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Rhonda abrams’s books have sold more than a million copies. Founder and CEO of PlanningShop, she writes the most widely circulated column on entre-preneurship in the U.S. appearing weekly in USAToday.com. She is the author of the best-selling Successful Business Plan: Secrets & Strategies, Six-Week Start-Up, and many other business books.

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Written by RhondaAbrams, America’s leading expert on business plansuccess.

If you’ve heard these words from a potentiallender, investor, or business partner, and youneed a business plan pronto, this book is for you!

Rhonda Abrams’s books have sold more than a million copies. Founder and CEO of The Planning Shop, she writes the most widely circulated column on entrepre-neurship in the U.S. appearing weekly in

USAToday.com and over 100 newspapers. She is the author of the best-selling The Successful Business Plan: Secrets & Strategies, Six-Week Start-Up, and many other business books.

NEW! 3rd Edition

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Contents

Praise for Books from PlanningShop . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . i

About the Author . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . vii

The In A Day Promise . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .viii

Need a Business Plan Fast? This Book Is for You! . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .ix

Overview: What’s a Business Plan? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . x

Step 1 Executive Summary . . . . . . . . . . . . . . . . . . . . . . .3n Prepare your summary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5

Step 2 Company Description . . . . . . . . . . . . . . . . . . . 13n Give your company name(s) and location(s) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .14

n Provide information about your company’s ownership and legal status . .16

n Describe your company’s history, development stage, and milestones . . .18

n Identify your product(s) or service(s) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .20

n Describe your industry . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .22

n Explain your company’s funding . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .24

n Pulling it all together: Company Description . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .28

Step 3 Target Market . . . . . . . . . . . . . . . . . . . . . . . . . . . 31n Specify the geographic location and reach of your target market . . . . . . . . .32

n Describe the demographic characteristics of your target customers . . . . . .36

n Explain customer motivations and purchasing patterns . . . . . . . . . . . . . . . . . . .38

n Determine your market size . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .40

n Evaluate market trends . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .42

n Pulling it all together: Target Market . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .44

00i-xiv BPIAD3_FM_v4.indd 12 2/7/13 1:41 PM


CONTENTS | xiii

Contents Step 4 The Competition . . . . . . . . . . . . . . . . . . . . . . . . . 47n Identify types of competition . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .48

n Identify your specific competitors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .50

n Determine your competitors’ market share . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .52

n Determine competitive positions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .54

n Highlight your competitive edge . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .56

n Evaluate barriers to entry and potential future competition . . . . . . . . . . . . . . .58

n Pulling it all together: The Competition . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .60

Step 5 Marketing and Sales Plan . . . . . . . . . . . . . . . 63n Summarize your marketing message . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .64

n Describe your offline marketing vehicles . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .66

n Outline your online and social media marketing vehicles . . . . . . . . . . . . . . . . .68

n Identify any additional marketing and sales strategies . . . . . . . . . . . . . . . . . . . .72

n Describe your sales team . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .74

Step 6 Operation s . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 79n Determine key operations elements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .82

n Outline your technology plan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .84

n Highlight your operational advantages . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .86

n Address current—or potential—operational challenges . . . . . . . . . . . . . . . . . .88

n Describe your commitment to social responsibility . . . . . . . . . . . . . . . . . . . . . . . .90

n Pulling it all together: Operations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .92

Step 7 Management Structure . . . . . . . . . . . . . . . . . 95n Highlight your key team members . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .96

n Predict future management needs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 100

n Describe your staffing structure . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 102

n Identify your board members, advisors, and consultants . . . . . . . . . . . . . . . . 104

n Pulling it all together: Management Structure . . . . . . . . . . . . . . . . . . . . . . . . . . . 106



xiv | BUSINESS PLAN IN A DAY

Step 8 Future Development . . . . . . . . . . . . . . . . . . . 109n Define your long-term goals . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 110

n Establish future milestones . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 112

n Assess the risks . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 114

n Explore exit strategies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 116

n Pulling it all together: Future Development . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 120

Step 9 Financials . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 123n Produce your Income Statement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 126

n Develop your Cash Flow Projection . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 134

n Generate your Balance Sheet . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 140

n Show your Sources and Use of Funds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 144

n Consider preparing additional supporting financial statements . . . . . . . . 148

