Things To Know When Starting A Consulting Business

The process of starting a consulting business can be incredibly daunting for many people, especially those who are endeavoring to bid farewell to being a status quo employee in the corporate grinder and become a successful entrepreneur.  Even someone with extensive business experience can find the task somewhat overwhelming!
With this challenge in mind, definitely take some time to review the forthcoming series of articles covering some of the most important elements involved in creating home business online for the serious entrepreneur.  It is literally some of the most valuable career change advice available.

Making The Process Personal

The series begins with two articles that discuss the importance of personalizing the creation of your own business.  In the first, you will glean details as to why business owners are advised to individualize their entrepreneurial process through the creation of a personal mission statement that actually charts the course for future success.  The second article clarifies the importance of a sound personal economy for the development of a home based business.

Understanding Entrepreneurship

Starting ones own small business requires dedication and the ability to stay focused on the details of becoming an entrepreneur.  There is a veritable laundry list of steps that are required to be successful in creating a business venture, and a successful business owner will learn to know these processes like the back of his or her hand.

The fact is, skipping some of these steps can take an otherwise brilliant business plan and lead it to the slaughterhouse; so it's wise to pay attention and follow the lead of those who have been there a time or two, themselves.  In the third series installment, you will find important details regarding these steps in founding a business. 
The fourth article in the series delves into the entrepreneurial mindset.  It is vitally important for a home business owner to learn, understand, and personally develop the behavioral characteristics of a serious entrepreneur.  People who are serious about starting a consulting business, as well as other types of small business owners, are infinitely more likely to achieve their dreams of success if they are able to follow the footsteps of entrepreneurs who have achieved their desired results!

The behaviors and traits of these business giants can be learned, and they are an important part of the equation for achieving business greatness.

Tapping Into Your Marketing Genius

No serious entrepreneur can approach the task of building a successful financial endeavor without creating a marketing plan, and making certain that the marketing plan is designed to succeed in the specific business environment where it will be implemented.  The fifth article in this series delves into the crucial step of creating the correct marketing plan for unbelievable success.  The sixth article covers small business marketing strategies in greater detail.

If you are one of the motivated business minds who is considering making the jump to a home-based consulting or small business, you owe it to yourself to read each entry in this series.  Every one of them will help you to grasp what it takes to make a successful career transition and become your own boss as an entrepreneur.

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Office Space for Your Startup

Finding the right office space can be one of the biggest challenges for any business, but the problem seems exponentially harder for a young, growing company.

Landlords generally prefer five- to seven-year lease terms. That doesn't exactly bode well with early-stage companies. Most young companies that are just graduating from the startup phase or from a co-working space don’t know where they will be or how many employees they will have just six months down the road, much less five years in the future.

So what is a newly-minted founder to do? Fortunately, there are several options available to entrepreneurs, but the key is to find the office most tailored to your specific situation. Do you need a distraction-free workplace or more open, collaborative environments? Do you feel confident in signing a long-term lease or should your company consider a sublease?

There are always questions and depending on the growth of your company, you need to be ready to make sure your office needs align with your business strategy.

Consider these factors when you start thinking about office space.

Time. Especially with newer, smaller companies, it’s important to make sure you don’t get locked into a lease that’s longer than you need. You may have only 10 employees now, but you could have 60 in six months. Generally speaking, you should never sign a lease that doesn’t work for your long-term business plan.

Ask questions and make sure you’ve fully explored your alternatives. Options like subleases may fit more into your timeline and flexibility, but there are other factors -- like consent from the space’s prime landlord -- that might limit your options down the line. Make certain your space meets, or could meet, your timeline.

Layout. If you’re a technology or creative company, you’ll likely want an open space, as ideas grow from collaboration. On the other hand, if you’re a small law firm, you might want something more office-focused. Clients want to discuss sensitive matters behind closed doors.

Make sure the layout of the space you choose is conducive to the type of work you’ll do in it. Also, explore options that share conference rooms or kitchens. If your company is comfortable in that sort of space, you may find “like-minded companies” that share your values or work on complementary initiatives and ideas.

Amenities. Amentities can make or break an office space, so make sure a location aligns with your needs.  Does the space have a conference room? How does the kitchen fit your needs and how many food options will your employees have in the immediate area? Do the bathrooms work? Does it have enough outlets to accommodate your technology equipment? What is the parking ratio?

