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The KEY$TONE 

Business Plan Guide

 For Start-Up or Existing Businesses

 

(C) Copyright EMB, 1996

Click here for details on how the KEY$TONE Co. can provide confidential long distance consulting for your business at a reasonable rate.

A business plan can be used to determine the feasibility of your business, an invention, a project, or when it is necessary to get financing.  Your suppliers may need certain information from your plan, and it will help keep your banker and investors informed.  But most importantly, YOU need it to stay focused, on course and ready for the future!  It will give you an edge on competition. 

There are many business plan guides available to assist the entrepreneur in planning a course for the future.  The KEY$TONE approach is fundamental.  As you will notice, the fundamental functions of a business are covered.  These business functions are marketing, operations (including services, production, and manufacturing), personnel (also called human resources), research & development (R&D), and finance.  The fundamentals of leadership and management are covered in the Overview section of the KEY$TONE BUSINESS PLAN GUIDE. 

 The format of this business plan guide is in a check list style x and some items may not be applicable to your business.  But you should seriously look at each item to see how it could be applicable to you before you cross it off.  As you go through the check list, use the following inquiring words to help you develop the plan for your needs; what, where, when, how, who, and why.  As you complete each item use a word processor to develop the narrative portion of the business plan, because you will need to keep revising it until you have the final draft.  Actually you will never have a perfect final draft because, as time goes by you will need to revise the plan to allow for changes that have occurred in your market, operations, or any other area of the business.  When you get to the Financial section, use the free KEY$TONE software to develop the financial reports required in the business plan.  You should know by then if your plan appears to be feasible or not. 

You can order the free KEY$TONE software by going on-line at www.wowidea.biz and go to  KEY$TONE Products.  The software is up-loaded to you via e-mail for a charge of $10 per file (you will only need a few files).

Getting Ready to Plan

Use a one inch (or larger) three ring notebook, and put in it six (6) tab dividers.  Use the tabs on the last page of this business plan to label each section according to your Table of Contents.  As you develop your plan, three-hole punch your printed pages and other material and place them in the appropriate section of the notebook.  The copy of your business plan that you take to the banker should be 2-Hole punched (on the top of the pages) and put in a file folder, supporting documents such as Income Tax Returns could be put in a separate file folder.  Make sure to put appropriate labels on the tabs of the file folders.

Not all items included in this business plan guide will apply to your business.  Some items relate to a start-up business, others to an existing business, and some items will apply to both.  There are extra lines to add other items in the plan that the lender or investor might have asked for, or other information that you feel necessary.

First, go through the plan and cross out the items that don't apply, and add any items that should be included in your plan.  Then start working on your plan.  Your business plan design will be unique according to the purpose of the plan.  For example, you could use it to obtain financing, or use it as an operational and control tool, or a combination of the two.  Prepare your plan in narrative form (as opposed to outline form).

Information Resources 

There are many resources when you develop your plan: The KEY$TONE Co. public/college/university libraries, your banker, trade associations, Chambers of Commerce, Small Business Development Centers (SBDC), Service Corp of Retired Executives (SCORE), the Small Business Administration (SBA), accountants, business consultants, lawyers, the internet, and state and local economic development agencies.

Putting the Plan Together

There is no exact sequence in putting a plan together, but it is best begin with the PURPOSE or MISSION, whichever you choose to call it.  The reason is, "to everything there is a purpose" and you should know what the purpose of your business is before you start planning for it.  A purpose statement should be short.  The Mission of the KEY$TONE Co. is "To help small businesses find solutions to problems, threats, and opportunities."  This mission provides focus, drive, and power to the organization.

People often ask me, "how long does it take to put a business plan together?"  To that there is no exact answer.  It depends on many things such as: how much time can you devote to putting your plan together, how many people are involved, how complex the project is, how much money you have to put into it, how much money you will need to get from investors (and trying to locate investors), or how much you will need to borrow,  will it involve new construction or remodeling, and so forth.  But the main thing is that you decide on a purpose/mission and get started.  It's just one step at a time until you get through the process.  And then if you decide to actually start the business, planning should remain a high priority in your business.


