Strategic Planning, Drafting and Implementing a Business Plan
Get the keys to creating and implementing a business plan for your start-up. Starting a business without a business plan is like planning for failure.
Without a Business Plan you’re Planning for Failure
You might have read some articles, either in this blog or other sources, about how to write a business plan. One item which is often neglected is the Pro Forma Financial Statement.
The term Pro Forma literally translated from Latin literally means, as a matter of form, and can have several different meanings in varied fields, i.e. Government, Law and Engineering but, we’ll be focusing on business. Pro Forma financial statements are the projected or planned results of changes to a company’s structure be it by merger, change in capital structure or acquisition. The statements would typically be drawn up and presented to the Board or Share Holders so they can assess said changes before voting on approving them or not.
Plan ahead. If this economy has taught us anything is that you just can’t plan on good times. Here at Brandings we offer strategic planning for start-ups and small and midsized companies. Please let us know if you have any questions about a Pro Forma Business Plan for start-ups.
Tips on Drafting an Effective Business Plan
By Marc Mays
When writing a business plan, there are many things which should be addressed, but also some things which should be omitted. Here are four items included in many business plans, and one item which should be left out:
1. Executive Summary
While the Executive Summary usually appears at the front of a business plan, it is usually written last, after the other parts of the business plan have been collected. The Executive Summary offers a brief overview of what the intended business is, what any critical assumptions may be, and general idea of the potential return an investor might expect. It might also include a brief listing of the company history, and even some of the key personnel involved, as well as their qualifications.
2. Pro Forma Financial Statements
These can include Pro Forma (another word for “imaginary”) Income Statements, Balance Sheets, Cash Flow Statements, and possibly a break-even analysis as well. It is helpful to have three versions of each: one which assumes an optimistic forecast of results, a second which assumes an average case forecast of results, and a third which assumes a pessimistic forecast of results. This helps provide investors with the reassurance that different scenarios have been considered, as well as a rough idea of what should be expected. Pro Forma Financial Statements are generally used more for planning purposes rather than a strict guide as to expected financial results, but are nevertheless very important to include.
3. Marketing Plan
A good marketing plan is essential to all businesses. It should explain the major market segments being targeted, give reasonable guides of market capitalization for the industry being entered and sensible goals for market share expected, as well as by what time frame this will occur. While some tactical marketing details might be left out (unless particularly relevant), good coverage of the overall marketing strategy should be provided.
4. Operations / Productions / Distribution Plan(s)
Depending on the business being created, one or more of these may be required. Operations Plans detail how the business will be run, which is more useful for service industries. Productions Plans are more appropriate to product or good manufacturers. Most product businesses will need some explanation of distribution as well, including which channels will be used to deliver products to their final consumers.
5. Expected Terms of Deal For Investors
Unlike the other items above, negotiations should not begin anywhere within the business plan! Savvy investors (such as venture capitalists) will use any suggested terms as the starting point for negotiations, instead of an end point. Should a deal become likely, it would be wise to bring in outside experts who have negotiation experience, and who can look out for your best interests (such as attorneys, accountants, etc.).
In summary, a good business plan should have an overall summary, pro forma financial statements, a marketing plan, and plans for operation, production, and distribution (if relevant to the business). Negotiations for investment terms, however, should be left out of the plan completely.
- Copyright 2010, by Marc Mays.
Marc Mays is the creator of Myplatinumparachute, which helps first-time small business owners obtain the critical skills needed for their small business success.
Article Source: EzineArticles Expert Marc Mays
As always please let us know if you have any questions by posting a comment or contacting us. Also if you have any ideas for blogs let us know.