Key Components of a Business Plan

Key Components of a Business Plan: Part II
By Dave Lavinsky


The first five components of a business plan provide an overview of the business opportunity and market research to support it. The remaining five components of the plan focus mainly on strategy, primarily the marketing, operational, financial and management strategies that that firm will employ. This article details these elements.

Marketing Plan. The marketing plan details your strategy for penetrating the target markets. Key components include the following:

A description of the company’s desired strategic positioning; Detailed descriptions of the company’s product and service offerings and potential product extensions;
Descriptions of the company’s desired image and branding strategy; Descriptions of the company’s promotional strategies An overview of the company’s pricing strategies A description of current and potential strategic marketing partnerships/ alliances

Operations/Design and Development Plans. These sections detail the internal strategies for building the venture from concept to reality, and include answers to the following questions:
What functions will be required to run the business? What milestones must be reached before the venture can be launched? How will quality be controlled?

Management Team. The Management Team section demonstrates that the company has the required human resources to be successful. The business plan must answer questions including:
Who are the key management personnel and what are their backgrounds? What management additions will be required to make the business a success? Who are the other investors and/or shareholders, if any? Who comprises the Board of Directors and/or Board of Advisors? Who are the professional advisors (e.g., lawyer, accounting firm)?

Financial Plan. The Financial Plan involves the development of the company’s revenue and profitability model. It includes detailed explanations of the key assumptions used in building the model, sensitivity analysis on key revenue and cost variables, and description of comparable valuations for existing companies with similar business models.

In addition, the financial plan assesses the amount of capital the firm needs, the proposed use of these funds, and the expected future earnings. It includes Projected Income Statements, Balance Sheets and Cash Flow Statements, broken out quarterly for the first two years, and annually for years 1-5. Importantly, all of the assumptions and projections in the financial plan must flow from and be supported by the descriptions and explanations offered in the other sections of the plan. The Financial Plan is where the entrepreneur communicates how he/she plans to “monetize” the overall vision for the new venture.

Appendix. The Appendix is used to support the rest of the business plan. Every business plan should have a full set of financial projections in the Appendix, with the summary of these financials in the Executive Summary and the Financial Plan. Other documentation that could appear in the Appendix includes technical drawings, partnership and/or customer letters, expanded competitor reviews and/or customer lists.

Expertly and comprehensively discussing these components in their business plan helps entrepreneurs to better understand their business opportunity and assists them in convincing investors that the opportunity may be right for them too.

Since its inception, Business Plans by Growthink has developed over 250 business plans. Growthink clients have collectively raised over $750 million in financing, launched numerous new product and service lines and gained competitive advantage and market share. Growthink has become the firm of choice for venture capital firms, angel investors, corporations and entrepreneurs in the know. For more information please visit http://www.growthink.com or download our free Business Plan Guide.

Article Source: http://EzineArticles.com/?expert=Dave_Lavinsky

Nine Ways to Make Your Work Plans Work

Nine Ways to Make Your Work Plans Work!
By Robin Henry


'Where do you want to go today?' asks Microsoft's advert. When Microsoft wrote that they knew that many people and firms have no idea where they want to go, or more importantly, how they will get there.

This item touches on work planning and presents a few ideas for you to consider when planning for your department or small business. Surprisingly, the benefits of strategic and operational planning are often overlooked. Many firms which spend money on planning often make it a once per year task and then, having developed their plans, let them sit unused on a shelf, in a file, or in drawer.

Each year they pull them out, dust them off and go through the planning process again only to see them filed away at the end of the process? Why? There are various reasons including: the organisational culture doesn't support planning; the plans are irrelevant; they are too complex or too lengthy; they are unachievable.

Some time ago I reviewed and rewrote a Work Plan (Operational) for a small organisation. It reminded me that throughout the years I have always planned within areas for which I have had responsibility. Planning helps avoid crises and achieve outcomes. Here are some tips for your work planning.

TIP ONE: Make sure you find out what policies, plans and procedures exist in your organisation that should be taken into account in your work plan. For example, is there a corporate plan, information technology plan, diversity plan, safety plan? If you don't take into account existing plans, policies and procedures, you may plan to do something that is unacceptable, unhelpful to the organisation, or otherwise counterproductive.

TIP TWO: Don't overplan. What's overplanning? Overplanning is producing a plan that has hundreds of key achievement objectives. Make your plan large or small enough to be achievable with your existing or expected future resources.

TIP THREE: Make your planning document in two parts. Part one contains any information you wish to include about your organisation, it's mission, how you determined the key achievement items etc. Make part two, or an attachment, the work plan proper. That way you can circulate or update the attachment without all the PR stuff .

TIP FOUR: Use a simple, tabular layout. Headings could be something like: Item No - Objective - How you will achieve the objective - When you will achieve it - How you will know you have achieved it - Who will be responsible

TIP FIVE: Don't include the routine in your plan. If you sell scrambled eggs and have been doing it very well for years, for heaven's sake don't waste your time creating a work plan that states how you will sell scrambled eggs. Focus your planning on issues you have that need to be resolved eg, strategies to increase market share.

TIP SIX: Make your plan the focus for your work efforts. This seems trite, but really, you need to integrate your plan into your daily work routine. Place a standing agenda item on planning in your staff meetings; schedule review meetings each month, quarter or less frequently.
TIP SEVEN: Ensure those affected by the plan share ownership. This can be done by seeking their help in developing, implementing and evaluating the plan. Make different people personally responsible for specific outcomes and link it with their performance management agreement.

TIP EIGHT: Think about having a limiting framework for your plan eg, '... our work plans will have no more than three key achievement focii, three levels of strategy and three action statements per plan.

TIP NINE: Celebrate your successes! When you achieve something in your plan, celebrate in some small way ... give yourself a pat on the back. It does wonders. If you keep the above tips in mind when writing your work plan, you should produce a worthwhile and useful document.
Copyright 2005 Robin Henry

Robin Henry is a human resources and development specialist, educator and Internet marketer. He operates his online business Desert Wave Enterprises (http://www.dwave.com.au) from Central Australia, but is at the time of writing, on assignment in the United Arab Emirates.
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Creating Business Plans : Why so Hard

Creating Business Plans: Why So Hard?
By Debbie Jensen


Artists beware! By far, the most difficult areas in creating successful and agreeable business plans have to do with working within proposed budgets and agreeing upon realistic time constraints. Typically, from my experience in providing the service of wedding photography, there are many hidden hours working on projects where clients typically underestimate processing time, skill level, and time spent in correspondence with them. I worry about my client accepting the cost of what it takes to pull together a top-notch product.

For instance, if I had a set of photographs on hand for a project and showed the pictures to a client prior to writing up a business plan, in many cases, the client would want me to throw in the photographs as a bonus. But, if the client had to purchase these photographs online for on average $300 each at Getty Images (that is, if I didn’t happen to have them on hand), my client would probably agree to pay the price. Then again, if the client knows that I will take the images on location for them, the price would be expected to go down to as low as $10 each. Yet, would I not deserve a fair marketable price per photograph? Since photography is second nature to me; my clients can easily think I am ripping them off due to the ease I have acquired with the camera. This is the type of issue that is very difficult to emotionally deal with.

Finding out what the fair market value is for artistic services (other than photographs) can be very misleading and stupefies most people (including myself at times). The varying talents of each artist vary and are difficult to price and compare.

