researched the market. Descriptions should also include the
business' legal status, such as whether it is a partnership or a sole
proprietary operation. It is essential to make the business' unique
selling point and profitability clear.
ideas, products, and company all line-up
start with a longer (1/2 page max.) “elevator pitch.” It grabs the reader’s interest
while going over all the important highlights you just touched on with the
summary. You can use more adjectives than you could in the summary, so make
your passion and your idea shine through.
Once that initial pitch is done, you can go into the legal description of the
company. You need to include the corporation status, legal entity, and anything
else relating to your business structure. This is necessary for most readers, so
you want to make it obvious and clear. You’ll also want to include company
locations (and don’t be afraid to mention that you are still “virtual,” if that’s the
case), and a brief history of the company. The history should include founding
dates, filing dates, investment details, ownership, and things that matter to
anyone looking over the businesses.
Another topic for this section is a more detailed version of the management team.
This topic will also get its own section later in the plan, but for now, it helps to
include the highlights of the entire team. Instead of giving detailed resumes here
(that goes in the other section), include enough experience to boast about high
points specifically related to creating and expanding this company.
If you’re not including a “Products” section, then you should include your products
in this section. It would contain the same information, but in a slightly less
detailed format. You should include enough of the problems, features, and
intellectual property for all of your products.
And finally, you must include your short term and long term objectives for the
company. Instead of just a quick “Exit Strategy” statement, include some details
about your overall strategy and a few major tactics that you’ll use. Make the
objectives seem real and possible.
Company History: Provide the back story, including date of founding, and
who was involved.
Management Team: Details about who runs the company, and other key
roles.
Now that we’ve set the groundwork on what should generally be included
in this chapter of a business plan, let’s break it out section by section for
more detailed information:
Company overview
This is the meet and greet section of your business plan. If you were to
eloquently write down your elevator pitch(source of funding), you could
put it in this section. Keep this brief, as you’re going to be expanding on
what you say here in the next few sections.
Company history
This is the “Once upon a time…” of your business plan. The company
history section will start out with when your business was founded and
who was involved, and will go into a little of the backstory.
This section is going to vary depending on who this business plan is being
presented to and what stage your company is in. Is this an internal plan?
Historical data may not be essential. Is this a plan to seek funding? In that
case, investors will want to know your backstory, and this section will
allow you to provide some context for your business plan. Include how
the company started, how it grew and changes made along the way. What
led you to this point?
If this is a business plan for a start up, you won’t have a company history
per se, but you could use the company history section to give a concise
description of how the founder or founders decided to start this venture.
What was the “light bulb” moment? Who was involved?
Management team
The management team section of your business plan is your opportunity
to paint a picture of your team and showcase their finest attributes. Again,
for internal use this may not be applicable, though you could use it to
highlight new employees being brought in or existing employees that are
taking on some new leadership responsibilities.
If you plan to present your plan to a bank or other potential investors, this
is critical data. Who are the leaders in your company? What qualifies
them for their positions and inspires confidence? Be sure to include details
about yourself, usually at the beginning. Work experience, past successes,
MBAs, and other degrees can be referenced for each person. You want to
showcase everyone in their best light, remembering that investors invest
in people first and ideas second.
Legal structure and ownership
Related to the management team, you may want to include a separate
section outlining the legal structure and ownership of your organization.
The legal structure of your business is important data for any funding
source to have. Are you an LLC? A C-corp? An S-corp? A sole
proprietor? In a partnership? This will also affect how you file your taxes.
Mission statement
Be as succinct as possible when crafting your mission statement. What
idea can you distill into one or two sentences that conveys the primary
mission of your company? This might be something you want to create
with your management team if you have one, so it conveys a shared long-
term vision. Looking at some sample mission statements from our sample
plan library can be a helpful start as you consider how to word your own.
See Also: How to Write a Mission Statement (Video) »
Further reading
For more information on the chapters to include in your business plan, and
how to use a business plan to secure funding, here are some articles you’ll
find helpful:
Imagine a real person making the actual decision to buy what you sell.
Use your imagination to see why she wants it, how she finds you, and
what buying from you does for her. The more concrete the story, the
better. (And keep that in mind for the actual mission statement wording:
“The more concrete, the better.”)
