Business Plan Development

A good business plan is invaluable to a company's future success. Not only can it serve as a vehicle to help the company raise capital, it is also a great strategic planning document that can be used to chart a company's future course. Key learning; while business plans are essential, not all business plans are equal. The process described below has be used for such notables as, Quizno’s, LinksExperts.com, Ben and Jerry’s, Nutra-Life, Tyco Electronics, Canali, Segafredo-Zanetti, Subway, Cinnabon, SeaAlaska, just to mention a few.

While most would agree that a good business plan is both essential and invaluable, the fact is that they are very time consuming and burdensome to develop and write successfully. Furthermore, a new business plan is needed as a company grows and reaches the significant milestones of the business growth cycle. QUESTION: Do business plans need to be so cumbersome to compose and does the timeline need to be months? No, but the issue needs to be examined more fully.

Business plans have been broken into three distinct categories, the process of development has been streamlined, and a multi-disciplinary team of experts has been assembled to compose the plan. Let’s look how this all fits together.

The Dream Team

A group of five experts has been assembled to work as a team in developing and writing business plans. It is a dedicated team and this is all they do, day-in-and-day-out. The team includes:

• A Master of Business Administration (MBA) in Finance
• A Master of Science in Health Administration (MHA)
• A Master of Public Administration (MPA)
• A Master of English, and
• A Bachelor of Arts in Marketing

This is quite a dream team with over 28 years of college education and 40 years of experience. Each person brings a distinct discipline to the team and plays a very specific role in the process. This allows for the timeline to be shortened and no need to outsource any part of the plan to "moon-lighters," or other unqualified individuals.

A Business Plan Is Not A Business Plan, "Do You Have The Secret Sauce?"

There are many uses for a business plan. Some business plans are merely a strategic planning document to set the course for the company, but most business plans are used to raise capital from various types of institutions. These institutions include; grant institutions, banks, qualified individual investors, angel investors, private equity firms, and venture capital firms. Each type of investor group has specific information needs and requirements. Hence, a business plan, is not a business plan, is not a business plan. As such, three distinct types of business plans have been developed to precisely address the needs of the company. The three types have been categorized by a Level I, Level II, and Level III Business Plans, with the Level III being the most comprehensive.

This is the most popular level of business plan! A Level I is a very affordable, quick, easy, and professional way for a company to get the bank loan that is needed now. This business plan delivers professional results that banks, government lenders, and granting agencies expect. Over the past six years, the Level I has been refined to these exacting standards. The Level I Business Plan has everything needed to get your loan and start your business off on the right foot.

Executive Summary - Every good business plan must have a solid Executive Summary. In the Level I, particular attention is paid to constructing an Executive Summary that properly portrays the business, its goals, the market, and key managers. An Executive Summary must also concisely portray the goal of the document, contain financial Pro Forma highlights, illustrate the company's goals, and establish key objectives of the near and distant future. The Executive Summary is taken as a personal matter.

Company Structure - In order to get a loan for a business, one needs to create a definite plan for your corporate structure. The corporate structure in a Level I Business Plan offers the readers a quick glimpse into start-up costs and expenses or a thorough view of an existing company's financial history. The company structure must also convey the legal registration of the company, ownership structure, and location of operations. Sound like a lot? Not to worry, because as the plan is written, advice and questions are answered free! It is all part of writing and developing the plan.

Product or Service Description - If the company doesn't sell a product or service, chances are a business plan is not needed. Most companies do sell products and/or services and hence a thorough description of the company's products and/or services is developed. Serious entrepreneurial passion should be taken in describing the products and services. The business plan should properly convey the products and services in a series of streamlined paragraphs, highlighted by concise bullet-points. This allows the reader to know exactly what services are provided, what products are sold, and how they will be delivered to the market.

Market and Industry Analysis - Here's where a business plan gets really tricky. Individuals don't often know where to begin when asked "what is the market for your product" or "how big is the industry the company is in?" These are no easy tasks for an entrepreneur, even if one is an expert. This can be accomplished by having market and industry analysis experts on the team and by subscribing to dozens of information Web sites and databases. Because the team prepares many business plans the cost and confusion of industry research can be spread across several people and sources. The end result is a mere perfect synopsis of the current market for the company's products and services.

Marketing Plan - Marketing is as old as the pyramids, but in the 21st century, it's more confusing then ever! Will the company use sponsored ads, SEO, email blasts, direct mail, CRM, PR, guerilla marketing, outdoor advertising, lead generation, or the literally thousands of other forms of marketing? And who will these marketing mediums impact? It is essential for the marketing planning team to be led by an individual with years of experience, formal education, and unqualified success writing marketing and promotional details for start-ups, ongoing businesses, and large international corporations. It is essential to have insight into marketing small businesses, and understand the trends affecting today's economic landscape.

3-Year Financial Projections (Pro Forma) - The Masters of Business Finance (MBA) expert will help build a projected model for the company's financial future. The Level I Business Plan provides everything needed to illustrate how much money the company will make, how the company will pay back loans, and even how employees will be paid. The Level I comes with everything the bank expects including: the Break-even Analysis, Projected Profit & Loss, Projected Balance Sheet and Projected Cash Flow. The level of attention to detail allows for financial projections that are structured and realistic, something appreciated by the reader.

By this point, you've probably read tons of books, web-forums, and talked to dozens of associates. Maybe you've even tried to create a business plan for the purpose of investment, acquisition, or joint-venture. Let's face it - it's just not that easy, but... it can be! The Level II Business Plan should be a 25 to 30 page document crafted to address the complex issue of raising equity investment from private parties, angel investors, or strategic alliances. The Level II offers a comprehensive analysis of the business segment the company participates.

