Written by Burke Franklin, founder and CEO, JIAN
This is part 3 of 3. If you missed parts 1 and 2, pick your poison- Part 1, where we talked about the executive summary or Part 2, where we talked about the market analysis and strategy. Let’s drive this puppy home.
11. Management Team- What’s a nice person like you doing in a business like this? How does your background and that of your management team qualify you for driving the venture to success? Can you do this? Really?
Who have you hired to help you pull this off? In a way, you are providing a mini-interview with your management team members to ensure an investor, banker or corporate manager that you have lined up the right people to make your project work. This is a crucial section of your plan- the only thing that will ensure success is the day-to-day activity of qualified people at the wheel following a plan toward a vision.
12. Present Situation- Provide readers with a snapshot of what you have accomplished so far. Patent filed, prototype working, etc. This will change as you work on your business so be sure to keep this section updated. It gives readers a starting point to understand where you are currently and what value you have created to this point. The idea is to continue building value in your business – the longer the investor waits, the higher the valuation.
13. Financial Plan and Projections- Describe your current financial picture, your projections for growth, tell your reader what sort of funding you will need (how much? when? for what?) and explain how you will pay it back. This section addresses your ability to make money in your proposed business and details how much money you will need. Your company’s capital requirements and the profit potential are demonstrated here. The supporting financial statements include the following:
- Revenue and expense assumptions
- 12-month budget, including your start-up requirements
- 12-month and 5-year income statement, cash-flow projection and pro-forma balance sheet
- Break-even analysis
- Sources and uses of funds summary
- Sensitivity analysis showing pessimistic, planned and optimistic scenarios
- Capitalization table
- A projection of your company’s value after 5 years is very useful
Are your financials believable? I’ve never met an investor who believed any projections beyond 5 years. Their “financial attention span” is fairly short and most investors will want to be out with their profit within 5 years. Investment performance, measured in ROI, takes time into consideration- the more they get and the sooner they get it- the better they did. The idea is to get ‘em in, make ‘em rich and get ‘em out!
14. Supporting Documents- Here is where you can add your collection of extra information you felt was too detailed for the body of the plan but would be helpful for a reader’s understanding of points or conclusions you’ve made. It can include copies of various financial statements, brochures, resumes, media kits, schedules, advertising, complete objective list, etc.
You may already have more of this material than you think. You may be able to put all of that knowledge floating around in your head or written in notes and memos to work for you. They’re sitting there now- just waiting to be organized into your plan. You may even have one or more documents already written, such as a budget or a resume, that can be used as is or inserted into the right plan section. The information you already know or have developed to this point should not go to waste! It will speed the plan writing process. Don’t reinvent the wheel.
This is a basic list of business plan components- but there can be more. What do you think? Did we miss anything?