A really good market-defining story explains the need, or the want, or—if
you like jargon—the so-called “why to buy.” It defines the target
customer, or “buyer persona.” And it defines how your business is
different from most others, or even unique. It simplifies thinking about
what a business isn’t, what it doesn’t do.
This isn’t literally part of the mission statement. Rather, it’s an important
thing to have in your head while you write the mission statement. It’s in
the background, between the words.
Don’t undervalue your business: You don’t have to cure cancer or stop
global climate change to be doing good. Offering trustworthy auto repair,
for example, narrowed down to your specialty in your neighborhood with
your unique policies, is doing something good. So is offering excellent
slow food in your neighborhood, with emphasis on organic and local, at a
price premium.
This is a part of your mission statement, and a pretty crucial part at that—
write it down.
My recommendation is that you don’t assert how the business is good for
employees—you define it here and then forever after make it true.
Qualities like fairness, diversity, respect for ideas and creativity, training,
tools, empowerment, and the like, actually really matter. However, since
every business in existence at least says that it prioritizes those things,
strive for a differentiator and a way to make the general goals feel more
concrete and specific.
In the early years of my business I wanted peace of mind about cash flow
more than I wanted growth, and I wanted growth more than I wanted
profits. So I wrote that into my mission statement. And at one point I
realized I was also building a business that was a place where I was happy
to be working, with people I wanted to work with; so I wrote that into my
mission statement, too.
Then, listen. Show drafts to others, ask their opinions, and really listen.
Don’t argue, don’t convince them, just listen. And then edit again.
And, for the rest of your business’s life, review and revise it as needed. As
with everything in a business plan, your mission statement should never
get written in stone, and, much less, stashed in a drawer. Use it or lose it.
Review and revise as necessary, because change is constant.
While there’s no maximum number of owners that an LLC can have, for
practical reasons you’ll probably want to keep the group small. An LLC
that’s actively owned and operated by more than about five people risks
problems with maintaining good communication and reaching consensus
among the owners.
Business insurance
A good liability insurance policy can shield your personal assets when
limited liability protection does not. For instance, if you are a massage
therapist and you accidentally injure a client’s back, your liability
insurance policy should cover you. Insurance can also protect your
personal assets in the event that your limited liability status is ignored by a
court.
LLC taxes
Unlike a corporation, an LLC is not considered separate from its owners
for tax purposes. Instead, it is what the IRS calls a “pass-through entity,”
like a partnership or sole proprietorship. This means that business income
passes through the business to each LLC member, who reports his share
of profits — or losses — on his individual income tax return. Each LLC
member must make quarterly estimated tax payments to the IRS.
While an LLC itself doesn’t pay taxes, co-owned LLCs must file Form
1065, an informational return, with the IRS each year. This form, the same
one that a partnership files, sets out each LLC member’s share of the
LLC’s profits (or losses), which the IRS reviews to make sure the LLC
members are correctly reporting their income.
For more information on LLC taxes, see How LLCs are taxed.
LLC management
The owners of most small LLCs participate equally in the management of
their business. This arrangement is called “member management.”
Forming an LLC
To create an LLC, you begin by filing “articles of organization” with the
LLC division of your state government. This office is often in the same
department as the corporations division, which is usually part of the
Secretary of State’s office. Filing fees are typically $100 or less.
Many states supply a blank one-page form for the articles of organization,
on which you need only specify a few basic details about your LLC, such
as its name and address and contact information for a person involved
with the LLC (usually called a “registered agent”) who will receive legal
papers on its behalf. Some states also require you to list the names and
addresses of the LLC members.
In addition to filing articles of organization, you must create a written
LLC operating agreement. While you don’t have to file your operating
agreement with the state, it’s a crucial document because it sets out the
LLC members’ rights and responsibilities, their percentage interests in the
business and their share of the profits.
Finally, your LLC must fulfill the same local registration requirements as
any new business, such as applying for a business license and registering a
fictitious or assumed business name.
To learn more about these and other details involved in setting up an LLC,
read How to form a Limited Liability Corporation (LLC) .
