By Michael Elia


Tap these treasures of ideas. The best money you can spend is money invested in your business plan education. Don't shortchange yourself when it comes to investing in your dream. Start gathering samples of business plans and collect business plan books and get a business plan library started, it can change your future. Here's what your library needs to show: that you're a serious student of business strategy and planning, finance and economics, selling, and writing.

Sample Business Plans

Start by gathering sample business plans. Look at the annual reports and S-1s, S-4s, 10ks, or 10Qs filed with the Securities and Exchange Commission (SEC) of companies in your industry. See how they present their case, explain their business, and discuss their industry and competition.

What exactly are these forms and how do you get them? Good question.

These are forms that public companies must file with the SEC in order to register their securities or to maintain the registration of previously registered securities with the SEC. You can find these forms by going to www.sec.gov, clicking on the Edgar database, and searching for a public company in your industry.

The key is to find the most helpful filings. These are the ones labeled S-1, S-4, 10K, and 10Q. They usually contain descriptions of the business, its products, industry, competitors and strategies. Sections that should sound familiar to you if you are planning to write a business plan.

Go to these sections and read how the company presents their business and its products. Look at how they describe the industry and their competitors. I encourage you to read as many filings in
your industry as possible. See what the “big guys” are saying, the issues, challenges, and trends they see in the industry and how they’re attacking them.

Be careful though about mimicking what they write. Many of these documents are written in legalese despite the SEC’s protestations and push for plain English. Just remember, you’re doing this exercise to see how other companies have built their case to business investors.

Another approach is to gather and read professionally written business plans of companies in your industry and use them as guides to prepare your plan. Try to avoid generic business plan templates. They're too general and often not worth the investment. Either way. Start filling your
business plan library with business plans and registration statements. Keep them close by and refer to them often as you write your business plan.

Strategy

Now, here's a good book to start your business plan library with. It's called: Competitive Strategy by Michael Porter. In this landmark book, Competitive Strategy, Porter shows you how to identify the forces that drive competition in your industry. Learn what moves your competitors are likely to make within it. Competitive Strategy provides a framework for evaluating the competitive alternatives you must consider and for thinking about how to change the rules of the marketplace in your favor. Competitive Strategy is the bible venture capitalist, investment bankers, and business development executives use when analyzing an industry or business venture. I use this book as the centerpiece of my business plan library. So I'm just asking you to take a look at Competitive Strategy by Michael Porter. If it suits you fine, if it doesn't suit you, keep looking till you find something that helps you understand strategy.

Opening your mind to strategic alternatives is a creative process. You can never have too many books on strategy in your business plan library. Read as much as you can to learn why some companies can sell their products more cheaply than others. Why others provide the best products...products that are just far superior to their competition. And, why some companies just always seem to provide unmatched service.

Fill your business plan library with business books that inspire, challenge and answer these questions. Read. Read. Read. And, study too. Find out how some companies are reinventing competition in their markets and obtaining funding while others are seemingly oblivious to the changing world around them.

Michael Treacy and Fred Wiersema set out to find answers to these types of questions in their book The Discipline of Market Leaders. Although the authors won't appreciate this comment, I found the underlying fundamentals in The Discipline of Market Leaders to closely parallel those laid out by Porter in Competitive Strategy. Perhaps that's why I like it so much. The difference, however, is that they present their material in a less academic, more engaging way. And, they provide excellent case studies that are sure to generate many aha's! The Discipline of Market Leaders will make you think about what it is your company or new venture does better than anyone else; what unique value do you provide to your customers? How will you continually increase that value? If you can't easily answer these questions about your business, The Discipline of Market Leaders is required reading and a must for your business plan library. The business owners and entrepreneurs that can answer these questions are not only raising the value bar in their industries, they're raising capital for their businesses!

Finance and Economics

Be sure to keep your business plan library well balanced...

Let me give you a sense of that balance. First is finance and economics. We all have got to have a sense of how to make money...the universal laws of business success, no matter whether you are selling fruit from a stand or running a Fortune 500 company. Finance and economics are the basic building blocks of business. Your business plan library needs a few books on the numbers. When you understand the basics of finance and economics its possible to bringing the most complex business down to the fundamentals. You become empowered to focus on the basics and make money from your venture.