Make two lists: one of amenities your company “needs to have” and another of the ones you’d “like to have.” Use these to guide your search. It will become helpful when deciding between the fully-furnished kitchen and the sand volleyball court.

Price. When determining how much you’re willing to spend, shy away from calculating price per person and instead focus on how much you’re willing to spend monthly, all-in, for your team. And don't forget to calculate the hidden costs like utilities, furniture and other office fees. (When you’re starting from scratch, these things can add up.)

Keep in mind that a number of factors -- particularly price, availability and variety of spaces on the market -- will vary depending on the location in which you’re searching. However, no matter the location, you’ll want to start planning at least three-to-four months before you’re ready to make a move.

Finding the right office is no small task, and you should plan on allotting plenty of time and resources to find the best space for your business. After all, the last thing any startup wants is to sign a five-year lease, only to realize 12 months in that the space doesn’t actually meet your company’s needs.

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First Steps to Starting Your Own Business

Sometimes you have an idea for a new product; sometimes you want to quit your corporate job and strike out on your own. What are the first steps to starting your own business?

The first step should be some market research. You need to know that your new business will have customers. Who will your customers be? You also need to find out who your competitors are and what they are doing. Is your market saturated with others doing the same type of business that you want to open? Is there something unique about your service or product or how you want to deliver your service or product?

Once you establish that you will potentially have clients/customers, you need to examine your finances. It is unlikely that your company will make money for the first few months or even years. You need to have a cushion of cash to get you through the lean times. From where do you get the funds you need to start your business and keep it going? Hopefully, you have savings. If you don't have savings, you need to figure out how you will raise some cash. Many entrepreneurs start by hitting their credit cards for cash advances. Or they ask for loans from their parents or siblings. Don't ruin your relationships by asking for large sums of money from your relatives to start your business. If the business does not do well, it could damage your interactions at every family gathering.

Get your team together. You want some paid professionals to give you advice (your accountant, lawyer, insurance broker) and some unpaid mentors, people who are successful business owners (hopefully in your field) who can show you the way to success. Ask questions of your team so you are not floundering.

If you are creating a product, you need to line up your suppliers. Are they local or overseas? What would you do if they went out of business - do you have back-ups to call on?

If your business requires a location, figure out the cheapest location you can find that fits your needs. If your business will rely on foot traffic, you must choose a storefront on a main street. Side streets will have cheaper rents but may not provide the number of customers that you need to survive. If your business does not need a storefront, you may be able to work out of your home or garage. You can sublet cheap office space or use a friend's conference room when you need to meet with a client. Make sure your business is not violating any zoning laws.

Should you incorporate or form a limited liability company? Do you need any business licenses to comply with state, county and municipal laws? If you are not sure, consult with a business lawyer.

Keep circling back to your team to ask questions every step of the way. Very few start-ups make it totally on their own.

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The Art of Planning a Business

Entrepreneurship, in today's world, does not need huge capital or a highly qualified team to start with. The Internet has opened up ways for people to start without investments, and to hire people with expertise on a need basis. Almost all aspects of running a business can be outsourced, while the owner can keep a brief overview of everything and ensure control over everything.

The starting point to create a successful business is to create a plan. A business plan contains your aims, objectives, an executive summary of what you intend to do, how you intend to do, and a complete analysis of the revenues you expect to make in the coming years. The goal of a business plan is to find out the time you are supposed to break even and make profits - thus determining the viability and feasibility of your business. With angel investors looking to invest money on businesses with promising ideas, a good business plan is essential to attract these investors.

However, not everyone has the required skill-set to create an effective business plan even after having all the required ingredients to it. Therefore, people are now looking to hire freelancing business experts who can create a business plan for them based on the requirements and data that have been gathered. This is a great way to earn income in case one has the required skill-set to create proper plans for business.

More often than not, business planners also provide expertise over the ideas provided to them by their clients. With experience, one can easily gauge the viability of certain aspects of business, and providing consultancy over such matters increase your value, and the income from the project. Generally, clients choose business planners from freelancing websites, which is done based on the qualifications portrayed. A degree in business administration is one way to attract clients into awarding you with their projects.