To be honest, I think designers are easy targets for dishonest people. From my experience as a wedding photographer (a 20 year whirlwind), I have been verbally muscled around too much! I learned that I had to work with a pre-set pricelist of the cost of every facet of my business. Otherwise, the customer assumed all extra services were FREE. Not only this, but many people tried to “sweet talk” me into lowering prices by minimizing my efforts and costs while maximizing their financial challenges. So unfair! But, what was worse than that was the occasional disgruntled attitude (buyer’s remorse) after a shoot. This aspect is ugly and if a designer or photographer is not careful, the clientele can beat them down to the point of burning out of the business. When this occurs, it’s not “buyers beware,” rather it should be “artists beware!” (revise 2/14/2006)

Debbie JensenGraphic Designer and Photographerhttp://www.debjensendesigns.com
Article Source: http://EzineArticles.com/?expert=Debbie_Jensen

Preparing a Rental Business Plan

Preparing A Rental Business Plan
By Shaunta Pleasant


Many people in the world today want to buy those big screen plasma TV’s, personal computers and other high end electronic equipment, but many lack the money to buy such expensive products outright.

What this means to you is that there is an enormous business opportunity waiting in the rental business.

==The Rental Business Is Booming==
In fact, the rental business has been booming, and more and more entrepreneurs are finding that the rent to own business is an extremely profitable one.
The cornerstone to success in the rental business, however, is a quality and detailed rental business plan.
==Raising Start Up Cash==
Without a business plan, it will be virtually impossible to raise the startup cash you need to get the rental business off the ground.

Starting such a rental business can be quite costly, after all you will have to buy a large number of high end electronics, furniture, computer equipment and other items that your clients can rent from you.

==Borrowing Or Taking On Partners==
This means that you will likely need to either borrow the startup funds you need or take on partners and investors in order to get your business up and running.
The first document any business banker or potential investor will want to see is the rental business plan you have created. Without such a business plan in hand, it will be virtually impossible to raise the funds you need to be successful.

==Keeping Your Taxes Low==
In addition to its usefulness in getting the startup funds you need, a rental business plan will also be invaluable in a number of other ways as well. For instance, a good business plan will help you plan your tax liability to keep your taxes as low as possible.

Keeping taxes low is an important part of planning for any business, and your business plan can definitely come in handy when it comes to planning your taxes.
==Using A Tax Attorney Or An Accountant==
Of course it is likely that you will need help when creating your rental business plan, especially when it comes to such complicated matters as taxes.

Tax law is an incredibly complicated subject, and paying a tax attorney or accountant to review your rental business plan will be money well spent.

Shaunta Pleasant is a professional web writer and editor on business plan topics. Visit my site to learn more about writing a business plan at http://www.business-plan-made-easy.com
Article Source: http://EzineArticles.com/?expert=Shaunta_Pleasant

What's included in a construction Business Plan

What's Included In A Construction Business Plan

By Shaunta Pleasant

It is no secret that the construction business has been an extremely profitable place to see for quite a number of years.

Home construction and business construction have both been growing at incredible rates, and that means that there is significant opportunity in all aspects of building and repairing homes and businesses.
==Start Up Capital For Your Business==
Of course in order to be successful in the construction world, you will need a solid construction business plan behind you.

Without such a business plan for your proposed business, you will be unable to raise the startup capital you need, or to attract the funds you may need to finance growth or ongoing operations.
==Structuring Your Business Properly==
In addition, the information you gather while creating your construction business plan can help you to structure your business properly, and it can even help you easily see the challenges and the opportunities of you new business venture.

==Running Your Construction Business==
Your construction business plan should also include information on how you plan to run your business, and how you plan to attract and retain qualified employees.
Finding skilled help at an affordable hourly rate is one of the most serious challenges facing the construction industry, and it is important for your construction business plan to address this important issue.

==The Information To Bring With You When You Are Getting financed==
When you do start searching for startup funds for your new construction business, it is important to be as prepared as possible for your meeting with the business lender.
You will of course need to bring your construction business plan with you, and you will want to make sure that it is accurate and complete prior to arriving at the meeting.
Chances are the business lender will also want to see other financial information, such as your bank account statements and tax returns, so be sure that you have all the information needed at your fingertips.

Shaunta Pleasant is a professional web writer and editor on business plan topics. Visit my site to learn more about writing a business plan at http://www.business-plan-made-easy.com/construction-business-plan.html
Article Source: http://EzineArticles.com/?expert=Shaunta_Pleasant

Understanding and preparing a Franchise Business Plan

Understanding And Preparing A Franchise Business Plan
By Shaunta Pleasant


There are a growing number of people who have become disenchanted with the rat race and are looking for to strike out on their own and start their own businesses.
For these workers, a franchise business plan is often the best choice.

After all, with a franchise business plan you already have a business model that has been proven to work, and with a franchise business plan you can have a quality company standing behind you and guiding you through opening and running a business.

==Consider The Level Of Support For Your Franchise Business==
It is important to carefully evaluate any franchise business plan you are considering, however, and to make sure that you know just what it is you are getting into.

The level of support offered by various franchise business plans can vary quite a bit, so it is definitely a good idea to thoroughly evaluate not only the franchise business plan but the company behind it.

==Use The Internet To Get Advice On What To Look For And What To Avoid==
Luckily, it is easier than ever these days to evaluate any franchise business plan which you are considering.

Thanks to the power of the internet, it is now possible to easily swap information with current owners of the franchise business plan you are considering, and to share their real world experiences and get advice on what to look for and what to avoid.
Of course it is important to get impartial information when it comes to evaluating a franchise business plan and this can sometimes be difficult.

Whether online or offline, it can be hard to sort out who has a vested interest in the franchise business plan they are discussing, and that is why it is so important to solicit as much advice as you possibly can.

==Choose A Franchise Business That Match Your Passion For Business==
A franchise business plan can be your ticket to financial freedom, but it is important to know that the franchise business plan suits your needs and your abilities.
It is best to choose a franchise business plan in which you have a real interest and a real passion. Choosing a franchise business plan that matches what you already know how to do is the best way to ensure a successful venture and a solid future.

Shaunta Pleasant is a professional web writer and editor on business plan topics. Visit my site to learn more about writing a business plan at http://www.business-plan-made-easy.com/franchise-business-plan.html

Article Source: http://EzineArticles.com/?expert=Shaunta_Pleasa

How to Make A Plan for Your Online Business

How to Make a Plan for Your Online Business
By Valerian Dinca


May be you awoke one morning with a fantastic idea for starting an online business and you hadn't a doubt in your mind that you could turn it into a huge success. Despite all ideas floating around in your head at the moment you don't feel yourself nearly prepared for the start. You have no reason to be afraid of. Internet may be revolutionizing the way the world does business, but it shouldn't change the approach to writing a business plan.

Whether you're starting an online venture or a traditional small business, the basic administration elements are the same: <> a description of the business,<> a marketing plan,<> a management plan, and<> a financial plan. The most effective strategy at this stage of the game would be to start writing things down. The only difference is that you should consider each element in the context of a web based activity and to develop a business plan that can't lose.

1. The description of the business.This is the first section you must write because it drives the remainder of your plan. First of all, this section describes why you want to be in business and it is a good opportunity for you to evaluate your skills and motivation. Make sure you are ready mentally, emotionally and financially to begin this business. Then you should state what is your venture's mission and what you're going to do.

