Business Plan

[Shannon X.]

I saw the sticky on top of the page however, I would like to ask if anyone knows of or can share their business plan for a visual reference; I'm kind of lost and confused on how to start one and can't get the right idea... I have the plan in my head.. however not on paper.

Thanks

[Bill Gulley]

Shannon, Copying word for word other's work should not be done, but there are ni issues with with following general outlines as a business plan is in the public domain just as a resume would be.

As you look at a business plan try to look at the overall topic or issue that is expressed and adopt it to your specific business.

A pro forma statement for example is a financial statement that predicts future performance. One the biggest mistakes people make is trying too hard to influence the reader in a positive way to obtain a loan or assistance. Need to understand that lenders for example read hundreds if not thosuands of business plans and can spot embelishments or an exageration in the numbers quickly. You are much better off being conservative but favorable enough to meet or just exceed the threshholds for profitablity. As a lender I also wanted to see that the profit estimated was not only reasonable but sufficient to conduct that business.

Starting out, it is perfectly acceptable and prudent to show a loss in the early stages, as that will most likely be the case. You need to bring your break even point in gradually and thereafter you can illustrate a conservative increase over a period of time. I like to see five years out, but it's the first three years that are more critical. If you fail to show a sufficient income similar to other businesses in the industry, the failure rate increases......why, because if you are a mechanic opening a repair shop and after three years you are not making more than any other mechanic working at other shops in the area, why are you doing it, why be in business, right or wrong, it is assumed you'll be doing what is most profitable for you, and you may just shut the doors and go get a job.

Real estate is fairly easy to estimate because there is so much information available. The MLS is full of stats that can help you with your business plan. Management fees, rents and rent levels, marketability by area, # of beds/baths/units and maintenance are known estimates. Use the standardized approach to formulate your estimates keeping within those stats of similar properties, you need to do that because the reader of your plan will be using that same information and if you are too far out, without good justification, it becomes a reflection on you as a business person, are you doing or capable of doing your due diligence or are you trying to fog your way through and reap some benefit.

Reading between the lines of a business plan is the real analysis by the reader of your plan. They may be investors, lenders, suppliers, your accountant and attorney, and it should be fit for public consumption, anything you put out is a reflection on you.

Probably my best advice is for you to get help, even if you had years of business experience, getting input from others is not a bad thing. Ask you banker what they are looking for, not only does tha show you value thier opinion but they will tell you what they want.

There are also business organizations that provide assistance, the small business administration provides assistance and the Chamber of Commerce can point you to those that provide assistance.

Keep it simple, don't over justify aspects that are generally accepted, like maintenance expenses. It might be a good thing if your portfolio consists of older properties and you factor in say 15% for maintenance and gradually bring that back down to the accepted norm of 10 or maybe 8%. It's an estimate!

Keeping it simple also means don't drill down so deep into your vision or make it so grand that you end up showing that you have unreasonable expectations. Gon't exagerate.

I remember one guy that came to me with a decent plan, decent numbers, sufficient assets and a decent product, but he didn't get a dime from me.....why?

He approached me in a very secretively manner, saying he didn't want to let the cat out of the bag, strike one, trust has to be there with your lender or investor.

He was too excited, his new product for resturants was going to revelotionize the food industry......strike two, no one is going to change the world overnight.

His marketing approach was too well based in his excitement for his product assuming too much growth too fast....strike three!

Turns out his idea was a shell for pocket sandwiches, like a soft taco shell, but larger for big wraps.....well, the world already had that basically. He did open his resturant/shop and he was closed in a couple years. Don't get carried away with yourself.

I could add much more, but I'll stop, don't be afraid to get help!