Here's a good book to help you in this area: What the CEO Wants You to Know by Ram Charan. What the CEO Wants You to Know captures the basics of finance and economics and explains in clear, simple language how to do what great business owners and entrepreneurs do instinctively and persistently. Charan explains the basic building blocks of business and how to use them to figure out how your company can, does, or will make money and operate as a total business. Learn how to use these building blocks to cut through the clutter of day-to-day business and the
complexity of the real world. What the CEO Wants You to Know by Ram Charan. This little book is only a 137 pages: but I'm telling you, it's so well written you'll be as intrigued as I was. What the CEO Wants You to Know by Ram Charan. Get it for your business plan library.

Writing

Next is writing. You have to be able to get your thoughts down on paper. Businessese, academese, legalese - all appear too often in business plans. Often preventing a knowledgeable writer with good intensions to fail at getting the message across to an intelligent, interested reader. For some reason, when people write business plans they are compelled to write "commence" and "prior to" instead of "begin" and "before." If you want to write an effective business plan, your business plan library must have books on how to be an effective writer.

Start with Edward Baily; he wrote a surprisingly straightforward book called The Plain English Approach to Business Writing. This book, The Plain English Approach to Business Writing, is about writing as you would talk, which not only makes your writing easier to read, it's also makes
it easier to write. In a brief, entertaining 124 pages Baily clearly lays out the dos and don'ts of plan English, illustrating them with examples drawn from business documents, technical manuals, trade publications, and the works of writers like Russell Baker and John D. MacDonald.
The Plain English Approach to Business Writing offers practical advice on clarity, precision, organization, layout, and many other topics. Best of all, you can read it an hour...and use it for the rest of your life.

But writing well is only a part of writing. A good business plan must be persuasive. Listen carefully to what I just said: persuasive. Not misleading or untruthful, but persuasive.

Here's a book you need to look at Persuading on Paper. How's that for a title? Persuading on Paper by Marcia Yudkin. Yudkin is a writing consultant who coaches small-business owners and professionals on improving their marketing materials. In a witty and vivid style, Persuading on Paper shows you how to use the written word to convert strangers to prospects to paying customers (or in our case, investors). What I like about this book is that Yudkin takes you step-by-step through the process of creating marketing materials that sell. Don't underestimate the power of marketing copy in your business plan. You'll be surprised how her methods and strategies can help create a more powerful business plan. Persuading on Paper is a must-have for anyone who wants to attract more clients, customers, or investors.

Raising Capital

Next is an understanding of the process of obtaining capital. No business plan library would be complete without a book on the process of raising capital. Without capital your venture is destined for failure. You need to learn how to select the right venture capital firm, make presentations, and negotiate your deal.

Try this book: The Venture Capital Handbook by David Gladstone. As an executive officer at Allied Capital Corporation, a large publicly-owned, venture capital firm in the United States, David has reviewed many proposals for venture capital financing. The Venture Capital Handbook
takes you through the entire process from presentation through negotiations, commitment letters, legal closings, due diligence, the exit by the venture capital company, to when the entrepreneur is left to own it all. As a result, The Venture Capital Handbook provides anyone who wants to spend the time and money with an insight into what venture capitalists really want. Prepare for the process of raising venture capital with The Venture Capital Handbook.

Selling

Finally, study the art of selling. Like it or not, when you are trying to start a business venture or raise money for your business you have to sell investors on why they should invest with you. It's like a rite of passage. But fast talking salesmanship won't raise the money you need for your business. You need an approach that respects the power of the investor…one that builds a relationship with investors. So, fill your business plan library with books on selling and presenting.

Here's a book to try: Socratic Selling by Kevin Daley with Emmett Wolfe. Socratic Selling as the title implies, uses the Socratic Method: "A method of teaching or discussion, as used by Socrates, in which one asks a series of easily answered questions which inevitably lead the answerer to a
logical conclusion" (Webster's Unabridged). Dalely's concise, easy-to-follow chapters explain how to open a sales dialogue and go right to the heart of the matter. Socratic Selling is a fun and informative 162 pages for those of us who believe selling means talking with, not at, investors. Study these techniques; they can make you more effective with potential investors.