Presentation Pointers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 154

Nine Surefire Ways to Ruin Your Business Plan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 166

The Experts Talk . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 168

Business Terms Glossary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 183

Business Resources . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 185

Index . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 188



Step 6: OperatiOnS

1Step 5: Marketing and SaleS plan

Step 4: the COMpetitiOn

Step 2: COMpany deSCriptiOn

Step 9: FinanCialS

Step 8: Future develOpMent

Step 7: ManageMent StruCture

Step 3: target Market

Step 1: exeCutive SuMMary

001-010 BPIAD3 Step1_v4.indd 1 2/6/13 10:08 AM


AccomplishmentsIn this step you’ll:

Prepare your Executive Summary

Time-Saving ToolsYou’ll complete this section more quickly if you have any of the following handy:

Information about your potential business plan readers

Completed worksheets for Steps 2-9



1 ExEcutivESummary

Your Executive Summary is the single most important part of your business plan—particularly if you are

seeking outside funding. Busy investors and lenders start reading here and use the Executive Summary to get an understanding of your business quickly.

In fact, some investors ask entrepreneurs to first send only their Executive Summary and financial statements (Step 9). If they like what they see, they’ll request the full plan. So if you can hook your readers here, they’ll ask for more. Your goal is both to summarize the major components of your business and to make your readers want to learn more.

This doesn’t mean you can misrepresent your business. As in all parts of your business plan, the information and data you present in your Executive Summary must be truthful. But you can, and should, focus on those aspects of your business that show it in the very best light.

Your Executive Summary provides a brief snapshot of your business. Highlight the most important facts and concepts from your full business plan as concisely as possible. When completed, your Executive Summary will answer these questions for your readers:

�Does your basic concept make sense?

�Has your business been thoroughly planned?

�Is the management team capable?

�Is there a clear-cut market need for your product/service?

�What advantages do you have over your competition?

�Are your financial projections realistic?

�Is the business likely to succeed?

�Will investors be able to make money? Will lenders be able to get their money back?

Step

KEY TO SUCCESSFirst Things Last!even though your executive Summary comes first in your business plan, you’ll find it much easier to prepare—and much more compelling—if you write it last. Once you’ve completed the rest of your plan on the pages that follow, you’ll find it much faster to come back and produce this section.



Visualize your reader As you create your Executive Summary, ask yourself, “Who’s going to read my business plan?” You can improve your chances of getting a positive reaction if you keep your potential business plan reader in mind as you write.

Remember, your reader is only going to spend a few minutes on your Executive Summary. They’re going to hone in on the issues that concern them most. If you understand their priorities, you’ll be better able to craft it to push just the right buttons.

Do some homework to discover the interests and concerns of your likely business plan reader. Then put those issues near the top of your Executive Summary. A venture capitalist might want to see that you have ground-breaking new technology, and an angel investor might want to see that you’ve identified an easily reached target market, while a banker wants to know that the company owners are investing their own money in the business. Give more emphasis to those aspects that concern your reader most.

Of course, you might not be able to identify the particular person who’s going to read your plan. In that case, you can focus on the type of person and their concerns. For instance, a banker is likely to look for aspects of your

business plan that minimize risk, since they want to make sure their loan will be secure. An investor, on the other hand, looks for aspects that increase the chance that your company will grow large, since they will get a piece of the action. Refer to the interviews with investors and lenders in The Experts Talk on pages 168-182 to get a better idea of how each type of reader reviews business plans.

QuicKTIPWhat Sets You Apart?

think about the number of busi-ness plans your readers must plow through each day, especially if they’re investors or bank lenders. (an aver-age venture capitalist, for instance, usually sees about 1,000 plans a year.) What distinguishes yours from the rest of the stack? early on in your executive Summary, highlight the qualities that set you apart from all the other businesses. put your win-ning concept up front and make sure your readers get it.

4 | BUSINESS PLAN IN A DAY



Prepare your summary

Your Executive Summary is the single most impor-tant part of your business plan. Readers will review

it before they read any other section. Many readers will breeze through the Executive Summary, so you need to explain your business concept clearly, concisely, and in a way that makes them want to know more. Your Execu-tive Summary is the first impression many readers will get of your company. Make sure it’s a good one.

