Sunday, November 18, 2012

scriptwritting

How to Format a TV Script • Writer's Resources • How to Guides • I Wrote a Script, Now What? • Revision Frenzy • Writing Software • Library • Finding Local Writers • Flyers For Downloading • Web Badges • Event Overview • The Beat Archive • Cameo Archive • Pep Talk Archive Once you know the basics of TV scripts, you’ll see that formatting is simple. Before you type a word, you’ll need to start by… PICKING YOUR FORMAT Unlike feature films, different styles of television shows require different formatting. If you’re writing a spec script (see INTRO TO TV WRITING) then spend some time tracking down a completed script for your show before you start writing. Nearly every episode on television is formatted just a little bit differently, and you’ll want to be sure to copy the format of your particular show as closely as possible. Templates for many new shows can also be found packaged with professional screenwriting programs, so if you’re working on Final Draft or Screenwriter, you might want to check to see what shows are already bundled with your software. For those of you writing an original pilot, or brazenly moving forward with a spec script with or without a script sample from your show, you’ll need to begin by deciding if your show is a DRAMA, a TV MOVIE, or a SITUATIONAL COMEDY (SITCOM). Each of these formats is structured differently, and is outlined below. DRAMA Dramas are any shows from a half-hour to one-hour in length that are serious in their tone, and these days tend to be shot in a more movie-like fashion. Shows like Sopranos and Mad Men, as well as CSI: Miami and Dexter are all dramas. In the last few years, an increasing number of comedies intended to be shot in a cinematic fashion, rather than in front of a studio audience, have also been scripted in accord with dramatic structure, so you have a good degree of flexibility in how you choose to approach your original pilot. Dramatic television structure is nearly identical to feature screenplay writing structure, with a few important differences. To get going, first review Section 7 in “INTRO TO TV WRITING,” where it states that hour-long shows are usually structured as follows: teaser—commercial—Act I—commercial—Act II— commercial—Act III—commercial—Act IV—commercial—tag Now, let’s get going: 1) As with all scripts, your drama should be written in 12-point Courier font. 2) Every TV script should start with a TRANSITION, such as “FADE IN,” “FROM BLACK,” or “COLD OPEN.” This should be justified to the left margin of your page, like this: 3) Two spaces below your transition should be the SLUG LINE for your TEASER, also known as a SCENE HEADING. Now your page should look something like this: Slug lines are made up of these three elements: a. INT. or EXT. Short for interior and exterior. If it’s both, such as when a drunken cop is thrown through the doorway of his favorite bar, you can write INT./EXT. b. Location. Where the scene takes place. These should be short, and avoid emotive description. It’s not INT. SUPER COOL 1970s SPORTSBAR, just INT. BAR. Don’t worry—they’ll be room for the fun stuff later. c. Time. Usually just DAY or NIGHT, but can also be a specific time, like 3:00 PM, if it’s an important detail to the plot. Don’t use demarcations like DUSK, MORNING, MIDNIGHT, or LATER. Again, save that for the next section. Slug lines are always in CAPS. There are usually two spaces between INT./EXT. and LOCATION, then space, hyphen, space between LOCATION and TIME. Occasionally, you’ll need a SUBLOCATION to clarify the location. These look like: INT. HIGH SCHOOL/JANITOR’S OFFICE – DAY Or: INT. HIGH SCHOOL – JANITOR’S OFFICE – DAY A new slug line is needed every time you change locations, so you’ll be writing a lot of these! 4) Next comes the ACTION BLOCK for your TEASER. This is where you can fill in details for your location, and explain what your characters are doing RIGHT NOW. Action is always written in the present tense, and in most cases follows standard rules of capitalization and punctuation. It’s always justified left, and looks like this: Anytime a CHARACTER is introduced in your script for the first time, the character’s name must be in BOLD, and generally, the character’s AGE or AGE RANGE should be placed in parenthesis to the right of it. For example: Notice the DESCRIPTION of the character that followed his introduction. Your character descriptions can be as detailed as you’d like, but avoid making them so long that they interrupt the momentum of your script. 5) When you’re ready for a character to start speaking, move two spaces down, and indent 2.2 inches from the left margin. This is the same margin used in film screenplay structure, so feel free to use the pre-set formats in any scriptwriting computer program. Type your character’s name in BOLD, like this: Sometimes you’ll have minor characters that you may not want to name, or a “secret” character who hasn’t revealed his or her identity. In these cases it’s okay to call them CLERK, PEDESTRIAN, or ROCK STAR. If there are several of the same types of characters, add a number: ROCK STAR #1 or PEDESTRIAN #2. 6) You’re set up now, and ready to give your character a voice! Dialogue is sandwiched in a window one inch from the left margin to two inches before the right margin. It looks like this: Notice that in the action blocks after the dialogue the words LOOSE BILLS and PEOPLE have been capitalized. Any word that describes one or more people, such CROWD, PEOPLE, KIDS or ZOMBIES should always be placed in caps, as should any key props, and words that describe sounds, such as THUMP, BOING, ZING, or WHOOSH. At certain times, it is also appropriate to capitalize ACTIONS for special emphasis, such as: He CHARGES into the room. Or: The car RACES around the corner. If you want dialogue to be spoken with a special emphasis, you may indent by an additional .6 inches (or one tab) on the line directly beneath a character’s name, and add in your direction: A parenthetical can also be used to clarify who a person is talking to, or who they are talking about. For example: (to GRANDMA) Or: (re: JIMMY) If the description within a parenthetical runs longer than a few words, try to move it out of the parenthetical and into the action block preceding the dialogue. The last thing you need to know about dialogue is how to handle a VOICE OVER, or a situation in which a character can’t be seen on camera but is heard speaking OFF SCREEN. This is easy. Simply add the initials (V.O.) or (O.S.) directly to the right of a character’s name, as in: MACK (V.O.) Or: ROBOCOP (O.S.) 7) If you need to cut to a new scene, simply drop down two lines and add a NEW SLUG LINE for the next scene: 8) At the END OF YOUR TEASER, tab down to the START OF THE NEXT PAGE. On the next clean sheet, center the words ACT ONE at the top of the page: Some writers also choose to underline ACT ONE, but you don’t need to do that unless you’re writing a spec and copying someone else’s formatting. After your ACT ONE title, go down THREE SPACES and write your first SLUGLINE for this act. It’s uncommon to use a transition after page one of your script, but you certainly can if you feel like you need it. After that, simply progress through your act using all of the formatting norms discussed above. You’re rocking it, baby! Incidentally, have you ever noticed when watching your favorite TV show that as the program progressed, the commercial breaks got longer and the good stuff in between got shorter? Well—that was planned. In television, Act One is usually the longest, and each act that follows tends to get progressively shorter. It’s all about getting your audience hooked into your story up front, so that they’ll put with the commercials at the end. After you’ve written through to your first cliffhanger (see INTRO TO TV WRITING), and are ready to wrap up your act, TRIPLE SPACE down, and center the words END OF ACT ONE. It will look like this: After that, tab down to the top of your next page, and center the words ACT TWO. Move down three spaces, and begin your next act! You’ve got it! And if you run into the odd situation where you’re unsure how to format something, try looking in the writer’s resource HOW TO FORMAT A SCREENPLAY. You can also post a question in the forums, or check with a commonly used reference book such as David Trottier’s The Screenwriter’s Bible. Now that you know all the tricks of the trade, the final step is to START WRITING! Have fun. Write something terrible, then throw it out and write it again. There may be a correct format, but there’s no correct creative process for approaching your first script. Keep your butt in your chair, and you’ll be amazed how quickly those pages fill up! TV MOVIE If you’re writing a TV movie, once known as a “movie of the week” or a M-O-W, start by reading the section above for formatting DRAMAS. All of the same formatting rules apply. TV movies generally have seven or eight acts, and the first few are the longest. While the first acts can run as long as 20 minutes (which means 20 pages), the last four or five acts may be as short as 7 to 10 minutes. TV movies can be fun to write, but with the advent of more cinematic cable shows such as Sopranos, Mad Men, and The Wire, they have fallen off in popularity. If you’re thinking about writing a TV movie, you may just want to write it up as a standard screenplay, as this will open up more doors for getting it read and (gulp) selling it. SITUATIONAL COMEDY Formatting style for situational comedies has developed out of a long tradition of bucking the norms of movie writing and trying to do something distinctly different. In the 1940s and '50s, sitcom writers also came primarily from theatre, so many of the idiosyncrasies in the half-hour format are in fact carryovers from playwriting. However we got here, one thing is for sure—sitcoms do not look like movies on the page! Before we get going, review Section 7 in “INTRO TO TV WRITING,” where it states that half-hour shows are usually structured as follows: teaser—commercial—Act I—commercial—Act II—commercial—tag Now let’s get going! 1) Like movie scripts, sitcoms are written in 12-point courier font. 2) If you’re beginning with a TEASER, write the word “TEASER” at the top of your first page, and center it like so: 3) In a sitcom, each scene is demarcated by a LETTER, starting with the letter “A.” Before you can start writing a scene, its scene letter needs to be centered at the top of a new page. If it is the first scene in a teaser, a tag, or a new act, the scene letter should be placed three lines below this specification, like so: 4) Next step, move four spaces down your page, and left-justify a TRANSITION that will bring us into your scene. Some of the most common transitions are “FADE IN,” “FROM BLACK” and “COLD OPEN.” Your page should now look like this: 5) Two spaces below your transition should be your first SLUG LINE, also known as a SCENE HEADING: Slug lines are made up of these three elements: a. INT. or EXT. Short for interior and exterior. If it’s both, such as when a drunken cop is thrown through the doorway of his favorite bar, you can write INT./EXT. b. Location. Where the scene takes place. These should be short, and avoid emotive description. It’s not INT. SUPER COOL 1970s SPORTSBAR, just INT. BAR. Don’t worry—they’ll be room for the fun stuff later. c. Time. Usually just DAY or NIGHT, but can also be a specific time, like 3:00 PM, if it’s an important detail to the plot. Don’t use demarcations like DUSK, MORNING, MIDNIGHT, or LATER. Slug lines are UNDERLINED and are always in CAPS. There are usually two spaces between INT./EXT. and LOCATION, then space, hyphen, space between LOCATION and TIME. Occasionally, you’ll need a SUBLOCATION to clarify the location. These look like: INT. HIGH SCHOOL/JANITOR’S OFFICE – DAY Or: INT. HIGH SCHOOL – JANITOR’S OFFICE – DAY A new slug line is needed every time you change locations, so get used to typing these up! 6) Next comes your ACTION BLOCK. This is where you can fill in details for your location, and explain what your characters are doing RIGHT NOW. Action is always written in the present tense, and must be written in ALL CAPS. It’s always justified left, and looks like this: When a character is introduced for the first time, his or her name should be UNDERLINED. Any action that describes a character’s MOVEMENT, be it an entrance, an exit, or a moonwalk across the middle of the room, should also be underlined: As much as possible, try to include the names of every character in a scene within the first sentence of your action block. This is a norm, but not a rule, so feel free to organize your introductions how you please. Sometimes, all of the characters within a scene are also listed parenthetically directly beneath the slug line. This can be a useful way of telling your reader which cast members are in a scene. If you decide to use this method, you must do it consistently throughout your script. It would look like this: Another tradition which many writers break these days is to separate out and underline all sounds and sound-effects onto their own line, justified to the left, like this: SOUND: HEAVY CRASH Or: SFX: FINGERS ON CHALKBOARD This formatting may be useful if you want to emphasize an especially important sound, but in general you may just underline your sound within an action block. 7) Almost there! Next stop—dialogue. Sitcoms are all about the talk. Keep your action blocks to a minimum, and try to focus on saying everything you can through dialogue and character movement. In situational comedies, dialogue is the only part of the script that is NOT in all caps. Before a person can speak, you need to move two spaces down from your last line of action, and type their character name 2.2 inches from your left margin, like so: A character’s dialogue block should start TWO SPACES DOWN from his name, and should be sandwiched within in a window one inch from the left margin to two inches before the right margin. The dialogue should be DOUBLE-SPACED, like this: This double-spacing is why sitcoms tend to average two-pages per minute of screen time, rather than the usual one-minute of screen time demanded by other types of scripts. Directions for the actors in a sitcom can be very specific, and should be written parenthetically WITHIN the dialogue. These should also be written in ALL CAPS, like this: 8) When you’re ready to end a scene, move down two spaces from the last dialogue or action block, and right-justify the words “FADE OUT” or “CUT TO:” like this: 9) When you have finished your scene, tab down to the top of the NEXT BLANK PAGE, and center the words “Scene B” at the top of the page. After that, format your new scene just as you did the last: When you have finished your teaser, move down three spaces after your last dialogue or action block, and CENTER the words END TEASER. To begin your FIRST ACT, tab down to the start of the next blank page, and set it up just like your did the start of your teaser: When you have finished act one, move down three spaces after your last dialogue or action block, and CENTER the words END ACT ONE. It’s that simple! Move on to your next act and begin again! Every scene always starts at the top of a new page, and your ACTS, TEASER and TAG should always end with a clear END-WHATEVER IT IS bookend. That’s all there is to it… If you run into the odd situation where you’re unsure how to format something, you can post a question in the forums, or check with a commonly used reference book such as David Trottier’s The Screenwriter’s Bible. Now that you know all the tricks of the trade, the final step is to START WRITING! Have fun. Write something terrible, then throw it out and write it again. There may be a correct format, but there’s no correct creative process for approaching your first script. Just keep laying ‘em down, one word after the other, and you’ll be amazed how quickly all that double-line spacing adds up to a finished first draft! How to Design TV Commercial Script Samp ,How Contributor A TV commercial aims to make its target market remember the advertised material. A television commercial script is usually one-page long because of this type of video's very short running time. A regular TV commercial often runs for only 30 seconds. Some are 15 seconds long, while others can be 45 seconds long, and sometimes, one minute or slightly longer. As a means of advertising meant to reach millions of people, a TV commercial intends to promote the brand and image of the product or service being advertised. Instructions 1. o 1 Make a new Word document file for your first TV commercial script sample. o 2 Write the title or project name of the TV commercial and its running time on the upper left part of your Word document. Sometimes, others also add the product name and the director's name to provide more information. If your TV commercial script sample has more than one page, put a page number as well. Turn Your Computer into a TV! Watch Full TV Episodes w Free App o 3 Add a table right below the project name and other information you initially placed on the document. This table must consist of two rows and two columns. The first row should have a single space where you can place your headers. The second row should have most of the space in the document, as your script will be placed there. You can first format the two columns to have equal spaces, then finalize the formatting after you finish writing your script. o 4 Use the first row to write the headers. This first row is actually divided into two, as you made a table made up of two rows and two columns. Write "Audio" on the left part of the first row, and "Video" on the right part of the first row. This also means that the "Audio" part will be the header for the left column and the "Video" part will be the header for the right column. o 5 Write all speaking lines or voiceovers under the "Audio" column. Write them in the order they will appear on the script. o 6 Write each shot description explaining what happens in the story under the "Video" column. Make sure you align each shot with the accompanying speaking lines or voiceovers placed under the "Audio" column. Write a shot number before each shot description, then include the type of shot to be used. For instance, if the first shot is a close-up shot of the product, the shot number and description should be: "1. CU of product." Other widely used shot abbreviations include "XCU" for extreme close-up, "MS" for medium shot, "LS" for long shot and "POV" for point-of-view shot. o 7 Continue listing down each shot description, speaking line and voiceover on the appropriate audio and video columns until you finish the script. o 8 Finalize your column's formatting. If the left (audio) column has more text than the right (video) column, adjust the table to allot more space for the left column. If it's the other way around, adjust accordingly. This helps you save space on the document, and it also makes your script easier to read. o 9 Make a new Word document file, then use this to make your next script sample. Use the same formatting for this and the rest of the script samples you will make.

