Archive for February, 2009
The Business Plan: Master Blue Print for Designers and Freelancers
February 27th, 2009
Many business owners dread the idea of preparing a business plan. They think of it as complicated, unnecessary documents that exist only to make it more difficult for them to get started as an entrepreneur.
They are wrong.
“The Small Business Administration has reported that 90 percent of all small graphic/advertising business failures are a result of poor management..”
Keep in mind, though, that the term poor management covers a number of faults. It could mean poor planning, poor record keeping, poor inventory control, poor promotion, or poor employee relations. Most likely it would include poor capitalization.
Business plans for the business owner is a necessary because they help you “see” your business. Instead of just talking in abstract ways about your “customer base” and your “profit potential,” it allows you to put those things in writing and in concrete terms. It forces you to think through every aspect of your business in advance so down the road you don’t realize you’ve made a mistake that’s cost you your business, your life’s savings, and your job. In addition, an effective business plan shows that you are a professional and that you understand what it takes to start and manage a successful business. Also, many business plans are written at the request of loan officers or investors. They want to know specifically how their funds will be used and how they’ll be repaid.
So while the bad news may be that you definitely do need a business plan, the good news is that they don’t have to be complicated. The truth is that your plan only needs to cover seven main areas and none of these areas are going to require you to write a full-length novel. These five sections are the executive summary, the company overview, the business environment, the company description, and the action plan. All of those sections may sound complex, but most of them won’t involve information that you don’t already know.
After identifying the reason for writing a business plan, you’re ready to start thinking through the process.
The Business Plan: Master Blue Print
A successful business plan is between 25 and 50 pages long and takes at least six months to write.
Outline of a Comprehensive Business Plan
The cover letter
Only one thing is certain when you’re hunting for investors or funds to start your business: You’re not the only one! You need to make potential funders want to read your business plan instead of the hundreds of others on their desks. Your cover letter should summarize the most attractive points of your project in as few words as possible. Be sure to address the letter to the potential investor by name.
A word of caution: “To whom it may concern” or “Dear Sir” is not the best way to win an investor’s support.
Now, let’s take a look at the main topics of a basic business plan that you’ll be writing. To begin, you can simply start writing notes in a notebook that you’ve divided into topic sections. At a certain point you’ll want to transfer your notes to a computer so you can begin editing your thoughts. Either way, start by simply making seven topic, or headline, areas. Then take one section at a time and answer the basic questions within that section:
Section 1 – Executive Summary
The executive summary is the most important part of your business plan. “This is the point where you need to catch the reader’s interest.” Begin with a two-page or three page management summary of the proposed venture. Include a short description of the business, and discuss major goals and objectives. It is advisable to develop the executive summary last.
Section 2 – Company Background
Describe your company’s operation to date (if any), potential legal considerations, and areas of risk and opportunity. Summarize your business financial condition, and include past and current balance sheets, income and cash flow statements, and other relevant financial records. Also, including a short description of your insurance coverage assures the investors that death or other mishaps would not pose major threats to the business.
Section 3 – Management Team
Include an organization chart, job description of listed positions, and detailed résumés of the current and proposed executives. A mediocre idea with a proven management team is funded more often than a great idea with an inexperienced team. Manages should have expertise in all disciplines necessary to start and run a business.
Note: If qualifications are weak in given area mention outside consultants who will serve in these roles and describe qualifications.
Section 4 – Financial Plan
Provide a five-year projection for income, expenses, and funding sources. Don’t assume the business will grow in a straight line. Adjust your planning to allow for funding in various stages of the company’s growth. Explain the rationale and assumptions used to determine the estimates. Assumptions should be reasonable and based on industry/historical trends. Make sure all totals add up and are consistent throughout the plan. If necessary, hire a professional accountant or financial analyst to prepare these statements.
Note: Stay clear of excessively ambitious sales projections; rather, offer best case, expected, and worst-case scenarios. These not only reveal how sensitive the bottom line is to sales fluctuations but also serve as good management guides.
Section 5 – Marketing Plan
Don’t underestimate the competition. Review industry size, trends, and the target market segment. Sources like American Demographics magazine and the Rand McNally Commercial Atlas and Marketing Guide can help you put a powerful marketing plan together. Discuss strengths and weaknesses of the product more desirable than what’s already available and whether the product can be patented. Compare pricing to the competitions forecast sales in dollars and units. Outline sales, advertising, promotion, and public relation s programs. Make sure the costs agree with those projected in the financial statements.
Section 6 – Location Analysis (if Applicable)
The location of the business is an important factor. Provide a comprehensive demographic analysis of consumers in the area of the proposed business as well as a traffic-pattern analysis.
Section 7 – Appendix
Include all marketing research on the product or service and other information about the product concept or market size. Provide a bibliography of all the reference materials you consulted. This section should demonstrate that the proposed company won’t be entering a declining industry or market segment.
Practice Explaining Your Business
Once you’ve completed your plan, (and before you start scheduling meetings with bankers or investors) start practicing your delivery. Start by explaining your business plan to people who will offer honesty feedback. The more you practice, the better your actual presentation will be.
Summary
The best part about writing a business plan is that it allows you the luxury of going through a critical learning curve before ever launching your business. Luxury? Hmmm. Seems like ‘luxury’ might be an odd choice of wording for such a daunting task. The effort of writing a business plan takes quite a lot of time, patience, and due diligence. But, gladly, when you reach the end of the business plan writing process, you’ll have in your hands the outline — the blueprint with which to build your business foundation. You’ll have educated yourself and knowledge really is power. Having that power will help you to overcome uncertainties. And that’s a very good thing!
Posted in Business Plan | 
Tags: Add new tag, designer, economy, entrepreneur, Finiance, Freelance, maketing | 
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