Question:
I'm working on starting a business.  I know creating a business plan is a good -idea, but I don't know what one should contain.  Can anyone help me?

Answer:
I was writing a business plan for a high-tech startup company that is attempting to develop a materials process for producing strong and lightweight metal stock (kind of like a metal composite, for a comparison of lightness).

In a meeting with a stockholder, who is the treasurer of a $100 million company in Cambridge MA, I gathered a list of the Elements of a Business Plan (not in any particular order):

o Purpose of a Business Plan

  This explains *why* the BP is being written.  This is very important, since it illustrates your thinking about your target audience, and your assumptions about them (the audience).  (Try to make this BP a complete document; that is, a document containing nearly everything about your thoughts about your business.  Just be careful about handing the entire thing out like it was candy; plan on handing out sections and edited portions.)

  This section in our BP contains the following reasons:

  o Gives guidelines for operating business.   o Shares info with interested investors.   o Attracts financing from grants (one-time or annual).   o Promotes consistency amongst the officers.   o Meets the conventional BP expectations of investors.   o Creates/develops business discipline amongst officers.   o Attracts customers.   o Manages shared expectations (stockholders, directors, officers).   o Show risks and assumptions  o Demonstrates business expertise in officers.

o Company History

  This is fairly straightforward.  This may contain occurrences *before* the company was formed; for example, when the product idea was first thought up.

o Vision and Mission

  Again, fairly straightforward.  If you can't write a simple mission statement for your business, you really can't say that you are focused enough to pursue the matter.  For example, "In this day and age of information access for the people, we will attempt to provide an information service for the community, and run fiber optics to nearly every home, to finally realize the information superhighway "  This is your moment (hopefully one of many) to shine; convey your *vision*, your *excitement*, and your mission in life.  It shouldn't be more than a page of well-composed words.

o Technology and Product

  Show your grasp of the technicals of the business.  Show how your technology or product will work, and how it compares to presently available alternatives.  For example, if you are starting a Public Access Unix site, show your grasp of the Internet, the hardware, etc.  Some market analysis will bleed into this section; it really can't be helped, so just take your best shot.

o Market Analysis

  Here's the tough part.  Show your knowledge of the market, without lying through your teeth.  Show consumer needs, the present fulfillment of those needs, etc.  For example, if you are starting an injection-molding shop for plastics, show the plastics-maufacturing consumption in your target market; show any pre-contacts you have made, or contracts for future work; show how your service compares as cheaper or better than that presently provided by competitors; etc.  Some financials may bleed into this section; but, as above, don't worry about the overlap.

o Financials

  Here's the *really* tough part.  Come up with a forecast of your financial needs in running the business.  You may want to forecast your earnings, but you should prefix this forecast with a solid disclaimer that you are not a genie and cannot predict the future; you otherwise may be held legally liable to an annoyed stockholder who thought that you were guaranteeing a certain earning/profit for the company (and therefore a certain return value on their stock).  Try not to lie.  Try to be comfortable with saying "I don't know, and nobody else knows either".

o People

  This is straightforward.  Do a bio and resume (no more than a page per person) on each major player (owner, salesman, technician, fundraiser, etc.) Like anything abut resumes, do not downplay the qualities that would be assets to the business -- show them distinctly.

o Patents

 You may not need this section.  For a replacement, you may concentrate on your competitors here in a section called "Competition".  Or skip this entirely.

o Philosophy and Methodology

  This is your philosophy of doing business.  For example, will you plan work extensively before acting, or will you tend to take little, bold steps without much planning?  Are you going to make a propertied business, with its overhead, of try the "virtual company" route?  Will your business be distributed or centralized?  Etc.

Overall, try to keep the plan under 40 pages, excluding exhibits.    I recommend an "Executive Summary" as the first substantive text; this section summarizes the entire plan of business, including the reason for the plan, in 1 to 3 pages.  Write this last and make it good.    In the "Financials" section, include a monthly (or other relevant period) cash flow analysis; this will look a lot like a budget.    If you're seeking outside financing, which is almost always the case when writing a business plan, separate out the section titled "Use of Proceeds," so the investor or lender can readily identify what's going to happen with their cash.    Presentation:  (often overlooked by the writer; never overlooked by the reader.)  Office supply stores will sell you a nice 1" binder with an overlay cover.  Create a title page and slip it in the front; copy the plan and exhibits on bond paper.  This format allows the reader to lay the plan open flat, allows you to add text when it changes, and gives the plan some "heft" and a nice feel of substance.  (This last factor will not replace the "heft" which can only be provided by a good plan backed by solid research.)

And, off the original subject, one last caveat that *should* go without saying, but often needs saying, nonetheless:  research, research, research, then research some more.  After the research, learn the plan inside out, especially if it's written by someone outside the company.

Finally, a note on practicalities:  label the plan "confidential," indicate it contains proprietary information, keep a log of who has one, and get them back after they are used, unless the lender or investor actually parts with some dough.  Don't leave your business plan floating out there.