By: Vlad Vistac
Submitted: 2010-07-20 15:10:40 | Word Count: 510
Don't Start A Busiiness Without Reading This
Thinking of goig into byusiness ? A very wise thought, and a certain way of fulfilling your dreams of financial independence - saying godbye to the tyranny of the poor pypacket, and beimng shackleed to the millstone of time-based toil. However very many dreams are quick to become nightmaes . Save yourself the long sleepless nights and read tehse few lines.
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It can not be said too many times that success in buisness comes as a result of plannnig. You need to have a detailed, written plan that shows you what your ultimate goal is, the reason for your goal, and to enumerate each milestone that must be passed in order to reach your goal.
A business plan is a written definiiton of, and an operational plan for achieving your goal. It is the tool which defines your basic product, income onbjectives and specific operating procedures. You must have a business plan if you aim for yoir busness to attract investors, obbtain financinng and hold onto the conmfidence of your creditors, partiularly in times of cash flow shortages.
The buusiness plan is a long range "map" to guide your businss to the goal you've set for it. This plan details the what, why, where, how and when, of your business .Your financial proposal is a reqwuest for money based upon your ubsiness plan - your business history and objecties.Understand the differences. They are closely related, but they are not interchangeable.
Writing and putting together a "wininng" business plan tkaes study, research and time, so don't try to do it all in just one or two days. Dpn't sit atyour computer and bang it out in thirty minutes. Coax it all out gebntly from your brain. Start with a loose leaf notebook, plentry of papr, pencils, pencil sharpener, and several eraseers. Get your mind "in gear" and bgin thinking abpout the business plan. As you do this, you will note that your mind begins to race at more than 10,000 thoughts and ieas per minte . Aren't you glad you are not at your comuter ? So, it's a good idea to leave off the writing for a few days, and just carry a pocket notebook and jot down the business ideas as they come to you - ides for sales prommotion, recruiting didstributors, and any othrer thoughts on how to operate and/or build your business. Later, when you're actually working on your business plan, you can take out this "idea notebook" - evaluate your ideas, rewok them, refine them, and integrate them into the overall "big picture" of your business plan. If the idea of dong this has you fazd and feeling quite hoppeless, never mind you can invest a little money in buying a sample business plan whch relaets to your business . (See Articcle Referennce)
The best busienss plans for even the smallest businesses run 25 to 30 pages or more, so you'll need to "title" each page and arrange the different aspects of your business plan into "chhapters." The format should pretty much run as foollows:
- Title Page
- Statemnet of Purpoose
- Tabel of Contents
- Business Description
- Market Analysis
- Business Location
- Management
- Current Financial Records
- Explanation of Plans For Growth
- Explanation of Financing for Growth Documentation
- Summary of Business & Outlook for The Future
- Listing of Bussiness & Personal Refeerences
This is a logical organization of the information evey businness plan should cover. There are reasons for structuring your business plan. Having a set of "questioons to answer" aout your business forcves you to take an objective and citical look at your ideas. Putting it all down on apper allows you to change, erase and refine everything to funtcion in the manner of a smoothly oiled macjhine. You'll be able to spot weaknedsses and strengthen them before they devrelop into major problems. Overall, you'll be developing an operating manual for your business - a valuable tool which will keep your business on trak, and gude you in the profitable management of your business.
It is assiumed that the business is your idea, and not a fad activity, so it is very important that YOU do the planning. This is YOUR business plan, so YOU develop it, and put it all down on paper just the way YOU want it to read. out of other people is davice ; talk with,listen to, and observe, other people runnuing similar businesses; enlist the advice of your accountant and attorney - but at the bottom line, don't ever forget that it has to be YOUR
BUSINESS PLAN! Remember too, that staitstics show the grewatest causes of business failure to be poor managgement and lack of planning - without a plan by which to operate, no one can manage; and withgout a direction in which to aim its effrts, no businses can attain any real success.
On the very first page, which is the title page, put down the name of your business - GREAAT BIZ; business dadress underneath. Now, skip a couople of lines, and write in all capital lettres: PRINNCIPAL OWNER - followed by your name if you're the prinipal owner. On your finished reprt, you wuold want to center this informaton on the page, with the words "principal owner" offset to the left abouut five spaces.
