The Complete Idiot's Guide to Business Plans, helps new and existing entrepreneurs create clear, comprehensive, and compelling business plans by walking them through all of the decisions they'll need to make before writing their plans, and then helping them structure and execute their plans to achieve their specific business goals.
Business Plans by Gwen Moran and Sue Johnson A member of Penguin Group (USA) Inc Business Plans by Gwen Moran and Sue Johnson A member of Penguin Group (USA) Inc This book is dedicated to the brave, visionary people who start and run the businesses that power our nation’s economy ALPHA BOOKS Published by the Penguin Group Penguin Group (USA) Inc., 375 Hudson Street, New York, New York 10014, USA Penguin Group (Canada), 90 Eglinton Avenue East, Suite 700, Toronto, Ontario M4P 2Y3, Canada (a division of Pearson Penguin Canada Inc.) Penguin Books Ltd., 80 Strand, London WC2R 0RL, England Penguin Ireland, 25 St Stephen's Green, Dublin 2, Ireland (a division of Penguin Books Ltd.) Penguin Group (Australia), 250 Camberwell Road, Camberwell, Victoria 3124, Australia (a division of Pearson Australia Group Pty Ltd.) Penguin Books India Pvt Ltd., 11 Community Centre, Panchsheel Park, New Delhi—110 017, India Penguin Group (NZ), 67 Apollo Drive, Rosedale, North Shore, Auckland 1311, New Zealand (a division of Pearson New Zealand Ltd.) Penguin Books (South Africa) (Pty.) Ltd., 24 Sturdee Avenue, Rosebank, Johannesburg 2196, South Africa Penguin Books Ltd., Registered Offices: 80 Strand, London WC2R 0RL, England Copyright © 2005 by Gwen Moran and Sue Johnson All rights reserved No part of this book shall be reproduced, stored in a retrieval system, or transmitted by any means, electronic, mechanical, photocopying, recording, or otherwise, without written permission from the publisher No patent liability is assumed with respect to the use of the information contained herein Although every precaution has been taken in the preparation of this book, the publisher and authors assume no responsibility for errors or omissions Neither is any liability assumed for damages resulting from the use of information contained herein For information, address Alpha Books, 800 East 96th Street, Indianapolis, IN 46240 THE COMPLETE IDIOT’S GUIDE TO and Design are registered trademarks of Penguin Group (USA) Inc ISBN: 1-4406-9085-5 Library of Congress Catalog Card Number: 2005928079 Note: This publication contains the opinions and ideas of its authors It is intended to provide helpful and informative material on the subject matter covered It is sold with the understanding that the authors and publisher are not engaged in rendering professional services in the book If the reader requires personal assistance or advice, a competent professional should be consulted The authors and publisher specifically disclaim any responsibility for any liability, loss, or risk, personal or otherwise, which is incurred as a consequence, directly or indirectly, of the use and application of any of the contents of this book Publisher: Marie Butler-Knight Product Manager: Phil Kitchel Senior Managing Editor: Jennifer Bowles Senior Acquisitions Editor: Mike Sanders Development Editor: Ginny Bess Munroe Production Editor: Megan Douglass Copy Editor: Jan Zoya Cartoonist: Jody Shaeffer Book Designer: Trina Wurst Indexer: Heather McNeill Layout: Becky Harmon Contents at a Glance Part 1: Getting Started According to Plan How your plan can help you Figuring Out the Financing Understanding your business’s financial needs Business Writing Basics Tips and pitfalls to consider while writing your plan Part 2: 15 29 Putting Together Your Plan 37 Ready, Set, Write Putting your business ideas on paper 39 Getting Down to Business How to put your best business foot forward 47 Industry Overview Describing your industry and its climate 61 Who Are You? Your people are your primary asset; how to showcase your dream team 75 Analyzing Your Business in the Market Explaining how your business will perform in the market 87 Getting the Word Out Positioning and promoting your business for the best possible results 105 10 Sales Plan and Forecast Explaining how you’ll sell your stuff 119 11 Operation Success Making the most of your day-to-day business activities 129 12 Money, Money Financial statements you’ll need to know for your plan 141 13 Show Your Documents Supporting your claims with all the right backup documents 159 14 Executive Summary What you’re going to tell them in this critical part of your plan Part 3: Putting Your Plan to Work 169 175 15 Financing Considerations