On pages 8-10, you’ll find a worksheet to help you pre-pare your Executive Summary. Each question on the worksheet refers to corresponding worksheets throughout this book. You’ll find it much easier—and quicker—to complete the Executive Summary worksheet if you’ve already worked through the rest of the steps in this book (Steps 2-9). Just refer to your completed worksheets to assemble the key ingredients for an informative, compel-ling Executive Summary.

Before you get to the worksheets you’ll see a sample Exec-utive Summary for the fictional company ComputerEase. Review this model for more ideas about the content and structure of an Executive Summary.

KEY TO SUCCESSPay Attention to Preparationa few ways to make your executive Summary look appealing to readers:

� divide the Summary into paragraphs that mirror the sections of your business plan.

� keep each topic brief.

� use bullets to highlight your most compelling information.

� include a small chart or graph if it makes an important point clear.

� use white space and informative subheads to break up text blocks and make the pages seem less intimidating.

For additional suggestions, see Presentation Pointers on pages 154-165.

STEP 1: EXECUTIVE SUMMARY | 5



sample plan:

Executive SummaryTHE COMPANYComputerEase, Incorporated, provides computer software and software-as-a-service (SaaS) training services, primarily to the corporate and business market. In addition to offering local training at its own dedicated facilities, the firm delivers on-premises training to corporations located in the greater Vespucci, Indiana, area. More recently, it has created online versions of its courses that can be accessed from anywhere with an Internet connection. The technology business services industry is one of the fastest growing in the United States, and ComputerEase intends to capitalize on that growth. The company’s stock is currently held by President and CEO Scott E. Connors and Susan Alexander, Vice President, Marketing.

PRODUCTS AND SERVICESThe company provides software training programs targeted to the corporate market, and currently has a portfolio that covers a broad range of leading business software programs. There are two ways that training is delivered. On-premise training is provided by in-person instructors, either at the customer’s place of business or at ComputerEase’s Corporate Training Center. Online training is offered via the Internet. In addition to providing training for the most- used enterprise and business software and web-based business services, ComputerEase also creates custom programs at corporate customers’ request for both on-premise and online delivery. The online training programs increasingly incorporate at least some video training segments, enhancing the learning experience.

TARGET MARKETSComputerEase’s “brick-and-mortar” business operates in the greater Vespucci, Indiana, area. Vespucci is the sixteenth-largest city in the United States, with a diverse and healthy economy. U.S. Census Bureau data show that more than 10,000 organizations with more than 50 employees (ComputerEase’s primary target market) are located in the area. ComputerEase’s online market is composed of English-speaking countries where a high percentage of businesses are automated or in the process of becoming automated. The market for online computer training has grown by more than 33 percent each year for the past five years, and is projected to sustain this rate of expansion into the next decade.

THE COMPETITIONNo market leaders have yet emerged in the corporate software training field—either in the Vespucci region, or in the online space. Competition is diverse and uneven, creating substantial market opportunities. ComputerEase maintains the following advantages over existing competition: Strategic partnerships with leading software publishers; formal certifications from those publishers; a growing reputation for delivering highly effective training and superior customer support; a company-owned, state-of-the-art computer training center; a local sales staff with strong ties to target customers; and a national network of third-party consultants and computer retailers that bundle ComputerEase’s courses with their own services.

Provides basic company

details in a straightforward

style

Briefly describes the

company’s offerings

Shows large

market potential

Describes competitive

edge

Immediately highlights a

positive factor




MARKETING AND SALES STRATEGYComputerEase differentiates itself in its marketing by emphasizing the needs of the corporation, not merely the students taking the classes. Locally, the firm employs highly regarded sales professionals with extensive ties to the target market who secure sales predominantly through face-to-face solicitations. For customers who access ComputerEase’s online training, the company has an aggressive online marketing strategy that includes advertising on prominent training websites, exhibiting at training industry trade shows, publishing a monthly email newsletter on best practices in corporate training, and using search engine marketing by purchasing keywords. To support its customer base, ComputerEase also maintains an active Facebook fan page and has a Twitter feed.

