How to write a business plan - Mike McKeever

Write a business plan that potential investors will embrace! If you're thinking of starting a business or raising money to expand an existing one, you need a plan. Running a successful business requires a great deal of forethought, so write a business plan and secure your venture's future. How to Write a Business Plan will show you how to write the right plan for your business and design a loan package necessary to finance your business and make it work. With this bestselling all-in-one guide you'll learn how to: . figure out if your business idea will make money . estimate operating expenses . prepare cash flow . create profit and loss forecasts . determine assets, liabilities, and net worth . find potential sources of financing . think first before borrowing from friends and relatives, and . professionally present your plan to lenders and investors How to Write a Business Plan provides spreadsheets that help you determine and forecast cash flow, financial statements, sales revenue, and profit and loss. It also provides three sample business plans you can modify for your own use.This edition is completely updated, providing all-new online resources and updated examples of successful business plans.

www.GetPedia.com * More than 500,000 Interesting Articles waiting for you . * The Ebook starts from the next page : Enjoy ! * Say hello to my cat "Meme" | How to Write a Business Plan by Mike McKeever ISBN: 0873375440 Nolo © 1999 , 220 pages How to Write a Business Plan Introduction: How to Use This Book Chapter 1: Benefits of Writing a Business Plan Chapter 2: Do You Really Want to Own a Business? Chapter 3: Choosing The Right Business Chapter 4: Potential Sources of Money to Start or Expand Your Small Business Chapter 5: Your Resume and Financial Statement Chapter 6: Your Profit and Loss Forecast Chapter 7: Your Cash Flow Forecast and Capital Spending Plan Chapter 8: Write Your Marketing and Personnel Plans Chapter 9: Editing and Finalizing Your Business Plan Chapter 10: Selling Your Business Plan Chapter 11: After You Open—Keeping on the Path To Success Chapter 12: Good Resources for Small Businesses Appendix 1: Business Plan for a Small Service Business Appendix 2: Business Plan for a Manufacturing Business Appendix 3: Business Plan for a Project Development Appendix 4: Blank Forms How to Write a Business Plan Mike P.McKeever Editors Lisa Goldoftas & Peri H. Pakroo Illustrations Mari Stein Cover Design Toni Ihara Book Design Terri Hearsh Manuscript Preparation Stephanie Harolde Proofreading Joe Sadusky Index Sayre Van Young Printing Consolidated Printers, Inc. Copyright © 1984, 1986, 1988, 1992 and 1999 by Mike P. McKeever. All Rights Reserved. Printed in the U.S.A. This book was last revised in: November 1999. Fifth Edition NOVEMBER 1999 An Important Message to Our Readers This product provides information and general advice about the law. But laws and procedures change frequently, and they can be interpreted differently by different people. For specific advice geared to your specific situation, consult an expert. No book, software or other published material is a substitute for personalized advice from a knowledgeable lawyer licensed to practice law in your state. Keeping Up to Date To keep its books up to date, Nolo issues new printings and new editions periodically. New printings reflect minor legal changes and technical corrections. New editions contain major legal changes, major text additions or major reorganizations. To find out if a later printing or edition of any Nolo book is available, call Nolo at 510-549-1976 or check our website at www.nolo.com. To stay current, follow the “Update” service at our website at www.nolo.com. In another effort to help you use Nolo’s latest materials, we offer a 35% discount off the purchase of the new edition of your Nolo book when you turn in the cover of an earlier edition. (See the “Special Upgrade Offer” in the back of the book.) No part of this publication may be reproduced, stored in a retrieval system or transmitted in any form or by any means, electronic, mechanical, photocopying, recording or otherwise without the prior written permission of the publisher and the author. Reproduction prohibitions do not apply to the forms contained in this product when reproduced for personal use. For information on bulk purchases or corporate premium sales, please contact the Special Sales Department. For academic sales or textbook adoptions, ask for Academic Sales. Call 800-955- 4775 or write to Nolo.com, Inc., 950 Parker Street, Berkeley, CA 94710. Dedication This book is dedicated to the memory of my late grandmother, Elizabeth Eudora Woodall Darby, whose influence I acknowledged only recently. Acknowledgments After more than a decade of working with various revisions and editions of this book, I am amazed at the uniform spirit of goodwill and cooperation given me by many people. Without that spirit, this book would not have seen the light of day or continued helping people. My first editor, Ralph “Jake” Warner, showed infinite patience in working with a first-time author. My second editor, Lisa Goldoftas, challenged every punctuation mark and sentence structure while gracefully deferring to my knowledge about the subject. Also at Nolo: Steve Elias designed many of the helpful charts and made a number of editorial suggestions; Adam Stanhope educated me about computers; Mark Stuhr lent his expertise by fine tuning and updating computer-related material; Stephanie Harolde worked her word processing wonders on the manuscript; Terri Hearsh designed the book and lent her vast experience to enhance the quality of the book and financial forms; Eddie Warner gave helpful suggestions on online information; and many more helpful and professional folks at Nolo improved the book greatly. A special thanks to a number of generous individuals, each of whom knows a great deal about starting and operating a small business. Peg Moran, author of Invest in Yourself: A Woman’s Guide to Starting Her Own Business and Surviving the First Two Years: A Woman’s Guide to Running Her Business