busness plan

Business planning is about results. You need to make the contents of your plan match your purpose. Don’t accept a standard outline just because it’s there.

What is a business plan?
A business plan is any plan that works for a business to look ahead, allocate resources, focus on key points, and prepare for problems and opportunities.

Unfortunately, many people think of business plans only for starting a new business or applying for business loans. But they are also vital for running a business, whether or not the business needs new loans or new investments. Businesses need plans to optimize growth and development according to priorities.

What’s a startup plan?
A simple startup plan includes a summary, mission statement, keys to success, market analysis, and break-even analysis. This kind of plan is good for deciding whether or not to proceed with a plan, to tell if there is a business worth pursuing, but it is not enough to run a business with.

Is there a standard business plan?
A normal business plan (one that follows the advice of business experts) includes a standard set of elements, as shown below. Plan formats and outlines vary, but generally a plan will include components such as descriptions of the company, product or service, market, forecasts, management team, and financial analysis.

Your plan will depend on your specific situation. For example, description of the management team is very important for investors while financial history is most important for banks. However, if you’re developing a plan for internal use only, you may not need to include all the background details that you already know. Make your plan match its purpose.

What is most important in a plan?
It depends on the case, but usually it’s the cash flow analysis and specific implementation details.

Cash flow is both vital to a company and hard to follow. Cash is usually misunderstood as profits, and they are different. Profits don’t guarantee cash in the bank. Lots of profitable companies go under because of cash flow problems. It just isn’t intuitive.
Implementation details are what make things happen. Your brilliant strategies and beautifully formatted planning documents are just theory unless you assign responsibilities, with dates and budgets, follow up with those responsible, and track results. Business plans are really about getting results and improving your company.

Can you suggest a standard outline?
If you have the main components, the order doesn’t matter that much, but here’s the outline order we suggest in Business Plan Pro and LivePlan software:

1. Executive Summary: Write this last. It’s just a page or two of highlights.

2. Company Description: Legal establishment, history, start-up plans, etc.

3. Product or Service: Describe what you’re selling. Focus on customer benefits.

4. Market Analysis: You need to know your market, customer needs, where they are, how to reach them, etc.

5. Strategy and Implementation: Be specific. Include management responsibilities with dates and budget.

6. Management Team: Include backgrounds of key members of the team, personnel strategy, and details.

7. Financial Plan: Include profit and loss, cash flow, balance sheet, break-even analysis, assumptions, business ratios, etc.