OPERATIONSComputerEase owns its own Corporate Training Center with 20 PCs fully equipped with all the latest versions of the most popular business software programs. The company offers corporate training sessions at the Center, as well as at local corporations’ place of business. It plans to open a second Training Center with some of the funds currently being sought. ComputerEase utilizes the excess capacity of the Training Center by offering Saturday and evening classes to consumers. Additionally, ComputerEase has three development PCs for creating the interactive course content based on the instructor-led courses and documentation. All equipment is leased, resulting in lower capital expenses and ensuring the latest equipment at all times. All data center operations, including the server that hosts the online training applications and student data, are outsourced to a local managed services provider. Video production is outsourced to a local company experienced in creating instructional videos.

MANAGEMENTPresident and Founder Scott E. Connors brings significant technology-related management experience to this position. Immediately before starting ComputerEase, Connors served as regional vice president for Wait’s Electronics Emporium, a large computer hardware and electronics retail chain. Previously, he was a sales representative for IBM. Vice President Susan Alexander brings direct experience in marketing to the target market from her prior position as assistant marketing director for AlwaysHere Health Care Plan, and sales experience as a sales representative for SpeakUp Dictation Equipment.

FUTURE DEVELOPMENT AND EXIT STRATEGYIn addition to expanding online operations, ComputerEase will consider franchising. The company will also increase the number of company-run locations, choosing major metropolitan areas. Online, the company’s goal is to become a major player in the corporate software training market. It would be open to merging with or being acquired by another leading online training brand or an online university or for-profit educational institution.

FINANCIALSThe financial strategy of ComputerEase emphasizes reinvestment of income for growth during the first few years of operation, with the company reaching profitability within the next three years. Annual revenue projections for the current year are $466,000; for year two, $987,750; and for year three, $1,637,230.

FUNDS SOUGHT AND USESThe company is currently seeking $160,000 in investment financing. These funds will be used for expansion, primarily opening an additional Training Center, hiring new staff, and increasing marketing activities. Long-term plans are for the company to aggressively expand its online business; work with customers to develop interactive online custom training programs for employees; and either develop a franchise operation or expand to become a regional company-owned chain, adding at least one training location annually.

Provides specific numbers and uses of funds.

Hints at exit opportunity

Highlights management’s

relevant experience




My Executive SummaryWhat is your business all about? What are its most compelling qualities? Answer the questions on this worksheet, summarizing conclusions you’ve reached in the worksheets in Steps 2-9 of this book. Organize the information in a way that most appeals to your target reader. Combine related topics if that improves the flow.

THE COMPANY

What are the basic details of your business? (See worksheets on pages 15 and 17.)

PRODUCTS AND SERVICES

What products or services do you offer or plan to offer? (See worksheet on page 21.)

TARGET MARKET

Who are your customers? (Include a summary of any market research results.) (See worksheet on page 43.)




THE COMPETITION

Who are your competitors? How is the market currently divided? What gives your company its competitive edge? (See worksheet on page 60.)

MARKETING AND SALES STRATEGY

How will you market and sell your product? (See worksheet on page 76.)

OPERATIONS

What are your most important operational features? (See worksheet on page 92.)

MANAGEMENT

Who are your founders? Who are the key members of your management team and what are their qualifications? (See worksheet on page 106.)




DEVELOPMENT

What is the company’s current stage of development? What are your long-term goals? What are some of the milestones you’ve met or plan to meet? What is your potential exit strategy? (See worksheet on page 120.)

FINANCIALS

What are the expected financial highlights or performance of your company? What are your company’s expected gross sales and net profits? (Use gross sales and net profit figures from the worksheets on pages 132-133.)

FUNDS SOUGHT AND USES

How much money are you seeking, from what sources, and how will the money be used? (See worksheets on pages 25 and 147.)