Successfully, made several suggestions that helped the book greatly and has been a good and support friend from the first. Terri Hearsh, a former Vice President for Bank of America, made a number of suggestions from the bank officer’s point of view. Roger Pritchard, a Berkeley, California small business consultant who has counseled hundreds of small business owners, reminded me that small is often beautiful. Also, thanks to two people who took the time to read the book carefully and offer suggestions. Their input was extremely useful—but I am responsible for any information that is incorrect: Jason Wallach is a friend and a CPA in Santa Rosa; his input was very helpful. Harry Keller of the Santa Rosa SBA office was kind enough to explain several intricacies of that system to me. Dan Peters took time from starting his new manufacturing business to read the manuscript and offer valuable suggestions. Sharyn Simmons kindly allowed me to use her business concept as an example of a service business. Larry Healy let me modify his business plan as an example of a manufacturing business. Hugh Codding and Leroy Knibb of Codding Investments shared details of retail operations. Finally, I want to thank all my readers, clients and students who have shared their hopes, dreams and problems with me over the years. Many of their stories and suggestions appear here in disguised form. I hope you will profit from their experiences as I have. Mike P. McKeever Santa Rosa, California Introduction: How to Use This Book “Nine to five ain’t takin me where I’m bound.” —Neil Diamond, from “Thank the Lord for the Nighttime” “You’ve got to be careful if you don’t know where you’re going because you might not get there.” —Yogi Berra Overview Here is a book designed to help you write a first-rate business plan and loan application. How to Write a Business Plan contains detailed forms and step-by-step instructions designed to help you prepare a well-thought-out, well-organized plan. It shows you how to apply proven financial and business planning techniques usedby traditional lenders and investors to your benefit. Coupled with your positive energy and will to succeed, this book shows you how to design a business plan and loan package you will be proud to show to the loan officer at your bank, the Small Business Administration or your Uncle Harry. But this book does more than just take you through the steps of writing a business plan. More importantly, the tools and techniques in this book help you decide if your business idea will work. The same financial and analytical tools necessary to convince potential lenders and investors that your business idea is sound can help you decide whether your idea is the right business for you. After working with hundreds of business owners, I have observed an almost universal truth about business planning: Writing a plan is an internal journey through the mind of one person. Even in partnerships and corporations, usually one person has the vision and energy to take an idea and turn it into a business by writing a business plan. For that reason, I have addressed this book to the business owner as a single individual rather than a husband and wife team, group, committee, partnership or corporation. What Kind of Plan Do You Need? You can use How to Write a Business Plan to write whatever type of plan best suits your needs: •Complete business plan. By writing this type of plan, you’ll gain a thorough understanding of all aspects of your business. A complete business plan is especially helpful for people who are starting a new business. This form of plan is also excellent for convincing prospective backers to support your business. You’ll be more successful in raising the money you need if you answer all of your potential backers’ questions. A complete plan should include the following elements: Title Page:Chapter 9, Section E Plan Summary:Chapter 9, Section C1 Table of Contents:Chapter 9, Section E Problem Statement: Chapter 3, Section D2 Business Description: Chapter 3, Section D3 Business Accomplishments:Chapter 5, Section B Marketing Plan:Chapter 8, Section B7 Sales Revenue Forecast:Chapter 3, Section F1 Profit and Loss Forecast:Chapter 6, Section D Capital Spending Plan:Chapter 7, Section B Cash Flow Forecast:Chapter 7, Section C Future Trends:Chapter 3, Section E Risks Facing Your Business:Chapter 8, Section B8 Personnel Plan:Chapter 8, Section C4 •Business Personality:Chapter 8, Section C1 •Staffing Schedule:Chapter 8, Section C2 •Job Descriptions:Chapter 8, Section C3 Specific Business Goals:Chapter 2, Section B4 Personal Financial Statement:Chapter 5, Section C Personal Background (Your Strong and Weak Points, General and Specific Skills Your Business Needs, Your Likes and Dislikes):Chapter 2, Section B Appendix: Table of Contents:Chapter 9, Section D Appendix: Supporting Documents:Chapter 9, Section D •Quick plan (one-day plan). This method allows you to produce a basic business plan in a short time—as little as one day in some cases. If you know your business, are familiar with and able to make financial projections and have done the necessary research, you may be able to create a plan in one day. But understand that a quick plan is a stripped-down version of a business plan. It won’t convince either you or your prospective backers that your business idea is sound. It is appropriate only if your business idea is very simple or someone has already committed to backing your venture. Most lenders and investors receive many requests for money every week and they develop a set of criteria that helps them screen proposals. The basic information in a quick plan is usually not enough for them to make a decision. Sad to say, most busy backers will turn down a proposal before they will ask for more information. Potential backers, just like most people, prefer a deluxe version with all the extras to a stripped-down model. A stripped-down quick plan has these few components: Title Page: Chapter 9, Section E Plan Summary: Chapter 9, Section C1 Table of Contents:Chapter 9, Section E Problem Statement:Chapter 3, Section D2 Business Description:Chapter 