If you are serious about writing your business plan...show it. Start a business plan library that shows you are a serious student of business plans. Fill it with business plans, public filings and annual reports of businesses in your industry. Stay away from those generic business plan templates. They are too general. And, Read, read, read and study too about strategy, finance, economics, writing, selling, and how to raise capital. Spend the money. Buy the books. The reward can be great...a funded business plan.

This article was originally called "Do You Need a Business Plan?"
The title was changed because in truth, every business needs a business plan. It's a common misconception that business plans are used only for raising capital, as in "my bank wants to see a business plan before they will approve a loan," or, "I need a business plan so I can get venture funding."

But a business plan is really just what it sounds like: a plan for running your business. The business plan will usually be divided into sections relating to the key activities of your business, such as Sales, Hiring, Manufacturing, and so on. In each section you will list the major goals and tasks to be accomplished, and the steps needed to accomplish them. For very small businesses you may plan a year in advance, but a more typical planning time frame is three to five years. In additional to these "operations" sections, your plan will have some informational sections that will be used in setting the operational goals. For example, what is the market opportunity that your company is pursuing? The information sections are especially important if you are using your business plan to raise capital, but they should not be neglected even if your company is self-funded. The information you gather about the market and your competitors is literally the foundation of your business plan.

The final key piece of your business plan is the financial section. In the operations section of your plan, you included a schedule of tasks, and that schedule should match your financial plan. For example, if you said that you would start advertising in April, you would spend $1500 per month, and the result would be a 20% increase in sales, then the $1500 per month advertising expense, as well as the increased sales, should be included in your financial plan.

Banks and venture firms will require the financial plan to be in a specific format; you may need an accountant to prepare this. But even if that's the case, start will a financial plan that you create and understand. Make sure the financial plan matches your operational plans, and be sure you understand how every number was determined!

You'll learn a lot in creating your business plan, and avoid many mistakes. Once your business plan is complete, don't put it away! Consult it regularly. Be sure your actual income and expenses match your financial plan. And if reality doesn't match your plan, figure out why and adjust the plan accordingly.

One small business owner initially projected that 65% of her business revenue would come from services her business provided, and 35% from product sales. Six months after the business was launched, she discovered that, although total revenue was very close to the plan, the ratio of service to product revenue was exactly the reverse of what had been projected. This raised several possibilities. Perhaps not enough effort was being spent to promote the service side of the business. Or perhaps the product portion of the business was a simply bigger opportunity than originally thought, and more emphasis should be placed there! Based on experiences such as this, I recommend that small businesses review their business plan at the end of each quarter, and that they conduct a thorough update of the plan at least once a year.

Simple Business Plan; Preparing One That Will Work For Your Business
Creating and starting your own business should be an exciting and thrilling time in your life. And a simple business plan can help.

Getting Outside Funding For Your Business
It is also hard to overestimate the importance of having a solid simple business plan to the success of the new startup business. A complete and accurate business plan is a necessary first step toward getting the financing that will be needed to create a new business.

Few new businesses can succeed without some form of outside funding, and a properly executed business plan is the key to getting this funding.
Any loan officer will want to see your business plan when you apply for business funding.

Using Private Investors And Partners
The simple business plan is also important for those business owners who plan to use only private funding. Private investors and prospective partners will want to see the business plan before they decide to invest their hard earned money there.

What Should You Include In Your Business Plan?
Many new business owners are confused about just what a business plan should include, and what format it should take. While the format of a business plan will vary from business to business, there is some basic information that simple business plans for any industry should contain.

Including Details About The Management Team
The management team section is actually one of the most important sections of the simple business plan. This is because the management team is such an integral part of a company’s eventual success or failure.

A company is only as strong as its management team, and it is important that the business plan showcase the qualifications and relevant experience of the principals in the business.

Including An Honest Assessment Of The Finances
An honest assessment of the finances of the business is also an important part of any business plan. Of course this is somewhat more complicated in the case of a startup company without a financial track record.

In the case of a startup, the business plan will include some financial assumptions. It is important to point out that these assumptions should not represent the opinion of the business owner.

This financial information will be vital to anyone reading the simple business plan.