Index

AAcquisitions, corporate, 118Advertising, traditional

cooperative or joint ads, 72, 73Financials and, 123marketing budget and, 66, 124Marketing/Sales Plan and, 62, 63, 66-67media kits, 34

Advisory committees, 104-05Allowances, defined, 126Angel investors, 4, 151, 152, 153

See also InvestorsAppendix to business plan, 14, 20, 159Assets, and Balance Sheet, 140, 141, 143

BB Corporations, 16Balance Sheet, 124, 127, 134, 140-43, 149Barriers to entry, 48, 58-59, 155Boards of directors, 104-05Brand names, 14, 15, 39, 50, 56Break-even analysis, 125Broadcast media, 34, 63, 66Business licenses, 12Business plan

anatomy of, x-xiappendix to, 14, 20, 159company details (see Company Description)competition details (see Competitive Analysis)executive summary (see Executive Summary)financial details (see Financials)format of (see Presentation pointers)future development (see Development Plan)length of, 154management details (see Management

Description)marketing strategy (see Marketing and Sales Plan)mistakes to avoid, 166-67modifications for very small businesses, 81, 95operational details (see Operations Plan)sales strategy (see Marketing and Sales Plan)

target market details (see Target Market Description)

Buy-outs, corporate, 118

CC Corporations, 16Canada Statistics website, 35Capital expenditures, 125, 145, 147Cash Flow Projection, 124, 134-39, 140, 148, 149Cash sales, defined, 135Census data, 30, 35, 40Cloud computing, 84, 85Collections, defined, 135Company Description, 11-28

company funding, 24-25company history and development, 18-19company name(s) and location(s), 14-15company ownership and legal status, 16-17company products and services, 20-21in digital slide presentation, 155“elevator pitch,” 26-27in Executive Summary, 6, 8industry description, 22-23modifications for very small businesses, 81overview of this section, 12-13worksheets and samples, 15, 17, 19, 21, 23,

25, 28Competitive Analysis, 45-60

in digital slide presentation, 155evaluating barriers to entry and future competi-

tion, 58-59in Executive Summary, 6, 9highlighting your competitive edge, 56-57identifying specific competitors, 50-51market share distribution, 52-53overview of this section, 46-48ranking competitors, 54-55types of competition, 48-49worksheets and samples, 49, 51, 53, 54-55, 57,

59, 60Competitive risk, defined, 114

168-194 BPIAD3_BM_v4.indd 188 2/7/13 8:19 AM


INDEX | 189

Computers. See Equipment and technologyConfidentiality, 158, 162-63Consultants, use of, 97, 102, 104-05, 125Convenience, 38, 48, 56, 64Copyrights, 16, 17Cost of goods (COG), defined, 127Cover letter to business plan, 159-61Cover sheet of business plan, 158Credit card financing, 135, 150Crowdfunding, 153Currency fluctuations, 149Customer service

company websites and, 70, 71competition and, 56in international settings, 102operational aspects of, 79, 81, 83

Customersdemographics, 30, 34-38in international markets, 24, 32, 42, 72loyalty, 63, 66market size, 40-41motivations and purchasing patterns, 36,

38-39, 64, 74online reviews, 62, 68suppliers’ and trade associations’ insight on, 42surveys, 30, 34

DDaily deal sites, 68, 69DBA (Doing Business As) names, 14, 15Debt financing, defined, 145Demographics, 30, 34-38Depreciation, defined, 127Development Plan, 107-20

defining long-term goals, 110-11establishing future milestones, 112-13in Executive Summary, 7, 10exit strategies, 116-18overview of this section, 108-09risk assessment, 114-15ROI (return on investment), 119worksheets and samples, 111, 113, 115, 117, 120

Development stages, summarized, 18Digital presentation of business plan, 155Direct competition, defined, 48Direct mail, 63, 66, 67, 112Disclaimer, inclusion of, 158Distribution

agreements, as legal consideration, 16, 17agreements, as marketing/sales strategy, 72, 73competition and, 50, 56operational aspects of, 79, 80, 83, 88

EEcommerce. See Online commerceEconomic risk, defined, 114“Elevator pitch,” 26-27, 155, 165Employees

fair treatment of, 63, 90international labor force, 24, 50, 82, 90labor costs, 50, 114, 124, 148worker safety, 82See also Payroll; Staffing structure and levels

Environmental policiesoperational aspects of, 79, 80, 81, 83, 90-91profitability of responsible practices, 63, 90

Equipment and technologyas capital expenditures, 125, 145, 147company technology plan, 84-85as competitive advantage, 56, 86as fixed assets, 127, 140, 141, 143industry trends and, 22market trends and, 42operational aspects of, 78, 79, 81, 83-86, 88