3, Section D3 Business Accomplishments:Chapter 5, Section B Sales Revenue Forecast: Chapter 3, Section F1 Profit and Loss Forecast: Chapter 6, Section D Capital Spending Plan: Chapter 7, Section B Cash Flow Forecast:Chapter 7, Section C Supporting Documents:Chapter 9, Section D Quick Plan. The “quick plan” icon appears at the beginning of each chapter containing quick plan components and guides you to the sections you’ll need. •Customized plan. Of course, you can start with a quick plan and add components from the complete business plan to suit your needs. When deciding what to include and what to exclude, ask yourself: Which of my statements are the strongest? Which statements do my backers want to see? Note that the Appendices contain blank forms as well as sample business plans for a manufacturing company, a project development and a service business. Meet Antoinette In an effort to make sense out of the thousands of types of small businesses, I have roughly divided them into five main ones: retail, wholesale, service, manufacturing and project development. All the financial tools I present can be used by all five. However, for the sake of simplicity, I follow one particular retail business—a dress shop. In so doing, I illustrate most of the planning concepts and techniques necessary to understand and raise money for any business. As you read through the text you’ll meet Antoinette Gorzak, a friend of mine. Antoinette wants to open a dress shop, and she has allowed me to use her plans and thought processes as an example of a complete and well-prepared business plan for a retail store. You’ll find parts of her plan presented in different chapters as we discuss the various components of a complete business plan. [...]... A stitch in time saves nine.” (proverb) A What Is a Business Plan? A business plan is a written statement that describes and analyzes your business and gives detailed projections about its future A business plan also covers the financial aspects of starting or expanding your business how much money you need and how you’ll pay it back Writing a business plan is a lot of work So why take the time to. .. some basic questions about who you are and what you are realistically qualified to do As a result, you should now have a better idea of whether you are willing to pay the price required to be successful as a small businessperson If you are still eager to have a business, you have said, “Yes, I am willing to make short-term sacrifices to achieve long-term benefits and to do whatever is necessary—no matter... 3 .How to make customers and employees think the business is special 4 .How to know what the customers want—today and, more important in the clothing business, to keep half -a- step ahead 5 .How to sell 6 .How to manage inventory 7 .How to judge people 3 Your Likes and Dislikes Take a few minutes and make a list of the things you really like doing and those you don’t enjoy Write this list without thinking about... a task Occasionally, a service business sells products as an ancillary function For example, a baby diaper cleaning service may also sell diapers and baby accessories Service business customers normally come from repeats and referrals It’s common to have to meet state licensing requirements Hairdressers, carpet cleaners, consultants, housecleaners, accountants, building contractors and architects are... inconvenience to reach my goals.” D Reality Check: Banker’s Analysis Banks and institutions that lend money have a lot of knowledge about the success rate of small businesses Bankers are often overly cautious in making loans to small businesses For that very reason it makes sense to study their approach, even though it may seem discouraging at first glance 1 Banker’s Ideal Bankers look for an ideal loan applicant,... For example, if you have profitably run a clothing store for an absentee owner for a year or two, a lender may believe you are ready to do it on your own All you need is a good location, a sound business plan and a little capital Then, watch out Neiman-Marcus! Further away from a lender’s ideal is the person who has sound experience managing one type of business, but proposes to start one in a different... securities regulations after you complete your plan and before you take any money into your business from selling shares or partnership interests 4 Your Management Skill This book shows you how to write a very good business plan and loan application However, your ultimate success rests on your ability to implement your plans—on your management skills If you have any doubts about your management ability, check... a plan If your business passes all these steps with flying colors, it means it’s a good idea to write a full business plan; it doesn’t guarantee success On the other hand, if your proposal doesn’t pass, you’ll probably want to modify or change your plans altogether If you’re like most people, chances are your business will pass some tests easily and fail some of the others Antoinette faces just that... typically meets these requirements: •For an existing business, a cash flow sufficient to make the loan payments •For a new business, an owner who has a track record of profitably owning and operating the same sort of business •An owner with a sound, well-thought-out business plan •An owner with financial reserves and personal collateral sufficient to solve the unexpected problems and fluctuations that affect... is helpful to know how well they typically fare For instance, these businesses have higher than average failure rates: •computer stores •laundries and dry cleaners •florists •used car dealerships •gas stations •trucking firms •restaurants •infant clothing stores •bakeries •grocery and meat stores If your business idea is on this list, it doesn’t mean you should abandon it automatically However, it . Berra Overview Here is a book designed to help you write a first-rate business plan and loan application. How to Write a Business Plan contains. book shows you how to design a business plan and loan package you will be proud to show to the loan officer at your bank, the Small Business Administration