Executive Summary
This section summarizes the entire business plan, emphasizing its high
points:
- What is the purpose of your plan?
- How much money are you requesting, in what form (equity or debt), and for what purpose?
- What is the market potential of your product/service?
- What are its significant features?
- What are your product development milestones?
- What financial results do you anticipate?
I. Business Elements
- What is your business?
- What are your principal products/services?
- What are your principal markets?
- What are the applications and needs for your product/service?
- What is your distinctive competence (i.e., what are the chief factors that will account for your success?)?
- What are your strengths and weaknesses?
II. Market Analysis
- Industry
- What industry are you in?
- How big is it now? How big will it be in five years? Ten years?
- What are its chief characteristics?
- Who are or will be the major customers?
- What are or will be the major applications?
- What are the major trends in the industry?
- Target Markets
- What are the major segments you will penetrate?
- For each major application, what are the following:
- Requirements by the customer or regulatory agency?
- Current ways of filling these requirements?
- Buying habits of the customer?
- Impact on the customer of using your product/service (e.g., how much will it save him per year; what return on investment will he get, will he have to change his way of doing things, buy other equipment, change work habits, or modify organizational structure?)
- Competition
- What companies will you compete with, including those like you who are not yet in the market?
- How do you compare with other competitive companies?
- What competition will you meet in each product/service line?
- How does your product/service compare with others, especially through the eyes of the customer?
- What is the market share of each existing competitor?
- Do you threaten the strategic objects or self-image of competition or just financial results (e.g., will competition see to destroy you at any cost)?
- Do you interface with important, noncompetitive equipment that manufacturers might still be reluctant to support your product due to warranty, liability, or image considerations?
- Reaction from specific prospective customers
- What prospective customers have you talked to?
- What was their reaction?
- Have they seen or tested a realistic prototype of the product/service? If so, what was their reaction?
- Marketing activities
- What is your marketing strategy?
- What are your plans for
- Distribution
- Promotion
- Pricing
- Sales appeal
- Geographical distribution
- Field service or product support
- Setting priorities among segments, applications, and marketing activities?
- Selling activities
- Who will you identify prospective customers?
- How will you decide whom to contact and in what order?
- What level of selling effort will you have?
- What efficiency will you have?
- What conversion rates will you be able to obtain?
- How long will each of the above activities take in person-days
- What will your initial order size be? What is the likelihood and size of repeat orders?
- Based on the above assumptions, what is the sales productivity of each salesperson?
- What is the commission structure? Does it have increasing or decreasing rates for exceeding quote? What will the average salesperson earn per year and how long will s/he have to wait to receive commissions?
- What evidence do you have to back up your answers to the estimates above?
III. Technology: Research and Development
- What is the essence and status of your current technology (idea, prototype, small production run, etc.)?
- What is your patent or copyright position?
- How much is currently patented or copyrighted and how much can be patented or copyrighted?
- How comprehensive and how effective will the patents or copyrights be?
- What companies have technology that is superior or equal to yours?
- Are there additional means or protecting your technology?
- What new technologies or scientific approaches exist that may become practical in the next five years? What factors limit their development or acceptance?
- What are the key research and development activities and related milestones and risks?
- What new products, hopefully derived from first generation products, do you plan to develop to meet changing market needs?
- Are there any regulatory or approval requirements?
IV. Manufacturing and Operations
- How will you accomplish production or conduct service operations?
- How much will you do internally and by what methods?
- How much through subcontracts, both initially and after several years?
- What production or operating advantages do you have?
- What is your present capacity for level or production or operations? How can this be expanded?
- What are critical parts? Are any of these parts “sole-sourced” or do you have backup vendors?
- What re the lead times of these parts?
- What are the standard costs for production at different volume levels?
V. Management and Ownership
- Who are your key managers?
- How do you intend to attract and compensate key people?
- What are their skills and, particularly, their experience, and how does this relate to the success requirements of
your venture? - What has their track record been, and how does this relate to your requirements?
- What staff additions do you plan, when and with what required qualifications?
- Do any managers have outstanding “noncompete” agreements with previous employers?
- Who is on your board of directors?
- Who are your current stockholders, and how many shares does each own?
- What is the amount of stock currently authorized and issued?
VI. Organization and Personnel
- How many people will you need by type?
- What compensation method will be used by type?
- Show sample organizational structure for formative years and thereafter.
VII. Funds Required and Their Uses
- How much money do you require now?
- How much will you require over the next five years, and when will it be required?
- Who will these funds be used?
- What portion of the funds will be raised from debt rather than equity?
- What terms?
- When do you plan to “go public”?
VIII. Financial Data
- Present historical financial statements and projects for the next three to five years, including
- Profit and loss or income statements by month or quarter, at least until break-even, and then annually to cover a five-year period
- Balance sheets at the end of each year.
- Cash budgets.
- Capital budgets for equipment.
- Manufacturing/shipping plan.
- What key assumptions have been made in your pro forms and how good are these assumptions?
IX. Administrative Considerations
- What is the name of your business?
- Has the name or trademark been searched?
X. Appendices
- Resumes of key managers
- Pictures of product.
- Professional references
- Market studies, articles, etc.
- Patents.