Business Plan Guidelines

that should be conveyed in a typical business plan.

Whilst one of the main reasons for a Business Plan is to obtain the finance for the project,probably the main advantage is for you. If either alone, or preferably with your accountant and/or advisor you have gone through the stage of putting together a plan, you will learn a considerable amount about your project.

I often find that by the time the plan is completed, the client is able to answer any questions asked. It is an invaluable education for someone starting up a business.

Many of my clients have setup in a business that is unknown to them, by the time we have gone 50% of the way to completion they have become well versed in the industry of their choice and enjoy the business side of things as they understand the mechanics of Engineering or Food or Other Industry.

If you are using the business plan to obtain finance for your project this, may be the only opportunity to convince financiers or bankers that you are professional and know your business, or have a good idea and know the right people to manage your business. Should the plan be very poor then to submit a plan for consideration a second time to the same financing group would be very difficult, you must make sure that it covers all the angles.

In each of the following , I will put the questions that you have to answer, and some ideas for obtaining the facts required. Unless your project is a one man (or woman), band then you would be wise to seek professional assistance in the completion of the plan.

In some circumstances of financing you may be required to present your plan to the financing body, (more of this in another section), but you would have to answer questions on the plan. I would suggest taking your advisor with you if applicable.

The layout of the business plan should not show how proficient you are at excel or other software, it should be professional without going over the top on colours, graphics etc. In my experience, this does not normally impress the financial people.

You will find that writing a business plan is not a start at the beginning and end at the last page; it is more a balancing act for larger projects where many items are interlinked and it becomes a matter of tuning the result based on the financial figures.

Executive Summary

This section should state the contents of the business plan in two or three pages; this is the most important section and will be read by financiers and other interested parties. Complete this when the rest of the plan is finished. Give the broad financial targets with possibly one graph and show how you will make a profit and the payback period.

Business Types

Below we list the broad as quoted in this web site. As you will be aware, there are many business models. In the quoted cases on this site, we refer to three typical types of business.

Internet Business

Usually one or two people creating web sites this relatively small business with some monetary return. Normally all that is needed is the registration of a URL and a server or ISP. The financial outlay is usually out of pocket for the participants.

Office Business

The Office Business is usually a professional service or agency of some type, requires an estimated cash investment of anything between $3,000 and $250,000 dependent on scale.

Manufacturing Business

The Typical Manufacturing Business requires considerable finance usually from a bank or other finance provider. There are considerable skills required during the project phases although the gains can be considerable.

The scale varies depending on local economic conditions and the market you are entering, although usually considerable investment is required in order to manufacture enough products to give a suitable return and cover the overheads.

In some countries, tabletop operations are popular for start-up businesses but in most developed countries, these would not be economic due to competition and labour costs.

A typical Manufacturing Project can cost from tens of thousands to many millions of dollars. A large start-up could be 3 to 30 million US Dollars.

Financial Plan Part of Your Business Plan

The Financial Plan

The financial plan is the centrepiece of any business plan, indeed some business plans need only comprise of the financial's with a few pages of description of the business.

If the plan is to attract funds from a bank, venture capitalist or angel investor, then it should be written by someone conversant with plans.  I have seen many plans which have been prepared by people who know how to use Business Plan Pro, or Word and Excel, these plans are often no use at all, they may look nice but business wise do not make sense.

I suggest you contact a business consultant or even a friend who is experienced in business, let them look over your spreadsheets, it may take several rewrites to get the financial plan to the stage where it is suitable for applying for funds.

There is considerable skill in reading financial plans, the figures are a balancing act between the capital costs, sales figures, overhead costs and many other parameters, only when the balance is credible is the plan any good. Very few people outside of business and financial professionals have the skills required.

Here are the main headings of a typical financial plan

Assumptions

Here you will put all the factors you are assuming in your financial plan, (guessing), the less of these the better, enter the assumption with the reasoning behind that assumption, for example inflation is not included in the report as we assume that prices and costs increase equally with the inflation rate. You may also put in the interest rate and corporation tax rate you have assumed together with any seasonal factors or any external factors that affects the plan.