Ending an LLC
Under the laws of many states, unless your operating agreement says
otherwise, when one member wants to leave the LLC, the company
dissolves. In that case, the LLC members must fulfill any remaining
business obligations, pay off all debts, divide any assets and profits among
themselves, and then decide whether they want to start a new LLC to
continue the business with the remaining members.
Your LLC operating agreement can prevent this kind of abrupt ending to
your business by including “buy-sell” provisions, which set up guidelines
for what will happen when one member retires, dies, becomes disabled or
leaves the LLC to pursue other interests. (See Plan for changes in LLC
ownership with buy-sell provisions for more information.)
Corporation Basics
Most people have heard that forming a corporation provides “limited
liability” — that is, it limits your personal liability for business debts.
What you may not know is that there’s more to creating and running a
corporation than filing a few papers. You’ll need to keep excellent records
to handle the more complicated corporate tax return, and in order to retain
your limited liability, you must follow corporate formalities involving
decision-making and record keeping. In short, you’ve got to be organized.
A solid liability insurance policy can protect you against many of the risks
of doing business. For instance, if you operate a clothing store, good
business insurance should adequately cover the bill if someone slips and
falls in your store. Also, insurance can protect you where the limited
liability feature will not — for example, if you personally injure someone
while doing business for the corporation, say by causing a car accident,
liability insurance will usually cover the accident so that you won’t have
to use either corporate or personal assets to pay the bill. Be aware,
however, that commercial insurance usually does not protect personal or
corporate assets from unpaid business debts, whether or not they’re
personally guaranteed.
The corporation pays taxes on whatever profits are left in the businesses
after paying out all salaries, bonuses, overhead and other expenses. To do
this, the corporation files its own tax return, Form 1120, with the IRS and
pays taxes at a special corporate tax rate.
For more details on regular corporate taxation, see How corporations are
taxed.
Forming a corporation
To form a corporation, you must file “articles of incorporation” with the
corporations division (usually part of the Secretary of State’s office) of
your state government. Filing fees are typically $100 or so. For most small
corporations, articles of incorporation are relatively short and easy to
prepare. Most states provide a simple form for you to fill out, which
usually asks for little more than the name of your corporation, its address
and the contact information for one person involved with the corporation
(often called a “registered agent”). Some states also require you to list the
names of the directors of your corporation.
To learn more about how to form your corporation, see How to form a
corporation.
What is an S corporation?
An S corporation is a regular corporation that lets you enjoy the limited
liability of a corporate shareholder but pay income taxes on the same basis
as a sole proprietor or a partner.
Most states follow the federal pattern when taxing S corporations: They
don’t impose a corporate tax, choosing instead to tax the business’s profits
on the shareholders’ personal tax returns. About half a dozen states,
however, do tax an S corporation like a regular corporation. The tax
division of your state treasury department can tell you how S corporations
are taxed in your state.
Should you elect S corporation status?
If your corporation meets certain criteria, such as having only
shareholders who are U.S. citizens or residents, you can elect to do
business as an S corporation. Operating as an S corporation rather than a
regular corporation may be wise for several reasons:
Consult an expert
Choosing an ownership structure for your business can be complicated.
To find out whether an S corporation, a C corporation or an LLC is the
best fit for your company, consult a tax lawyer or an experienced
accountant who is knowledgeable about the tax advantages and
disadvantages of the various types of ownership structures.
Sole proprietorships are so easy to set up and maintain that you may
already own one without knowing it. For instance, if you are a freelance
photographer or writer, a craftsperson who takes jobs on a contract basis,
a salesperson who receives only commissions or an independent
contractor who isn’t on an employer’s regular payroll, you are
automatically a sole proprietor.
Examples
Example 1: Lester is the owner of a small manufacturing business. When
business prospects look good, he orders $50,000 worth of supplies and
uses them in creating merchandise. Unfortunately, there’s a sudden drop
in demand for his products, and Lester can’t sell the items he’s produced.
When the company that sold Lester the supplies demands payment, he
can’t pay the bill. As sole proprietor, Lester is personally liable for this
business obligation. This means that the creditor can sue him and go after
not only Lester’s business assets, but his other property as well. This can
include his house, his car and his personal bank account.
