Writing a Convincing Business Plan (Arthur R. DeTHomas, 2015)

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  • Title, content, proposal summary, executive summary, business description, operating plan, industry analysis, market analysis, financial plan
  • Business description: identify the firm and location, trace the firm history, identify the business mission statement, define the firm’s industry and market description, describe operation (why we are successful), develop profiles of top management and other key personnel, develop financial profile
  • Industry analysis summary: industry analysis summary, industry description, industry suppliers customers and distributors, competition, historical performance, future outlook, strategic opportunity
  • Market analysis: market analysis and sales forecast summary, define the firm’s market location, understand market forces, identify the firm’s market niche, define the firm’s target market (geographic, demographic, psychographic, behavioral segmentation + measurable, significant, accessible), identify the competition, forecast and prepare a marketing plan
    • Standard metropolitan statistical areas (SMSAs), Primary metropolitan statistical areas (PMSAs), consolidated statistical areas (CMSAs)
  • Life-cycle concept: development stage > growth stage > maturity stage > decline stage
  • Sales forecasting techniques: extrapolating past sales, estimate market potential and market share, market build-up method, market factor method
  • Marketing plan flow: establish business philosophy and mission statement > develop overall strategy, objectives, and policies > evaluate the environment, make assumptions and develop forecast > set measurable goals and make operating plans > monitor environment and operating results > no correct action / corrective action needed
  • Marketing plan: consider a marketing plan summary, prepare a situational review, identify marketing goals, explain the intended marketing strategy, prepare the marketing budget, establish marketing controls
    • Know you full cost /  price, image, and goals are interrelated / price, product differentiation, and market power / price and non-price perceptions
    • Cost / product class / degree of exposure required / other marketing-mix considerations / market characteristics / service marketing
    • Sales promotion / sales strategy / advertising and public relations
  • Operating plan: consider an operating plan summary, prepare a situational review, identify the firm’s location, exploring operating procedures, describing operating facilities and layout, describe purchasing procedures, explain inventory management procedures, establish quality control and customer service procedures
    • Location of customers / location of suppliers / location of competitor / location of labour supply / access to transportation / services, taxes and regulations / community service 
  • Organisational plan: organisational plan summary, situational review, identify the legal form of ownership, management philosophy, organisational structure, key-personnel assessment
    • Risk, taxes, image, control, transferability & marketability
    • Nature of the task, level of employee skills and motivation, location of employees, the degree to which authority is delegated, the degree of interaction required
    • By product, function, process, customer, territory
  • Types of financing: seed money, startup capital, working capital, long-term financing/growth capital, self-financing, commercial banks, venture capitalists, angels, initial public offering, franchise, employee stock options
    • Loans: working capital loan, account receivables financing, inventory financing, term loan, revolving credit loans, mortgage loans, asset-backed loans, leasing, business credit card
  • Financial plan: financial plan summary, the situational review, cash-flow planning - the cash budget, cash-flow planning - pro forma financial statements, capital structure planning
    • Financial ratio values, percentage growth rates, percent profit margins, cost and expense relationships
    • Pro forma balance sheet: gather the appropriate data, calculate and enter asset values, calculate current liabilities, enter the remaining carry-forward values, calculate retained earnings and plug figure
    • Cash planning is necessary, practice by doing, document underlying assumptions, expert assistance may be necessary, be a financial manager, use debt financing judiciously, save for a rainy day, closely monitor accounts receivables and inventory
    • Financial ratios: average collection period (ACP), inventory turnover, total asset turnover, times interest earned, debt ratio, gross profit margin, net operating profit margin, net profit margin, return on investment (ROI), return on owner’s equity (ROE), break even analysis, rate of return
    • Be realistic, be cautious, be prepared for the negotiation process, consider all relevant factors, shop carefully, learn from rejection, be organised and prepared, ensure that your credit history is accurate, be sure to present adequate collateral, invest in yourself to inspire confidence, prepare a strong business plan, present a strong track record
  • Risk: business risk, financial risk


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