2. The marketing plan.A marketing and promotion strategy should be made part of your starting planning phase in spite of the fact it will changed and many times over the life of your business. To find the ways you'll follow make the ideal client profile and then develop a customer service policy. Take into your consideration the similar products existing on the market to have a general picture. If you are a newbie in online marketing, think that purchasing a good Internet marketing course will pay big dividends in the future

3. The management plan.It's important to set goals, both long term and short term, but set reasonable goals. Think very carefully about how much time you are able to invest in developing and maintaining your business. Then assign a term for every goal.

4. The financial plan.You need a budget. For good advises or professional tools you must pay. What is free is time consuming and often efficientless. You are investing in your future. If this is not your first goal in your business plan, then reconsider your reasons for running an online venture. A final piece of advice.It's amazing how quickly you can forget something that you thought would stay with you forever, so keep notes on all your ideas

Valerian Dinca is a freelance writer specialized in items like home business planning
Article Source: http://EzineArticles.com/?expert=Valerian_Dinca

Writing a Business Plan

Writing a Business Plan By Stephen Kreutzer

Preparing a business plan is the most important part of starting a business. So much rests on the business plan, from financing to suppliers. A business plan shows that you are prepared, educated, and dedicated to your business. A good business plan will define what your business is about, where you expect it to go in the future and how you will get there. The following outline the essentials of a good business plan.

1. Executive Summary - This explains about everything that is the rest of the business plan. It should be written to completely cover every aspect of the rest of the business plan. A good way to think about it is this may be the only part of the whole plan that gets read, so it should sell your business.

2. Table of Contents - Do not elaborate. Keep it short and to the point. You get to explain later.
3. Company Description - This should cover the basics of your business. What industry and what products/services your business provides. It should also cover what makes your business stand out from the competition and how you will be successful.

4. Market Analysis - This is where you prove that you have done your marketing research. You should explain about the industry, including target markets. Explain your competition and compare your business to them. Explain your marketing strategies and plans.

5. Technology - Explain the technology you will use and how new developments may affect your business.

6. Business Operations or Manufacturing - Explain how you will conduct business. What makes you better than the competition as far as operations.

7. Management and Ownership - Here you will need to name all the key personnel. Explain their skills, education and what they bring to the company.
8. Organization and Personnel - This is where you explain your personnel needs. State how many employees are needed, how you will pay them and what you will pay them. Also explain the personnel organizational structure.

9. Capital and Usage - This should be very detailed and explained. Starting with how much is needed to start and then projection of needs.

10. Financial - Here is where you get to project future gains and losses. You should list them quarterly until the business breaks even then annual reports are fine.
12. Appendices - Any resumes, references, copies of studies done or anything else to back up information in the business plan should be included here.

These 12 steps should help you put together a solid business plan. Just keep in mind that you should stick to the facts and back everything up with evidence.
About the author: Stephen Kreutzer is a freelance publisher based in Cupertino, California. He publishes articles and reports in various ezines and provides business information on Your Business Plan!

Article Source: http://EzineArticles.com/?expert=Stephen_Kreutzer

Get Your Own Product

Get Your Own Product!
By Kim Haas


It's common knowledge that the hottest seller on the Internet today is information. Many people are aimlessly searching the 'net' looking for affiliate programs which provide "ready made" products. Who actually makes the biggest profit from affiliate programs? Right! The merchants themselves. You probably will get an average of 10-15% if you're lucky.
Many affiliate programs offer what's called a 'referral fee', which is a very small amount of money in most cases. Some affiliate programs offer a whole 5 cents per click through while they themselves are making $30-200 dollars off that customer you sent. Doesn't sound fair does it? It's not!

In order to have a successful business, you must have your own product. That product must fill a need for many people. Start out by making a list of what you like to do. Include everything! Your work and volunteer experience can be considered an asset to your business and may even hold the key to the product that you decide to sell. Perhaps you have a hobby and create corn silk dolls for instance....or you've invented a cool gadget to help you do something.
Look over your list and get some ideas from it. List a few possible businesses you can start from this list of ideas. Eliminate anything that isn't appealing or won't fill a need that people have. When you start a business from something that you enjoy doing, you won't be quickly bored with it and give up before it's had a chance to get off the ground.

Try to list potential areas of personal background, special training, educational and job experience, and special interests that could be developed into a business.
There are literally thousands of things you can do in a home based business. All it takes is a little imagination and creativity to come up with an idea. The more unique your idea, the better off you and your business are going to be. You also might try checking the public library near you. Something as simple as leafing through the card catalog (they do still have those) for something to spark an idea.

You will also need to get a good idea of how successful your product or service will be. Write down a list of the characteristics and selling points of your product based on price, durability, performance, ease of use, size or weight and appearance, packaging or any other features you can think of.

Rate the product on a scale of 0 to 10 for each of the characteristics you wrote down. Be honest or this exercise will be a waste of time. A -0- score indicates your competitors product puts yours to shame, a 10 indicates your product or service is much better than what your competitor offers.

Once you've finished rating your product, go over the list and see if there are any ways you can improve your product to make it better than other similar products on the market. Make note of the features that are rated 8 or better as these are the best selling points for writing future ad copy.

If you're ready to become rich, then think seriously about selling a product or service (preferably something exclusively yours) - something that you "pull out of your brain"; something that you write, manufacture or produce for the benefit of other people.
Kim Haas is a WAHM and Founder of Womans-Net.com, a popular online networking community focusing on working from home and women in business and owner of http://article-host.com/. To learn more about Kim, visit http://kimberlyhaas.com/" Copyright 2005 Kim Haas
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The Addictive Business Plan

The Addictive Business Plan
By Dave Lavinsky


While the average business plan ranges from twenty to thirty pages in length, on average, investors only read one page of each business plan they receive. Obviously, for a business plan to receive funding, investors have to be encouraged to read the entire business plan, and then take additional action such as setting up a meeting with the company’s management.
In figuring out how to get investors to read more than the first page of a business plan, soap operas quickly came to mind. Soap operas are very effective in getting viewers to keep watching over time. They do this by making their content addictive. That is, they have cliff hanger episodes, they pique the interest of viewers, and they make viewers eager to learn what will happen next. By making their business plans addictive, ventures entice investors to want to learn more and best position themselves to reap an investment.

So how do you make a business plan addictive? They key is to bring up, in the Executive Summary, exciting factors regarding why the venture is a great investment opportunity and then further substantiate each of these factors in the remainder of the plan. Such factors include how and why your company is unique; why you have a sustainable competitive advantage; why market trends support your vision; why your exit strategy will provide a significant return to investors; and why management is uniquely qualified to execute on the opportunity among others.

Developing an addictive business plan is often the difference between a plan that gets pushed aside after one page and one that investors review thoroughly and act upon. As such, it is critical to make the plan addictive. Going back to the soap opera analogy, keep in mind however that investors are much more sophisticated than the average soap opera viewer. As such, the addiction must not be based on fluff, but solid information about the investment opportunity.
Since its inception, Growthink Business Plans & Business Planning has developed over 300 business plans. Growthink clients have collectively raised over $750 million in financing, launched numerous new product and service lines and gained competitive advantage and market share. Growthink has become the firm of choice for venture capital firms, angel investors, corporations and entrepreneurs in the know and offers Business Planning, Venture Research and Venture Capital Services.