It is always said "If you Fail to Plan, you Plan to Fail"
Success in business comes as a result of planning. You have to have a detailed, written plan that shows what the ultimate goal is, the reason for the goal, and each milestone that must be passed in order to reach your goal.

A business plan is written definition of, and operational plan for achieving your goal. You need a complete but success tool in order to define your basic product, income objectives and specific operating procedures.

YOU HAVE TO HAVE A BUSINESS PLAN to attract investors, obtain financing and hold onto the confidence of your creditors, particularly in times of cash flow shortages--in this instance, the amount of money you have on hand compared with the expenses that must be met.

Aside from an overall directional policy for the production, sales effort and profit goals of your product--your basic "travel guide" to business success--the most important purpose your business plan will serve, will be the basis or foundation of any financial proposals you submit. Many entrepreneurs are under the mistaken impression that a business plan is the same as a financial proposal, or that a financial proposal constitutes a business plan. This is just a misunderstanding of the uses of these two separate and different business success aids.
The business plan is a long range "map" to guide your business to the goal you've set for it. The plan details the what, why, where, how and when, of your business--the success planning of your company.

Your financial proposal is a request for money based upon your business plan--your business history and objectives.
Understand the differences. Writing and putting together a "winning" business plan takes study, research and time, so don't try to do it all in just one or two days.
The easiest way to start with a loose leaf notebook, plenty of paper, pencils, pencil sharpener, and several erasers. Once you get your mind "in gear" and begin thinking about your business plan, "10,000 thoughts and ideas per minute" will begin racing thru your mind...So, it's a good idea when you aren't actually working on your business plan, to carry a pocket notebook and jot down those business ideas as they come to you--ideas for sales promotion, recruiting distributors, and any other 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, rework them, refine them, and integrate them into the overall "big picture" of your business plan.

The best business 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 "chapters." Title Page Statement of Purpose Table of Contents Business Description Market Analysis Competition Business Location Management Current Financial Records Explanation of Plans For Growth Projected Profit & Loss/Operating Figures Explanation of Financing for Growth Documentation Summary of Business & Outlook for The Future Listing of Business & personal
References
This is a logical organization of the information every business plan should cover. I'll explain each of these chapters titles in greater detail, but first, let me elaborate upon the reasons for proper organization of your business plan.

Overall, you'll be developing an operating manual for your business--a valuable tool which will keep your business on track, and guide you in the profitable management of your business.
Because it's your idea, and your business, it's 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. Seek out the advice of other people; talk with, listen to, and observe, other people running similar businesses; enlist the advice of your accountant and attorney--but at the bottom line, don't ever forget it has to be YOUR BUSINESS PLAN!

Remember too, that statistics show the greatest causes of business failure to be poor management and lack of planning--without a plan by which to operate, no one can manage; and without a direction in which to aim its efforts, no business can attain any real success.

On the very first page, which is the title page, put down the name of your business-ABC ACTION--with your business address underneath. Now, skip a couple of lines, and write it all in capital letters: PRINCIPAL OWNER--followed by your name if you're the principal owner.

Examples: ABC ACTION 1234 SW 5th Ave. Anywhere, USA 00000
PRINCIPAL OWNER: Your Name
That's all you'll have on this page except the page number -1-
Following your title page is the page for your statement purpose. This should be a simple statement of your primary business function, such as: We are a service business engaged in the business of selling business success manuals and other information by mail.
The title of the page should be in all capital letters across the top of the page, centered on your final draft--skip a few lines and write the statement of purpose. Then you should skip a few lines, and from the left hand margin of the paper, write out a sub-heading in all capital letters, such as: EXPLANATION OF PURPOSE.
From, and within this sub-heading you can briefly explain your statement of purpose, such as: Our surveys have found most entrepreneurs to be "sadly" lacking in basic information that will enable them to achieve success. This market is estimated at more than a 100 million persons, with at least half of these people actively "searching" for sources that provide the kind of information they want, and need.

With our business, advertising and publishing experience, it is our goal to capture at least half of this market of information seekers, with our publication.

MONEY MAKING MAGIC! Point to remember: Keep it short. Very few business purpose explanations justify more than a half page long.
Next comes your table of contents page. Don't really worry about this until you've got the entire plan completed and ready for final typing. It's a good idea though, to list the subject (chapter titles) as I have, and then check off each one as you complete that part of your plan.

