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For Entrepreneurs: How to Write A Business Plan
The business plan is a powerful tool for planning success. Here's Tom Courtney's advice:
Why do you need a business plan? Writing a strong business plan will help you maximize your success in:
- Selling your company
- Raising capital from investors
- Arranging bank financing
- Starting a business
- Planning for a business expansion
- Integrating an acquisition
- Building a successful company
People with written goals made three times as much as those without any written commitments, according to a study of Harvard Business School graduates at their 25th reunion. For your company a written plan can crystallize your thinking and serve as a blueprint for your company's success.
In our experience in investment banking we have helped clients increase the price at which they sold their business by 50% or more vs. prior offers by providing buyers with a compelling description of the business and its future prospects and opportunities. Did the value of the business increase because of the plan we helped write? No, but buyers could understand the big picture much better, and that led to higher offers.
A business plan can help you introduce your business and yourself to the reader in the most favorable light. An attractively packaged business plan helps create a good first impression. A careless or inadequate plan will reflect badly on a company.
Always prepare a cover letter and an executive summary (2-5 pages) of your plan. This is because many times you need to convince not only the person you are dealing with, but other colleagues for example, investment or loan committees.
The actual organization will vary in response to your needs. The content of a plan should be tailored to the targeted audience and purpose. For example, if the plan is only for internal management the content should be more geared toward action steps rather than descriptions of the company. The plan should be concise, about 20 pages should be enough. For selling a business it may be longer because it may need to contain relevant exhibits.
There are many resources and books on how to write a business plan. One that I like is: "Writing a Convincing Business Plan" by Arthur R. DeThomas, Ph.D., and William B. Fredenberg, Ph.D. Barron's, 1995.
Good luck!
Tom Courtney
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How to Write A Business Plan
Tom Courtney's advice on how to write a business plan that funding sources can understand. |
How to Sell a Business
"The Art of the Sale" by Arden Dale is Tom Courtney's recommended reading if you're thinking of selling a business. |
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"Secrets of Attracting Dealflow"
Tom Courtney's step-by-step method for growing your network and increasing your ability to get in on business opportunities (requires registration).
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Sample Outline for a Business Plan
1. Title Page
2. Table of Contents
3. Financing Proposal
4. Executive Summary
5. Business Description
a. Business History
b. Management/Key Employees
c. Products/Services
6. Operating Plan
a. Location
b. Operations
c. Facilities and Layout
d. Purchase and Distribution
e. Inventory Management and Control
f. Quality Control and Customer Service
7. Industry Analysis
a. Industry Description
b. Industry Competition
c. Industry Growth and Sales Projections
8. Market Analysis
a. Target Market Description
b. Market Competition
c. Sales Forecast
9. Financial Plan
a. Historical Analysis
b. Financial Projections
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