Business Plan. What to look out for?

[Snoopy_inc]

Hi All,

As the topic states i am looking to start writing a business plan for a new company im going to be starting.... been wondering about this whole concept of a business plan vs a idea of where you wanna go. I find it quite daunting the prospect of having to suck information out your thumb about how to do a business plan and implemention especially when you dont have much experience in such endeveours.

My question is this. What could you advise someone on how to get a business plan together and possibly a little guide on what one should look out for?

[duncan drennan]

Cash flow....where will the money come from, where will it go to, and how will you fund the shortfall (if there is).

[Snoopy_inc]

dont mean to sound funny..... but i expected a more.... full answer. :s

[Dave A]

What we need is a link - try crawl the Nedbank site - there was a really over-the-top one there a while ago.

[duncan drennan]

dont mean to sound funny..... but i expected a more.... full answer. :s

Snoopy, I wasn't trying to give one, partly due to limited time, and partly due to scepticism around some things that "should" be in a business plan.

What I've learnt in my short time as a business owner is that cash flow is the thing which dominates a startup business. When you start breaking that down for your particular setup you will also begin to see where some strengths and weaknesses lie.

I would start by figuring out what all your known expenses are going to be, added some estimate for the unknown ones, and then figure out how many sales you need to make to cover those. If you can't make that many sales from the first month, then you need to figure out how many months it is going to take, and where the cash will come from.

Yes, it is pretty simplistic, but that is where I would start.

[Snoopy_inc]

ic. Thanks DSD. That helps me alot more

does one follow the set criteria that they lay out for you.

IE

Cover page
Executive summary
Business overview
— business profile
— the product or service
Management
— the entrepreneurs
— the management structure
The Market
— industry analysis
— market analysis

Sales and Marketing strategy
Financial statements and projections
Legal and regulatory environment
SWOT analysis and risk/reward assessment
Appendices and supporting documentation

[stephanfx]

I have a piece of software called Business Plan Pro which I used to set up my initial plan, it has almost been 8 months and I am still adding and changing to it. The outlines you gave is more or less what is used in the software, but when I started, I didn't use every option, only those which I thought would help me in my first sale.

[duncan drennan]

I think the "catch" with a business plan is what you intend to use it for. If you want to create one for getting business finance it is very different to creating one for your own personal use.

For example, if you want to loan money from the bank, all you need to put in is how much you want, and what will be surety for that amount

Why are you drawing up a business plan?

[Snoopy_inc]

Goals, direction & Focus.

I want to build a business plan to gain direction and have some sort of plan to a goal. The idea behind it is that if somone comes on board i will have a clear indication as to what i need them to acomplish etc.

Am i barking up the wrong tree?

[Dave A]

To my mind, the one that is the biggest time consumer for least return is:

Financial statements and projections

In start-ups there are no historical financial statements, and guessing what the numbers might be is pretty much a thumbsuck.

Yes - You need to gring some numbers. But rather spend time on cost per unit, markup, competitive finished price, overheads, working capital (money tied up in production until paid) and available capital. This gives a clue as to volume targets that give break-even, arguably the first critical point to achieve as quickly as possible. If you do your calculations around break-even, and get a reasonable estimate for ramp-up time to that point, you've gone a long way to identifying your minimum capital requirements.

But the mere act of making sure you've got money available doesn't achieve anything. It's the plan to get and keep customers that's the critical stuff. And that is where the intial focus and thinking must go. The money is a vital ingredient, but it isn't the "magic" part of the business that adds value.

[Snoopy_inc]

I am now using the same product you mentioned above dave.

It asks a bunch of questions i really dont have a clue to but im wadding through it slowley.

Are ther any criteria that one can advise on the way about business plans, that one of you have picked up from experience?

would be appriciated.

[Dave A]

Part of the trouble is cookie cutter templates are generic and a business plan is affected by all sorts of factors. This makes some aspects of these templates pretty much trivial.

I read through the one on the Nedbank site once a while ago. Part of the challenge is that aspects are tailored around getting finance - and the cynic in me says they spend far more time perusing the collateral section than some of the stuff that really counts towards the success of the business.

It does ask some interesting questions, though, that test your understanfding of your concept - and that's what you need to focus on. If it's not applicable, cross it out. If something is relevant that isn't in the template - add it in.

It's your plan - done to make sure you understand how this is going to work. You need to know:

• What the product is.
• What the product costs.
• Where the customers are.
• Why the customer will buy from you.
• What the customer will pay.
• How you will reach the customer.
• How you will be paid.
• What skills you have.
• What skills you need to acquire.
• Where the obstacles are.
• How much capital you need.
• What other people are already doing.

There's probably more - but how's that for a start.

[Snoopy_inc]

Thanks ill use that as a base and include it with the rest of my research.... is there a business 101 for the people starting out from scratch?

[Snoopy_inc]

Ok i have a question.

What questions would you ask yourself if you not quite sure of the business. I know that sounds absurd but let me explain:

I know what i want to start, I have the Capital to start it. I know what kind of products im giong to supply and how im going to supply it. I konw my medium term goals and long term goals. I am just strugglin to form my short term goals and ask the questions that will give me the information im asking myself.

I was wondering. what questions does one ask oneself about the new business?

IE: what are my strengths?
What are my weaknesses?
What procedures do i require?
etc.

[Dave A]

is there a business 101 for the people starting out from scratch?

I chewed over that one a bit. And here is why.

The DTI had (perhaps still has) a program that was supposed to develop emerging entrepeneurs. It had a 6 week intensive training course and 6 months of mentorship built in - plus a priority treatment support side that gave folks preferential treatment for government, provincial and municipal contracts for a year.

I was last exposed to the numbers on this about 18 months ago - but they weren't good. From memory the success (survival?) rate after 1 year was about 2%. And looking at what was being taught, the problem was not the material. I would have loved to sit in on some of that stuff.

When it comes to entrepreneurship, there's an x factor of some sort that isn't injected in courses somehow.