View an expanded business plan outline

We don’t recommend developing the plan in the same order you present it as a finished document. For example, although the Executive Summary comes as the first section of a business plan, we recommend writing it after everything else is done.

Do I Need a Business Plan?

a banker for a loan for a startup business, your loan officer may suggest a Small Business Administration (SBA) loan, which will require a business plan. If you have an existing business and are approaching a bank for capital to expand the business, they often will not require a business plan, but they may look more favorably on your application if you have one.

Reasons for writing a business plan include:

Define a new business
Support a loan application
Raise equity funding
Define objectives and describe programs to achieve those objectives
Evaluate a new product line, promotion, or expansion
Create a regular business review and course correction process
Define agreements between partners
Set a value on a business for sale or legal purposes

What’s in a business plan?
A business plan should prove that your business will generate enough revenue to cover your expenses, but a business plan may vary depending on your audience. If you are writing a plan for your colleagues and partners to expand an existing business, then the focus of that plan may be more operational than financial. If you are writing a plan for a bank, the most important aspect to the bank manager will be your financials. Are your assumptions realistic? Will the cash flow be enough that you can make the monthly payments for the loan you have requested? If your business is making $1,000 a month and your payments are $1,200 a month, the bank is likely to turn you away.

If you are writing a plan for a venture capitalist, the most important factor in a decision to invest in a company is the quality of the people. In real estate, where the three biggest criteria are “location, location and location,” the venture capital axiom is “people, people and people.” VCs will ask, how experienced are the people that are going to run this business? Do they have knowledge of the industry? Have they started successful ventures in the past?

What makes a successful business plan?

Presents a well thought out idea
Contains clear and concise writing
Has a logical structure
Illustrates management’s ability to make the business a success
Shows profitability

Bringing it all together…
Your business plan is like your calling card; it will get you in the door where you’ll have to convince investors and loan officers that you can put your plan into action. You want your calling card to look impressive, so make sure your business plan is printed out on good quality paper, you have checked the spelling and grammar, and that your numbers add up. Anyone who sees errors while reading your plan will wonder whether you are going to make similar errors in running your business.

A great business plan is the best way to show bankers, venture capitalists, and other investors that you are worthy of financial support. Make sure that your plan is clear, focused and realistic. Then show them that you have the tools, talent and team to make it happen.

How Will You Use Your Plan?

The classic uses are seeking investment or applying for a loan. There are also the obvious communication with employees, partners, family members, consultants. And there is valuation, sometimes for tax purposes, sometimes for growth, divorce, estates.

Too many people think of business plans as something you do to start a company, apply for a loan, or find investors. Yes, they are vital for those purposes, but there’s a lot more to it. Preparing a business plan is an organized, logical way to look at all of the important aspects of a business. First, decide what you will use the plan for, such as to:

Define and fix objectives, and programs to achieve those objectives.
Create regular business review and course correction.
Define a new business.
Support a loan application.
Define agreements between partners.
Set a value on a business for sale or legal purposes.
Evaluate a new product line, promotion, or expansion.

How Long Should a Business Plan Be?

Page count is not a good way to measure length. A 20-page plan with dense text and no graphics is much longer than a 35-page plan broken up into readable bullet points, useful illustrations of locations or products, and business charts to illustrate important projections.

Measure a plan by readability and summarization. A good business plan should leave a reader a good general idea of its main contents even after only a quick skimming, browsing the main points, in 15 minutes. Format, headings, white space, and illustrations make a big difference. Summaries are very important. Main points should show up in a business plan as quickly as they do in a business presentation.

Unfortunately, many people still use page count as measurement. And in that context, some of the more practical, internal-use-only business plans can be only 5 or 10 pages long. Corporate business plans for large companies can run into hundreds of pages. The more standard start-up and expansion plans developed for showing outsiders normally run 20-40 pages of text – easy to read, well-spaced text, formatted in bullets, illustrated by business charts and short financial tables – plus financial details in appendices.

The right length of the plan depends on the nature and purpose of the plan. Will it include descriptions of the company and management team for outsiders to read? Does it need an executive summary good enough to stand alone? Does it include detailed research, plans, drawings, and blueprints? Is it worded to withstand legal scrutiny as part of an investment proposal? Form follows function.

Venture contests often limit a plan to 30 pages, sometimes 40, rarely 50 – and that includes detailed financials in the appendices. Unfortunately the page limitation leads some contestants to very bad choices, as they cram content into dense typefaces and thick texts, making their plans worse, not better.

Palo Alto Software‘s business plan contest ran four years. Several hundred plans entered that competition. Finalists never had less than 20 pages or more than 50 pages. Most run 30-40 pages. These are all 20-30 pages of text, not counting useful graphic additions to show locations, designs, menus, etc., and not counting the appendices pages containing monthly financial projections, resumes of team leaders, etc. You’ll want to add some pages for the standard financials; usually that means appendices with monthly tables for sales, personnel, income statement, cash flow, and balance sheet. You also want to include the main annual numbers of those tables in the body of the plan.

Don’t ever shorten a plan by taking out useful graphics. Page count matters far less than readability. Use business charts to illustrate numbers so your projections are easier to absorb. Use photographs and drawings to show locations, products, sample menus, product pictures, and other illustrations as much as possible. However, don’t ever add extra graphics, like clip art, not directly relevant to the matter at hand, as if that would make a plan better.

he Different Types of Business Plans

Business plans are also called strategic plans, investment plans, expansion plans, operational plans, annual plans, internal plans, growth plans, product plans, feasibility plans, and many other names. These are all business plans.

In all these different varieties of business plan, the plan matches your specific situation. For example, if you’re developing a plan for internal use only, not for sending out to banks or investors, you may not need to include all the background details that you already know. Description of the management team is very important for investors, while financial history is most important for banks.

Some of these specific case differences lead to different types of plans:

The most standard business plan is a start-up plan, which defines the steps for a new business. It covers standard topics including the company, product or service, market, forecasts, strategy, implementation milestones, management team, and financial analysis. The financial analysis includes projected sales, profit and loss, balance sheet, cash flow, and probably a few other tables. The plan starts with an executive summary and ends with appendices showing monthly projections for the first year.
Internal plans are not intended for outside investors, banks, or other third parties. They might not include detailed description of company or management team. They may or may not include detailed financial projections that become forecasts and budgets. They may cover main points as bullet points in slides (such as PowerPoint slides) rather than detailed texts.
An operations plan is normally an internal plan, and it might also be called an internal plan or an annual plan. It would normally be more detailed on specific implementation milestones, dates, deadlines, and responsibilities of teams and managers.
A strategic plan is usually also an internal plan, but it focuses more on high-level options and setting main priorities than on the detailed dates and specific responsibilities. Like most internal plans, it wouldn’t include descriptions of the company or the management team. It might also leave out some of the detailed financial projections. It might be more bullet points and slides than text.
A growth plan or expansion plan or new product plan will sometimes focus on a specific area of business, or a subset of the business. These plans could be internal plans or not, depending on whether or not they are being linked to loan applications or new investment. For example, an expansion plan requiring new investment would include full company descriptions and background on the management team, as much as a start-up plan for investors. Loan applications will require this much detail as well. However, an internal plan, used to set the steps for growth or expansion funded internally, might skip these descriptions. It might not include detailed financial projections for the whole company, but it should at least include detailed forecasts of sales and expenses for the new venture.
A feasibility plan is a very simple start-up plan that includes a summary, mission statement, keys to success, basic market analysis, and preliminary analysis of costs, pricing, and probable expenses. This kind of plan is good for deciding whether or not to proceed with a plan, to tell if there is a business worth pursuin

What Makes a Good Plan?

What factors are involved in creating a good business plan? Is it the length of the plan? The information it covers? How well it’s written, or the brilliance of its strategy. No.

The following illustration shows a business plan as part of a process. You can think about the good or bad of a plan as the plan itself, measuring its value by its contents. There are some qualities in a plan that make it more likely to create results, and these are important. However, it is even better to see the plan as part of the whole process of results, because even a great plan is wasted if nobody follows it.

Planning is a process, not just a plan

A business plan will be hard to implement unless it is simple, specific, realistic and complete. Even if it is all these things, a good plan will need someone to follow up and check on it. The plan depends on the human elements around it, particularly the process of commitment and involvement, and the tracking and follow-up that comes afterward.

Successful implementation starts with a good plan. There are elements that will make a plan more likely to be successfully implemented. Some of the clues to implementation include:

1. Is the plan simple? Is it easy to understand and to act on? Does it communicate its contents easily and practically?

2. Is the plan specific? Are its objectives concrete and measurable? Does it include specific actions and activities, each with specific dates of completion, specific persons responsible and specific budgets?

3. Is the plan realistic? Are the sales goals, expense budgets, and milestone dates realistic? Nothing stifles implementation like unrealistic goals.

4. Is the plan complete? Does it include all the necessary elements? Requirements of a business plan vary, depending on the context. There is no guarantee, however, that the plan will work if it doesn’t cover the main bases.

Uses of business plans
Too many people think of business plans as something you do to start a company, apply for a loan, or find investors. Yes, they are vital for those purposes, but there’s a lot more to it.