Every business has its own template of business plan, and while creating one, it is extremely important to stick to the standard format of the plan in order to be considered by venture capitalists. While the information is generally provided by the client, it is the duty of the planner to ask for any data that might be required to create a good business plan.

The charges for creating a business plan varies based on several factors like the complexity of the business, the expertise of the planner and the deadline provided among others. If one can create a name for oneself, there are several projects available online, which can help you earn an handsome extra income for yourself.

Article Source: http://EzineArticles.com/7982804

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Start-Up Business Plan

Editor's note: This article is excerpted from Rule's Book of Business Plans for Startups , from Entrepreneur Press

For a startup business, creating a business plan is like creating a game plan in sports. You need to scout out all the information to create a winning strategy for the game. While business plans for existing companies may have a special focus, such as setting overall goals, reviewing specific operations, evaluating new products, assessing new technology in the industry, or some other specific purpose, the business plan for a startup company is the blueprint for its formation, its operation, and its success. A business plan exposes a new company's strengths and weaknesses. It reveals ways to capitalize on the strengths and minimize the weaknesses, uncovers every facet of the business that can be developed, and points to the best method for that development. It provides a structure for the company's pursuit of the winner's trophy.

Even though creating a business plan takes time, thought and effort, and may seem like an impediment to getting on with opening or growing your new business, it is imperative in today's competitive business climate for you to have all relative information available and evaluated before opening your doors. With a thoughtfully prepared business plan you will enter the business world prepared, ready to run your business and ready to compete.

Although researching and writing your business plan may seem like a monumental task, with preparation it can be quite painless. As you go through the process, you will develop your knowledge and understanding of your business, improve your chances of success, and diminish your risks of failure as a startup owner.

Prior to writing your business plan, there are several issues you must resolve. It is beyond the scope of this text to cover all of these in depth; however, a basic checklist with a few recommended reference books is provided, so you can explore some of the subjects more thoroughly. As an entrepreneur of a startup company:

• Are you prepared to operate a business?

• Have you already decided upon your product(s) or service(s)?

• Have you investigated other types of businesses? Have you explored the broad economic business sectors: manufacturing, wholesale, retail, service ...? Have you considered other industries within the sector of your choice? Have you thought about what types of businesses are strongest now and for the future?

• Have you checked out franchises? To check out the possibilities and benefits of becoming a franchise outlet owner or franchisor, read Erwin Keup's Franchise Bible and my books,No Money Down: Financing for Franchising and The Franchise Redbook.

• Do you have a location in mind? Have you researched the principles of site selection: physical site needs (address, neighborhood, interior lot, corner lot), cost effectiveness, interior space, exterior space, visibility, traffic volume (which side of the street and times of the day), and accessibility? Are you familiar with the advantages and disadvantages of types of sites, such as freestanding buildings, storefronts, regional malls, and many others? Are you familiar with the principles of lease negotiation? See Luigi Salvaneschi'sLocation, Location, Location.

• Have you located the necessary business consultants--accountant, attorney, banker, and others? One resource is The Small Business Insider's Guide to Bankers by Suzanne Caplan and Thomas M. Nunnally.

• Do you know your financial position, your credit rating, your investment costs? The author's No Money Down: Financing for Franchising covers these topics in detail for any business, not only franchising.

Before going forward, it is assumed you have done the basic homework for each of the elements above and that:

• You are ready to go into business
• You have your basic business concept
• You have decided on your basic product(s) or service(s)
• You have your location and facility
• You have a business accountant and attorney
• You understand your financial position and your investment costs

While you may have already explored the following business concepts during your startup stage, you will be reconsidering and reevaluating these as you develop your business plan:

• Vesting
• Business objectives
• Mission statement
• Keys to success
• Industry analysis
• Market analysis
• Competitor analysis
• Strategies
• Marketing plan
• Management
• Organizational structure
• Operations
• Financial pro formas
• Break-even analysis
• Financial requirement

Don't be concerned if you aren't familiar with all of these concepts. Writing a business plan for your new business is a straightforward process that you can move through step by step to completion. The whole process can be accomplished in two to four weeks, depending on your business.

In surveying many successful business plans, you will find that no one format fits them all. Depending upon the nature of the business, certain topics take precedence over others. Often the owners write their business plans, since they know the most about their business operation and management and they have learned what elements to include to make the best impression.