Article Source: http://EzineArticles.com/?expert=Dave_Lavinsky

How to Write a Business Plan

How to Write A Business Plan
By Charles Fuchs


Knowing how to effectively write a business plan is important if you want to get financing to support your business. Yet knowing how to write a business plan will also help you define specific issues that will define how you do business in the beginning and as your business grows. There are very specific items you will need to look at more closely as you learn how to write a business plan.

As you being to learn how to write a business plan, you will need to get a good idea of your overall business. The first item that will go into your business plan is your introduction, so as you develop how to write a business plan you should also develop a summary of your business. The introduction will include a description of your business and its goals, the ownership of the business and its legal structure, and what skills or experience you bring to your business. Another item to think closely about as you learn how to write a business plan is what advantage you have over your competitors. It is okay if you do not know this already, as you learn how to write a business plan, the other parts of the plan will help you write your introduction.
Knowing how to effectively write a business plan also means learning a little about marketing and how you will use it effectively to promote your business. You will need to be able to define customer demand, identify your market, and explain your pricing strategy in this section. So before you move further in how to write a business plan, you should do your research into marketing techniques that will be effective for your business.

The next item you will need to learn in how to write a business plan is how to manage your business money. When potential investors read your business plan, you want to give them the idea that you have a solid financial plan for the money they are about to give you. Therefore, as you learn how to write a business plan, you should also be able to write about your initial capital, develop an initial first year budget, provide projected income statements and balance sheets for two years, talk about your breakeven point, and more. Also as you develop your skills in how to write a business plan, you want to do some thinking about the future and present several “what if” scenarios in this section so that potential investors know that you are able to see both the best case scenario and the bumps in the road.

Next when you are learning how to write a business plan is to develop your operations plan. This is where you will begin thinking about how your business will be managed on a daily basis. As you continue with how to write a business plan, you will need to also think about hiring, insurance, rent, equipment, services, etc.

Finally, your summary skills will come in handy as you learn how to write a business plan, for the final section is the concluding statement. In this section you will summarize all of your business goals and objectives. It is important that upon completion that you ask friends or colleagues to look it over, because there are always new things to learn about how to write a business plan.

Read the rest of the article here: Business Plans.
Download the Free Quick Start Workbook (Free $97 Value!) and receive valuable tips, strategies and techniques designed to grow a very successful Home Based Business.
Copyright © Charles Fuchs is an established Six Figure Income earner and one of the top online marketer's. He specializes in showing people the Best Home Based Business and Jobs Information.

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Getting Rich Through Innovation

Getting Rich Through Innovation
By Matt Fox


You have planned your business to use systems to ensure quality as well as control costs and increase profits. One of the systems is an innovation program that is used daily. To make your innovation program effective you will need to quantify your results to ensure your innovations actually help the business. To quantify your results means to produce numbers that can be measured. You want to count everything in your business. From the number of customers you have daily you can break down more numbers. The number of customers in the morning, in the afternoon, in the evening, on a rainy day, a sunny day, a cloudy day, week days, week ends and so on.

Now you implement your innovation, maybe if you’re a salesman you wear only blue suits and red ties for six weeks. You have continued to quantify your customers and compare the numbers from before you started your innovation to the end of the six weeks. Now you try a brown suit for six weeks. You check the results again and determine that you sell more products wearing a blue suit and a red tie. You will not be wearing brown suits to work anymore. This is innovation, quantification and implementation of the innovation.

The possibilities are endless. This process will help you develop the best systems for your business. By having systems in your business you will eliminate choice and discretion. This will be a repeatable process that will give you results that you can implement as your business grows. This gives you a unique way of doing business that is proprietary property. Simply by innovating simple things such as this you are creating value in your business. In essence, you are creating wealth.

With three startup businesses before he was 21 years old, Matt Fox has the experience to help you create your own businesses for your financial future. See his blog at http://www.bizmaker.blogspot.com.
Article Source: http://EzineArticles.com/?expert=Matt_Fox

Failing to Plan is Planning to Fail

Failing To Plan Is Planning To Fail!
By Mark Flanighan


Ok most of us have heard this statement, possibly even have it on a poster on the wall or even used it within internal training sessions to your staff. But I find this one of the most ignored business statements there is. You would be surprised how many businesses start without a business plan written down in an organised form, covering all of the business issues. The truth is, had many of these businesses took the time to do this; chances are many may never have been started in the first place. Take for example marketing. A business owner might in his head know what he wants to sell and how much he is going to sell if for, but never once considers it would take money to promote or market his services or product.

A structured business plan would have shown this. Take banking charges, seasonality or products, Christmas time when businesses shut down, holiday time when potential customers are away on holiday are all factors that should be written into a structured business plan. When the question is asked the answer nearly always is, “I do have a business plan, it’s just not written down but in my head”. When you consider every function that is a business function it is hard to believe that anyone could keep all that information neatly within one’s mind. There are a group of businesses that are even worse than that. Those that have spent valuable time putting together a master business plan just to have it in a drawer or on a shelf never to be seen or used. Why waste all that valuable time for no return?

A business plan should be drafted as a working document, should contain every function to the business and must be set up in a way to be flexible to changes. It should be a working document in that it can be transported for others to see, is in easy understandable language; contain everything about your business so surprises are limited. And as it is extremely unlikely that everything will go to plan, you should allow flexibility within your figures. Then within your business plan, diarise to review this business plan every so often depending on the nature of the business. If it does better than expected adjust the plan to suit, if it is not so well, again adjust your new plan to suit. A business plan allows you to control your business rather than business controlling you. When you consider the planning that goes into the family holiday for 2 weeks, it is sometime astonishing of how little planning goes into something that could mean the lifeline to the business owner, its staff and everyone connected to it.

Mark is web master for Breakdown Recovery is a Business Consultant and Retail Consultant
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What's a Niche and How do you find one

What's a Niche and How Do You Find One? By Kathryn Beach


According to Wikipedia, a niche is "a special place within the scheme of things." Niche marketing is defined as "the process of finding and serving small but potentially profitable market segments and designing custom-made products or services for them." So it's all about finding your special place and the products and services that fit.

Right from the start, you should understand that your goal in discovering a niche is to concentrate all your ideas and thoughts into the most precise, concise, and focused concept possible. Your potential audience is everyone in the world with computer access and an interest in your site's topic. Your potential information resources are everything known about that topic. So you want to be sure to have enough information to eventually fill hundreds of pages, and you want to narrow your focus enough that you can be perceived as an expert, as "THE place to go" for information, products, and/or services.

I want to add right now that if your only interest is making money online, this is a very difficult subject to build a website around these days. That niche was "hot" eight years ago. Most successful internet entrepreneurs in that area say they would not attempt breaking into that niche if they were starting out today. There's just too much competition, there are way too many experts already. Breaking into a niche using keywords like "make money at home" "work at home" "home business" is next to impossible. There are billions of niches out there; find yours.

Focus, focus, focus...

Let's say you're interested in art. You can narrow your focus by choosing an art medium, period in history, particular artist, subject (still lifes, dogs, clothing, hairstyles, architecture, etc.), events, geographical location, and/or the life and inspiration of one or more artists. Your aim should be to choose as many of these focal points as possible, so that the end result is extremely well-defined subject matter.