Preparing a business plan is an organized, logical way to look at all of the important aspects of a business. First, decide what you will use the plan for, such as to:

Define and fix objectives, and programs to achieve those objectives.
Create regular business review and course correction.
Define a new business.
Support a loan application.
Define agreements between partners.
Set a value on a business for sale or legal purposes.
Evaluate a new product line, promotion, or expansion.

No time to plan? A common misconception
“Not enough time for a plan,” business people say. “I can’t plan. I’m too busy getting things done.” A business plan now can save time and stress later.

Too many businesses make business plans only when they have to. Unless a bank or investors want to look at a business plan, there isn’t likely to be a plan written. The busier you are, the more you need to plan. If you are always putting out fires, you should build fire breaks or a sprinkler system. You can lose the whole forest for too much attention to the individual trees.

Keys to better business plans

Use a business plan to set concrete goals, responsibilities, and deadlines to guide your business.
A good business plan assigns tasks to people or departments and sets milestones and deadlines for tracking implementation.
A practical business plan includes 10 parts implementation for every one part strategy.
As part of the implementation of a business plan, it should provide a forum for regular review and course corrections.
Good business plans are practical.

Business plan “don’ts”

Don’t use a business plan to show how much you know about your business.
Nobody reads a long-winded business plan: not bankers, bosses, nor venture capitalists. Years ago, people were favorably impressed by long plans. Today, nobody is interested in a business plan more than 50 pages long.

Standard Business Plan Outline

What information needs to be in your business plan? What is the order of information that will make the most sense to lenders and investors? You can answer these questions with the business plan outlines provided below.

What are the standard elements of a business plan? If you do need a standard business plan to seek funding — as opposed to a plan-as-you-go approach for running your business, which I describe below — there are predictable contents of a standard business plan outline.

For example, a business plan normally starts with an Executive Summary, which should be concise and interesting. People almost always expect to see sections covering the Company, the Market, the Product, the Management Team, Strategy, Implementation, and Financial Analysis. The precise business plan format can vary.

Is the order important? If you have the main components, the order doesn’t matter that much, but here’s the sequence I suggest for a business plan. I have provided two outlines, one simple and the other more detailed.

Simple business plan outline

1. Executive Summary: Write this last. It’s just a page or two of highlights.

2. Company Description: Legal establishment, history, start-up plans, etc.

3. Product or Service: Describe what you’re selling. Focus on customer benefits.

4. Market Analysis: You need to know your market, customer needs, where they are, how to reach them, etc.

5. Strategy and Implementation: Be specific. Include management responsibilities with dates and budgets. Make sure you can track results.

6. Web Plan Summary: For e-commerce, include discussion of website, development costs, operations, sales and marketing strategies.

7. Management Team: Describe the organization and the key management team members.

8. Financial Analysis: Make sure to include at the very least your projected Profit and Loss and Cash Flow tables.

Build your plan, then organize it. I don’t recommend developing the plan in the same order you present it as a finished document. For example, although the Executive Summary obviously comes as the first section of a business plan, I recommend writing it after everything else is done. It will appear first, but you write it last.

Standard tables and charts

There are also some business tables and charts that are normally expected in a standard business plan.

Cash flow is the single most important numerical analysis in a plan, and should never be missing. Most plans will also have Sales Forecast and Profit and Loss statements. I believe they should also have separate Personnel listings, projected Balance Sheet, projected Business Ratios, and Market Analysis tables.

I also believe that every plan should include bar charts and pie charts to illustrate the numbers.

Expanded business plan outline

Here’s an expanded full business plan outline, with details you might want to include in your own business plan.

1.0 Executive Summary
1.1 Objectives
1.2 Mission
1.3 Keys to Success

2.0 Company Summary
2.1 Company Ownership
2.2 Company History (for ongoing companies) or Start-up Plan (for new companies)
2.3 Company Locations and Facilities

3.0 Products and Services
3.1 Product and Service Description
3.2 Competitive Comparison
3.3 Sales Literature
3.4 Sourcing and Fulfillment
3.5 Technology
3.6 Future Products and Services

4.0 Market Analysis Summary
4.1 Market Segmentation
4.2 Target Market Segment Strategy
4.2.1 Market Needs
4.2.2 Market Trends
4.2.3 Market Growth
4.3 Industry Analysis
4.3.1 Industry Participants
4.3.2 Distribution Patterns
4.3.3 Competition and Buying Patterns
4.3.4 Main Competitors

5.0 Strategy and Implementation Summary
5.1 Strategy Pyramids
5.2 Value Proposition
5.3 Competitive Edge
5.4 Marketing Strategy
5.4.1 Positioning Statements
5.4.2 Pricing Strategy
5.4.3 Promotion Strategy
5.4.4 Distribution Patterns
5.4.5 Marketing Programs
5.5 Sales Strategy
5.5.1 Sales Forecast
5.5.2 Sales Programs
5.6 Strategic Alliances
5.7 Milestones

6.0 Web Plan Summary
6.1 Website Marketing Strategy
6.2 Development Requirements

7.0 Management Summary
7.1 Organizational Structure
7.2 Management Team
7.3 Management Team Gaps
7.4 Personnel Plan

8.0 Financial Plan
8.1 Important Assumptions
8.2 Key Financial Indicators
8.3 Break-even Analysis
8.4 Projected Profit and Loss
8.5 Projected Cash Flow
8.6 Projected Balance Sheet
8.7 Business Ratios
8.8 Long-term Plan

Business plan outline advice

Size your business plan to fit your business. Remember that your business plan should be only as big as what you need to run your business. While everybody should have planning to help run a business, not everyone needs to develop a complete formal business plan suitable for submitting to a potential investor, or bank, or venture contest. So don’t include outline points just because they are on a big list somewhere, or on this list, unless you’re developing a standard business plan that you’ll be showing to somebody else who expects a standard business plan.

Consider plan-as-you-go business planning. I’ve done a lot of work on this idea lately, resulting in my new “Plan As You Go” business planning, which is a now a book published by Entrepreneur Press, available through Amazon.com, Barnes and Noble, and Borders, and bundled as an eBook with Business Plan Pro and LivePlan.

More business planning resources

Sometimes an outline just isn’t enough to write your business plan. Do you want to view sample business plans from real businesses? Would seeing a business plan template that banks prefer be useful to you? These valuable resources can help:

Sample business plans – Over 500 free sample business plans from various industries

Business plan template – This fill-in-the-blank business plan template is in the format preferred by the SBA and banks

Start a business – An easy to follow six-step process for starting a new business

Business Plan Pro – Step-by-step software that makes it easy to create a business plan, regardless of your business planning experience

LivePlan – Easy business planning for everyone. This online software includes expert advice, built-in help and more than 500 complete sample business plans.

A Simpler Plan for Startups

Business advisors, experienced entrepreneurs, bankers, and investors generally agree that you should develop a business plan before you start a business. A plan can help you move forward, make decisions, and make your business successful. However, not all business plans are the same, not every business needs the same level of detail. You might develop a fairly simple plan first as you start a small business, and that might be enough for you. You can also start simple and then elaborate as you prepare to approach bankers or investors.

For a simple example, imagine a woman making jewelry at home and selling it at a local flea market on the weekend. A business plan could give her a chance to step back from the normal flow and look at ways to develop and improve the business. The planning process should help her understand her business. It should help her define what she wants from the business, understand what her customers want, and decide how to optimize her business on her own terms. She might benefit from developing a simple sales and expense forecast, maybe even a profit and loss, so she can plan how to use and develop her resources. She might not need to create detailed cash flow, balance sheet, and business ratios. A simple plan may be just what she needs to get going.

This first stage of a plan, that we call the Concept Kick-Start, focuses only on a few starter elements. The Mission Statement, Keys to Success, Market Analysis, and Break-Even Analysis give you a critical head start toward understanding your business.

However, not all startups are that simple. Many of them need product development, packaging, retail fittings and signage, office equipment, websites, and sometimes months or even years of payroll before the sales start. Unless you’re wealthy enough to finance these expenditures on your own, then you’ll need to deal with bank loans or investors or both; and for that you’ll need a more extensive business plan. Startup company or not, the plan has to meet expectations.

One suggestion for getting started is to develop your plan in stages that meet your real business needs. A few key text topics might be enough to discuss the plan with potential partners and team members, as a first phase. You may well want to add a basic sales and expense forecast, leading to profit and loss, as next phase. Adding business numbers helps you predict business flow and match spending to income.