to Include in Your Plan How to use your plan for investment or lending purposes 177 16 Using Your Plan as a Management Tool How your plan can help everyone in the business get on the same page 189 17 Keeping Your Plan Current How to keep your plan up to date and relevant 205 Appendixes A Business Terms Glossary 215 B Sample Plans 221 C Resources 301 Index 307 Contents Part 1: Getting Started 1 According to Plan Business Owner Basics Types of Business Plans Securing Financing or Investors Strengthening Operations Preparing for a Sale How Can a Plan Help? Establishing a Vision and Direction Keeping on Course Setting Goals and Benchmarking Success Outlining Operations Fiscal Fitness Checking the Ego Thorough Research Marketing Plan Feasibility Future Expansion Exit Strategy Your USP Finding Your USP Through Feedback Doing It Yourself or Getting Help? 10 Finding Free or Low-Cost Help 11 Hiring Help 11 Getting Soft 12 Figuring Out the Financing 15 Understanding Debt and Equity 16 Debt 16 Equity 16 Money Sources 16 Grants 17 Personal Resources 17 Loans 19 Selecting a Lender 21 Angel Investors 21 Other Funding Sources 22 vi The Complete Idiot’s Guide to Business Plans EDA 22 Community Development Centers 22 Trade or Business Groups 22 What Lenders and Investors Want 23 Capacity to Repay 23 Capital to Invest 23 Collateral 24 Conditions of Use of Money 24 Character of Owners 24 Credit Rating 24 Credit-Reporting Bureaus 25 Your Credit Score 26 Assessing Your Report 26 Increasing Your Score 27 Beware of Quick Credit Fixes 28 Business Writing Basics 29 Effective Business Writing 29 Targeting Your Audience 30 Language and Tone 30 Grammar 31 Cutting the Fluff 32 Avoiding Clichés 33 Presenting Your Information 33 Capitalizing and Punctuating Properly 34 Writing, then Rewriting 35 Avoiding Writer’s Block 35 Speaking and Writing Well 36 Part 2: Putting Together Your Plan Ready, Set, Write 37 39 From Dream to Document 39 Being Organized 40 Knowing Your Stuff 40 Supporting Your Claims 41 Getting to the Goal 41 Obtaining Financial Assistance 41 Attract Business Partners 43 Operation Benchmark 43 Contents Obtain Assistance 43 Iterative Process 44 Staying Updated 44 Analysis 44 Annual Meeting 45 Getting Down to Business 47 Getting Off on the Right Foot 48 Title Page 50 Table of Contents 52 Confidentiality Agreement 52 Executive Summary 55 Purpose 55 Business Description 55 Structure 55 Owners 56 Location 56 Hours of Operation 56 Season’s Greetings 56 What Is It? 57 We’re on a Mission 57 Mission Statement 58 Vision Statement 58 Values Statement 59 Industry Overview 61 Industrial Strength 61 Understanding Market Research 62 Interviews 63 Surveys 63 Focus Groups 63 Online Focus Groups 64 Observation 64 Understanding the Industry 64 Industry Life Cycle 64 Industry Economics and Trends 66 Opportunities and Obstacles 67 Innovations 67 Regulations 68 Economic Factors 68 vii viii The Complete Idiot’s Guide to Business Plans Price Comparisons 69 Location 69 Competition 69 Business Performance 71 Who Are You? 75 Internal Assets 76 Owners and Partners 76 Staffing 77 Management Team 77 Outsourcing and Consultants 79 Employee or Contractor? 79 Who Is an Independent Contractor? 80 Who Is a Common-Law Employee? 80 Who Is an Employee? 81 Statutory Employees 81 Statutory Nonemployees 82 Organizational Chart 82 Salaries 83 Strategic Partners 83 Professional Resources 84 CPA 84 Attorney 84 Bank 84 Insurance Professionals 84 Other 85 Analyzing Your Business in the Market 87 Getting Down to Strategy 88 Targeting Your Customers 89 Demographic Profiles 90 Income and Spending Habits 90 Personal Characteristics 90 Standard of Living 90 Household Characteristics 91 Getting Psychographic 91 Opinions and Values 91 Political Views 91 Style and Taste 92 300 Appendix B Confidentiality Agreement The undersigned reader acknowledges that the information provided by Monkey Muffins, Inc., in this business plan is confidential; therefore, reader agrees not to disclose it without the express written permission of Monkey Muffins, Inc It is acknowledged by reader that information to be furnished in this business plan is in all respects confidential in nature, other than information which is in the public domain through other means, and that any disclosure or use of same by reader may cause serious harm or damage to Monkey Muffins, Inc Upon request, this document is to be immediately returned to Monkey Muffins, Inc Signature Name (typed or printed) This is a business plan It does not imply an offering of securities © 2005 Monkey Muffins All rights reserved _ Date C Appendix Resources