A complete business plan for a startup company is best organized according to the logical development of the business and is comprised of at least 12 basic components.

1. Executive Summary: By definition, to summarize the elements of your business

2. Company Description: For identification, to introduce your readers to your company and your business concept

3. Industry analysis: To provide a picture of your industry and of the position of your business within the larger framework

4. Market and Competition: To evaluate what you are getting into. While some business plan proponents separate market and competition, it takes an examination of both, together, to come to one very important final conclusion: your market share. Consequently, it is best to examine and present them together.

5. Strategies and Goals: To analyze the market and your competition in order to determine how and where your company or products or services fit and to maximize your position with your target market

6. Products or Services: To describe your products or services and how they match your findings of your strategies and goals

7. Marketing and Sales: To market your products or services with the best positioning and to forecast your sales based on the findings of categories four, five, and six, in that order

8. Management and Organization: To present the management and personnel who will run the show. This section can be separated into two sections for more complex companies.

9. Operations: To explain how the business is run

10. Financial Pro Formas: To forecast successful financial performance for all activities

11. Financial Requirement: To present the type and amount of financing needed, based on the previous sections, to accomplish the whole plan

12. Exhibits: By definition, to close the plan and separate any supporting materials that would otherwise interrupt the flow of the story

A professionally written startup business plan has all 12 of these basic sections presented in the order of the outline. Most of the segments listed will also be reflected in the same order of presentation, although there may be slight variances depending on your type of business. When your business plan is written to obtain financing, the financial requirement section may be tailored either as a loan request or as an investment offering proposal, and then titled accordingly.

The saying, "There's no second chance to make a good first impression," is highly appropriate when it comes to the opening sections of your business plan and its overall appearance. With current desktop publishing, business plans are looking more professional--prospects are competing for neatness and an impressive presentation that sets them apart.

• Format. As to format, the norm is to bind your business plan in booklet form with high-quality materials. Better ones have quality report covers in dark or rich colors and are labeled on the front. The title page serves better than a label if laminated or positioned behind a windowed cover or behind a full clear cover. Most types of binding are available at copy centers: Ibico and GBC presentation bindings, Wire Bind, and Velobinder are a few of the better ones. Some businesses go the extra step to have printed covers or printed binding strips. Three-ring binders have been used for years and are still acceptable, but you improve your odds for making that favorable first impression by using the latest and most professional-looking, high-tech materials available.

• Page layout. Make sure the layout of each page is balanced and artistically pleasing, with a lot of open or negative space--paragraphs, lines, and characters should not be too closely spaced. With desktop publishing, many types of fonts are available. The text is generally easier to read if you use a font with serifs, such as New Times Roman, Charter or Garamond, and the margins are justified. For a professional quality, use a sans-serif font, such as Arial, Modern or Verdana, for titles, sideheads, tables and outlines. Choose one of each and stay consistent throughout the presentation.

Using the latest software printing design tools, such as boxes, borders, shadow lines, and enlarged and bold characters, can add a professional look if correctly done without drawing attention to their use and stealing the show from the material itself. Color printing, judiciously placed, is being used more all the time.

• Tabs and titles. Each subject, with titled heading, should have its own section and be separated with indexed partitions keyed to the table of contents. Tabbed index partitions make it easier to locate information, especially during a personal presentation. Another feature is to use colored partitions, preferably muted or soft colors that coordinate with the color of the cover and with the colors of any charts or graphs inside. Instead of custom tabs, some plans are assembled with printed tab indices with miniature plastic covers, but if you have access to preprinted laminated tabs, they are preferable. Avery has Index Maker dividers for ink-jet and laser printers that you can customize with basic desktop software. A recent innovation is hidden tabs that protrude past the pages but not the cover.

Within each section, set off subsections or segments with crossheads usually set bold in a sans-serif font. When these are justified to the right or left margin, they are referred to as sideheads.

• Color and charts. Charts, graphs, and illustrations are commonly acceptable if appropriate to the text. Color is often better than black and white; however, choose reds and blues, not chartreuses, yellow-oranges, or some other unusual color. In fact, if you are going to use extensive colored charts and graphs, choose a theme of three or four rich colors and use them consistently throughout the work. Reserve photographic prints for the exhibits. Even then, they should be presented in protective sheets or converted to color copies and labeled or captioned in font styles consistent with the rest of the business plan. If needed in the main body of the business plan, pictures look more professional when scanned and merged into the layout.