Equity capital investments, 135, 138Equity financing, defined, 145Ethics, business, 63, 90Execution risk, defined, 114Executive Summary, 1-10

modifications for very small businesses, 95overview of this section, 2-3preparation, 5, 8-10table of contents and, 164visualizing the reader, 4worksheets and samples, 6-7, 8-10

Exit strategiesExecutive Summary and, 7, 10investors and, 109, 116-18, 155omission of, as mistake to avoid, 167

Expenses, operatingCash Flow Projections and, 134, 138Cost of goods (COG), defined, 127customizing the Financials for, 126data for Financials, 132, 138, 147overestimating, as recommended, 166working capital and, 145

Exporting, 32, 82

FFacilities

as capital expenditures, 125as fixed assets, 127, 143maps of, 78operational aspects of, 79, 80, 88

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Family company hand-downs, 118Family financing, 150, 151Financial control systems, 79, 81, 83Financial risk, defined, 114Financials, 121-53

Balance Sheet preparation, 140-43Cash Flow Projection preparation, 134-39in digital slide presentation, 155in Executive Summary, 7, 10financial statements to include, 124-25, 148-49Income Statement preparation, 126-30, 132-33overview of this section, 122-23PlanningShop’s Business Plan Financials, 131,

148questions to consider, 152-53Sources and Use of Funds statement prepara-

tion, 144-47sources of money, overview of, 150-51worksheets and samples, 128-30, 132-33, 136-

39, 142-43, 146-47Financing

Company Description and, 24-25with credit cards, 135, 150Development Plan and, 109, 114digital slide presentation and, 155disclaimer for outside funding sources, 158Executive Summary and, 7, 10Financials and, 123, 124, 134, 144-47, 148-49industry trends and, 22Management Description and, 95, 97, 100market size and, 40for new products or services, 20operational concerns and, 79, 80, 82questions to consider, 152-53Sources and Use of Funds statement, 124, 144-

47, 149, 167sources of money, overview of, 150-51See also Investors; Lenders; Loans

Fixed assets, 127, 140, 141, 143Focus groups, 34Foreign currency exchange, 149Format of business plan. See Presentation pointersFounders, company, 9, 96, 104, 116Franchising, 117, 118Funding. See FinancingFuture development. See Development Plan

GGeographic data, 33, 35, 40, 41Global commerce. See International commerceGraphs and charts, presentation of, 156-57

HHistory, company, 18-19, 112

IIncome Statement

vs. Balance Sheet, 127, 140as key financial statement, 124, 149preparation, 126-30, 132-33supporting financial statements and, 148

Incorporationboard of directors and, 104documentation of, 12as milestone, 18name of corporation, 14statement of intent to incorporate, 13types of corporations, 16

Independent contractors, use of, 74, 75, 97, 102, 125

Indirect competition, defined, 48Industry analysis

in appendix to business plan, 159Company Description and, 13, 22-23international trends, 24for Target Market Description, 30, 42-43

Insurance, 82, 132Interest income, 135, 138International commerce

competition, 50financial considerations, 149global risk, defined, 114industry trends and, 24management team and, 102operational aspects of, 32, 82, 102sales team and, 74social responsibility and, 90targeting international customers, 24, 32, 42,

72Internet

cloud computing, 84industry trends and, 22, 23market research and, 34-35, 52target geographic market and, 32Voice over IP (VoIP), 82See also Online commerce; Online marketing;

Websites, companyInventory management, 79, 80, 83, 125, 134Investors

board of directors and, 104business plan presentation and, 164Competitive Analysis and, 47crowdfunding and, 153

168-194 BPIAD3_BM_v4.indd 190 2/7/13 8:19 AM


INDEX | 191

equity financing, defined, 145Executive Summary and, 3, 4exit strategies and, 109, 116-18, 155Financials and, 123, 124-26, 144, 148-49following up with, 165Management Description and, 95, 100market size and, 40Marketing/Sales Plan and, 63overview of various types, 151personal financial commitment and, 24, 25,

144risk assessment and, 114, 152ROI and, 119, 152technology companies and, 84See also Financing

LLabor issues

costs of labor, 50, 114, 124, 148fair treatment of employees, 63, 90international labor force, 24, 50, 82, 90worker safety, 82