This list of resources is meant to give you an idea of the resources available to you As always, use caution when giving your personal or business information to associations, companies, websites, or other organizations Government Association of Small Business Development Centers (www.asbdc-us.org) Here, you’ll find out about what the U.S Small Business Administration’s Small Business Development Centers can offer you, and locate the one closest to your business Business.gov (www.business.gov) Business.gov guides you through the maze of government rules and regulations … and provides access to services and resources to help you start, grow, and succeed in business Economic Development Administration (www.eda.gov) The U.S Department of Commerce’s website, where you can find out information about loan guarantees, tax incentives, and other EDA programs Federal Trade Commission (www.ftc.gov) This is the government agency regulating trade practices The site has a wealth of information about regulations, as well as information about compliance measures Internal Revenue Service (www.irs.gov) Yes, the IRS This site, especially the small-business page, has good information on your tax-filing requirements, as well as resources to which you can turn for help 302 Appendix C Office of Women’s Business Ownership (www.onlinewbo.gov) Under the auspices of the Small Business Administration, this organization exists to help womenowned businesses U.S Census Bureau (www.cnesus.gov) The U.S Census offers a lot of information about the population and businesses in the country that would be useful in market research for your business U.S Patent and Trademark Office (www.uspto.gov) If you’ve got a trade secret that you want to keep all to yourself, or a logo that you want to be sure remains proprietary, this site will give you the information you need to so U.S Chamber of Commerce (www.uschamber.com) This international organization represents 3,000,000 businesses, 2,800 state and local chambers, 830 business associations, and 96 American Chambers of Commerce abroad U.S Customs and Border Protection (www.customs.ustreas.gov) This agency, refocused after the 9/11 terrorist attacks, is still the place to get regulatory and tariff information on importing and exporting U.S Department of Labor (www.dol.gov) From minimum wage laws to statistics on hiring and employment, the Department of Labor is a place to visit for regulatory, trend, and employment information U.S Postal Service (www.usps.gov) The governing authority of your friendly, neighborhood post office has a website with great information on using the postal system to promote your business U.S Small Business Development Center (www.sba.gov) This should be your first stop on the Internet for virtually everything related to starting, financing, and operating your small business Sample business plans, information on special programs and seminars, articles, and other resources are just a few of the valuable tools you’ll find here Money and Management America’s Business Funding Directory (www.businessfinance.com) searchable database of more than 4,000 loan and capital sources Business Owners Toolkit (www.toolkit.cch.com) and low-fee downloads of legal forms Free A site filled with tools, articles, Resources 303 Clickangel (www.clickangel.com) ness owners An online network of angel investors and busi- Cloudstart (www.cloudstart.com) plan for investors to see This website allows you to post your business Quicken (www.quicken.com) The creator of this popular financial software has a website filled with financial information for small businesses and individuals Small Business Administration (www.sba.gov/financing) The SBA offers much information on how to find proper financing for your business, and also offers guarantees for loans Marketing Publicity Services: Contacts on Tap (www.cornerbarpr.com) media contacts from around the country PR Leads (www.PRLeads.com) ing sources for stories A database of A service that e-mails leads from journalists seek- Profnet (www.profnet.com) Another publicity-lead service, affiliated with PR Leads, but also offers a searchable database of experts for journalists Publicity Hound (www.publicityhound.com) Print and online newsletter of publicity leads, as well as a terrific website filled with information on publicity and marketing for small businesses Send2Press.com (www.send2press.com) service News-release creation and distribution Media and Clipping Services Bacon’s Publicity Checker (www.bacons.com) Offers database of media contacts, directories, and news-release