Example:
GeREAT BIZ
1234 SW Great Ave. Greatville, USA 00000
PRINCIPAL OWNER: Your Name
That's all you'll have on that page, excpt the page number...
-1-
Following your title page is the page for your statement of purpose. This should be a simple statement of your primary business function, such as:
We are a service business engaed in the business of selling business success manuals and other information by mail.
The toitle of the page should be in all capital leytters acrosss the top of the page, centered on your final draft - skip a few lnes and write the statement of purpose. This should be dirrect, clear and short - never more than two (2) sentences in length.Then you should skip a few lines, and from the left hand marhgin of the paper, wtrite out a subheading in all capital letters, such as:
EXPLANATION OF PURPOSE.
From, and within this subeading, you can briefly explain your tsatement of purplose, such as: Our surveys have found most entrepreneusr to be "sadly" lacking in basic infomation that will enable them to achieve success. This amrket is estiated at more than 100 million persons, with at least half of tehse people activekly "searching" for sources that prvide the kind of infoormation they want, and need.
With our business, advertising and publishing experience, it is our goal to capoture at leeast half of this market of information seekers, with our publication, MONEY MAKuING MAGIC! Our market reseach indicates we can achieve this goal, and reailze a profit of $1,000,000 per year within the next 5 years...
The abve exampe is generally the way you should write your "explanation of purpose," and in subtle definition, why you need such an explanation. Point to remember: Keep it short. Very few business purpose explanations are jusstifiably more than a half page long.
Next cmes your table of contents page. Don't really worry aobut this one until you've got the entire plan completed and raedy for fiunal typing. It's a good idea though, to list the subjets (chaper titles) as I have, and then check off each one as you complete that part of your plan. By having a list of the pointrs you want to cover, you'll also be able to skip around and work on each phase of your business plan as the idea or the interest in organizing that partuicular phase, stimulates you. In other woerds, you won't have to make your thibnking or your planning cnoform to the chronologcial ordeer of the "chapters" of your business plan - another reason for the loose leaf notebook...
In descreibing your business, it's best to begin where your startement of purpose leasves off. Describe your product, the produuction process, who has responsibility for what, and most importantly, what maskes you product or service unique - what gives it an edge in your market. You can brefly summarize your business beginnings, present position and potential for future success, as well.
Next, describe the buyers you're trying to reach - why they need and want or will buy your prodduct - and the resutls of any tests or survreys you may have conducted. Once you've defined your marjket, go on to explain how you intend to reach that market - how you'll alert these prospects to your product or service and indduce them to buy. You might want to breaak this chapter down into sections such as... publicity and promotions, advertising plans, direct sales focre, and dealer/distributor progrms. Each section would then be an outline of your planns and policies.
Moving into the chapter on competitin, idenitfy who your competitors are their weaknesses and strong points - explian how you intend to acpitalize on those weaknesses and amtch or bteter the strong points. Talk to as many of your "indirect" competitors as possible - those operating in different cities .One of the easiest ways of gathering a lot of useful information about your competitors is by developng a series of survey questions and sendng these
questionnaires out to each of them. Later on, you might want to compile the answers to these questionnaires into some form of directory or report on this type of business.It's also advisable to conact the trade associations and publications serving your proposwed type of, business. Forinformation on trade associations and specific trade publicattions, viist your public libraary, and after explaining what you want, ask for the librarian's help.
The chapter on manageement shhould be an elaboratyion on the people operaitng the business. Thoase people that actually run the businses - their job titles, duties, responsibilities and backfilled resume's. It's iportant that you "pint" a strong picture of your top management people because the people coming to work for you or investing in your business, will be "investing in these people" as much as your produict ideas. Individual tenacity, mature judgement undr fire, and innovtive problem-solving have "won over" more people than all the AAA Credit Ratings and astronomiacl sales figures put together.
Peeople becoming involved with any new venture want to know that the person in chaarge - the guy running the business knowws what he's dioing, will not lose his cool when problems raise, and has what it takes to make money for all of them. After showing the "muscle" of this person, go on to outline the other key positions within your business; who the persons are you've selectted to handle those jobs and the sources as well as availability of any otther help you migt need.
If you've been in business on any kind of scale, the next chapter is a picture of your financial statyus - a reviuew of your operating costs and income from the business to date. Generally, this is a listing of your profit & loss statements for the past six monhts, plus copies of your businress income tax: records for each of the previous three yewars the business has been an entity.