Land. See Real estateLawsuits, 17Legal status, company, 16-17Lenders

business plan presentation and, 164Executive Summary and, 3, 4Financials and, 123, 124-26, 144, 148-49following up with, 165Management Description and, 95, 100Marketing/Sales Plan and, 63risk assessment and, 114, 152See also Loans

Length of business plan, 154Liabilities, and Balance Sheet, 140, 141, 143Licenses, business, 12Licensing agreements, 17, 72, 73Limited Liability Company (LLC), 16Limited Liability Partnership (LLP), 16Loans

data for Financials, 122, 138, 140, 147debt financing, defined, 145Executive Summary and, 7, 10loan proceeds, defined, 135overview of various types, 150personal financial commitment and, 24, 25,

97, 144See also Lenders

Locations, businessin appendix to business plan, 159

in Company Description, 14-15long-term goals, 110, 111, 112, 113operational aspects of, 79, 80, 83target market and, 32-33, 80

Logo, company, 158

MMail, direct, 63, 66, 67, 112Management Description, 93-106

board members, advisors, and consultants, 104-05

in Executive Summary, 7, 9future management needs, 100-101highlighting key team members, 96-99overview of this section, 94-95staffing structure, 102-03worksheets and samples, 98-99, 101, 103, 105,

106Manufacturing and production, 78, 79, 80, 83Market, target. See Target Market DescriptionMarket research

in appendix to business plan, 159in digital slide presentation, 155evaluating market trends, 42-43for Target Market Description, 8, 30, 31tips on conducting, 34-35, 52See also Customers

Market risk, defined, 114Market share distribution, 52-53Marketing and Sales Plan, 61-76

cooperative agreements and partnerships, 72-73in Executive Summary, 7, 9marketing message, 64-65offline marketing vehicles, 66-67online marketing vehicles, 68-69overview of this section, 62-63sales team, 74-75website essentials, 70-71worksheets and samples, 65, 67, 69, 71, 73,

75, 76Marketing budget

Financials and, 122, 124, 148Marketing/Sales Plan and, 62, 66-67, 69

Marketing collateral, 62, 63, 66-67, 159Media kits, 34Mergers, corporate, 22, 118Milestones, company, 10, 18-19, 109, 112-13, 155Minimal Viable Product, 20Mistakes to avoid, 166-67Mobile devices and commerce, 20, 68, 70, 84

168-194 BPIAD3_BM_v4.indd 191 2/7/13 8:19 AM



NNames, business, 14-15Net worth, 140, 141, 143Networking groups, 66, 67Newspapers, 34, 66, 72, 123Niche markets, 64, 110Nondisclosure agreements, 162-63Not-for-profit status, 16

OOffshoring, 22, 82Online commerce

brick-and-mortar vs., 36competitors’ websites, 34, 48, 50, 51, 58customer reviews, 62, 68industry trends and, 22, 23mobile devices, 20, 68, 70, 84target geographic market and, 32website essentials, 70-71

Online marketingcompany websites and, 63, 68, 70-71vs. offline marketing, 66-67social media and, 62, 68-69

Operational risk, defined, 114Operations Plan, 77-92

addressing operational challenges, 88-89elements of operations, 80-83in Executive Summary, 7, 9highlighting your operational advantages,

86-87overview of this section, 78-79social and environmental responsibility, 90-91technology plan, 84-85worksheets and samples, 83, 85, 86-87, 89, 92

Order fulfillment, 32, 79, 81, 83Outsourcing, 22, 74, 82, 102, 125Owner’s draw, defined, 135Ownership, company, 16-17

PPaid-in capital, defined, 141Partnership, defined, 16Partnerships, strategic, 50, 72-73, 112, 159, 166Patents, 16, 17, 58Payroll

data for Financials, 122, 132, 140data for Management Description, 94sales force’s pay structure, 74, 75staff pay rates and ranges, 103working capital and, 145

Photographs, inclusion of, 159

PlanningShop products and resourcesBusiness Plan financials package, 125, 131, 148trade associations, list of, 42, 66

Presentation pointers, 154-65cover letter, 159-61cover sheet, 158digital slides, 155final touches, 164graphs and charts, 156-57nondisclosure agreements, 162-63text styles and spacing, 154, 156