distribution services Burrelle’s (www.burrelles.com) Another service offering a database of media contacts It also offers a news-monitoring service that will send you clips that include a particular company name or topic 304 Appendix C Professional Associations and Organizations American Association of Advertising Agencies (www.aaaa.org) many of the leading advertising agencies in the country An association of American Management Association (www.amanet.org) International association including information on all aspects of management Extensive publication list and library are available online American Marketing Association (www.marketingpower.com) The country’s leading marketing-trade association Again, this site offers resources, library, and other valuable information, including local chapters, available online American Small Business Association (http://www.asbaonline.org) tion that advocates for the interests of small businesses An associa- Better Business Bureau (www.bbb.org) This nonprofit organization, often mistaken for a government agency, is the watchdog of the business world, reporting businesses that act unethically or illegally Direct Marketing Association (www.the-dma.org) zation of direct-mail and marketing companies The world’s foremost organi- International Association of Business Communicators (www.iabc.com) Association of communications and marketing professionals, with local chapters throughout the country National Association for the Self-Employed (www.nase.org) An association that supports the needs of micro-businesses (those with fewer than 10 employees) National Business Incubation Association (www.nbia.org) Association of incubator developers, managers, and technology specialists, devoted to advancing business incubation and entrepreneurship It provides thousands of professionals with the information, education, advocacy, and networking resources to bring excellence to the process of assisting early-stage companies worldwide National Association for Women Business Owners (www.nawbo.org) The nation’s leading association for women business owners, with chapters throughout the country National Speakers Association (www.nsaspeaker.org) An association of professional speakers and those who have developed an area of expertise and leveraged it into a speaking career Resources 305 Point-of-Purchase Advertising International (www.popai.com) An association devoted to the interests and practices of in-store and on-site advertising and promotion Public Relations Society of America (www.prsa.org) ation of public relations professionals The world’s leading associ- Service Corps of Retired Executives (SCORE) (www.score.org) Part of the SBA, this organization offers free counseling to small-business owners by experienced professionals versed in various areas of business Toastmasters (www.toastmasters.org) This international organization helps individuals improve their speaking, presentation, and interpersonal skills Local chapters meet throughout the world Magazines and Newsletters Check out these business publications and magazines for the latest information about business Entrepreneur Magazine (www.entrepreneur.com) Guerrilla Marketing Online (www.gmarketing.com) Idea Café (www.ideacafe.com) Inc Magazine (www.inc.com) Marketing Profs (www.MarketingProfs.com) Marketing Sherpa (www.marketingsherpa.com) MarketingVOX (www.marketingvox.com) Nolo—Self-Help Law Center (www.nolo.com) Wall Street Journal’s Startup Journal (www.startupjournal.com) Market Research and Information Sources Need market information? These companies provide market research and other information that can help you target your best markets Dataminers (www.dataminers.com) SRI Consulting Business Intelligence (SRIC-BI) (www.sric-bi.com) 306 Appendix C Experian Information Solutions (www.experian.com) Harte Hanks (www.hartehanks.com) Standard and Poor’s Register of Corporations, Directors and Executives (www standardandpoors.com) Ward’s Business Directory of U S Private and Public Companies Business Portals and Directories Each of these sites has terrific articles, information, and resources for small businesses: ◆ www.Business.com ◆ www.businessknowhow.com ◆ www.businessnation.com ◆ www.morebusiness.com ◆ www.sbinformation.about.com ◆ www.Smartbiz.com ◆ www.womanowned.com ◆ www.workingsolo.com Business Plan Software Business Plan Pro 2005 by Palo Alto Software (www.businessplanpro.com) Plan Write by Business Resource Software (www.brs-inc.com) Biz Plan Builder by Jian Tools for Sales (www.jian.com) Business Plan 12.0 by Out of Your Mind … And into