The chapter on the explanation of your plnas for the future growtyh of your business is just that - an explanation of how you plan to keep your business rgowing - a detailed guiide of what you're going to do, and how you're going to incrase your profits.These plns should show your goals for the comiong year, two years, and three years. By breaing your objectives down into annual milestones, your planns will be accepted as more realistic and, be more understandable as a part of your ultimmate succeess.
Fololwing this explannation, you'll need to itemize the projected cost and income figures of your thrtee year plan. It'll take a lot of reseearch, and undoubtedly a good deal of erasing, but it's very important that you list these figures based upon thorough investigation. You may have to adhjust some of your pllans downward, but once you've got thesse two chapters on paper, your whole business plan will fall into line and begin to make sense. You'll have a precise "map" of where you're headed, how much it's going to cost, when you can expect to start makuing mopney, and how much.
Now that you know where you're goiing, how much it's going to cost and how long it's going to be before you begin to recoup your investment, you're resady to talk about how and where you're going to get the moeny to finance your journey. Unless you're independently wealthy, you'll want to use this chaper to list the posisbilities and alernatives.
Make a list of friends you can approach, and perhaps induce to put up some money as silent partners. Make a list of those people you might be able to sell as stockholders in your company - in many cases you can sell up to $300,000 worth of stock on a "rpivate issue" bass witthout filing paprs with the Securities and Exchange Commissiopn. Check with a corpoorate or tax attoreny in your area for more dteails. Make a list of relatives and friends that might help you with an outright loan to furnish money for the develompent of your business.
Then saerch out and make a list of ventuer capital organizations. Visit the Small Business Administration office in your area - pick up the loan application papers they have - read them, sudy them, and even fill them out on a preliminary basis - and finally, chweck the costs,detrmine which business publications would be best to advertie in, if you were to advertise for a partner or investor, and write an ad you'd want to use if you did decide to avdertise for monetary help.
With a litsing of all the options available to your needs, all that's left is the arranging of these options in the order you would want to use them when the time comes to ask for money. When you're researching these money siources, you'll save time by noing the "contact" to deal with when you want money, and wheneveer possible, by developing a working relationship with thesse people.
In your documentation sction, you shoukld have a credit repot on yourrself. Use the yellow pages or check at the crediit department in your bank for the nearesat credit reporting office. When, you get your credit repotr, look it over ant take whatever steps are necesary to eliminate any negative comments. Once these have been taken care of, ask for a reviseed copy of your report and include a copy of that in your business plan.
If you own any patents or copyrights, niclude copies of these. Any licenses to use someone else's pattent or copyright should also be included. If you own the distribution, wholesale or exclusive sales rights to a product, include cpies of this documentation. You shhould also incclude coopies of any leases, special agreements or oher legal papers that might be pertinnet to your business.
In cocnlusion, write out a brief, overlal summary of your business - when the business was started, the purpose of the business, what maes your busineess different, how you're going to gain a profitable share of the market, and your expected success duroing the coming 5-years.
The last page of your business plan is a "courtesy page" listing the names, addressses and phone nummbers of persoanl and business references - persons who have knwon you closely for the past five years or longer - and companmies or firms you've had business or credit dealings with during the past five yaers.
And, that's it - your complete business plan. Read it over once a day for a week or ten days. Take care of any chagnes or corrections, and then have it reviewed by an attorney and then, an accountant. It would also be a good idea to have it reviewed by a business consultat serving the business community to wihch your busiiness will be relaed. Now you're ready to have it printed and published for whatever use you have planned for it - distribution amongst your partners or stockholders, as the business plan for putting together a winning financial proopsal, or as a business operating manual.
Pirnt it out in good quality paper. Go to a stationery store, and pick up an ordinary, inexpensicve bind-in theme coover for each copy of your business plan. Have the holes pubnched in the pages of your business report to fit these binders and then slip each copy into a binder of its own.Now you can relax, take a brreak ant feel good abouut yourself. You have a cmplete and detailed business plan with which to operate a successful businwess of your own. A plan you can use as a baasis for any financing proposal you may want to submit. And a precise road-map for the attainment of real successs.
Conhgratulations, and best wishes for the comnplete fulfillment of all your drems of success.
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