Then you want to find out how frequently people are searching for this information, what keywords they are entering in the search engines, and how many sites are currently available with that information. Eventually you will come up with your concept, your keywords, and you can begin creating your domain name and meta tags for your website.

Keywords were named that for a reason...

Every page on your website will have its own keywords. These are the words that people will enter into a search engine and find your webpage. Maybe your art interest has been narrowed down to the history of London architecture as depicted in the photographs of John Doe. You must find the best keywords, see what sites are currently available, maybe change your focus until you find just the right balance between what's hot, what's available, and what's wide open for you.

This all may seem a bit confusing, and it's not my purpose here to show you exactly how to do all this, because there's already a step-by-step manual available and it's free, so why reinvent the wheel? It's the Affiliate Masters Course by SiteSell. Pick up your copy and go through it one page at a time. Don't skip steps no matter how tedious they may seem, because once this work is done, you'll pick up speed and you'll never lose focus.

Doing your homework completely at the beginning is crucial to your success. It's the hardest part, and at the moment, the least rewarding. But once it's done, you've got the skeleton, the foundation, of everything else you will be doing. You'll have a list of websites to refer back to for researching all the rest of your web pages, articles, links, and so on.
Might as well start out with the current "hot item"...

One last tool before I wind this up. There's a new kind of free advertising out there that's also an incredible tool when you're gathering information. It's called "Social Bookmarking" or "tagging". It's the latest alternative to linking, but it's also a great way to create your reference list when you're going through the Affiliate Masters Course. In addition to creating spreadsheets with the information you find as you're directed to do within AMC, you can create your own bookmark page online containing all the sites you visit that are relevant to your niche. Eventually this forms a web of links and backlinks, but in the meantime you'll have all your sites for further research in one place. You can read more about "tagging" and the service "TagExplosion" on my website. It's a free service until you wish to use it for advertising, then there's a one-time fee. For now, the free offer is all you need, and it's a great help as you're getting started building your niche website.

Kathryn Beach has been building websites and businesses online since 1998. She shares knowledge from personal experience, about getting started in affiliate marketing as well as about her passion for the healing properties of tea tree oil, on her website, "Affiliate Marketing Tips" [http://www.7affiliatecentral.com]. To receive the newsletter send an email to niche@kathrynbeach.emailaces.com

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How to Prepare A Business Plan

How To Prepare A Business Plan That Guarantees Big Profits By Julia Tang


It is always said "If you Fail to Plan, you Plan to Fail"

Success in business comes as a result of planning. You have to have a detailed, written plan that shows what the ultimate goal is, the reason for the goal, and each milestone that must be passed in order to reach your goal.

A business plan is written definition of, and operational plan for achieving your goal. You need a complete but success tool in order to define your basic product, income objectives and specific operating procedures. YOU HAVE TO HAVE A BUSINESS PLAN to attract investors, obtain financing and hold onto the confidence of your creditors, particularly in times of cash flow shortages--in this instance, the amount of money you have on hand compared with the expenses that must be met.

Aside from an overall directional policy for the production, sales effort and profit goals of your product--your basic "travel guide" to business success--the most important purpose your business plan will serve, will be the basis or foundation of any financial proposals you submit. Many entrepreneurs are under the mistaken impression that a business plan is the same as a financial proposal, or that a financial proposal constitutes a business plan. This is just a misunderstanding of the uses of these two separate and different business success aids.
The business plan is a long range "map" to guide your business to the goal you've set for it. The plan details the what, why, where, how and when, of your business--the success planning of your company.

Your financial proposal is a request for money based upon your business plan--your business history and objectives.

Understand the differences. They are closely related, but they are not interchangeable.
Writing and putting together a "winning" business plan takes study, research and time, so don't try to do it all in just one or two days.

The easiest way to start with a loose leaf notebook, plenty of paper, pencils, pencil sharpener, and several erasers. Once you get your mind "in gear" and begin thinking about your business plan, "10,000 thoughts and ideas per minute" will begin racing thru your mind...So, it's a good idea when you aren't actually working on your business plan, to carry a pocket notebook and jot down those business ideas as they come to you--ideas for sales promotion, recruiting distributors, and any other thoughts on how to operate and/or build your business.
Later, when you're actually working on your business plan, you can take out this "idea notebook" evaluate your ideas, rework them, refine them, and integrate them into the overall "big picture" of your business plan.

The best business plans for even the smallest businesses run 25 to 30 pages or more, so you'll need to "title" each page and arrange the different aspects of your business plan into "chapters." The format should pretty much run as follows:

Title Page Statement of Purpose Table of Contents Business Description Market Analysis Competition Business Location Management Current Financial Records Explanation of Plans For Growth Projected Profit & Loss/Operating Figures Explanation of Financing for Growth Documentation Summary of Business & Outlook for The Future Listing of Business & personal

References
This is a logical organization of the information every business plan should cover. I'll explain each of these chapters titles in greater detail, but first, let me elaborate upon the reasons for proper organization of your business plan.

Having a set of "questions to answer" about your business forces you to take an objective and critical look at your ideas. Putting it all down on paper allows you to change, erase and refine everything to function in the manner of a smoothly oiled machine. You'll be able to spot weakness and strengthen them before they develop into major problems. Overall, you'll be developing an operating manual for your business--a valuable tool which will keep your business on track, and guide you in the profitable management of your business.

Because it's your idea, and your business, it's very important that YOU do the planning. This is YOUR business plan, so YOU develop it, and put it all down on paper just the way YOU want it to read. Seek out the advice of other people; talk with, listen to, and observe, other people running similar businesses; enlist the advice of your accountant and attorney--but at the bottom line, don't ever forget it has to be YOUR BUSINESS PLAN!

Remember too, that statistics show the greatest causes of business failure to be poor management and lack of planning--without a plan by which to operate, no one can manage; and without a direction in which to aim its efforts, no business can attain any real success.
On the very first page, which is the title page, put down the name of your business-ABC ACTION--with your business address underneath. Now, skip a couple of lines, and write it all in capital letters: PRINCIPAL OWNER--followed by your name if you're the principal owner. On your finished report, you would want to center this information on the page, with the words "principal owner" off-set to the left about five spaces.
Examples: ABC ACTION 1234 SW 5th Ave. Anywhere, USA 00000
PRINCIPAL OWNER: Your Name
That's all you'll have on this page except the page number -1-

Following your title page is the page for your statement purpose. This should be a simple statement of your primary business function, such as: We are a service business engaged in the business of selling business success manuals and other information by mail.

The title of the page should be in all capital letters across the top of the page, centered on your final draft--skip a few lines and write the statement of purpose. This should be direct, clear and short--never more than (2) sentences in length.

Then you should skip a few lines, and from the left hand margin of the paper, write out a sub-heading in all capital letters, such as: EXPLANATION OF PURPOSE.

From, and within this sub-heading you can briefly explain your statement of purpose, such as: Our surveys have found most entrepreneurs to be "sadly" lacking in basic information that will enable them to achieve success. This market is estimated at more than a 100 million persons, with at least half of these people actively "searching" for sources that provide the kind of information they want, and need.

With our business, advertising and publishing experience, it is our goal to capture at least half of this market of information seekers, with our publication. MONEY MAKING MAGIC! Our market research indicates we can achieve this goal and realize a profit of $1,000,000 per year within the next 5 years...

The above example is generally the way you should write your "explanation of purpose," and in subtle definition, why you need an explanation. Point to remember: Keep it short. Very few business purpose explanations justify more than a half page long.