• Printing. Use laser or ink-jet printers to print on paper of stationery quality. Paper should be the brightest white you can find, laser quality, or one of the muted color r�sum� stocks in soft gray or ivory. Staying consistent by using the same type of paper for text, graphs, charts, and illustrations yields a quality professional look. Using bits and pieces of different paper gives the impression the plan was thrown together.

• Proofreading and copyediting.Have your figures checked by an accountant and the text proofread by an editor or proofreader. An accurate, easy-to-read, and well-organized text will convey professionalism and credibility. Too often this important step is avoided or forgotten: despite all the work that has gone into creating an impressive presentation, typos, missing words, poor sentence construction, and figures that don't add up become a significant part of that first impression made on a reviewer.

Important Points to Remember

• An accurate, easy-to-read, and well-organized business plan conveys professionalism and credibility.
• You improve your odds for making a favorable first impression by using the latest and most professional-looking, high-tech materials available.
• Don't necessarily try to balance the material from section to section. Place your emphasis in the proper perspective and accent the features that are most important for your business.
• Always include a cover letter with your business plan, because it may get passed on to other staff members who won't know about your venture.

Excerpted fromRule's Book of Business Plans for Startupsby Roger Rule, from Entrepreneur Press

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How To Write Financial Plan

The financial part of a business plan includes various financial statements that show where your company currently is financially, and where it intends to be. This information helps you determine how much financing your business needs and helps financiers determine whether lending you money or investing in your business is a prudent use of funds.

While the financial statements are helpful in and of themselves, the data they contain can also be used to calculate financial ratios such as gross profit margin, return on investmentand return on owner's equity. Ratios provide helpful information about a company's liquidity, profitability, debt, operating performance, cash flow and investment valuation.(Learn more about financial ratios in our Financial Ratio Tutorial.)

Before you seek financing, ask yourself if your business is ready to take on new debt. Do you know exactly what you will use the money for? Can your business handle the cost and the risk of borrowing this money? What would the consequences be if you were to default?
Begin your financial plan with information on where your firm stands financially at the present time, and what its financial situation has looked like historically. Then lay out your financial targets, such as return on investment, sales per employee, profit margin and so on.

If your business plan is for the expansion of an existing business, your statements will be based on your business's existing financial data. If your business is new, your statements will be speculative, but you can make them realistic by basing them on the published financial statements of existing businesses similar to yours. (Our Financial Statements Tutorial will get you up to speed, if you're new to the subject.)

Your financial plan should include three key financial statements: the income statement, thebalance sheet and the cash flow statement. Let's look at what each statement is and why you need it.

• Income Statement
  The income statement summarizes your company's revenue and expenses. Revenues are your company's sales and/or other sources of income (for example, a car dealership might earn money from car sales, car leases and auto loans). Expenses include items such as the cost of goods sold, payroll, taxes and interest. The bottom line of the income statement shows the company's net income. Financiers want to know what kind of numbers your company is working with and whether your company is profitable. (To learn more, read Understanding The Income Statement.)
  
  
• Balance Sheet
  The balance sheet shows your company's assets and liabilities. It's called a balance sheet because the assets must perfectly balance the liabilities. Within each category are numerous subcategories. For example, your assets will include things like cash, accounts receivable, inventory and equipment. Your liabilities will include things like accounts payable and loan balances. The balance sheet is important because it shows the company's financial position at a specific point in time, and compares what you own to what you owe. (For more information, see Reading The Balance Sheet.)
  
  
• Cash Flow Statement/Cash Budget
  The cash flow statement shows the amounts of money you expect to be coming into and going out of your business in a given time frame. Topics you'll need to examine to predict cash flow include sales forecasts, cash receipts vs. credit receipts and the time frame for collecting accounts receivable. How much will these expenses be, and how often will you need to pay them? Will you have trade credit, and how long will you have to pay your suppliers? A realistic cash budget covering one year of operations and broken down into one-month intervals is an important short-term planning tool. You'll also need to prepare longer-term projections that go at least three years out, if not five. These are called "pro forma" statements, and they are based on your assumptions about how your business will perform.