NAME OF YOUR COMPANY

BUSINESS PLAN (Include the items that apply to your plan)

TABLE OF CONTENTS

1.  SUMMARY and LOAN APPLICATION -------------------------------------------------- 1-1

2.   FINANCIAL ----------------------------------------------------------- ---------------------------- 2-1

3.  OVERVIEW  OF THE BUSINESS --------------------------------------------------------- 3-1 

4. MARKETING ----------------------------------------------------------------------------------------- 4-1

     Part A: Market Research, Analysis, and Forecast

     Part B: Marketing Plan

 5.  OPERATIONS and PERSONNEL --------------------------------------------------------- 5-1

 6.  APPENDIX

 NOTE:  Begin numbering each section with Page 1. Then you won't have to renumber the entire business plan as you develop it or change it in the future.  This can be achieved with a footer using word processor software.


1.  SUMMARY and LOAN APPLICATION 

 The Business Plan Summary is prepared AFTER the rest of your plan is finished.  The summary should be one to three pages in length.  Your summary must be well prepared so the reader will feel that it is a good business venture.  The summary must be convincing.

 If you are presenting the business plan to an investor or  lender, address the summary letter to the person/firm to receive it.  You might include a nondisclosure agreement, however, I’ve found that there are very few situations that would actually require it.

          [ ] a) Legal form of business.

         [ ] b) Ownership breakdown.

         [ ] c) Mission/purpose of the business.

         [ ] d) Type of industry/business, and a general description of your product (s) or service (s).

         [ ] e) General description (profile) of your customers.

         [ ] f)  Management strengths and expertise.

         [ ] g) Marketing summary.

         [ ] h) Operations/Services/Manufacturing summary.

         [ ] i)  Research and Development summary.

         [ ] j)  Financial summary: 

                        ~ Begin by stating who is asking for the financing, the amount of money needed, and how the funds will be used. 

                        ~ State the percent of interest that you used in the plan, the period of the loan, and the amount of monthly payments. 

                        ~ Summarize the projected sales and profits. 

                        ~ Then clearly explain why you need the financing.         

                        [ ] ___________________________________________________

 The LOAN APPLICATION

 Include the forms and exhibits as required by the lender/guarantor/investor.

 2.   FINANCIAL

      A. General Information 

         [ ] Provide a current (within 60 days) personal financial statement.

        [ ] Include three years of your personal tax returns.            

        [ ] Who will do your books? (In-house?  Computerized?  Outside?)

        [ ] What are your credit policies?

        [ ] What kind of taxes will you be required to pay?

        [ ] Prepare a "Source and Use of Funds Statement."

        [ ] What collateral are you pledging and what is its value?  Is the value based on cost, market, or liquidation value? 

        [ ] Have you prepared a depreciation schedule?

        [ ] For existing investment capital: What is the percent and dollar amount of ownership, and number of shares?

        [ ] For new investment capital: How much is being sought, at what percent of ownership, number of shares, etc.

        [ ] Is the business involved in any litigation?

        [ ] Give the name, and phone number of your attorney.  

        [ ] __________________________________________________________

B. Existing Business (The KEY$TONE free file #203- Three Year Cash Flow works well to prepare the 3 year analysis)

         1.  If you are an EXISTING BUSINESS, the financial records for the previous three years should include:

[ ] Balance sheets                                    [ ] Income statements

[ ] Cash flow                                            [ ] Income tax returns

[ ] Aging of accounts payable                    [ ] Financial ratios

[ ] Aging of accounts receivable

[ ] __________________________________________________________

        2.  Current credit and loan financing information should Include:

        [ ] Who is owed, when was it obligated, original amount, current balance, interest rate, payment amount, when due, and state what your current loan status is.             