Example 2: Shirley is the owner of a flower shop. One day Roger, one of
Shirley’s employees, is delivering flowers using a truck owned by
business. Roger strikes and seriously injures a pedestrian. The injured
pedestrian sues Roger, claiming that he drove carelessly and caused the
accident. The lawsuit names Shirley as a co-defendant. After a trial, the
jury returns a large verdict against Roger — and Shirley as owner of the
business. Shirley is personally liable to the injured pedestrian. This means
the pedestrian can go after all of Shirley’s assets, business and personal.
By contrast, the law provides owners of corporations and limited liability
companies (LLCs) with what’s called “limited personal liability” for
business obligations. This means that, unlike sole proprietors and general
partners, owners of corporations and LLCs can normally keep their house,
investments and other personal property even if their business fails. If you
will be engaged in a risky business, you may want to consider forming a
corporation or an LLC. You can learn more about limiting your personal
liability for business obligations by reading Nolo’s articles
on corporations and LLCs.
Paying taxes on business income
In the eyes of the law, a sole proprietorship is not legally separate from
the person who owns it. The fact that a sole proprietorship and its owner
are one and the same means that a sole proprietor simply reports all
business income or losses on his individual income tax return – IRS Form
1040 with Schedule C attached.
Most cities and many counties require businesses — even tiny home-
based sole proprietorships — to register with them and pay at least a
minimum tax. In return, your business will receive a business license or
tax registration certificate. You may also have to obtain an employer
identification number from the IRS, a seller’s permit from your state and a
zoning permit from your local planning board.
And if you do business under a name different from your own, such as
Custom Coding, you usually must register that name — known as a
fictitious business name — with your county. In practice, lots of
businesses are small enough to get away with ignoring these requirements.
But if you are caught, you may be subject to back taxes and other
penalties.
Partnership Basics
Second, any individual partner can usually bind the whole business to a
contract or other business deal. For instance, if your partner signs a year-
long contract with a supplier to buy inventory at a price your business
can’t afford, you can be held personally responsible for the sum of money
owed under the contract.
There are just a few limits on a partner’s ability to commit the partnership
to a deal — for instance, one partner can’t bind the partnership to a sale of
all of the partnership’s assets — but generally, unless an outsider has
reason to know of any limits the partners have placed on each other’s
authority in their partnership agreement, any partner can bind the others to
a deal.
Third, each individual partner can be sued for — and be required to pay
— the full amount of any business debt. If this happens, an individual
partner’s only recourse may be to sue the other partners for their shares of
the debt.
Partnership taxes
A partnership is not a separate tax entity from its owners; instead it’s what
the IRS calls a “pass-through entity.” This means the partnership itself
does not pay any income taxes on profits. Business income simply “passes
through” the business to each partner, who reports his share of profit — or
his losses — on his individual income tax return. In addition, each partner
must make quarterly estimated tax payments to the IRS each year.
While the partnership doesn’t pay taxes, it must file Form 1065, an
informational return, with the IRS each year. This form sets out each
partner’s share of the partnership profits (or losses), which the IRS
reviews to make sure the partners are reporting their income correctly. For
more information on reporting and paying partnership taxes, see How
partnerships are taxed.
Creating a partnership
You don’t have to file any paperwork to establish a partnership — just
agreeing to go into business with another person will get you started.
Ending a partnership
One disadvantage of partnerships is that when one partner wants to leave
the company, the partnership generally dissolves. In that case, the partners
must fulfill any remaining business obligations, pay off all debts, and
divide any assets and profits among themselves.
If you want to prevent this kind of ending for your business, you should
create a “buy-sell agreement,” which can be included as part of your
partnership agreement. A buy-sell agreement helps partners decide and
plan for what will happen when one partner retires, dies, becomes
disabled or leaves the partnership to pursue other interests. One way a
buy-sell agreement helps avoid this situation is by allowing the partners to
buy out a departing partner’s interest so business can continue as usual.
See Plan for ownership changes with a buy-sell agreement for more
information.
http://articles.bplans.com/partnership-basics/