Next comes your table of contents page. Don't really worry about this until you've got the entire plan completed and ready for final typing. It's a good idea though, to list the subject (chapter titles) as I have, and then check off each one as you complete that part of your plan.
By having a list of the points you want to cover, you'll also be able to skip around and work on each phase of your business plan as an idea or the interest in organizing that particular phase, stimulates you. In other words, you won't have to make your thinking or your planning conform to the chronological order of the "chapters" of your business plan--another reason for the loose leaf notebook.

In describing your business, it's best to begin where your statement purpose leaves off. Describe your product, the production process, who has responsibility for what, and most importantly, what makes your product or service unique--what gives it an edge in your market. You can briefly summarize your business beginnings, present position and potential for future success, as well.

Next, describe the buyers you're trying to reach--why they need and want or will buy your product--and the results of any tests or surveys you may have conducted. Once you've defined your market, go on to explain how you intend to reach that market--how you'll these prospects to your product or service and induce them to buy. You might want to break this chapter down into sections such as..publicity and promotions, advertising plans, direct sales force, and dealer/distributor programs. Each section would then be an outline of your plans and policies.
Moving into the next chapter on competition, identify who your competitors are--their weakness and strong points--explain how you intend to capitalize on those weaknesses and match or better the strong points. Talk to as many of your "indirect" competitors as possible--those operating in different cities and states.

One of the easiest ways of gathering a lot of useful information about your competitors is by developing a series of survey questions and sending these questionnaires out to each of them. Later on, you might want to compile the answers to these questionnaires into some form of directory or report on this type of business.

It's also advisable to contact the trade associations and publications serving your proposed type of business. For information on trade associations and specific trade publications, visit your public library, and after explaining what you want ask for the librarian's help.

The chapter on management should be an elaboration on the people operating the business. Those people that actually run the business, their job, titles, duties, responsibilities and background resume's. It's important that you "paint" a strong picture of your top management people because the people coming to work for you or investing in your business, will be "investing in these people" as much as your product ideas. Individual tenacity, mature judgement under fire, and innovative problem-solving have "won over" more people than all the AAA Credit Ratings and astronomical sales figures put together.

People becoming involved with any new venture want to know that the person in charge--the guy running the business knows what he's doing, will not lose his cool when problems arise, and has what it takes to make money for all of them> After showing the "muscle" of this person, go on to outline the other key positions within your business; who the persons are you've selected to handle those jobs and the sources as well as availability of any help you might need.

If you've been in business of any kind scale, the next chapter is a picture of your financial status--a review of your operating costs and income from the business to date. Generally, this is a listing of your profit & loss statements for the six months, plus copies of your business income tax records for each of the previous three years the business has been an entity.

The chapter on the explanation of your plans for the future growth of your business is just that--an explanation of how you plan to keep your business growing--a detailed guide of what you're going to do, and how you're going to increase your profits. These plans should show your goals for the coming year, two years, and three years. By breaking your objectives down into annual milestones, your plan will be accepted as more realistic and be more understandable as a part of your ultimate success.

Following this explanation, you'll need to itemize the projected cost and income figures of your three year plan. I'll take a lot of research, an undoubtedly a good deal of erasing, but it's very important that you list these figures based upon thorough investigation. You may have to adjust some of your plans downward, but once you've got these two chapters on paper, your whole business plan will fall into line and begin to make sense. You'll have a precise "map" of where you're headed, how much it's going to cost, when you can expect to start making money, and how much.

Now that you know where you're going, how much it's going to cost and how long it's going to be before you begin to recoup your investment, you're ready to talk about how and where you're going to get the money to finance your journey. Unless you're independently wealthy, you'll want to use this chapter to list the possibilities and alternatives. Make a list of friends you can approach, and perhaps induce to put up some money as silent partners. Make a list of those people you might be able to sell as stockholders in your company--in many cases you can sell up to $300,000 worth of stock on a "private issue" basis without filing papers with the Securities and Exchange Commission. Check with a corporate or tax attorney in your area for more details. Make a list of relatives and friends that might help you with an outright loan to furnish money for the development of your business.

Then search out and make a list of venture capital organizations. Visit the Small Business Administration office in your area--pick up the loan application papers they have--read them, study them, and even fill them out on a preliminary basis--and finally, check the costs, determine which business publications would be best to advertise in, if you were to advertise for a partner or investor, and write an ad you'd want to use if you did decide to advertise for monetary help.

With listing of all the options available to your needs, all that's left is the arranging of these options in the order you would want to use them when the time come to ask for money. When you're researching these money sources, you'll save time by noting the "contact" deal with when you want money, and whenever possible, by developing a working relationship with these people.

If your documentation section, you should have a credit report on yourself. Use the Yellow Pages or check at the credit department in your bank for the nearest credit reporting office. When you get your credit report, look it over and take whatever steps are necessary to eliminate any negative comments. Once these have been taken care of, ask for a revised copy of your report and include a copy of that in your business plan.

If you own any patents or copyrights, include copies of these. Any licenses to use someone else's patent or copyright should also be included. If you own the distribution, wholesale or exclusive sales rights to a product, include copies of this documentation. You should also include copies of any leases, special agreements or other legal papers that might be pertinent to your business.
In conclusion, write out a brief, overall summary of your business- when the business was started, the purpose of the business, what makes your business different, how you're going to gain a profitable share of the market, and your expected success during the coming 5 years..
The last page of your business plan is a "courtesy page" listing the names, addresses and phone numbers of personal and business references--persons who have known you closely for the past five years or longer--and companies or firms you've had business or credit dealings with during the past five years.

And, that's it--your complete business plan. Before you send it out for formal typing, read it over once a day for a week or ten days. Take care of any changes or corrections, and then have it reviewed by an attorney and then, an accountant. It would also be a good idea to have it reviewed by a business consultant serving the business community to which your business will be related. After these reviews, and any last-minute changes you want to make, I'll be ready for formal typing.

Type and print the entire plan on ordinary white bond paper. Make sure you proof-read it against the original. Check for any corrections and typographical errors--then one more time--read it through for clarity and the perfection you want of it.

Now you're ready to have it printed and published for whatever use you have planned for it--distribution amongst your partners or stockholders as the business plan for putting together a winning financial proposal, or as a business operating manual.

Take it to a quality printer in your area, and have three copies printed. Don't settle for photo-copying..Have it printed!

Photo-copying leaves a slight film on the paper, and will detract from the overall professionalism of your business plan, when presented to someone you're trying to impress. So, after going to all this work to put together properly, go all the way and have it duplicated properly.

Next, stop by a stationery store, variety store or even a dime store, and pick up an ordinary, inexpensive bind-in theme cover for each copy of your business plan. Have the holes punched in the pages of your business report to fit these binders and then slip each copy into a binder of its own.

Now, you can relax, take a break and feel good about yourself..You have a complete and detailed business plan with which to operate a successful business of your own. A plan you can use as a basis for any financing proposal you may want to submit..And a precise road-map for the attainment of real success...