the Marketplace (www.businessplan.com) Anatomy of a Business Plan by Linda Pinson (www.business-plan.com/anatomy.html) Index Numbers 7(a) loan guarantee, 20 504 loan program, 20 A Achievers, 97 acquisition agreements, 163 actions implementing, 193 marketing plan, 114-115 active voice, 31 advertising, 108 See also promotions advisors, 43 advisory boards, 194-196, 201 affiliate programs, 121 agreements acquisition, 163 confidentiality, 52 franchise, 163 partnerships, vendor, 138 AIDA (Attention Interest Desire Action), 125 alliances, 83 analyzing credit reports, 26-27 finances, 153-154 industries competition, 69-71 economic factors, 68 innovations, 67-68 life cycles, 64 locations, 69 market research, 62-64 price comparisons, 69 regulations, 68 backup documents, 159, 166 acquisition agreements, 163 appendix, 160 articles of incorporation, 162 bios, 160-162 credit reports, 163 franchise agreements, 163 leases/mortgages, 164 letters of intent, 165 licenses, 164 loans, 163 market analyses, 166 personal financial statements/ tax returns, 162 resumés, 160 balance sheets, 149 banks, 84 barriers, 193 basic insurance coverages, 155-156 Believers, 98 benchmarking, 43, 206 benefits of business plans, establishing vision/ direction, exit strategies, feasibility, finances, future, marketing, outlining operations, reality checks, research, setting goals, staying on course, B-to-C (Business-to-Consumer) bios, 160-162 markets, 89 Biz Plan Builder, 12 B2B (Business-to-Business) BizMiner, 66 markets, 89, 92-93 brand loyalty, 96 industry data, 40 iterative process, 44 markets B2B customers, 92-93 backup documents, 166 customer profiles, 96-99 demographics, 90-91 standard of living, 90 motivations, 95 perfect customers, 94-96 psychographics, 91-92 targeting customers, 89, 93 undesirable customers, 99 performance, 71 profitability, 151 Anatomy of a Business Plan, 13 angel investors, 21-22 annual meetings, 45 appendix, 160 applications for loans, 183 articles of incorporation, 162 assets, 76 associations, 128 assumptions, 127 Attention Interest Desire Action (AIDA), 125 attorneys, 84 attracting business partners, 43 financial assistance, 41-42 audiences, 30 B 308 The Complete Idiot’s Guide to Business Plans break-even points, 152 budgeting marketing plans, 115 operating budgets, 143-144 Bureau of Labor Statistics, 65 Business Plan 12.0, 13 Business Plan Pro 2005, 12 Business-to-Business (B2B) markets, 89, 92-93 Business-to-Consumer (B-to-C) markets, 89 businesses descriptions, 55 incubators, 21 networking groups, 124 partners, 43 selling, summaries, 171-172 writing audiences, 30 capitalization, 34 grammar, 31-33 language/tone, 30-31 presentation, 33-34 punctuation, 34 rewrites, 35 voice recorders, 36 buying preferences, 96 C CAM (common area maintenance), 134 CAN-SPAM Act of 2003, 112 capacity to repay, 23 capital investors/lenders, 23 sources, venture, 42 capitalization, 34 cash flow, 145-147 catalogs, 121 CDC (Community Development Centers), 22 census data, 66 certificates of insurance, 156 channels, 120-121 choices for customers, 92 clichés, 33 Clickangel website, 186 collateral, 24, 109 commercial loans, 19 common area maintenance (CAM), 134 common-law employees, 80 Community Development Centers (CDC), 22 community relations, 111 comparing prices, 69 competition analyzing, 69-71 market share, 103 complementary companies, 197 confidentiality agreements, 52 contractors, 79-80, 197 corporate seals, 45 corporations, 56 cost matrix, 115 Counselors to America’s Small Business, 11 cover letters elements, 48 example, 49 formatting, 50 CPAs, 84 credit cards, 18 credit reports backup documents, 163 bureaus, 25 free, 26 scores, 24-26 assessing, 26-27 increasing, 27 scams, 28 credit-reporting bureaus, 25 customer-service policies, 139-140 customers B2B, 92-93 databases, 207 demographics, 90-91 expanding, 124 feedback, 209 information management software, 122 marketing, 100-103 motivations, 95 perfect, 94-96 profiles, 96 Achievers, 97 Believers, 98 Experiencers, 98 Innovators, 97 Makers, 99 Strivers, 98 Survivors, 99 Thinkers, 97 psychographics, 91-92 targeting, 89-90, 93 undesirable, 99 D databases customer, 207 as sales tools, 122 debt financing, 16 decision makers, 95 declarative sentences, 32 declining industries, 65 deliveries, 137 demographics, 90-91 depreciation, 144 descriptions of products/ services, 57 direct mail promotions, 109 direct marketing, 109 direct selling, 120 direction, distractions, 191 distribution, 107 E economics, 66-68 EDA (Economic Development Authority), 22 E-Focus Groups, 64 Index 309 elements confidentiality agreements, 52 