Raw Materials

If you are preparing a plan based on production or manufacturing then give information regarding the raw materials such as, can sufficient be procured, what are the seasonal considerations, how does the price vary, are there any alternative suppliers.

If you are using assembly components list prospective suppliers and stock levels, (how many days stock you would need).

Personnel Plan

How many people will you be employing, where will you recruit them from and what will be your labour costs. It would also be preferable to insert an organisation chart here to show responsibilities, also, how many people are required to run your operation.

It is quite possible that in manufacturing the personnel will increase gradually in line with production and sales, possibly on a shift basis, introducing shifts as manufacturing requirement increases.

See the organogram elsewhere on the site.

Finance Plan.

It is preferable that an accountant or other experienced person should complete this section, it will include at a minimum, a profit and loss, balance sheet, cash flow forecast and information on the investment and start up capital.

Sales Forecast.

It can be difficult to forecast sales, but you should try not to be too optimistic, probably look at your competitors sales if possible and start at a low percentage of those sales. Your forecast should be monthly and show any seasonal variations.

There are other items that may be inserted in the financials, dependent on to whom the plan will be submitted, the financial plan should be part of the business plan, however it can be useful on its own if you need to give someone a financial view of your project. Although it may be better to forward the executive summary which tends to be an overview of the whole business plan and usually two or three pages long.

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Creating a Business Plan

should normally be completed by a professional, unless the business is small and does not need external financing.We attempt to show the minimum information

Business On The Net

is only one part of general business and information on this topic is prolific on the web and as real businesses it is usually quicker and less risk to initially open a conventional business.

However, the requirements for web businesses are the same as any other business.

Marketing Sales Plan Technical Knowledge

As it is very easy to make a presence on the net it is of course very popular. This also leads to scams, dishonest dealings and a lack of integrity.

is full of get rich quick schemes and false promises the following paragraphs will outline the pitfalls of a few of the more popular money making schemes.

Pay to Click.

This system relies on people clicking advertisements and being paid for it, the payment is from .01 cent to 50 cents but the latter is very infrequent.

Sites such as these:
www.rocashbux,info
www.isabelmarco,com
www.buxhits.com
www.beanybux.com

Pay, (sometimes), into an account such as www.alertpay.com (Please note, I am not endorsing the above sites, they are examples only.)

The failings of this system are:-

The amount of clicks available and the time taken to click means that the maximum earnings taking into account 2 clicks per minute would be four dollars per day for around 12 hours work.

Many of the sites do not pay, pay irregularly or pay less than advertised.

Many of these sites have a limited amount of items to click on daily, you would need to join hundreds of sites to make four dollars per day.

The sites often have tier systems where you can buy affiliates and a percentage of what they earn is put into your account. More often than not these “affiliates” are actually created “bots” in software and generally are poor performers.

The pay per click system is not the way to make money on the net unless you have several hundred affiliates under you and a very busy web site.

Score 1/10

Google Adsense

Google adsense is a major player in the “make money online” world. It relies upon visitors to your site clicking on those little Google ads you see everywhere.

The key to making money with all of these systems is to have a web site with considerable traffic. A small percentage of your visitors will click on the ads, for which you will get paid.
This is not suitable for a start up as it can take years to gain enough traffic to your site to give a reasonable income. The cost of advertising via Adwords, (The other side of the Google coin), is generally more expensive than the receipts from Adsense.

There is a system that in theory at least, makes money using these two Google systems. It is called Arbitrage but Google and the similar system from Yahoo frown upon the practice and they are trying to stamp it out.

So the main problem is the time required to get free visitors from the search engines. Once submitted it can take months or years to reach a reasonable level of visitors on the Googles of the internet world.

Also the fact that earnings are only made on a small proportion of your visitors, the ones that click on the Adsense ads.

Score 3/10

Clickbank – Selling eBooks

Clickbank, is the leading affiliate program on the net for electronic books. There are many people making a living on Clickbank, although from the 100,000 active affiliates probably less than 1% are making a reasonable monthly profit from the affiliation.