This might be an intermediate plan, incorporating a more extensive outline and business analysis:

Outline	Topic	Table	Chart
1.0	Executive Summary		Highlights
1.1	Objectives
1.2	Mission
1.3	Keys to Success
2.0	Company Summary	Startup	Startup
3.0	Product Description
4.1	Market Segmentation
4.2	Target Market Segment Strategy
4.3	Market Needs
4.4
5.0	Strategy and Implementation Summary
<5.1	Competitive Edge
5.2	Sales Strategy	Sales Forecast
6.0	Management Summary
7.0	Financial Plan
7.1		Break-even	Break-even
7.2	Projected Profit and Loss
7.3	Projected Cash Flow	Cash Flow	Cash Flow

Ultimately, the choice of plan isn’t based as much on the stage of business as it is on the type of business, financing requirements, and business objective. Here are some important indicators of the level of plan you’ll need, even as a startup:

Some of the simpler businesses keep a plan in the head of the owner, but every business has a plan. Even a one-person business can benefit from creating a plan document with ideas written down, because the process of producing a plan is useful and valuable.
As soon as a second person is involved, the need for planning multiplies. The plan is critical for communicating values, goals, strategies, and detailed implementation.
As soon as anybody outside the company is involved, then you have to provide more information. When a plan is for internal use only, you may not need to describe company history and product features, for example. Stick to the topics that add value, that make you think, that help support decisions. When you involve people outside the company, then you need to provide more background information as part of the plan.
For discussion purposes, text is enough to get a plan started. Try describing your mission, objective, keys to success, target market, competitive advantage, and basic strategies. How well does this cover your business idea?
Can you live without a sales and expense forecast? Sometimes the one-person business keeps numbers in its (the owner’s) head. However, it’s much easier to use some tools that can put the numbers in front of you, and add and subtract them automatically. That’s where a plan helps.
Do you really know your market? A good market analysis can help you see opportunities that might not otherwise be obvious. Understand why people buy from you. What are the needs being served? How many people are out there, as potential customers?
Do you manage significant amounts of inventory? That makes your cash management more complicated, and usually requires a more sophisticated plan. You need to buy inventory before you sell it.
Do you sell on credit? If you are a business selling to businesses, then you probably do have to sell on credit, and that normally means you have to manage money owed to you by your customers, called accounts receivable. Making the sale is no longer the same thing as getting the money. That usually requires a more sophisticated plan.
Do you do your taxes on a cash basis, or accrual basis? If you don’t know, and you are a very small (one person, maybe 2-3 people) business, then you’re likely to be on a cash basis. That makes your planning easier. However, most businesses big enough to work with a CPA and have separate tax statements use accrual accounting because they want to deduct expenses as they are incurred, even if they aren’t fully paid for. By the time you are using accrual accounting, you’ll probably need more sophisticated cash flow tools, and a more extensive business plan.
As you approach banks and other lending institutions, expect to provide more detail on personal net worth, collateral, and your business’ financial position. Some banks will accept a very superficial business plan as long as the collateral looks good. Others will demand to see detailed monthly projections. No bank can lend money on a business plan alone; that would be against banking law. But a good bank wants to see a good plan.
If you’re looking for venture investment, take a good look at your plan. Professional investors will expect your plan to provide proof, not just promises. They’ll want to see market data, competitive advantage, and management track records. They’ll want to see robust and comprehensive financial projections. True, you’ll hear stories about investors backing new companies without a plan, but those are the exceptions, not the rule.

So, however you cut it, your business plan is very important, even at the early startup stage, and even if you can keep it in your head. Before you purchase business stationery, telephones, or rent a location, you should do a business plan.

Start with an Initial Assessment

Start your business plan with a quick assessment. Even for an ongoing business, take the time to step away from the business and look at the basics. Do your business numbers make sense? One of my business school professors used to refer to this process as finding out “is there a there there?”

Objectives
Objectives are business goals. Set your market share objectives, sales objectives, and profit objectives. Companies need to set objectives and plan to achieve them.

Make sure your objectives are concrete and measurable. Be specific, such as achieving a given level of sales or profits, a percentage of gross margin, a growth rate, or a market share. Don’t use generalities like “being the best” or “growing rapidly.”

For example, “being the best” or “maximize customer satisfaction” are not serious business plan objectives because they cannot really be measured. Much better objectives would set measurable goals, such as holding gross margin to 25 percent as a minimum, or selling more than $3 million, or achieving six percent profit on sales and 10 percent return on equity.

If less tangible goals are critical to a plan, find a way to measure them. For example, if image and awareness are vital, then plan for statistically valid surveys to measure the improvements in image and awareness. You can also set goals for market share, and purchase research to measure the actual share. Or, if you want to focus on customer satisfaction, plan for a survey to quantify satisfaction or specify numerical objectives regarding returns or complaints.

Mission statement
Use the mission statement to define your business concept. A company mission statement should define underlying goals (such as making a profit) and objectives in broad strategic terms, including what market is served and what benefits are offered.

What business you are in—Ask yourself what business you are in, and don’t narrow yourself down. One of the classic business examples is the railroads, which lost a chance to expand in the twentieth century because they misdefined themselves. They thought they were in the business of running trains on tracks. They didn’t understand they were in the business of transporting goods and people. When trucks and buses and highways grew, the railroads were left behind.My company, Palo Alto Software, is not in the business of software development. It is in the business of helping people do business plans by themselves, providing business know-how through software and documentation. The broader definition helps us understand what we’re up to.
Customer satisfaction—Leading experts in developing customer satisfaction look to a mission statement to define customer satisfaction goals. Developing customer care programs depends on spreading the idea and importance within a company. That should normally start with a statement included in your mission statement.
Workplace philosophy—Some mission statements also define internal goals, such as maintaining a creative work environment and building respect for diversity. Experts in employee relations look immediately to a mission statement for a definition of a company’s stand on some of these fundamental issues.
Value-based marketing—Experts developed the value-based marketing framework to help companies understand their business better. This framework starts with a business value proposition, which states what benefits a business offers, to whom, and at what relative price level. For example:

This automobile manufacturer offers reliable, safe automobiles for families at a relative price premium.
This fast food restaurant offers quick and consistent lunches at a low price.

Keys to success
Focusing on what I call “keys to success” is a good idea for getting a better view of the priorities in your business. Just about any business imaginable is going to depend a lot on three or four most important factors. In a retail business, for example, the classic joke is that the keys to success are “location, location, and location.” In truth, that might be location, convenient parking, and low prices. A computer store’s keys to success might be knowledgeable salespeople, major brands, and newspaper advertising.

Focus is very important, and the keys to success framework helps you develop focus. There is what I call a law of inverse focus. I can’t prove it with detailed research but I’ve seen it many times. Beyond three or four key items, the more items on a priority list, the less chance of implementation. Thinking about keys to success is a great way to focus on the main elements that make your business work.

Break-even analysis
Next comes a simple Break-even Analysis table, as shown in the next illustration, where you estimate when your business will actually begin to make money. The Break-even Analysis table calculates a break-even point based on fixed costs, variable costs per unit of sales, and revenue per unit of sales.

Make the following three simple assumptions:

1. Average per-unit sales price (per-unit revenue): The price that you charge per unit. Take into account sales discounts and special offers. For non-unit based businesses, make the per-unit revenue $1 and enter your costs as a percent of a dollar.

2. Average per-unit cost: The incremental cost of each unit of sale. If you are using a Units-Based Sales Forecast table (for manufacturing and mixed business types), you can project unit costs from the Sales Forecast table. If you are using the basic Sales Forecast table for retail, service and distribution businesses, use a percentage estimate. For example, a retail store running a 50% margin would have a per-unit cost of .5, and a per-unit revenue of 1.

3. Monthly fixed costs: Technically, a break-even analysis defines fixed costs as costs that would continue even if you went broke. Instead, you may want to use your regular running fixed costs, including payroll and normal expenses. This will give you a better insight on financial realities.

This next illustration shows a Break-even chart. As sales increase, the profit line passes through the zero or break-even line at the break-even point. In the illustration the Break-even chart shows that the company needs to sell almost 1,200 units per month to break even.

This is a classic business chart that helps you consider your bottom-line financial realities. Can you sell enough to make your break-even volume? Of course, the break-even analysis depends on assumptions made for average per-unit revenue, average per-unit cost, and fixed costs, and these are rarely exact assumptions.

Market analysis
Determine if there is a sufficient market to support your business. You don’t need to do major market research for this initial market analysis. You may want to, and even need to, do real research later on. For now, however, you want to get a good educated guess about how many potential customers you might have.

What you want at this point is a reality check. You’ve already developed a quick break-even analysis that ties your initial business numbers to your required sales. Now you’re going to look at how many customers you might have so you can think about the importance of breaking even.

Develop a basic Market Analysis table. This table gives you a simple list of market segments. Each segment is a group of customers. Define the groups according to what needs you supply, demographic characteristics, buying habits, preferences, or whatever other classification system works for your plan. Fill in the total potential customers estimated and the annual growth rate expected for each segment.

The following illustration shows a Market Analysis table. You can also use a Market Analysis chart as a visual guide to your market segments.

Pause for reflection
Now it’s time to give your planning an objective appraisal. At this point, you’ve defined your business, your financial break-even point, and your total potential market. How does your business look from this viewpoint? Does it make sense? Can you make the sales you need to break even? Is the market big enough? Are your projections realistic? Can you bring together the keys to success?

Especially for potential start-up companies, a moment of reflection is critical. Many people dream of starting a business, but that dream turns into a nightmare if the new business isn’t successful. If you think you can make your break-even numbers work and you believe you have enough customers to make it, then go on to develop the plan. If not, either do more research and revise the idea, or give up and try something else.

Writing an Executive Summary

The executive summary section of a business plan is a summary of the highlights of your business plan. Even though the topic appears first in the printed document, most business plan developers leave the writing of the executive summary until the end. This summary is the doorway to the rest of the plan. Get it right or your target readers will not go further than the executive summary.

What should an executive summary include?