You just complete one of the important steps to fulfill of all your dreams of success.
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Julia Tang publishes Smart Online Business Tips, a fresh and informative newsletter dedicated to supporting peoplelike you! To find out the best online business opportunities,and to discover hundreds more proven and practical internet marketing secrets, plus FREE internet marketing products worth over $200, visit: http://www.best-internet-businesses.com
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Note: Feel free to publish it with the resource box and content unchanged
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Business Results - 4 Critical Success Factors

Business Results - Four Critical Success Factors By Leanne Hoagland-Smith



Scenario One
During a recent presentation, a business owner was given the following challenge. If 10 of his 100 employees were asked to name the top 3 organizational goals for the current year as they perceived them to be, would he receive the same 3 goals from everyone or would he receive 5, 10 or even 25 different goals? The business owner shook his head and thoughtfully responded, “No, I am sure that I would receive more than 3 goals.” He was then asked to consider what these misdirected actions from his employees were costing him in terms of missed opportunities.

Scenario Two

At another presentation, a business owner was asked if she set goals? She responded quite enthusiastically, “Of course, I set goals.” She was asked a follow-up question: “Can you state with 100% conviction that your employees know how to consistently achieve both their personal and professional goals?” After a few moments, she replied “No.” She was then asked how this lack of knowledge potentially affected her bottom line?

Scenario Three

A president of a company was asked: “Have you ever seen behavior inconsistent with your strategic plan?” He quickly answered “Yes!” A second question was asked, “What did you do about it?” “Well, we sent them to training and within 6 months we had to send them back again?” A new question was then posed to the President. “Are these performance failures a result of a lack of knowledge or skills or due to poor attitudes and habits?” The president immediately said “Why bad attitudes and poor habits.” Again, the facilitator asked another question: “What are all these re-do’s costing your company?”

Scenario Four

During the annual meeting, the CEO of a manufacturing company informed her executive team that she wanted to achieve a 10% growth during the next 12 months. The VP of Operations made plans to purchase new manufacturing equipment for some new products while the VP of Marketing & Sales began to implement a plan selling existing products. The CFO decided to cut budgets to capital improvements and marketing. All three executive team members believed that their actions would help achieve the 10% growth.

These scenarios shared four critical success factors (CSF’s) that impede all organizations from achieving consistent results: communication, goal setting and goal achievement skills, attitudes and alignment.

Critical Factor #1: Communication is the key to unlocking the potential within businesses as well as individuals. When the goals are in alignment with the vision and consistently communicated from top down, then performance excellence is much more likely to happen. Inconsistent communication contributes to missed targets and lowers the performance for the entire organization.

Critical Factor #2: Goal setting and goal achievement are learned skills. Unfortunately, many presume that these skills are acquired during the K-12 educational experiences through the “Osmosis Process.” Also, these skills are not actively taught in the corporate setting. Yet, consistent goal achievement or the results are what every organization seeks.

Critical Factor #3: Attitudes drive behaviors that result in change. Many companies focus on trying to change negative behaviors because they are experiencing negative change. However, when the negative attitudes are replaced with positive attitudes, those attitudes will drive positive behaviors creating positive change. By failing to address negative attitudes, new trends, changes or initiatives, the result is wasted resources creating a negative drain on the “KASH Box.”

Critical Factor #4: Alignment is necessary to ensure that the desired results are achieved. Performance excellence happens when the strategies, systems and people are working together to build loyal internal customers that drive loyal external customers. The much heard adage about “Getting everyone to row in the same direction” is true, but probably should be amended to include the following “by using the same paddles.”

When these four CSF’s work together, results happen quicker and create a culture of working “smarter and not harder.” The following questions may help you to achieve the consistent results that you desire as you work your strategic plan:

1. Do I know with 100% accuracy that every employee can clearly articulate the top 3 goals for the organizations?

2. Does every person within the organization consistently sets and achieves all of his or her personal and professional goals?


3. Does everyone within the organization at ALL times consistently demonstrate positive attitudes?

4. Are the strategies, systems and people in alignment to build loyal internal customers?
Leanne Hoagland-Smith, M.S. President of ADVANCED SYSTEMS, is the Process Specialist. With over 25 years of business and education experience, she builds peace and abundance by connecting the 3P’s of Passion, Purpose and Performance through process improvement. Her ROI driven process solutions affect sustainable change in 4 key areas: financials, leadership, relationships and growth & innovation with a variety of industries. She aligns the strategies, systems and people to develop loyal internal customers that lead to external customers. As co-author of M.A.G.I.C.A.L. Potential:Living an Amazing Life Beyond Purpose to Achievement due for June 2005 release, Leanne speaks nationally to a variety of audiences. Please call Leanne a call at 219.759.5601 or email leanne@processspecialist.com if you are seeking amazing results.
Copyright 2005 Leanne Hoagland-Smith, http://www.processspecialist.com

Permission to publish this article, electronically or in print, as long as the bylines are included, with a live link, and the article is not changed in any way (grammatical corrections accepted).
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Business Plan Financial Projections

Business Plan Financial Projections: Stop Worrying About Being Right...By Michael Elia


Business plan financial projections seem daunting because they are so uncertain. This very uncertainty, however, is what makes preparing them easy because you can’t possibly be right. You can’t predict the future. None of us can. All you can be is competent in the way you prepare your business plan projections.
Before you finalize your business plan this year, consider these six caveats to preparing your business plan financial projections:

1. Don’t offer pull-out-of-the-air, “conservative” guesstimates about getting some percentage of the overall market demand or year-over-year growth.

It is a mistake to assume that business investors will appreciate your being conservative with your business plan financial projections in the early years of your business. Don’t think for a Wall Street minute that presenting “conservative” business plan financial projections indicates “realism” to prospective business investors. Business investors invest for one reason: to earn a return on their money. How long the money is invested influences the amount of the return earned. Let’s say a business investor wants to triple an investment. Well, if that investment triples in 3 years, the return is 44%. If it triples in five years, the return is 25%. Adding just two years to the investment period nearly halves the return! Now do you see why time is so important to a business investor? Here are a few other examples: let’s say a business investor wants to:

Make 5 times an investment in 3 years = 71% returnMake 5 times an investment in 5 years = 38% returnMake 7 times an investment in 3 years = 91% returnMake 7 times an investment in 5 years = 48% returnMake 10 times an investment in 3 years = 115% returnMake 10 times an investment in 5 years = 59% return

So, while you may find it attractive to figure out how to make “just a living” until the business venture proves itself, you now understand why business investors want sales and earnings to grow absolutely as fast as possible, without being deceived, in your business plan financial projections. On the whole, business investors are risk averse only to the extent that they don’t want to lose their money or tie it up in a low return investment. Typically when you make the claim that your business plan financial projections are “conservative”, it usually just means that you have no idea how and why you’ll achieve a certain level of sales within a certain time frame. Interesting, these kinds of estimates, provided that you’ve done some good thinking about market segments and overall demand, often turn out to be too low. Remember, it’s just as bad to underestimate your sales, as it is to overestimate them.

2. Avoid calculating costs as a straight percentage of revenues.

Sure it’s easier to do things this way, especially with Excel and other business plan financial projection software. Costs are real, however. You need to know what they are very specifically. If you’ve done your homework in developing your business plan, then you should already have this information, or at least the basis of it. Just estimate and calculate your costs on a product-by-product basis.

With these warnings in mind, use the following steps to develop your business plan financial projections:

Think about what percentage of the overall market share your competitors already own. Assume that they will continue their present trends in growth. (Note: some competitors may already be trending down and losing market share.) Temper your market share estimates with some discussion of how your entry into the market will affect these trends. Then, estimate the percent of total, potential demand that remains available to you.