Cash flow statements not only show potential investors that you know what you're doing, they also help you to make sure your business model is financially viable and to establish goals that you want to achieve. (For more on this subject, check out What Is A Cash Flow Statement? and The Essentials Of Cash Flow.)

Your financial statements should show both a long- and short-term vision for your business. In business plans, three-year and five-year projections are considered long term, and your plan will be expected to cover at least three years. Your projections should be neither overly optimistic best-case scenarios, nor overly cautious worst-case scenarios, but realistic in-between projections that you can support. Also, be aware that lenders may want your statements presented in a certain way. A bank, for example, may want to see monthly projections for the first year, quarterly projections for the second year and annual projections for the third year. In addition to financial statements for your company, if you are a new business, you may need to provide personal financial statements for each owner.

Preparing your financial plan shows how much money will you need. Perhaps this sounds obvious, but you really should know how much money you need from lenders or investors before you ask. If you can't ask for a specific amount of money, explain why you need that amount of money and show exactly how it will be used, any reasonable lender will be very hesitant to give it to you. Lenders and investors will also expect that you have invested your own money in the firm - this shows that you are committed to your idea and confident that your business will succeed. The amount of your own money the lender will expect you to have invested in the business compared to the amount you want to finance varies, but it usually ranges from 20-50%.

You must also determine what type of financing would be most suitable for your business. Banks offer several types of financing to businesses that do not present too much risk. Do you need a short-term working capital loan to increase your inventory? Do you want a transaction loan, where you receive all the money at once, or a line of credit, where you draw on funds as you need them? Do you need an intermediate-term loan to purchase larger assets such as real estate or equipment? Would you prefer revolving credit, which has a longer time frame than a line of credit and allows you to re-borrow funds that you have previously paid back? 

Potential lenders will also want to know how and when you intend to repay the loan or line of credit, so you should put together a proposed repayment schedule and terms. They may not agree with you, but your proposal shows that you are considering the loan from the lender's perspective. Also describe what collateral is available to secure the loan, such as inventory, accounts receivable, real estate, vehicles or equipment. Be aware that lenders do not count the full value of your collateral, and each lender will count a different percentage.

Potential investors will want to know when their investment will pay off and how much of a return to expect. They will also want to see that you have an exit strategy to cash out on your investment. 

When you put together your financial statements, make sure there are absolutely no typos or mistakes in your calculations. If you are inexperienced in preparing these statements, hire a professional to help you. Even if you and all of your business partners know exactly what you are doing, you may still want to hire an unbiased, outside professional to check your work and give you a second opinion on whether you are being realistic in your projections. You don't want to be blindsided by mistakes or problems in your financial statements when a potential lender or investor rejects your proposal. 

Keep in mind that no one has to lend you any money or invest in your company, and when they are considering doing so, they will be comparing the risk and return of working with you to the risk and return they could get from other investments, such as bonds and stocks.

source : http://www.investopedia.com/

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Business Plan Introduction

A business plan is a written description of your business's future. That's all there is to it--a document that desribes what you plan to do and how you plan to do it. If you jot down a paragraph on the back of an envelope describing your business strategy, you've written a plan, or at least the germ of a plan.

Business plans can help perform a number of tasks for those who write and read them. They're used by investment-seeking entrepreneurs to convey their vision to potential investors. They may also be used by firms that are trying to attract key employees, prospect for new business, deal with suppliers or simply to understand how to manage their companies better.

So what's included in a business plan, and how do you put one together? Simply stated, a business plan conveys your business goals, the strategies you'll use to meet them, potential problems that may confront your business and ways to solve them, the organizational structure of your business (including titles and responsibilities), and finally, the amount of capital required to finance your venture and keep it going until it breaks even.

Sound impressive? It can be, if put together properly. A good business plan follows generally accepted guidelines for both form and content. There are three primary parts to a business plan:

• The first is the business concept, where you discuss the industry, your business structure, your particular product or service, and how you plan to make your business a success.
• The second is the marketplace section, in which you describe and analyze potential customers: who and where they are, what makes them buy and so on. Here, you also describe the competition and how you'll position yourself to beat it.
• Finally, the financial section contains your income and cash flow statement, balance sheet and other financial ratios, such as break-even analyses. This part may require help from your accountant and a good spreadsheet software program.

