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Reasons for a
B-Plan
Highlight the strengths
of the business
Identify current and
potential problems
Eliminate blind spots,
identify major flaws
Communicate your ideas to
others
Allow you to spot hidden
opportunities
Provides an operating
plan and financial budget
Provides basis to measure
and monitor performance
The discipline of writing
a business plan is a learning experience that is much more valuable than the
money it raises.
Common B-Plan
Pitfalls
Plan is too long, not
concise
Competition is
inadequately assessed
Expectations and
projections are unreasonable
Financial assumptions not
consistent with projections
No exit plan
Failure to demonstrate
requisite skills
Written in jargon, not
English
Not enough financial
detail
Not enough market
analysis
Not enough thought into
sales and delivery
Assumptions are taken as
fact
Not targeted to the right
audience
Business Plan
Do’s:
Involve the entire
management team
Make the plan logical,
comprehensive, readable, and short
Demonstrate commitment by
doing it well
Articulate the critical
risks and assumptions, and why they are tolerable
Disclose and discuss
potential problems
Identify several
alternative sources of financing
Spell out the proposed
deal and the upsides
Be creative in getting
the investor’s attention and interest
Remember that the plan is
not the business
Prioritize generating
cash above preparing the plan
Know your targeted
investor group and tailor the plan to them
Let realistic market sales
projections drive the assumptions underlying the financial spreadsheets, rather
than the reverse
Target your plan to the
intended reader’s needs:
Bankers focus on
collateral and downsides
Venture capitalists focus
on upsides and return
Emphasize the market
Anticipate
what can go right or wrong
Business Plan
Don'ts:
Make ambiguous, vague, or
unsubstantiated statements
Use specialized jargon
Focus too much on the
presentation
Defer making sales or
collecting cash so that you can plan
Assume the deal is done
before the cash is in the bank
Copy another plan or use
a canned template
Plan Dynamics
These elements should be
addressed through-out the plan in the context of the various plan components:
The people
The opportunity
The external context
The deal – risk and
reward
The People
Experience
Skill
Contacts
Attitude
Knowledge
Motivations
Commitment
The
Opportunity
Entry Barriers
Customers
Suppliers
Substitutes
Competition
Economics
The Customer
Who is the customer
How does the customer
make decisions
How will the product or
service be priced
How will the customer be
reached, and what will that cost
How much does it cost to
support the customer
How easy is customer
retention
Context
Regulation and Tax
Macroeconomics
Demographics,
Socio-political
Technology
Investment environment
Anticipated changes
The Deal
Allocation of risk and
reward
Incentives to each party
Time and money needs
Options available
Who is involved
Likelihood of success
Plan
Components
Executive Summary
Description of Industry,
Company, Products
Market Research and
Analysis
Economics of the Business
Marketing Plan
Design and Development
Plans
Operating Plans
Management Team
Overall Schedule
Critical Risks, Problems,
and Assumptions
Financial Plans
Proposed Offering
Appendixes
Executive
Summary
Description of the
business and concept
The Opportunity and
Strategy
Target Market and
Projections
Competitive Advantages
Economics, Profitability,
Harvest Potential
The Team
The Offering, how much
money is needed
The company’s status
Make Sure You
Clearly Cover:
What business you are in
What makes you unique
Who comprises the
management team that will make it happen
What will make the plan
succeed
What sales, profit
margins, and assets you need to make it happen
What the
risks and rewards are for investors
Purpose of
Executive Summary
The
executive summary is often the only part of the plan that gets read. It needs
to grab the reader by the throat and compel him or her to read the rest of
your plan. The executive summary must generate sufficient interest to keep the
reader motivated and excited.
Description of
Industry, Company, Products
The Industry
The Company and Concept
The Product or Service
Entry and Growth Strategy
Market
Research and Analysis
Customers
Market Size and Trends
Competition and
Competitive Edges – product, price, approach
Estimated Market Share
and Sales
Management’s
perspective on the market
The reaction the company
expects from the market
Economics of
the Business
Gross and Operating
Margins
Profit Potential and
Durability
Fixed, Variable,
Semi-Variable Costs
Months to Breakeven
Months to Reach Positive
Cash Flow
Marketing Plan
Overall Marketing
Strategy
Pricing
Sales Tactics
Service and Warranty
Policies
Advertising and Promotion
Distribution
Design and
Development Plans
Development Status and
Tasks
Difficulties and Risks
Product Improvement and
New Products
Costs
Proprietary Issues
Operating
Plans
Operating Cycle
Geographic Information
Facilities and
Improvements
Strategy and Plans
Regulatory and Legal
Issues
Management
Team
Organization
Key Personnel
Compensation
Employment and Incentive
Agreements
Other Investors
Board of Directors
Supporting Professional
Advisors
Financial
Plans
Historical Financial
Statements
Pro-Forma Financial
Statements
Breakeven Chart and
Calculations
Cost Controls
Highlights
Thoroughly documented
assumptions
Financial
Mechanics
All financial statements
should be linked together and interactive
Do not hard-code; keep
the assumptions and input separate from the calculations and presentation
Build a pyramid, capped
by a precise summary and underpinned with successive layers of increasing
detail
Always build the model
from the bottom up – do not rely on global averages, especially for
businesses that are seasonal or non-homogeneous
Proposed
Offering
Desired Financing
Offering
Capitalization
Use of Funds
Investor’s Returns
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Michael Goldman & Associates, L.L.C. - Consulting
& CPA Services 