Now, based on the limitations of your operations plans, calculate how much of this remaining available demand you can achieve. This is a very simple calculation. Start with your overall productive unit capacity and factor it by the expected yield of sellable product, then multiply these unit sales by their respective selling prices and voila, you have the revenue numbers for your business plan financial projections.

Let’s take an example.

Your research indicates that 2 out of every 10 females age 23 to 55 will under go some type of non-invasive cosmetic treatment in your area. Your research also shows that this number is expected to grow 20% each year over the next 5 years. There are 40,000 females in your target market. You identified four competitors in your target market. These four competitors currently handle on average 6 procedures a day. You plan to start a non-invasive cosmetic treatment center that uses the most advanced technology and is thus capable of performing an average of 7 procedures a day. Using this data you calculate the following statistics about your market and market potential:

Total market 40,000 females x 20% = 8,000 procedures per year4 competitors x 6 procedures x 250 days = 6,000 procedures per yearAvailable procedures: 8,000 less 6,000 = 2,000 per year

Your productive capacity: 7 procedures a day x 250 days = 1,750 or 21.875% of the total market. The average selling price for a procedure is $400. Thus, the revenue for the first year in your business plan financial projection would be 1,750 procedures times $400 or $700,000.
Now, let’s say you’re were projecting 2,200 procedures per year. This would mean that you would have to alter your operating plan to be able to perform 2,200 procedures. You would also have to demonstrate how you would capture an additional 200 procedures from your competitors. Granted this is an over simplified example, but it should give you a feel for how this process works.

Regarding price, in most cases you should have a clear idea of how to price your product or service. There are usually other, similar products or services out on the market. Unless your competitive advantage is a cost reduction and/or unless price is a critical basis of competition, just estimate the value of your improvement and add it on to the average price currently offered in the marketplace. In order to make this estimate, you’ll have to be talking to potential users. Find out what they pay now. Find out how they feel about the current price. Ask them if they’d be willing to pay more and how much more. If you ask enough people, you’ll get a general idea.

3. Never determine price on the basis of a margin you think is attractive.

The market will pay you only for the value you deliver, which is determined by the consumer paying the final price. It’s easy to make the mistake of thinking that a 20%, 40% or even a 60% margin is great. Never considering that if the product or service you’re offering provides a real advantage. If you do this, you may be grossly underestimating the price you can get in the marketplace and underestimating your business plan financial projections. Consumers don’t think in terms of margins. They could care less about what you ought, “reasonably”, to get for your product. That’s why you must find out the most that they’ll pay. This is the value of your product or service. Come up with some reasonable basis for determining this real value. Keep in mind the obvious: If the consumer’s value on the final product or service is less than your cost plus a reasonable profit to keep your business growing, you’re in trouble. Your business model will not be sustainable and your business plan financial projections useless.

Now calculate the costs of manufacturing and distributing your product. These costs flow directly from your revenues estimates and operations plan. How much will it cost to purchase what equipment and materials, hire what personnel, engage in what selling efforts, pay what accountants and lawyers, rent what kind of space and so forth, to achieve the revenues you're showing in your business plan financial projections. You must be very specific. Project your costs over time. Keep them tied to the units you need to sell to achieve the revenues in your business plan financial projections.

Obviously, costs and revenues work hand in hand.

4. Keep your fixed cost low.

Keep in mind that none of these revenues and the cost estimates are going to be perfectly accurate, which means the amount of profit or cash available to pay “fixed” cost isn’t going to be accurate either. As a result, you can lose your shirt trying to pay for equipment, a receptionist, or other activities that don’t contribute to the sole objective of making sales. Wherever possible, rent space, rent time on equipment, answer your own phones, etc. To the extent that you keep costs variable in your business plan financial projections, you can cut back when sales are slower than expected. It’s the worst situation to have a big, well-furnished office with an expensive secretary who needs the job, when the money isn’t coming in. High fixed costs in your business plan financial projections also send the wrong message to investors that you know more about the “form” of doing business than about actually making money.

Now pull all your numbers together to prepare the financial statements that summarize your business plan financial projections. You need three basic statements: cash flow analysis, income statements, and balance sheets. All of these come directly from the above calculations. Your cash flow analysis indicates when and what amounts of capital infusion you’ll need to start and sustain your business plan. Make your income and balance sheet projections on the assumption that you’ll get the capital. For the first year or two of your business plan financial projections, present each of these statements on at least a quarterly basis. Monthly is best. I suggest doing a 24- or 36-month projection depending on your growth plans and changes in the industry that you foresee. Follow these monthly or quarterly projections with annual projections till you cover a span of 5 years.

Finally, run through some “what-if” scenarios or sensitivity analysis. Though you business plan financial projections should be based on your best, and best-supported estimates of costs and revenues, you know you can’t be 100% right. That’s why it’s important to identify those elements or assumptions of your business plan financial projections that you feel are most uncertain. Write out the nature of the uncertainty and the range you think the estimates will fluctuate up or down. Then change the estimates accordingly and re-run all your statements.

Pay close attention to how your business plan financial projections, especially cash flows, change when you change each assumption. This will help you determine how much “cushion” you have available and, if business isn’t going according to plan, at what point cash will become an issue.
5. Do not simply assume that costs and revenues may be “off”, up or down, by some percentage.
Again, I know that Excel makes it easy to do this. For all the same reasoning as above, stay focused on the assumptions and details that make up your business plan financial projections. It’s the details you need to examine for their sensitivity and their impact on the bottom line.

You only need to alter those specific items that you’re most uncertain about. If it’s revenues that you’re worried about, is it the price, the volume, or both that concerns you most? How big a swing in the estimate are you worried about, in what direction and why? If it’s your cost projections that are keeping you awake at night, which cost elements and why? Things like rents and labor costs can be determined fairly accurately. But maybe you’re unsure about materials or labor availability or how efficiently you can produce your products or provide your services. Maybe you’ll have to pay extra to ensure their availability. This kind of thinking forms the basis for running “what-if” or sensitivity analysis on your business plan financial projections.

6.Do not include every possible business plan financial projection scenario in your business plan.
Both you and your investors need to know what aspects of the business plan financial projections are most uncertain, represent the most risk, in what direction, why, and how they affect the bottom line. Having hundreds of alternative scenarios to sort through is like a man with two watches showing two different times… he never knows what time it is. Lots of alternative business plan financial projections also indicate that you’re not too sure about anything. This is an impossible way to communicate with business investors, manage your business, or make important decisions. It’s much more effective to identify the risky areas of your plan, tell why and how they impact the bottom line and what actions you plan to take if they occur. This helps you and your business investors stay focused on the high impact areas and to think clearly about whether other factors should be considered as well. It also lends more credibility to your talents and increases the likelihood of your plan’s success.

Finish this discussion with a summary of the critical aspects of your plan and related contingency plans. If you’ve followed all these steps, then you can figure out what you’ll do if your actual performance turns out to be different than your business plan financial projections. Remember, you’re purpose is to demonstrate to business investors that you’re competent; worrying about protecting their investment and running a business, not just flying by the seat of your pants.

Mike Elia is a chief financial officer and an advisor to venture capitalists and leverage buyout specialists. For more information about business plans and raising capital for your business or to review his business plan manual, visit Business Plan Secrets Revealed.
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