cover letters, 48 executive summaries, 55 purpose portion, 55-56 title pages, 50 TOCs, 52 e-mail, 112 emerging industries, 65 employees See also personnel common-law, 80 defined, 81 finding, 198 incentives, 199-201 information sources, 208 motivating, 198 relations, 111 statutory, 81-82 entrepreneurship, Equifax, 25 equipment, 130-132 compared to supplies, 130 leasing, 132 technology, 131 equity financing, 16 exclamatory sentences, 32 executive summaries, 55, 170, 174 exit strategies, 8, 210-212 expectations implementing, 193 loans, 183-185 Experian, 25 Experiencers, 98 F factors, 179 facts, 32, 40 family as money sources, 18 Federal Trade Commission, 112 financial statements as backup documents, 162 information sources, 207 financing See also money analyzing, 153-154 angel investors, 21-22 assistance, 41-42 benchmarking success, 43 capital, credit-reporting bureaus, 25 debt, 16 equity, 16 factors, 179 internal growth, 187 investors/lenders capacity to repay, 23 capital, 23 collateral, 24 conditions, 24 credit ratings, 24 finding, 185 impressing, 180-181 owner’s character, 24 requirements, 179 selecting, 21 stake in company, 187 loans, 182 applications, 183 expectations, 183-185 government-secured, 183 leasing, 183 lines of credit, 18-19, 182 term loans, 182 transaction loans, 182 turnaround time, 185 money sources, 22 CDC, 22 EDA, 22 grants, 17 loans, 19-20 personal, 17-18 trade groups, 22 negotiating, 181 online, 186 securing, sources, 178-179 summaries, 172 finding employees, 198 investors, 185 low-cost/free help, 11 prospects, 123-124 USP, 9-10 focus groups, 63-64 focusing summaries, 173-174 forecasting sales, 119, 127-128 formal advisory boards, 194 formatting cover letters, 50 franchise agreements, 163 free help, 11 friends as money sources, 18 future, 202 G geography See locations goals, 41-43 attracting business partners, 43 financial assistance, 41-42 marketing plan, 114 setting, government-secured loans, 183 grammar, 31 active voice, 31 clichés, 33 facts, 32 passive voice, 31 sentences, 32 grants, 17, 42 growth industries, 65 locations, 133 H help free/low-cost, 11 hiring, 11-12 software, 12-13 writing services, 10 home-equity loans, 18 hours of operation, 56 household characteristics, 91 hyperbole, 33 310 The Complete Idiot’s Guide to Business Plans I imperative sentences, 32 implementation, 192-193 impressing lenders, 180-181 improvements, 191 incentives for employees, 199-201 income customers, 90 defined, incorporation, 162 increasing credit scores, 27 industries associations, 128 competition, 69-71 data analysis, 40 economics, 66-68 innovations, 67-68 life cycles, 64-65 locations, 69 price comparisons, 69 regulations, 68 trends, 66-67 influencers, 95 informal advisory boards, 194 innovations, 67-68 Innovators, 97 insurance coverages, 154-156 professionals, 84 internal assets, 76 Internal Revenue Service See IRS Internet financing, 186 marketing, 112 ordering, 121 sales, 121 interrogative sentences, 32 interviews, 63 inventory, 136-137 investors angel, 21-22 finding, 185 requirements, 23-24 securing, stake in companies, 187 IRS (Internal Revenue Service) contractors, 80 employees common-law, 80 defined, 81 statutory, 81-82 website, 81 iterative process, 44 analysis, 44 annual meetings, 45 benchmarking, 206 customer feedback, 209 information sources, 207-208 updates, 44 J–K–L jargon, 31 joining networking groups, 124 language, 30-31 leadership, 192 leases, 183 backup documents, 164 equipment, 132 locations, 133 lenders finding, 185 impressing, 180-181 requirements, 23-24, 179 selecting, 21 stake in company, 187 letters of intent, 138, 165 liability insurance, 155 licenses, 164 life cycles of industries, 64-65 lines of credit, 18-19, 182 LLCs (Limited Liability Corporations), 56 loans, 19, 42 applications, 183 backup documents, 163 commercial, 19 expectations, 183-185 government-secured, 183 leases, 183 lenders See lenders finding, 185 impressing, 180-181 requirements, 23-24, 179 selecting, 21 stake in company, 187 lines of credit, 18-19, 182 micro, 20 SBA-guaranteed, 20 term, 182 transactions, 182 turnaround time, 185 locations, 56, 107, 132 analyzing, 69 B2B customers, 93 growth, 133 lease lengths, 133 locations/services, 134 pricing, 132 traffic, 133 low-cost help, 11 M Makers, 99 managing cash flow, 145 deliveries, 137 future, 202 inventory, 136 ordering, 137 plans, 189 teams, 77 manufacturer’s representatives, 120 marketing, 113 actions, 114-115 analyzing, 166 B-to-C, 89 B2B, 89, 92-93 budgeting, 115 cost matrix, 115 Index 311 customers perfect, 94-96 profiles, 96-99 undesirable, 99 defined, 106 demographics, 