Monday, August 11, 2014

Doing An Internet Start-up? Don't forget to plan (Part 2)

Many business plans include a section about Strategies, describing how the start up will address particulars like funding, market penetration, customer relations, cost control, pricing and competition. Other sections could be included in the plan, depending on the type of business. A section discussing suppliers and product costs would be critical for retail or manufacturing businesses, but is probably unnecessary in service-type businesses.

In its final section, the comprehensive business plan provides financial forecasts (usually in the form of a spreadsheet or table) in sufficient detail to reveal any particular short-term problems such as cash flow, seasonal variations in sales, and projected growth. It may be advisable to project the financial results on a month-to-month basis the first year of operation, then quarterly for the second year, and annually for the third through fifth year. When complete the plan will be an easy-to-understand logically-organized narrative fully describing the scope, strategy, and projected operating results of the proposed business.

Banks invariably ask for a written business plan when the entrepreneur applies for a business loan. Usually, they receive an unorganized assortment of spreadsheets and a short, one page, ill-conceived narrative. The bank loan officer will give much more consideration to the professional entrepreneur who presents a well-organized, comprehensive business plan.

When completed the business plan should never be tossed into a file cabinet to be forgotten. The plan is a living document, kept on the entrepreneur’s desk for day-to-day reference. The entrepreneur writes notes in the margins, adjusts strategies, updates information on the competition. Periodically the business plan is reprinted with the changes incorporated. It becomes the foremost document guiding the startup business toward its eventual success.


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