Breaking these three major sections down even further, a business plan consists of seven key components:

1. Executive summary
2. Business description
3. Market strategies
4. Competitive analysis
5. Design and development plan
6. Operations and management plan
7. Financial factors

In addition to these sections, a business plan should also have a cover, title page and table of contents.

How Long Should Your Business Plan Be?Depending on what you're using it for, a useful business plan can be any length, from a scrawl on the back of an envelope to, in the case of an especially detailed plan describing a complex enterprise, more than 100 pages. A typical business plan runs 15 to 20 pages, but there's room for wide variation from that norm.

Much will depend on the nature of your business. If you have a simple concept, you may be able to express it in very few words. On the other hand, if you're proposing a new kind of business or even a new industry, it may require quite a bit of explanation to get the message across.

The purpose of your plan also determines its length. If you want to use your plan to seek millions of dollars in seed capital to start a risky venture, you may have to do a lot of explaining and convincing. If you're just going to use your plan for internal purposes to manage an ongoing business, a much more abbreviated version should be fine.

About the only person who doesn't need a business plan is one who's not going into business. You don't need a plan to start a hobby or to moonlight from your regular job. But anybody beginning or extending a venture that will consume significant resources of money, energy or time, and that is expected to return a profit, should take the time to draft some kind of plan.

Startups. The classic business plan writer is an entrepreneur seeking funds to help start a new venture. Many, many great companies had their starts on paper, in the form of a plan that was used to convince investors to put up the capital necessary to get them under way.

Most books on business planning seem to be aimed at these startup business owners. There's one good reason for that: As the least experienced of the potential plan writers, they're probably most appreciative of the guidance. However, it's a mistake to think that only cash-starved startups need business plans. Business owners find plans useful at all stages of their companies' existence, whether they're seeking financing or trying to figure out how to invest a surplus.

Established firms seeking help. Not all business plans are written by starry-eyed entrepreneurs. Many are written by and for companies that are long past the startup stage. WalkerGroup/Designs, for instance, was already well-established as a designer of stores for major retailers when founder Ken Walker got the idea of trademarking and licensing to apparel makers and others the symbols 01-01-00 as a sort of numeric shorthand for the approaching millennium. Before beginning the arduous and costly task of trademarking it worldwide, Walker used a business plan complete with sales forecasts to convince big retailers it would be a good idea to promise to carry the 01-01-00 goods. It helped make the new venture a winner long before the big day arrived. "As a result of the retail support up front," Walker says, "we had over 45 licensees running the gamut of product lines almost from the beginning."

These middle-stage enterprises may draft plans to help them find funding for growth just as the startups do, although the amounts they seek may be larger and the investors more willing. They may feel the need for a written plan to help manage an already rapidly growing business. Or a plan may be seen as a valuable tool to be used to convey the mission and prospects of the business to customers, suppliers or others.

Plan an Updating Checklist
Here are seven reasons to think about updating your business plan. If even just one applies to you, it's time for an update.