90-91 goals, 114 motivations, 95 psychographics, 91-92 researching, 62 focus groups, 63-64 interviews, 63 observation, 64 primary, 62 quantitative, 62 sales forecasts, 127 secondary, 62 surveys, 63 tainted data, 63 segments, 100 share, 103 strategies, 106 place, 107 pricing, 107 products, 106 promotions, 107-113 SWOT, 101-102 summaries, 172 targeting, 89, 93 timing, 116 mature industries, 65 micro-loans, 20 Minority Business Development Agency, 66 missions, 57-59 money See also financing balance sheets, 149 cash flow, 145-147 financial analysis, 153-154 insurance coverages, 154-156 operating budgets, 143-144 profit-and-loss statements, 147 profitability, 151-152 inventory, 136 letters of intent, 138 locations, 132-134 ordering, 137 outlining, production, 135 purchasing policies, 137 quality control, 135-136 service provisions, 135 strengthening, suppliers, 137 vendor agreements, 138 opportunities, 102 ordering, 137 organizational charts, 82 outlining assumptions, 127 marketing plans, 113 actions, 114-115 budgeting, 115 NAICS (North American cost matrix, 115 Industry Classification goals, 114 System), 65 timing, 116 narrative summary format, 170 operations, National Foundation for Credit suppliers, 137 Counseling, 28 outsourcing staff, 79 National Venture Capital owners Association website, 186 B2B customers, 92 needs versus wants of customers, character, 24 95 descriptions, 56 negotiating, 181 experiences, 76 networking groups, 124 investment amounts, 154 North American Industry transferring, 210-212 Classification System (NAICS), 65 notices of confidentiality, 50 Source and Use of Funds statements, 144 start-up costs, 142 sources, 22 angel investors, 21-22 CDC, 22 EDA, 22 grants, 17 investors/lenders, 23-24 loans, 19-20 personal, 17-18 trade groups, 22 mortgages, 164 motivations customers, 95 employees, 198 N P O observation, 64 operations, 129 budgets, 143-144 customer-service policies, 139-140 deliveries, 137 equipment, 130-132 partnerships, 56 agreements, experiences, 76 strategic, 83, 196-197 passive voice, 31 past sales, 127 perfect customers, 94-95 brand loyalty, 96 buying preferences, 96 decision makers, 95 312 The Complete Idiot’s Guide to Business Plans importance, 95 influencers, 95 pricing, 96 performance, 71 personal characteristics of customers, 90 personal financial statements, 162 personal resources of money, 17-18 personnel See also employees advisory boards, 201 contractors, 80 finding, 198 incentives, 199-201 motivating, 198 organizational charts, 82 owners, 76 partnerships, 56 agreements, experiences, 76 strategic, 83, 196-197 professional resources, 84-85 salaries, 83 staffing, 77-79 philosophies, 190 places See locations Plan Write, 12 point-of-purchase advertising, 108 political views of customers, 91 POS (point-of-sale) programs, 208 predicting market share, 103 presentation, 33-34 pricing comparing, 69 customers, 96 finding prospects, 124 locations, 132 marketing strategy, 107 utilities/services, 134 primary market research, 62 pro forma, 145 production, 135 products descriptions, 57 marketing strategy, 106 professional resources, 84-85 profit-and-loss statements, 147 profitability, 151-152 promotions, 107 advertising, 108 collateral materials, 109 community relations, 111 direct mail, 109 direct marketing, 109 employee relations, 111 online marketing, 112 point-of-purchase advertising, 108 public relations/publicity, 110-111 relationship marketing, 112-113 property insurance, 155 prospects, finding, 123-124 psychographics (customers), 91 B2B customers, 93 opinions/values, 91 political views, 91 styles, 92 public relations, 110-111 publicity, 110-111 punctuation, 34 purchasing policies, 137 purposes portion, 55-56 Q–R Qualitative Research, 64 quality control, 135-136 quantitative research, 62 referrals, 123 regulations, 68 relationships building, 196 advisory boards, 194-196 strategic partners, 196-197 identifying, 196 marketing, 112-113 researching, facts, 40 industry trends, 66-67 markets, 62 focus groups, 63-64 interviews, 63 observation, 64 primary, 62 quantitative, 62 sales forecasting, 127 secondary, 62 surveys, 63 tainted data, 63 resources business plan help, 11 hiring, 11-12 software, 12-13 resumés, 160 retailers, 121 return on investment (ROI), 152 revenue, reviewing iterative process, 44-45 rewriting, 35 rhetorical sentences, 32 ROI (return on investment), 152 S salaries, 83 sales channels, 120-121 cycles, 125 finding prospects, 123-124 forecasting, 119, 127-128 territories, 123 tools, 122 savings as money resources, 17 SBA-guaranteed loans, 20 SBIR (Small Business Innovative Research), 