        [ ] What is your credit rating?  You might include a current credit report in the Appendix.

        [ ] __________________________________________________________

 C. Start Up or Existing Businesses (use KEY$TONE Software to prepare the key financial reports)

        For the First year projected, include the following financial reports:

        [ ] Monthly Cash Flow at least for one year and maybe two years

        [ ] Cash Flow line item justifications/assumptions.  

        For the three year projection summary and analysis include:

        [ ] Three Year Cash Flow

        [ ] Three Year Balance Sheets

        [ ] Three Year Income Statements

        [ ] Three Year financial ratios

       Additional Considerations:

        [ ] Pro-forma Balance Sheet (necessary)

        [ ] Source and Use of Funds (necessary)

        [ ] Collateral list and value (necessary)

        [ ] Break-even calculations (maybe)

        [ ] Allow 10% - 20% extra money for construction, miscellaneous start-up/project costs, acquisition, and a general contingency fund

        [ ] Allow 2% to 5% for closing/loan costs

        [ ] You might include your home budget

        [ ] If you are requesting a loan, how much are you requesting, at what rate of interest 

3. OVERVIEW OF THE BUSINESS

     [ ] Prepare a Purpose or Mission Statement.

     [ ] Consider including the following: A creed, code of ethics, or value statements.  This means; how will you treat your employees, the environment, the community, your customers, and your suppliers.

     [ ] History of the business (if you are an existing business).

     [ ] Give your Standard Industrial Classification Number (SIC #), the title, and the basic SIC description.

     [ ] If you are a partnership, include the "partnership agreement," or if you are/will be a corporation, include the "articles of incorporation," or if an L.L.C. the "articles of organization."

     [ ] Complete applications for your Trade Name Registration, sales taxes and other necessary licenses and permits to begin business. 

     [ ] Prepare "resumes" for yourself and the key management team that will explain how everyone is qualified to be in this type of business.  Include: Education, management training, leadership abilities, certifications, experience, skills, and achievements.

     [ ] Show the major organizational functions and the names of those who are, or will be, responsible.  An "organizational chart" can be used to explain this.

     [ ] Explain your "risk management" program (such as: general liability, product liability, and key-man insurance).

     [ ] Discuss the strengths, weaknesses, opportunities, and threats of your business.  Explain how you intend to correct weaknesses, and how you will take advantage of your strengths.

     [ ] Will/do you have a business computer?  State how it will be used in the business.

     [ ] State your overall progress to date (if you are an existing business).

     [ ] What kind of image do you intend to project?     

     [ ] State the basic strategies of the business (Strategy means:  The guides for making decisions in key areas of the business, such as: your customers, competition, suppliers and the government).  Strategies can be designed for short, medium, or long term performance.  They can also be related to marketing, R&D, finance, personnel, or operations.

     [ ] List the business' goals/objectives.

     [ ] You might want to show the schedule of events for the year, or state the major events for each year projected (a Gantt Chart works well to demonstrate this).        

     [ ] ___________________________________________________________

     [ ] ___________________________________________________________


4.   MARKETING

As you develop this section explain how you gathered the data (e.g., did you run a survey and what secondary research did you do)?  Make sure to document your sources of  information.

The Marketing section of your business is divided into two parts.  Part A. is Market Research & Analysis;  Part B. is your Marketing Plan.

A.  Market Research and Analysis (understanding the market)

     [ ] Describe the product or service market that is similar to what you offer.

     [ ] What is 100% of the total market that you serve?  Use quantitative values    such as sales dollars, number of customers, or number of sales/units.

     [ ] Analyze/define your market niche (what it includes, where it is, what % it is of the total market, and how some needs are not met).

     [ ] Define the customers/users of  products/services (what they buy, who buys, when they buy, how much they buy, how often do they buy,  what is the age range of the buyers/users, what is their income, and gender).

