Outline of a comprehensive Business Plan

Transcription

1 DePaul University From the SelectedWorks of Dr. Harold Welsch 2011 Outline of a comprehensive Business Plan DePaul University, DePaul University Available at:

2 OUTLINE OF A COMPREHENSIVE BUSINESS PLAN The following is an all-encompassing outline of a business plan. The points that should be emphasized and the exact elements to be included depend on the nature of the venture and the desires of the entrepreneur. I. Business Summary A. The company and its founders 1. When the company was formed 2. Current status and objectives 3. Background or unique knowledge of the entrepreneur that qualifies him/her to pursue this business opportunity 4. Trends of recent years in sales and profits B. Market opportunity 1. Identify the market and its size 2. Growth rate of market to be captured 3. Industry-wide trends 4. Present and planned products/services C. Products and technology 1. Unique attributes of the product/service 2. Benefit to the consumer D. Financial projections Sales and profit projections for the first and second year of operation, postfinancing E. Proposed financing 1. Amount of capital needed to meet objectives 2. What is being offered in exchange for investment 3. Projected returns on investor's equity 4. How will raised capital be used 5. How and when will investor benefit II. III. IV. Table of Contents The Industry and Company A. The industry 1. Current status and trends 2. Changes that would affect the venture positively or negatively B. The company 1. How and why was the company formed 2. History of the company (sales and profit) 3. Where the company will go in the next five years 4. The management team Product/Service A. Description 1. Application 2. Unique features 3. Primary end use 4. Summary of functional specifications and technology used 5. Photos B. Proprietary position

3 1. Patents and trademarks 2. Trade secrets C. Potential 1. Advantages 2. Foreseeable technological developments, favorable and unfavorable 3. Plans and opportunities to expand and improve product line 4. Dependence on supply sources V. Market Research and Analysis A. Customers 1. Who are they? 2. Customer characteristics and buying profile 3. Tell the customer's basis for purchase decision: price, quality, services, etc. B. Market size and trends 1. Current size of the total market in units and dollars 2. Indicate source of information and their measurement methods used 3. Discuss major factors affecting market growth: previous and future 4. Project additional customer demands and personality of industry 5. Barriers to market entry C. Estimated market share and sales 1. Illustrate the segment of the market that will be targeted 2. Initial penetration projections 3. Degree of penetration in 1, 3, and 5 years 4. List major customers and why 5. Tell which customers could be major purchases in the future D. Competition 1. Names of competitors 2. Competitor strengths and weaknesses 3. Advantages/disadvantages of current products 4. Ability to react 5. Market share, sales, distribution, production, and profitability of each competitor 6. Identify price and quality leaders 7. Discuss companies that have recently entered or dropped out of the market 8. Discuss why proposed venture can compete E. Ongoing market evaluation 1. Discuss how market will be evaluated 2. Tell how customer needs will be assessed 3. Product/service pricing VI. Overall Marketing Strategy A. Marketing 1. Customer groups to be targeted, initially and later 2. Describe how customers will be identified 3. Describe channels of distribution 4. Tell what product features will be emphasized to generate sales 5. Unusual or innovative marketing concepts 6. National or regional introduction; explain why and give plans to extend sales 7. Marketing milestones and projections for meeting milestones. B. Sales 1. Sales forecasts for the next five years 2. Tell how forecasts were arrived at

4 3. Discuss and justify sales costs in comparison to the competition 4. Description of sales force and closing techniques 5. Explain how product/service will be promoted 6. Discuss the channels of distribution that will be used 7. Tell how the sales force will be managed and compensated C. Pricing 1. Explain price strategy selected and support this decision 2. Discuss how the price of the product/service was determined 3. Compare pricing policy to that of the competition 4. Discuss gross profit margin, coverage of costs D. Service and warranty 1. Importance to customer purchase 2. Warranty items 3. Profit or break-even center 4. Compare to principal competition VII. VIII. IX. Design and Development Plans A. Development status and tasks 1. Current status and remaining work 2. Company competence B. Difficulties and risks C. Product improvements and new products D. Costs Manufacturing and Operations Plan A. Geographic Location 1. Advantages 2. Disadvantages B. Production process 1. Make/buy decision 2. Potential suppliers and subcontractors 3. Current and future production method explained 4. Discuss costs at various volumes C. Facilities and improvements 1. Describe existing space and necessary improvements 2. Lease or acquire space and equipment D. Quality control Describe objectives and how they will be met Management Team A. Organization 1. Key managerial roles and individuals in them (in order of importance) 2. Include organizational chart in appendix 3. Responsibilities and authority of each member 4. Refer reader to appendix for complete resumes and letters of reference for each founder 5. Discuss highlights and accomplishments of key management that demonstrates ability to perform assigned roles B. Management compensation and ownership 1. Compare current salary of all key personnel to that of their last job 2. Detail stock ownership planned for key personnel (options and bonus plans)