17 Index 313 scams, 28 SCORE (Counselors to America’s Small Business), 11 seals (corporate), 45 seasonal information, 56 secondary market research, 62 segmented summary format, 170 segments of markets, 100 selling companies, POS programs, 208 sentences, 32 services descriptions, 57 locations, 134 marketing strategy, 106 provisions for, 135 Small Business Administration, 11 Small Business Development Centers, 11 Small Business Innovative Research (SBIR), 17 Small Business Technology Transfer (STTR), 17 software business-plan, 12-13 customer information management, 122 sole proprietorships, 56, 162 Source and Use of Funds statements, 144 sources capital, financing, 178-179 information, 207-208 money, 144 CDC, 22 EDA, 22 grants, 17 loans, 19-20 personal, 17-18 trade groups, 22 spam, 112 spending habits of customers, 90 staffing, 77 advisory boards, 201 contractors, 79-80 employees common-law, 80 defined, 81 statutory, 81-82 finding, 198 incentives, 199-201 management teams, 77 motivating, 198 organizational charts, 82 outsourcing, 79 professional resources, 84-85 salaries, 83 strategic partnerships, 83, 196-197 start-up costs, 142 statements cash flow, 145-147 financial as backup documents, 162 information sources, 207 mission, 58 profit-and-loss, 147 Source and Use of Funds, 144 values, 59 vision, 58 statutory employees, 81-82 strategic partnerships, 83, 196-197 strategies developing, 190 exit, 210-212 market, 101 marketing, 106 place, 107 pricing, 107 products, 106 promotions, 107-113 SWOT, 101-102 strengths, 101 Strengths, Weaknesses, Opportunities, Threats (SWOT), 101-102 Strivers, 98 STTR (Small Business Technology Transfer), 17 styles of customers, 92 success, 43 succession plans, 8, 210-212 summaries, 169 company, 171 executive, 170, 174 financial, 172 focusing, 173-174 market, 172 operations, 171-172 suppliers outlining, 137 relationships with, 197 surveys, 63 Survivors, 99 SWOT (Strengths, Weaknesses, Opportunities, Threats), 101-102 T Table of Contents (TOC), 52 tainted data, 63 targeting audiences, 30 customers, 89-90, 93 tax returns, 162 technology equipment needs, 131 sales tools, 122 software business-plan, 12-13 customer information management, 122 term loans, 182 territories for sales, 123 Thinkers, 97 threats, 102 timing, 116 title pages, 50 TOC (Table of Contents), 52 tone, 30-31 trade associations, 124 314 The Complete Idiot’s Guide to Business Plans trade groups, 22 trade journals, 67 trade shows, 122 traffic, 133 Trans Union, 25 transaction loans, 182 transfers of ownership, 8, 210-212 trends in industries, 66-67 types B2B customers, 92 business plans, 4-5 loans, 182-183 U undesirable customers, 99 United States Commerce website, 23 Small Business Administration, 11 Statistics Division, 66 updates, 44 USP (unique selling proposition), 9-10 utilities, 134 V VALS Types, 97-99 values customers, 91 statements, 59 vendors agreements, 138 contacts, 123 venture capital, 42 Venture Capital Journal, 186 visions developing, 190 establishing, statements, 58 voice, 31 voice recorders, 36 W–X–Y–Z wants versus needs of customers, 95 weaknesses, 102 websites Anatomy of a Business Plan, 13 Biz Plan Builder, 12 BizMiner, 66 Bureau of Labor Statistics, 65 Business Plan 12.0, 13 Business Plan Pro 2005, 12 census data, 66 Clickangel, 186 E-Focus Groups, 64 EDA, 22 Federal Trade Commission, 112 financing, 186 focus groups, 64 free credit reports, 26 IRS, 81 Minority Business Development Agency, 66 National Foundation for Credit Counseling, 28 National Venture Capital Association, 186 Plan Write, 12 Qualitative Research, 64 salary surveys/calculators, 83 SCORE, 11 Small Business Administration, 11 Small Business Development Centers, 11 United States Commerce, 23 United States Statistics Division, 66 wholesalers, 120 worker’s compensation insurance, 155 working capital budgets, 143-144 writing audiences, 30 block, 35 capitalization, 34 grammar, 31-33 language, 30-31 presentation, 33-34 punctuation, 34 rewrites, 35 services, 10 voice recorders, 36 ... how to put the best possible words and numbers on paper xviii The Complete Idiot’s Guide to Business Plans What You Need to Know Before You Start The Complete Idiot’s Guide to Business Plans. .. For The Complete Idiot’s Guide to Business Plans is for anyone who is starting or acquiring a business and wants to go the extra mile to ensure its success Whether you’re using your plan to map... talking to customers And then modify your plan to make the most of what’s working and to stop wasting effort on what’s not working These are the steps that will get your business off to a great