By having a list of the points you want to cover, you'll also be able to skip around and work on each phase of your business plan as an idea or the interest in organizing that particular phase, stimulates you. In other words, you won't have to make your thinking or your planning conform to the chronological order of the "chapters" of your business plan--another reason for the loose leaf notebook.

In describing your business, it's best to begin where your statement purpose leaves off. You can briefly summarize your business beginnings, present position and potential for future success, as well.

Once you've defined your market, go on to explain how you intend to reach that market--how you'll these prospects to your product or service and induce them to buy. publicity and promotions, advertising plans, direct sales force, and dealer/distributor programs. Each section would then be an outline of your plans and policies.

Moving into the next chapter on competition, identify who your competitors are--their weakness and strong points--explain how you intend to capitalize on those weaknesses and match or better the strong points. 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 contact the trade associations and publications serving your proposed type of business. For information on trade associations and specific trade publications, visit your public library, and after explaining what you want ask for the librarian's help.

The chapter on management should be an elaboration on the people operating the business. Those people that actually run the business, their job, titles, duties, responsibilities and background resume's. It's important that you "paint" 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 product ideas. Individual tenacity, mature judgement under fire, and innovative problem-solving have "won over" more people than all the AAA Credit Ratings and astronomical sales figures put together.

If you've been in business of any kind scale, the next chapter is a picture of your financial status--a review of your operating costs and income from the business to date. Generally, this is a listing of your profit & loss statements for the six months, plus copies of your business income tax records for each of the previous three years the business has been an entity.
The chapter on the explanation of your plans for the future growth of your business is just that--an explanation of how you plan to keep your business growing--a detailed guide of what you're going to do, and how you're going to increase your profits. These plans should show your goals for the coming year, two years, and three years. By breaking your objectives down into annual milestones, your plan will be accepted as more realistic and be more understandable as a part of your ultimate success.

Following this explanation, you'll need to itemize the projected cost and income figures of your three year plan. You may have to adjust some of your plans downward, but once you've got these two chapters on paper, your whole business plan will fall into line and begin to make sense. Unless you're independently wealthy, you'll want to use this chapter to list the possibilities and alternatives. 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 "private issue" basis without filing papers with the Securities and Exchange Commission. Make a list of relatives and friends that might help you with an outright loan to furnish money for the development of your business.

Then search out and make a list of venture capital organizations. Visit the Small Business Administration office in your area--pick up the loan application papers they have--read them, study them, and even fill them out on a preliminary basis--and finally, check the costs, determine which business publications would be best to advertise 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 advertise for monetary help.

When you're researching these money sources, you'll save time by noting the "contact" deal with when you want money, and whenever possible, by developing a working relationship with these people.

If your documentation section, you should have a credit report on yourself. Use the Yellow Pages or check at the credit department in your bank for the nearest credit reporting office. If you own any patents or copyrights, include copies of these. If you own the distribution, wholesale or exclusive sales rights to a product, include copies of this documentation. You should also include copies of any leases, special agreements or other legal papers that might be pertinent to your business.

In conclusion, write out a brief, overall summary of your business- when the business was started, the purpose of the business, what makes your business different, how you're going to gain a profitable share of the market, and your expected success during the coming 5 years..

The last page of your business plan is a "courtesy page" listing the names, addresses and phone numbers of personal and business references--persons who have known you closely for the past five years or longer--and companies or firms you've had business or credit dealings with during the past five years.

And, that's it--your complete business plan. Take care of any changes 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 consultant serving the business community to which your business will be related. Type and print the entire plan on ordinary white bond paper. 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 proposal, or as a business operating manual.

Don't settle for photo-copying..Have it printed!
Photo-copying leaves a slight film on the paper, and will detract from the overall professionalism of your business plan, when presented to someone you're trying to impress. Next, stop by a stationery store, variety store or even a dime store, and pick up an ordinary, inexpensive bind-in theme cover for each copy of your business plan. Have the holes punched in the pages of your business report to fit these binders and then slip each copy into a binder of its own.

You have a complete and detailed business plan with which to operate a successful business of your own.