Pricingbrick-and-mortar vs. online, 36competition and, 50, 52, 56, 64customer motivations and, 38, 39

Print mediaadvertising, 63, 66, 72, 123market research and, 30, 34

Production and manufacturing, 78, 79, 80, 83Products

appendix to business plan and, 159Company Description and, 20-21of competitors, 48, 50, 52, 58Executive Summary and, 6, 8long-term goals, 110, 111, 112Minimal Viable Product, 20new product releases, 18, 20, 108operational aspects of, 79, 88product features, as competitive advantage, 56See also Distribution

Professional services budget, 125Profit and Loss (P&L) statement. See Income

StatementProfits

company’s legal status and, 16data for Financials, 10, 124-25gross and net profits, defined, 127long-term goals, 110, 111, 113operational costs and, 79, 80, 86, 88sales team and, 74social/environmental responsibility and, 63, 90See also Income Statement

Public relations, 63, 66, 67

QQualitative vs. quantitative goals, 110Quality control, 79, 80, 83Quick Facts website, 35

RRadio, 34, 63, 66

168-194 BPIAD3_BM_v4.indd 192 2/7/13 8:19 AM


INDEX | 193

Real estateas capital expenditures, 125, 145, 147as fixed assets, 140, 141, 143See also Facilities

Regulatory concerns, 17, 58, 82Research and development, 82Retrenchment, defined, 18Risk assessment, 109, 114-15, 152ROI (return on investment), 119, 152

SSales

businesses’ purchasing patterns and, 36, 38cash sales, defined, 135company development and, 18cooperative agreements and partnerships, 50,

72-73data for Financials, 10, 125, 126-27, 132gross and net sales, defined, 126-27long-term goals, 110, 111, 112, 113vs. marketing, 63overestimating, as mistake to avoid, 166projections, 62, 122, 124, 126, 148structure of sales team, 74-75See also Marketing and Sales Plan

Seed company, defined, 18SEM (search engine marketing), 68Services

Company Description and, 20-21of competitors, 48, 50, 52Executive Summary and, 6, 8operational aspects of, 79, 80

Slide presentation of business plan, 155Slogans, 64, 65Social entrepreneurship, 90Social media, 34, 62, 66, 68-69, 84Social responsibility, 63, 79, 81, 90-91Sole proprietorship, defined, 16Sources and Use of Funds statement, 124, 144-47,

149, 167Staffing budget, 122, 124, 148Staffing structure and levels

documenting staff composition, 95, 102-03long-term goals, 110, 111, 112, 113management team, 96-99sales team, 74-75

Start-up companies, 18, 104Start-up costs, 58Stock ownership and offerings, 17, 116, 117, 118Subchapter S Corporations, 16Suppliers

competition and, 56

insight on customer trends, 42operational concerns and, 79, 80, 82, 83, 88

Sustainability. See Environmental policies

TTable of contents, inclusion of, 164Taglines, 64, 65Target Market Description, 29-44

customer demographics, 34-38customer motivations and purchasing patterns,

36, 38-39in digital slide presentation, 155in Executive Summary, 6, 8geographic location and reach, 32-33market research tips, 34-35market size, 40-41market trends, 42-43overview of this section, 30-31worksheets and samples, 33, 37, 39, 41, 43, 44

Taxescapital expenditures and, 125company’s legal status and, 16data for Financials, 122, 132, 138, 143depreciation allowance, 127exit strategies and, 118

Technology. See Equipment and technology; Inter-net

Telemarketing, 63, 74Trade associations, 42, 52, 66Trade shows, 63, 124Trademarks, 16, 17, 58TV, 34, 63, 66

UU.S. Census Bureau, 35, 40

VVehicles. See Equipment and technologyVenture capitalists, 4, 104, 151, 152, 153

See also InvestorsVoice over IP (VoIP), 82

WWebsites, company

names of, 14online marketing and, 63, 68, 70-71overview of, 70-71technology plan and, 85

Websites, competitors’, 34, 48, 50, 51, 58Wholesalers, 72, 80Worker safety, 82Working capital, defined, 145World Bank website, 35

168-194 BPIAD3_BM_v4.indd 193 2/7/13 8:19 AM


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