     [ ] Summarize the industry life cycle and the market outlook.  What are the industry trends?    

     [ ] Explain the major risks within the industry, your market niche, and your competition.  How will you protect yourself against those risks?

     [ ] What external factors affect your market such as: availability of supplies,    the length of time it takes to get supplies, government regulations, the international and local economy, customer demands, and competition.

     [ ] What is your competitors share of the market?

     [ ] What are your competitors strengths and weaknesses?  How will you take advantage of this knowledge?

     [ ] How do your competitors price, promote, and distribute their products and/or services?

     [ ] How will your competitors react to competition?

     [ ] ___________________________________________________________

     [ ] ___________________________________________________________

 B.  Marketing Plan  (how you will market your business)

      [ ] Define your PRODUCT (s) and/or SERVICE (s).  Give general descriptions, and state any unique benefits, features, accessories, packaging, and warranties.

     [ ] What makes your product/service better than the competition?         

     [ ] How will you differentiate your product/service from your competition?

     [ ] Explain your product and/or service life cycles and growth rate.

     [ ] Explain how you selected the location of your business. Possibly include photos and a map showing its location.  Also, show the location of your competitors.    

     [ ] What are your marketing strategies (1st, 2nd, & 3rd years)? 

     [ ] How will you segment (divide up) your targeted market?

     [ ] Explain your sales projections.  This is based on your market research, analysis, seasonality, and projected trends.  You can also refer to your KEY$TONE sales printouts.

     [ ] What will your market share be for each year that you are projecting?

     [ ] What are the unique opportunities for new markets, products, and services?

     [ ] How are you filling customer needs?  Why will they buy from you?

     [ ] Explain your pricing policies/strategies.  Include list price, discounts, terms, and method of payment.  You can also refer to your KEY$TONE sales printouts showing markups and discounts.

     [ ] What are your biding policies (if applicable)?

     [ ] Summarize your promotion plans.  Include costs and scheduling for the different types of advertising, personal selling, news releases, community involvement, promotional items, direct mail, and publicity). A Gantt Chart might help illustrate scheduling of your promotion and You can also refer to various KEY$TONE worksheet printouts.

     [ ] Discuss your sales force (e.g. qualifications, strengths, and weaknesses) and how you will capitalize on them.

     [ ] Explain your distribution system (how you will get your products/services to your customers at the right time, at the right place, and in the right amount).

     [ ] What kind of meetings, reports, and records will you have that will help maintain control of your marketing activities?

     [ ] ___________________________________________________________

     [ ] ___________________________________________________________

 5.   OPERATIONS and PERSONNEL

      [ ] What is 100% of your operations/service capacity?

     [ ] What will the percent of operation capacity be for each year projected?                                                                                    

     [ ] How would you handle a surge in product/service demand?

     [ ] What are your present production and equipment needs?

     [ ] What are your future plant and equipment needs, and when will you need them?

     [ ] Explain where you get your products and supplies, when you get them, how much you pay, special terms, and delivery/shipping terms.  Include any special discounts/buy backs.  Why do you buy from specific sources?     

     [ ] Explain your inventory system (is it computerized, what is the inventory turnover per year, what is your reorder policy, and so forth).                           

     [ ] How will you maintain quality standards and controls? 

     [ ] What kind of equipment do/will you have? How will it allow you to offer quality service and also enable you to meet customer demand?

     [ ] Explain what kind of facilities you have/will need.          

     [ ] Will/do you lease, buy, remodel, or will you relocate?  Will the facilities give you a competitive advantage?

     [ ] Include plant layout and/or floor plan.

     [ ] How will you avoid/handle obsolescence & ageing inventory

     [ ] Will zoning laws permit your kind of business in the location you have selected?

 R&D is all about the future of the business.  It includes technological changes that will affect your marketing, personnel, finance, and operations.  It is about new ways to manage better, and leadership styles of the future.  In other words, it's focusing on and being ready for change!  How will you keep up with changes and trends?