You receive up to 75% of the sale price of the ebooks you sell, (less a small payment to Clickbank), and providing you either have a very large number of people to your site or use Adwords, the Google advertising system sales will be very poor.

A considerable amount of knowledge is required to be successful using the Clickbank system. One system I have found has the required information is the Commission Blueprint system. It has a lot of very good information and whilst expensive is probably has the best guide I have seen for making money on Clickbank. The free guides, (the first two videos), are generally given away free. Although they are of limited use as they mainly contain waffle.

Commission Blueprint
It is not a scam and the information contained in the course is excellent, but requires considerable involvement from the purchaser.

One other note on Clickbank – If you go to CBengine you can view everything that Clickbank has to offer. I would suggest that the majority of products are on the edge of being scams.

There are many books on how to be a millionaire within a few weeks. A plethora of get rich quick schemes, all playing to the emotions of people that can ill afford to buy a lot of the junk advertised.

Please be very careful in selecting these types of products, most of the time it is difficult to get an unbiased opinion from a user as nearly all the people reviewing and commenting on these Clickbank products are selling them as well.

Score 5/10

Hard Goods/Amazon

I use Amazon as an example as they are the leaders in their field. Amazon have a very well organized affiliate system and a very wide range of products. You as an affiliate simply send customers to their site from your site or Adwords ads. For this you get between 4 and 6% of the sales price.

In order to send visitors to the Amazon site you either have to have a web site that generates a lot of visitors or invest heavily in Google Adwords. Adwords can work out very expensive and as your profit is the difference between the cost of ads and the commission it doesn't’t leave much room for profit.

Many people have a successful with this system but have to be very skillful in the keywords they pick and the amounts they bid on these words to have them appear to the right people.

Conclusion

There is no “Get Rich Quick” business on the net any more any Intrapreneur needs the following to get into a profitable business:-

Traffic – a web site that attracts a considerable number of people.

Time – Enough time for the major search engines to find the site and elevate it to a position where traffic is considerable.

Knowledge – How to use Adwords profitably, how to build a good site and optimise it for the search engines.

Many of the items shown in the appendix do not involve the internet but they can be set up and in action much quicker than internet businesses. They generally have less risk as they can be quantified more easily than the Internet type business.

If You Still Want a Web Site

If after reading this chapter, you still want to have your own , then I can recommend the Site Builder System. It will give you the skills required step by step, with assistance all the way. It doesn't guarantee success, but there are more SBI clients in the top 1% of sites than any other system.

Manufacturing Business

Schematic
Below is a Schematic of a typical , although simplified is still much more complex that the other schematics in this series.

The fact that land, building and equipment requirement leads to a relativly high capital cost complicated matters.

Although you should bear in mind that frequently the returns increase as the capital costs increase. Also the land, building and equipment will maintain a value even if the business has difficulties, although these items will normally be used as security with the bank.

Office Business

Above is a typical schematic for an , whilst not complicated it assumes that any property will be rented and require minimal office equipment.

An office based business is usually rented accommodation or a home based office.

This type of schematic would apply to consultancy, architects, shipping agents and other professional businesses, indeed any business that can be operated from an office.

This type of business needs a considerable amount of planning, particularly in regard to income growth which is rather difficult to forecast. The business plan should be well prepared before starting the business.

Borrowing is usually difficult for this type of business startup due to the lack of tangible assets and frequency of failure of similar companies.If letters of Internet can be obtained from possible clients this helps considerably.

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Startup Business

Chart

The chart below shows the usual processes required for a . The process initially is a matter of completing a business plan, then revisit the results, constant adjustment and fine tuning until the optimum budget and profit figures are reached. Usually this is a balance of profit, capital costs and Operational Costs.

Business Plan

The is the most important document in bringing a project to fruition, it can be a complete plan and feasibility study including drawings capital equipment schedule etc. etc. covering well over 100 - 200 pages or a much simpler affair with only basic financial information and a few pages of commentary.

Warning! - Throwing a few numbers into an Excel Sheet and taking it to the bank for funding is not the way to do it. The effective is a balancing act between your market, the volume you can sell, your capital costs, overhead costs and the profitability of your product.