For a standard business plan, the first paragraph of the executive summary should generally include:

Business name
Business location
What product or service you sell
Purpose of the plan

Another paragraph should highlight important points, such as projected sales and profits, unit sales, profitability and keys to success. Include the news you don’t want anyone to miss. This is a good place to put a highlights chart, a bar chart that shows sales, gross margin, and profits before interest and taxes for the next three years. You should also cite and explain those numbers in the text.

Different plans require different summaries

An internal plan, such as an operations plan, annual plan, or strategic plan, doesn’t have to be as formal with its executive summary. Make the purpose of the plan clear, and make sure the highlights are covered, but you don’t necessarily need to repeat the location, product/service description, or other details.

Never waste words in a summary.

If you’re looking for investment, say so in your executive summary, and specify the investment amount required and the percent of equity ownership offered in return. You should probably also add some highlights of your management team and your competitive edge.

If you’re looking for a loan, say so in the executive summary, and specify the amount required. Leave loan details out of the summary.

How long should an executive summary be?

Experts differ on how long an executive summary should be. Some insist that it takes just a page or two, others recommend a more detailed summary, taking as much as ten pages, covering enough information to substitute for the plan itself. Although 50+ page business plans used to be common, investors and lenders these days expect a concise, focused plan.

The best length for an executive summary is a single page. Emphasize the main points of your plan and keep it brief. You are luring them in to read more of the plan, not explaining every detail.

Don’t confuse an executive summary with the summary memo. The executive summary is the first chapter in a business plan. A summary memo is a separate document, normally only 5-10 pages at most, which is used to substitute for the plan with people who aren’t ready to see the whole plan.

For more information on executive summaries, see our sample executive summaries below or use one of our software products, Business Plan Pro or LivePlan, which help you write an executive summary as well as contain over 500 executive summary examples.

Business Plan Software

Business Plan Pro
If you’re looking for help with the executive summary or other parts of your business plan, Business Plan Pro can save you lots of time and headaches. It contains over 500 sample business plans which can be used to help create your own plan.

LivePlan
LivePlan includes expert guidance and built in help to ensure your executive summary, and entire plan, is error-free. Being that it’s online, LivePlan allows you to collaborate with others and access your plan from anywhere.

Sample Executive Summaries

The links below take you to the executive summary of some of our sample business plans that were created with Business Plan Pro.

Studio 67 Executive Summary

Studio67 is a medium-sized restaurant focusing on organic foods and an intriguing atmosphere, in a prime neighborhood of Portland.

AMT Computers Executive Summary

AMT is an ongoing business computer reseller which also provides service and support.

Javanet Internet Cafe Executive Summary

JavaNet is a start-up business that will provide a unique forum for communication and entertainment through the medium of the Internet.

What You Sell

A complete business plan describes what you sell: either products, services, or both. This part of the plan is mainly description. Sometimes it will include tables that provide more details, such as a bill of materials or detailed price lists. More frequently, however, this section is mainly text. It normally appears in the plan, after the company description, but before the market analysis.

Detailed description
List and describe the products or services you sell. For each business offering, cover the main points, including what the product or service is, how much it costs, what sorts of customers make purchases, and why. What customer need does each product or service line fill? You might not want or need to include every product or service in the list, but at least consider the main sales lines.

It is always a good idea to think in terms of customer needs and customer benefits as you define your product offerings, rather than thinking of your side of the equation–how much the product or service costs, and how you deliver it to the customer.

As you list and describe your sales lines, you may run into one of the serendipitous benefits of good business planning, which is generating new ideas. Describe your product offerings in terms of customer types and customer needs, and you’ll often discover new needs and new kinds of customers to cover. This is the way ideas are generated.

Competitive comparison
Use this topic for a general comparison of your offering as one of several choices a potential buyer can make. Use a separate topic, in the market analysis section, for detailed comparison of strengths and weaknesses of your specific competitors.

You should discuss how your product lines and retail offering compare in general to the others. For example, your outdoor store might offer better ski equipment than others, or perhaps it is located next to the slopes and caters to rental needs. Your jewelry store might be mid-range in price but well known for proficiency in appraisals, remounts, and renovation. Your hobby shop has by far the largest selection of model trains and airplanes.

In other words, in this topic you want to discuss how you are positioned in the market. Why do people buy from your business instead of from others in the same market? What do you offer, at what price, to whom, and how does your mix compare to others? Think about specific kinds of benefits, features, and market groups, comparing where you think you can show the difference. Describe the important competitive features of your products and/or services. Do you sell better features, better price, better quality, better service, or some other factor?

Sourcing and fulfillment
Explain your product sourcing and the cost of fulfilling your service. Manufacturers and assemblers should present spreadsheet output showing standard costs and overhead. Distributors should present discount and margin structures. Service companies should present costs of fulfilling service obligations.

For example, sourcing is extremely important to a manufacturing company. Your vendors determine your standard costs and hold the key to continued operation. Analyze your standard costs and the materials or services you purchase as part of your manufacturing operation. Look for strengths and weaknesses.

Manufacturing companies want to have ample information about resource planning and sourcing of vital materials, especially if you are preparing a plan for outsiders, such as bankers or investors, or for business valuation. In this case, you may have additional documentation you can copy and attach as appendices, perhaps even contracts with important suppliers, standard cost breakdowns, bills of materials, and other information.

Where materials are particularly vital to your manufacturing, you might discuss whether second sources or alternative sources are available, and whether or not you use them or maintain relationships with them. This is also a good time to look at your sourcing strategy, and whether or not you can improve your business by improving your product sourcing.

But sourcing is not just for product-based companies. For example, a professional service company, such as an accounting practice, medical practice, law practice, management consulting firm, or graphic design firm, is normally going to provide the service by employing professionals. In this case, the cost is mainly the salaries of those professionals. Other service businesses are quite different. The travel agency provides a service through a combination of knowledge, rights, and infrastructure, including computer systems and databases. The Internet provider or telephone company provides a service by owning and maintaining a network of communications infrastructure. A restaurant is a service business whose costs are a combination of salaries (for kitchen and table waiting) and food costs.

Technology
Once technology changed lives only when the next wave of invaders swept across the Mesopotamian farmlands. Now technology can change our lives as we read the morning paper. Explain how technology affects your business, the products you sell, the means you use to sell them, and the needs of the customers you serve.

In some cases this might be a change in scanning technology, retail point-of-sale systems, or even video displays. In others, technology changes the nature of the goods or services you sell, such as cellular phones or DVD videos that didn’t even exist a few years ago. Do you want to include the Internet? Will a Web site change the way you do business?

Sometimes, technology can be vital to a service company, such as the case of the Internet provider that uses wireless connections as a competitive edge, or the local company that offers conference rooms for video conferencing. An accounting practice might gain a competitive advantage from proprietary software or wide-area network connections to its clients. A medical laboratory might depend completely on certain expensive technologies for medical diagnostics. A travel agency might depend on its connection to an airline reservation system.

Technology can be critical to a manufacturing business in at least two ways: first, the technology involved in assembly or manufacturing, such as in the manufacture of computer chips; and second, the technology incorporated in your product, such as proprietary technology that enhances the value of the product. In either case, technology can be a critical competitive edge. If you are writing a plan for outsiders, then you need to describe the technology and how well or thoroughly you have the technology protected in your business, through contracts, patents, and other protection.

Technology might be a negative factor, something to be included in a plan because a threat should be dealt with. For example, that same travel agency that depends on a computerized reservation system might also note growing competition from Internet reservations systems available to consumers who prefer to buy direct.

Not all businesses depend on technology. Technology might also be irrelevant for your business. If so, you can delete this topic if it doesn’t seem important.

Future products
Now you want to present your outlook for future products or services. Do you have a long-term product strategy? How are products developed? Is there a relationship between market segments, market demand, market needs, and product development?

Here again, what you include depends on the nature of your plan. In some cases future products are the most important point for investors looking to buy into your company’s future. On the other hand, a bank is not going to lend you money for product development or hopes for future products; so in a plan accompanying a Loan Application, there would probably be much less stress on this point.

You may also need to deal with the issue of confidentiality. When a business plan includes sensitive information on future products, then it should be carefully monitored, with good documentation of who receives copies of the plan. Recipients might reasonably be asked to sign non-disclosure statements and those statements should be kept on file.

Sales literature
It is generally a good idea to include specific pieces of sales literature and collateral as attachments or appendices to your plan. Examples would be copies of advertisements, brochures, direct mail pieces, catalogs, and technical specifications. When a plan is presented to someone outside the company, sales literature is a practical way to both explain your services and present the look and feel of the company.

If it is relevant for your business, you should also use this topic to discuss your present situation regarding company literature and your future plans. Is your sales literature a good match to your services and the image your company wants to present? How is it designed and produced? Could you improve it significantly, or cut the cost, or add additional benefits?

Depending on the purpose of your plan, you should provide good, practical information on the products or services you sell. Give your plan readers what they will need to evaluate the plan. Make sure they understand the need you serve, how well you satisfy that need, and why your customers buy from you instead of somebody else. Ideally, the descriptions in this chapter make your sales forecast seem realistic and even conservative.

Know Your Industry Before You Start Your Business

by Tim Berry

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You need to explain the type of business you’re in. You’ll be expected to explain the general state of your industry and the nature of the business, especially if your plan is going outside your company to banks or investors.