1. A new financial period is about to begin. You may update your plan annually, quarterly or even monthly if your industry is a fast-changing one.
2. You need financing, or additional financing. Lenders and other financiers need an updated plan to help them make financing decisions.
3. There's been a significant market change. Shifting client tastes, consolidation trends among customers and altered regulatory climates can trigger a need for plan updates.
4. Your firm develops or is about to develop a new product, technology, service or skill. If your business has changed a lot since you wrote your plan the first time around, it's time for an update.
5. You have had a change in management. New managers should get fresh information about your business and your goals.
6. Your company has crossed a threshold, such as moving out of your home office, crossing the $1 million sales mark or employing your 100th employee.
7. Your old plan doesn't seem to reflect reality any more. Maybe you did a poor job last time; maybe things have just changed faster than you expected. But if your plan seems irrelevant, redo it.Business plans tend to have a lot of elements in common, like cash flow projections and marketing plans. And many of them share certain objectives as well, such as raising money or persuading a partner to join the firm. But business plans are not all the same any more than all businesses are.
   Depending on your business and what you intend to use your plan for, you may need a very different type of business plan from another entrepreneur. Plans differ widely in their length, their appearance, the detail of their contents, and the varying emphases they place on different aspects of the business.
   The reason that plan selection is so important is that it has a powerful effect on the overall impact of your plan. You want your plan to present you and your business in the best, most accurate light. That's true no matter what you intend to use your plan for, whether it's destined for presentation at a venture capital conference, or will never leave your own office or be seen outside internal strategy sessions.
   When you select clothing for an important occasion, odds are you try to pick items that will play up your best features. Think about your plan the same way. You want to reveal any positives that your business may have and make sure they receive due consideration.
   Types of Plans
   Business plans can be divided roughly into four separate types. There are very short plans, or miniplans. There are working plans, presentation plans and even electronic plans. They require very different amounts of labor and not always with proportionately different results. That is to say, a more elaborate plan is not guaranteed to be superior to an abbreviated one, depending on what you want to use it for.
   • The Miniplan. A miniplan may consist of one to 10 pages and should include at least cursory attention to such key matters as business concept, financing needs, marketing plan and financial statements, especially cash flow, income projection and balance sheet. It's a great way to quickly test a business concept or measure the interest of a potential partner or minor investor. It can also serve as a valuable prelude to a full-length plan later on.
   Be careful about misusing a miniplan. It's not intended to substitute for a full-length plan. If you send a miniplan to an investor who's looking for a comprehensive one, you're only going to look foolish.
   • The Working Plan. A working plan is a tool to be used to operate your business. It has to be long on detail but may be short on presentation. As with a miniplan, you can probably afford a somewhat higher degree of candor and informality when preparing a working plan.
   A plan intended strictly for internal use may also omit some elements that would be important in one aimed at someone outside the firm. You probably don't need to include an appendix with resumes of key executives, for example. Nor would a working plan especially benefit from, say, product photos.
   Fit and finish are liable to be quite different in a working plan. It's not essential that a working plan be printed on high-quality paper and enclosed in a fancy binder. An old three-ring binder with "Plan" scrawled across it with a felt-tip marker will serve quite well.
   Internal consistency of facts and figures is just as crucial with a working plan as with one aimed at outsiders. You don't have to be as careful, however, about such things as typos in the text, perfectly conforming to business style, being consistent with date formats and so on. This document is like an old pair of khakis you wear into the office on Saturdays or that one ancient delivery truck that never seems to break down. It's there to be used, not admired.
   • The Presentation Plan. If you take a working plan, with its low stress on cosmetics and impression, and twist the knob to boost the amount of attention paid to its looks, you'll wind up with a presentation plan. This plan is suitable for showing to bankers, investors and others outside the company.
   Almost all the information in a presentation plan is going to be the same as your working plan, although it may be styled somewhat differently. For instance, you should use standard business vocabulary, omitting the informal jargon, slang and shorthand that's so useful in the workplace and is appropriate in a working plan. Remember, these readers won't be familiar with your operation. Unlike the working plan, this plan isn't being used as a reminder but as an introduction.
   You'll also have to include some added elements. Among investors' requirements for due diligence is information on all competitive threats and risks. Even if you consider some of only peripheral significance, you need to address these concerns by providing the information.
   The big difference between the presentation and working plans is in the details of appearance and polish. A working plan may be run off on the office printer and stapled together at one corner. A presentation plan should be printed by a high-quality printer, probably using color. It must be bound expertly into a booklet that is durable and easy to read. It should include graphics such as charts, graphs, tables and illustrations.
   It's essential that a presentation plan be accurate and internally consistent. A mistake here could be construed as a misrepresentation by an unsympathetic outsider. At best, it will make you look less than careful. If the plan's summary describes a need for $40,000 in financing, but the cash flow projection shows $50,000 in financing coming in during the first year, you might think, "Oops! Forgot to update that summary to show the new numbers." The investor you're asking to pony up the cash, however, is unlikely to be so charitable.
   • The Electronic Plan. The majority of business plans are composed on a computer of some kind, then printed out and presented in hard copy. But more and more business information that once was transferred between parties only on paper is now sent electronically. So you may find it appropriate to have an electronic version of your plan available. An electronic plan can be handy for presentations to a group using a computer-driven overhead projector, for example, or for satisfying the demands of a discriminating investor who wants to be able to delve deeply into the underpinnings of complex spreadsheets.
   Source: The Small Business Encyclopedia, Business Plans Made Easy, Start Your Own Business and Entrepreneur magazine.

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