5 3. Milestones that generate rewards to key people C. Board of directors 1. Describe members and their credentials 2. Give philosophy as to size and composition D. Supporting personal services Lawyers, accountants, advertisers, banking organizations X. Overall Schedule A. Timing and interrelationships of major events necessary to launch the venture B. Deadlines or milestones critical to venture's success C. Alternative plans Capital requirements XI. XII. XIII. Critical Risks and Problems A. Risks 1. Industry risk 2. Company and personnel risk 3. Market appeal 4. Timing and financing of start-up B. Which business plan assumptions or potential problems are most critical to success of venture C. Plans to minimize unfavorable risks The Financial Plan A. Summarize previous financial performance B. Pro forma income statement and balance sheet C. Financial projections for the next five years 1. Cash flow and income statement forecasts 2. Best, most realistic, and worst case scenarios D. Break-even analysis of the level of production/business needed to cover all operating costs E. Highlight conclusions to be drawn from statements F. Discuss assumptions made in preparation of statements G. Discuss money leveraging strategies H. Describe accounting and control systems I. Be clear about pro formas (derived from sales and budget forecasts) and assumptions made in appendix J. Include detailed financials in appendix Proposed Company Offering A. Describe company's current and future structure B. Describe desired financing 1. Summarize from cash flows the amount of money required over the next 3 years to meet growth plans 2. Tell where capital will come from C. Securities offering 1. Kind, unit price, and total amount of securities to be offered 2. Indicate terms 3. How much will be owned by investors D. Capitalization 1. Show current and proposed number of shares outstanding

6 2. Indicate shares offered to key management resulting amount held by them E. Use of funds 1. How much money is the company seeking to raise? 2. Tell how capital will be raised and used XIV. Appendix A. Products and services Explain design, components, safety factors, areas of concern, and assumptions B. Research and development 1. Future products and services 2. Philosophy of the R&D department C. Manufacturing 1. Production procedures 2. Equipment, personnel, and controls necessary 3. Production milestones D. Marketing 1. Research information 2. Market test results 3. Sales forecasts and methodology 4. Competition 5. Marketing and sales philosophies E. Finance 1. Next five years' budgets 2. Pro forma financial reports 3. Discuss leverage strategy F. Administration Explain coordination of all areas G. Organization and personnel 1. Give a detailed organizational chart 2. Describe responsibilities of each individual by both function and objectives 3. Include a very compete resume on founders and key management personnel 4. Letters of reference for key management H. Management systems 1. Spell out all systems used by company 2. Tell how systems will change as company grows I. List of assumptions J. Summary of problem areas 1. Areas met and anticipated 2. List alternative solutions K. Parallel case histories 1. Describe other similar start-ups 2. Analyze and give corrective solutions for those that failed 3. Analyze ROI for successes L. Distribution letters of reference

7 BIBLIOGRAPHY 1. Bank of Ravenswood 1983 Annual Report. Ravenswood Financial Corporation: Ravenswood, IL, Burch, John G. Entrepreneurship. John Wiley and Sons: New York, Clark, R.S. "Building a Better Business Plan." CA Magazine. Issue 119, November Frits, Roger. Nobody Gets Rich Working for Somebody Else. Dodd, Mead and Co.: New York, Kravitt, Gregory I. How to Raise Capital. Dow Jones-Irvin: Homewood, IL, Rich, Stanley R. and David E. Grumpert. Business Plans that Win $$$. Harper and Row: New York, Timmons, D.B.A., Jeffrey A., Leonard E. Smollen, M.S., and Alexander L. M. Dingee, B.S. New Venture Creation: A Guide to Small Business Development. Richard D. Irvin: Homewood, IL, White, Jr., Richard M. The Entrepreneur's Manual. Chilton Book Co.: Radnor, PA, 1977.