Whether you’re a service business, manufacturer, retailer, or some other type of business, you should do an Industry Analysis, describing:

Industry Participants.
Distribution Patterns.
Competition and Buying Patterns.

Industry analysis
Everything in your industry that happens outside of your business will affect your company. The more you know about your industry the more advantage and protection you will have.

A complete business plan discusses general industry economics, participants, distribution patterns, factors in the competition, and whatever else describes the nature of this business to outsiders.

The Internet has had an enormous impact on the state of business information. Finding information isn’t really the problem any more, after the information explosion and the huge growth in the Internet beginning in the 1990s and continuing in the 21st Century. Even 10 or 15 years ago, dealing with information was more a problem of sorting through it all than of finding raw data. That generality is more true every day. There are Web sites for business analysis, financial statistics, demographics, trade associations, and just about everything you’ll need for a complete business plan.

Industry participants
You should know who else sells in your market. You can’t easily describe a type of business without describing the nature of the participants. There is a huge difference, for example, between an industry like broadband television services, in which there are only a few huge companies in any one country, and one like dry cleaning, in which there are tens of thousands of smaller participants.

This can make a big difference to a business and a business plan. The restaurant industry, for example, is what we call “pulverized,” which, like the dry cleaning industry, is made up of many small participants. The fast food business, on the other hand, is composed of a few national brands participating in thousands of branded outlets, many of them franchised.

Economists talk of consolidation in an industry as a time when many small participants tend to disappear and a few large players emerge. In accounting, for example, there are a few large international firms whose names are well known and tens of thousands of smaller firms. The automobile business is composed of a few national brands participating in thousands of branded dealerships. In computer manufacturing, for example, there are a few large international firms whose names are well known, and thousands of smaller firms.

Distribution patterns
Products and services can follow many paths between suppliers and users. Explain how distribution works in your industry. Is this an industry in which retailers are supported by regional distributors, as is the case for computer products, magazines, or auto parts? Does your industry depend on direct sales to large industrial customers? Do manufacturers support their own direct sales forces, or do they work with product representatives?

Some products are almost always sold through retail stores to consumers, and sometimes these are distributed by distribution companies that buy from manufacturers. In other cases, the products are sold directly from manufacturers to stores. Some products are sold directly from the manufacturer to the final consumer through mail campaigns, national advertising, or other promotional means.

In many product categories there are several alternatives, and distribution choices are strategic. Encyclopedias and vacuum cleaners are traditionally sold door-to-door, but are also sold in stores and direct from manufacturer to consumer through radio and television ads.

Many products are distributed through direct business-to-business sales, and in long-term contracts such as the ones between car manufacturers and their suppliers of parts, materials, and components. In some industries companies use representatives, agents, or commissioned salespeople.

Technology can change the patterns of distribution in an industry or product category. The Internet, for example, changed options for software distribution, books, music, and other products. Cable communication is changing the options for distributing video products and video games.

Distribution patterns may not be as critical to most service companies, because distribution is normally about physical distribution of specific physical products such as a restaurant, graphic artist, professional services practice, or architect.

For a few services, distribution may still be relevant. A phone service or cable provider, or an Internet provider, might describe distribution related to physical infrastructure. Some publishers may prefer to treat their business as a service rather than a manufacturing company, and in that case distribution may also be relevant.

Competition and buying patterns
It is essential to understand the nature of competition in your market. This is still in the general area of describing the industry, or type of business. Explain the general nature of competition in this business, and how the customers seem to choose one provider over another. What are the keys to success? What buying factors make the most difference–Price? Product features? Service? Support? Training? Software? Delivery dates? Are brand names important?

In the computer business, for example, competition might depend on reputation and trends in one part of the market, and on channels of distribution and advertising in another. In many business-to-business industries, the nature of competition depends on direct selling, because channels are impractical. Price is vital in products competing with each other on retail shelves, but delivery and reliability might be much more important for materials used by manufacturers in volume, for which a shortage can affect an entire production line.

In the restaurant business, for example, competition might depend on reputation and trends in one part of the market, and on location and parking in another.

In many professional service practices the nature of competition depends on word of mouth, because advertising is not completely accepted. Is there price competition between accountants, doctors, and lawyers? How do people choose travel agencies or florists for weddings? Why does someone hire one landscape architect over another? Why choose Starbucks, a national brand, over the local coffee house? All of this is the nature of competition.

Main competitors
Do a very complete analysis of your main competitors. List the main competitors. What are the strengths and weaknesses of each? Consider their products, pricing, reputation, management, financial position, channels of distribution, brand awareness, business development, technology, or other factors that you feel are important. In what segments of the market do they operate? What seems to be their strategy? How much do they impact your products, and what threats and opportunities do they represent?

he People Behind the Plan

The personnel section will normally include information on the skills and experience of your management team, and cover your estimated personnel costs.

Summarize your management chapter
The personnel management section of your plan outline will normally include an explanation of your management team, management philosophy, backgrounds, organization and functions, plus at least one table that covers your estimated personnel costs. The management chapter starts, like the other chapters, with a good summary. You may want to use that summary as part of a summary memo or loan application document, so cover the main points. Consider what you’d say about your management if you only had one or two paragraphs to say it.

Make sure you cover the basic information first. That would include how many employees the company has, how many managers, and how many of the managers are founders. Is your organizational structure sound, with job descriptions and logical responsibilities for all the key members? Is your team complete, or are there gaps still to be filled? Particularly with start-up companies, you may not have the complete team as you write the plan. In that case, be sure to point out the gaps and weaknesses and how you intend to fill them.

Explain your organizational structure
The organizational structure of a company is what you frequently see as an organizational chart, also known as an “org chart.” If you have access to a graphic of an organizational chart (from a drawing program, or one of the specialized organizational charting software packages available), that works really well at this point. If not, you can just use the text to describe the organizational structure in words, without a chart.

Make sure you explain how job descriptions work and how the main company functions are divided up. Are your organizational lines drawn clearly? Is the authority properly distributed? Do you have jobs that include responsibility without authority? Do your resources seem in line with your organizational needs?

List team members and their backgrounds
List the most important members of the management team. Include summaries of their backgrounds and experience, using them like brief resumes. Describe their functions with the company. Resumes should be appended to the plan.

Discuss your management gaps
You may have obvious gaps in the management, especially in start-up companies, but even in ongoing companies. For example, the manufacturing company without a production manager has some explaining to do, and the computer company without service has some problems. It is far better to define and identify a weakness than to pretend it doesn’t exist. Specify where the team is weak because of gaps in coverage of key management functions. How will these weaknesses be corrected? How will the more important gaps be filled?

Other management team considerations
Applicability depends on your company. Some questions that should be answered include: Do any managers or employees have “noncompete” agreements with competitors? Who is on your board of directors? What do the members contribute to the business? Who are your major stockholders? What is their role in management?

Develop your personnel costs
At this point you should normally include a personnel table to project personnel costs, including direct compensation and indirect costs. The indirect costs include vacation pay, sick pay, insurance benefits, education, and of course, payroll taxes and some other costs. There are different terms for all of this, but my favorite is “personnel burden,” which is a cost over and above the direct wages and salaries.

Special treatment for home offices
If you are working as a sole proprietor in a home office, you should still include your own compensation as part of your business plan. What you pay yourself should be added into the profit and loss as an expense. However, in this case you don’t really need to include payroll burden, because these additional expenses are irrelevant until you include additional employees.

Two standard personnel variations
A good personnel plan varies according to your business and business plan needs. You may want a simple list of names, titles, or groups, each of which is assigned a monthly cost. This model is shown in the next illustration.

Standard personnel plan

The standard personnel plan is a simple list of names, titles, or categories. The sum transfers into your profit and loss statement. This illustration shows the last three months and first two years of a sample plan.

The simpler model totals all payroll only. It is perfectly appropriate for a lot of small businesses. You can use each of the lines in the table to describe specific individuals, or groups and departments. When you have the list complete, just add up the totals for personnel costs in your profit and loss. Multiply that total times your burden rate—say 15 or 20 percent—to calculate your personnel burden. The burden goes into the profit and loss as a separate line.

The next illustration shows the more detailed personnel plan that divides the rows into categories, such as sales and marketing, general and administrative, and so forth. The more detailed model shown here totals the planned payroll for each of the four departments, and then calculates total payroll.

Detailed personnel plan

The more detailed personnel plan shown here divides personnel expenditures into categories including production, sales and marketing, general and administrative, and other.

As with the simple personnel table, you also want to calculate a payroll burden as a percentage of the total. Make sure to include the personnel burden assumption in your list of general assumptions.

The payroll assumptions in this model will also be used for the other financial projections. The Profit and Loss (also called income statem

The Financials

Expert opinions may vary, but in general there are some standard analyses that a business plan ought to have, regardless of specifics. You can find detailed discussions of each of these online in Hurdle: The Book on Business Planning, but let’s discuss here what probably ought to be included in a business plan.