     [ ] How do you plan for future growth and expansion?

     [ ] How will you stay abreast of your professional field (ie: seminars, trade associations, trade magazines, etc.) and are they budgeted in your cash flow?

     [ ] What kind of new products/services do you plan to introduce and when do you anticipate including them?

     [ ] What kind of technical manuals, books, data bases, and information will you need to run the business?  How will  this give you a competitive advantage over your competition?

     [ ] Will any of your products/processes involve trade secrets?

     [ ] Do/will you have any patents, copyrights, or trademarks?

     [ ] Are there any special technology risks or environmental concerns associated with your products/services?

 Personnel

     [ ] Do you have an operation and procedures manual?

     [ ] Will/does your plant meet OSHA safety requirements?

     [ ] Will/do you use subcontractors?  If so, under what conditions.

     [ ] How will you or do you meet the requirements of ADA?

     [ ] Do you have a qualified and adequate human resource market?

     [ ] How many employees will/do you have, and what are your planned future requirements?

     [ ] How will you handle training and safety of employees?

     [ ] What kind of benefits will you provide your employees?

     [ ] Have you prepared employee policy and benefit manuals?

     [ ] Prepare job descriptions (for line employees).

     [ ] Prepare a wage and salary structure.

     [ ] How will you evaluate employee performance?

     [ ] Will you require proprietary agreements for employees?

     [ ] ___________________________________________________________

     [ ] ___________________________________________________________

 

6.  APPENDIX    (Possible items to include)

     [ ] Agreements with suppliers

     [ ] Market research support material and references

     [ ] Letters of support, or intent to purchase your products or services

     [ ] Charts, Graphs, and Tables showing various items such as: Sales, Gross Profit, Operating Expenses, Net Profit Financial Ratios and Market Share

     [ ] Gantt Charts for: Start-up period, promotion, operations, expansion plans

            A Gantt Chart is basically a 13 column (including a description column) that shows the start and finish of a variety of activities on a monthly basis.

     [ ] Photos of products and your facilities

     [ ] Drawings and maps

     [ ] Sample promotional material

     [ ] Copies of contracts

     [ ] ___________________________________________________________  

     [ ] ___________________________________________________________        

     [ ] ___________________________________________________________

     [ ] ___________________________________________________________  

     [ ] ___________________________________________________________        

     [ ] ___________________________________________________________

     [ ] ___________________________________________________________  

     [ ] ___________________________________________________________        

     [ ] ___________________________________________________________

  Make sure to update your plan as needed.  When you combine your business plan with the  KEY$TONE software you will have the finest tools available to help you successfully plan, operate and manage your business.

(C) 1996 Elwin M. Boody (EMB)

KEY$TONE Co.

2480 Tower Avenue

Burlington, CO  80807

(719) 346-0328


TABS

 Cut the following tab headings out on the dotted line and at both end marks.  Then fold each one in the middle (at the middle mark) and insert them in the index tabs of your business plan notebook.  As you develop your business plan, punch the pages and insert them in the proper section of your business plan notebook.  This procedure will help you keep your business plan organized as you develop it or revise in the future.

 ---------------------------------------------------------

| 1. SUMMARY/App. | 1.SUMMARY/App. |                                           

---------------------------------------------------------

 --------------------------------------------

| 2. FINANCIAL | 2.FINANCIAL |                           

--------------------------------------------

 ---------------------------------------------

| 3. OVERVIEW | 3. OVERVIEW |

---------------------------------------------

 ------------------------------------------------

| 4. MARKETING | 4.MARKETING |

------------------------------------------------

 ----------------------------------------------------

| 5. OPERATIONS | 5. OPERATIONS |

----------------------------------------------------

 -------------------------------------------

| 6. APPENDIX | 6. APPENDIX |

-------------------------------------------

 >KEY$TONE bus plan             July 06, 1996

 

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