The Business Plan Helps Focus Your Efforts While Providing a Roadmap for Potential Investors.
PART TWO
By Ken Tarlow
In the last issue, I discussed the Business Plan in general terms. Now let's look at the specific sections in more detail, in the order in which they appear.
1. Disclaimer--The Disclaimer is a simple, carefully worded statement. Here are some sample clauses you may include:
* The document is not a prospectus* The information is speculative
* There are no guarantees that the forecast will occur
* There are no guarantees that the product can be made
* There are no guarantees that after the product is made, it will work
2. Executive Summary--The Executive Summary should be no longer than two pages. Most of the top executives in the United States operate on the basis of executive summaries. The Executive Summary is your opportunity to convince the executive or investor that what you're proposing is worthwhile and that he should read the full business plan to find out how viable your project is.
Your Executive Summary, which highlights the main points of your business plan, is written after the rest of the plan is completed.
3. Table of Contents--Don't make the Table of Contents too detailed. The Table of Contents should enable the reader to locate the sections he or she is particularly interested in. For example, one reader might want to look at the resumes of the key people before he reads the rest of the plan. Another might want to look at your production data. Another reader might skip form one subject to another. Make it easy for the reader to find the material he or she is looking for.
4. Company History and Background--The Company History and Background describes when and where the company was formed; whether it is a company, a corporation, an individual proprietorship, or a partnership; who formed it and for what reason it was formed. List the key people and discuss your progress to date.
Provide the reader with an overview of its potential for your industry (the one you will operate in) and of your customer's industry. Describe in general terms how you're going to use the money you are trying to raise. Be specific only where you have to be. Don't duplicate the section on "How the Money You Wish to Obtain Will Be Used" (that section is usually called "Use of Funds." ). State your case in an anticipatory manner so that the reader is prepared for the details later on.
5. Products and Services--Describe your product, particularly its unique features. Highlight the features of your product that make it different from and superior to competing products. You want to be able to say, "Here is why my product is needed. Here is how my product solves this problem. Here is the market that is waiting eagerly for my product."
Describe whether you have a proprietary position--in the form of trade secrets, patent applications, trademarks, or copyrights. Provide a conservative estimate of how long you can make your product before competition can copy it. You must realize that there are people out there who can copy your product. They have the advantage of having your product from which to start working on a product similar to yours. If anybody wants to copy your product, they can do so in a much shorter time than you took to develop yours in the first place.
Include visuals, such as photographs, concept drawings, charts, and graphs, in a business plan if they assist in communication. Show three-dimensional drawings, models, and prototypes during a personal presentation of the business plan. Use flip charts if appropriate.
Keep in mind that presentations should not be lengthy. Assume that people have a limited attention span. Also assume that if they're interested in your proposal, they will ask for further and detailed information. Don't be offended by interruptions and questions. If the answer to a question is covered later on, say so, but also be prepared to answer it immediately.
When possible, verify not only that your product works, but under what conditions it works. If you have engineering studies from independent laboratories verifying the functions of your product, refer to them. Include portions of the study in the text or include the entire study in the appendix.
If you have do do any additional research and development to make your product viable for manufacture and sales, tell your readers. Tell them what you are working toward, how far you have advanced, and what additional problems might have to be overcome. Give them some idea of what it will take and how long it will take to successfully complete the project.
6. Future Plans--Discuss your future plans for existing products and the direction of your research for the development of new or improved products. Tell your readers where, when, how, and under what conditions you're going to expand your product line.
NEXT ISSUE: More Detail on the Business Plan
The above article was excerpted from Tarlow's MIND TO MONEY, a cassette tape/workbook package that can help you develop a new product from the idea stage to the marketplace. MIND TO MONEY may be ordered from the Dream Merchant at $59.95 plus $4.95 CA sales tax and$5 shipping and handling ($69.90 total). Send orders to the Dream Merchant, 2309 Torrance Blvd., Suite 104, Torrance, CA 90501.
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