Executive Summary - A Level II Business Plan is similar in structure to the Level I, but several significant differences make this type of business plan "investor worthy." A core difference is the executive summary. A Level II executive summary is meant to be used in conjunction with the business plan, or created to be a separate document to gain the interest of the investor. The Level II Business Plan's primary function is to be a teaser or "elevator pitch." It is meant to pique the interest of any type of investor before they read your entire business plan.

In-Depth Research - The second major difference of the Level II Business Plan is the scope of research within the document. While a bank focuses primarily on simple geographic data, an investor is usually impressed by a business plan that takes national and international industry trends into account. The challenge is to digest all materials that are relevant to the industry and market. It is important to paint a picture of the present and future of the business and the space it operates in.

Expanded Financial Projections - A crucial element of a Level II Business Plan is its financial projections. These pro forma financials have to be calculated over a period of five years - not three years like a bank-ready document. They also have to show a lucrative return on investment that is based in reality. Factors such as the price-to-earnings ratio of similar companies are used to come up with a realistic model for the investor's review. Most importantly, a strong set of financial projections will allow the company to calculate an educated investment proposition or projected valuation for the company; it is the next differentiating characteristic of this type of business plan development process.

Investment Proposition - The investment proposition is an important piece of information that helps to pitch and strike an attractive deal with an investor. The investment proposition uses projected future earnings to calculate the share of the company to exchange for the capital being raised.

A Level II Business Plan covers everything needed to help the company find the money that will allow for launch or expansion of the business. The Level II can also be used in conjunction with an investor to acquire a small business loan for the company.

The Level III Business Plan is the most thorough and most team-driven business plan offered to management teams seeking money from venture capitalists (VCs) and other savvy investment institutions. The Level III team enables entrepreneurs the ability to maneuver around the hurdles of preparing a comprehensive business plan for esteemed investors. Oftentimes, the Level III includes onsite work from the business plan executive team. The Level III is meant to keep time with the trends in Venture Capital deals. This plan includes the completion of a strong elevator pitch; a strategy and implementation section focused on defensible differentiation; a concise description of the management structure and the identification of any gaps that exist; a thorough and forward-thinking analysis of the market; and realistic goal setting. These details, along with excellent business plan structure, allow entrepreneurs to confidently approach the challenge of attaining Venture Capital funding.

Concise Elevator Pitch - According to Sequoia Capital, one of the first VC firms to back Google, "If you can't lay it out in a gripping sentence or two, a VC might assume you don't have a good grasp of your concept." The objective is to pin down responses to the "What is your business really about?" and "Why people will buy?" questions that the company needs to answer clearly before an investor will listen to an investment presentation. Drilling down to these two core questions and answering them in an eloquent manner will be the first and most important part of getting the business plan read by VCs.

Strategy & Implementation - More than anything, VCs like ideas that put current business models and practices on their heels. This is the Bigger, Faster, Stronger approach to business. Remember, VCs are in the business of making money, and a business plan that doesn't illustrate contingencies, strategies, creative marketing, and/or the dynamic position of a product or service doesn't have what it takes to raise money from discerning VCs. The Level III Business Plan development team works with the management members of the company to determine an appropriate strategy and to perfectly illustrate the positioning of the company.

Management Team (or Lack Thereof) - When it comes to writing a management team summary to garner investment capital from a VC, there is one simple rule to follow - keep it real. VCs don't want to hear how you are an "excellent leader" and are "committed to doing what it takes to go to the next level." Rather than page filler, it is important to come forth with an accurate, honest depiction of who the management is and what the business can do and accomplish. Venture Capital firms want to know what the management team has been responsible for in the past, and what outcomes were accomplished. To ensure the management team has a solid foundation, it is important to determine what the current team lacks . . . "Who's going to handle the accounting?" "Who's going to lead the R&D team?" This honest approach to structuring the management team - which can give a whole new legitimacy to the entire business concept - will make VCs want to read the business plan closely instead of just rolling their eyes and tossing it aside.

Realistic & Forward-Thinking Market Analysis - The company can't be everything to everyone, even if you are Bill Gates. Properly analyzing a market and observing the trends in a specific market can mean the difference between a business plan that quickly finds its way to the waste basket and a business plan that makes the Wall Street Journal. It is important to keep the market analysis numbers conservative, and to defend that analysis with ample citations from reliable sources.

Goal Setting - Fully understanding the company's vision enables the business plan development team to help the company "get real". Stating the company is going to grow faster than the biggest competitor in the industry is a GIANT red flag for investors. It is essential to lay out realistic projections for the first five years without promising that the company will deliver "the next big thing."

Above all, financial institutions want to review a business plan that promotes a realistic, honest, and concise projections of where the company is headed and where it can go with capital infusion. It is paramount that the business plan development team guides and assists the company's management team through the pitfalls of the complex matter of gaining capital funding. Without funding there is no company. As a responsible senior management team, the question that has to be asked is, "Does your business plan development team have the recipe for the secret sauce so success can be had in raising the capital needed to have a future?"

This article has been provided by Bob Patton who is the CEO of Creative Strategies, LLC.  Bob has worked together with Steve Corsello of ACTIVIZE Inc.  creating solutions for more than 12 years.

Bob has put together powerful teams to assist companies with a wide variety of consulting services and support. This creative consulting model has given Creative Strategies the agility to move quickly while keeping the cost to the client competitive. The consulting engagement is a partnership and the project is not successful until the client is fully satisfied! It is called Signature Client Consulting!!

Please contact ACTIVIZE for more information on the ‘Signature Client Consulting’ proposition.

Steve Corsello
President, ACTIVIZE