Cash flow is the most important. Businesses run on cash. No business plan is complete without a cash flow plan.
Profit and loss, incorporating sales, cost of sales, operating expenses, and profits. This of course is also a pro forma income statement. In most cases it should show sales less cost of sales as gross margin, and gross margin less operating expenses as profit before interest and taxes (also called gross profit, and contribution to overhead). Normally there is also a projection of interest, taxes, and net profits.
Pro-forma balance sheet: Aside from cash and income, there is the balance of assets, liabilities, and capital.
Sales forecast: The form may vary to suit the business, but it is hard to imagine a plan without a sales forecast. Some plans forecast in excruciating detail, some summarize, but the forecast should be there. In the simplest of plans, the sales forecast might be a single line in the pro-forma income statement.
Personnel plan: Personnel costs are so intimately related to fixed costs that they should often be set aside and discussed. In some simple plans, they too, like the sales forecast, can be just a line or two in the income statement.
Business ratios: The numbers are there, when there is pro-forma income, cash, and balance sheet, so the ratios can be calculated. This isn’t as necessary for an internal plan as for one for bankers and investors, but some key ratios are almost always a good idea. They should probably include some profitability ratios like gross margin, return on sales, return on assets, and return on investment; plus some liquidity ratios such as debt to equity, current ratio, and working capital. You already know which ratios you like to use, and how to calculate them. A banker will have a similar view.
Break-even analysis: Most of the break-even analyses included with business plans have little value, but most bankers and analysts like to see them.
Market forecast: Aside from the sales forecast, which is essential, a market forecast is also a good idea. How many potential customers are there? How does market growth stand to impact this business?

Precise, Accurate Estimates are more than Guesses

When you are in the midst of creating your business’ planning forecasts, do you use Guess, Estimate, Accurate and Precise interchangably? I don’t. I believe there are very distinct differences in these words — they are not synonymous. Here’s how I see them.

Guess: Pulled out of thin air. “Oh yeah, sure, no problem, easy-peazy! I can get all my darts into the target! Um — uh — er — which target was that?”

Estimate: Prediction of the future, based upon past results, or research. “In my previous rounds I’ve hit the target. I’m improving. I think I have a 65% chance.”

Accurate: The real data, the actual results — in a broad sense. “I did hit the target.”

Precise: Specific detail, categorization, analysis. “I hit the bulls-eye once, the triple 20 once, and one dart hit the target, but outside the scoring rings. I need consistency.”

When you are initially writing and then regularly reviewing your business’ operating plan think seriously about these concepts.

Guess: Leave these blue-sky, gross generalizations out. Venture Capitalists and investors can tell when you pulled these out of ……. thin air. If you run your business on guesses, guess what, you’re out of business.

Estimate: Do your research. Forecasting is more than guessing. It is grounded in past experience, sound market research and analysis. Cite your sources.

Accurate: Keep your records and use all your results. You can use the big picture, but it may not serve you well if your view is too broad. “The fewer the data points, the smoother the curve.” But really, you want to see all the peaks and valleys so you can adjust your business activities and future planning to account for real-world variables.

Precise: Be honest here. Look closely. Continue to do your periodic scheduled reviews. Do your analysis thoroughly and completely, even if the conclusions may not be exactly what you wanted to find. If you throw out half of your data in order to reach correspondence with your estimates, you are neither accurate, precise, nor honest with yourself nor with everyo

Forecasting Your Sales

Developing your sales forecast isn’t as hard as most people think. Think of your sales forecast as an educated guess. Forecasting takes good working knowledge of your business, which is much more important than advanced degrees or complex mathematics. It is much more art than science.

Whether you have business training or not, don’t think you aren’t qualified to forecast. If you can run a business, then you can forecast its sales. Most people can guess their own business’ sales better than any expert device, statistical analysis, or mathematical routine. Experience counts more than any other factor.

Break your sales down into manageable parts, and then forecast the parts. Guess your sales by line of sales, month by month, then add up the sales lines and add up the months.

The illustration below gives you an example of a simple sales forecast that includes simple price and cost forecasts which are used to calculate projected sales and direct cost of sales and estimate total dollar value for each category of sales.

A simple sales forecast

Use text to explain the forecast and related plans and background
Although the charts and tables are great, you still need to explain them. A complete business plan should normally include some detailed text discussion of your sales forecast, sales strategy, sales programs, and related information. Ideally, you use the text, tables, and charts in your plan to provide some visual variety and ease of use. Put the tables and charts near the text covering the related topics.

In my standard business plan text outline, the discussion of sales goes into the chapter on Strategy and Implementation. You can change that to fit whichever logic and structure you use. In practical terms, you’ll probably prepare these text topics as separate items, to be gathered into the plan as it is finished.

Sales strategy
Somewhere near the sales forecast you should describe your sales strategy. Sales strategies deal with how and when to close sales prospects, how to compensate sales people, how to optimize order processing and database management, and how to maneuver price, delivery, and conditions.

How do you sell? Do you sell through retail, wholesale, discount, mail order, phone order? Do you maintain a sales force? How are sales people trained, and how are they compensated? Don’t confuse sales strategy with your marketing strategy, which goes elsewhere. Sales should close the deals that marketing opens.

To help differentiate between marketing strategy and sales strategy, think of marketing as the broader effort of generating sales leads on a large scale, and sales as the efforts to bring those sales leads into the system as individual sales transactions. Marketing might affect image and awareness and propensity to buy, while sales involves getting the order.

Forecast details
Your business plan text should summarize and highlight the numbers you have entered in the Sales Forecast table. Make sure you discuss important assumptions in enough detail, and that you explain the background sufficiently. Try to anticipate the questions your readers will ask. Include whatever information you think will be relevant, that your readers will need.

Sales programs
Details are critical to implementation. Use this topic to list the specific information related to sales programs in your milestones table, with the specific persons responsible, deadlines, and budgets. How is this strategy to be implemented? Do you have concrete and specific plans? How will implementation be measured?

Business plans are about results, and generating results depends in part on how specific you are in the plan. For anything related to sales that is supposed to happen, include it here and list the person responsible, dates required, and budgets. All of that will make your business plan more real.

How many years?
I believe a business plan should normally project sales by month for the next 12 months, and annual sales for the following two years. This doesn’t mean businesses shouldn’t plan for a longer term than just three years, not by any means. It does mean, however, that the detail of monthly forecasts doesn’t pay off beyond a year, except in special cases. It also means that any detail in the yearly forecasts probably doesn’t make sense beyond three years. It does mean, of course, that you still plan your business for five, 10, and

MOOT CORP^® Competition
"The Super Bowl of Business Plan Competition." Business Week

The MOOT CORP^® Competition simulates entrepreneurs asking investors for funding. MBAs from the best business schools in the world present their business plans to panels of investors. The investors then choose the best new venture. All participants benefit from the opportunity to:

crystallize their thinking in preparing to present to the investors,
receive feedback and advice from distinguished investors, entrepreneurs, and support professionals,
network with fellow MBA entrepreneurs
become more skilled in analyzing, writing, and presenting business plans

For more information, see:

The following business plans were presented at MOOT CORP^® Competition. Read the details of any of these plans or select from the list below the best example of each specific topic.

2MBA, Inc. World Champion

Manufacturing and Marketing Beverage Appliances, Inc. (2MBA) develops innovative beverage equipment for corporate owners of major food brands.

SanaSana.com Best Written Plan

SanaSana is a B2B2C internet service for consumers of health care and the payers, providers and suppliers of health services in the Hispanic community.

Fabrica Co., Ltd. Former World Champion

Fabrica is a provider of woven fabric samples from the KS Loom, which gives buyers the chance to see the actual colors and feel the precise texture of what they desire in less than one-tenth the time usually required for making samples with a production-weaving machine.

Vusion, Inc. First Runner-Up

Vusion is developing a chemical analyzer and Sensor Cartridge, based upon the Electronic Tongue^TM technology, which can instantly analyze complex chemical solutions.

JetFan Technology Ltd. Second Runner-Up

JetFan was established to develop and manufacture commercial applications for an innovative fan-blade technology. Market applications include those in compact electronic equipment cooling; heating ventilation and cooling; and domestic appliances.

Internet Services:

AdGrove.com

AdGrove serves as a sales channel for radio ads. Stations can list ad space and broker sales. Buyers can search for available ad space, plan ad campaigns, buy with discounts, and monitor services.

ePower Systems

ePower uses the Internet to provide utility companies with electronic billing and bill payment. The utility achieves significant cost savings by replacing paper bills, faster payment cycles and an interactive marketing connection to their customers.

AudioRush.com

AudioRush.com offers online purchase and download of music files to be written to CD for play on a conventional player.

Mindshaker

Mindshaker provides a single, online source of proven books, articles by academic and industry experts, cases and value added learning aids for more than 2.8 million graduate students and the faculty that instruct them.

ProTrax, Inc.

ProTrax offers customized advertising services on the Internet for organizations seeking highly specialized employees.

Boomerang Pharmaceutical Communications

Boomerang provides educational programs on the Internet to medical and therapeutic practitioners

Services:

Momentex

Momentex markets beverages, snacks and entertainment items to drivers at toll booths.

VeriType

VeriType is a medical software company that allows medical service providers to ensure compliance with government regulations and avoid fines and minimize errors.

Time Merchants

Time Merchants references consumers to qualified service providers and provides home delivery of goods and services.

Eurosky

Eurosky offers shared, fractional ownership of aircraft. The Business Plan is capital intensive and is based upon the founders' specialized knowledge of the industry.

Green Design Group

Green provides apparel design, import and marketing of active sportwear. It generates revenue through consulting, royalties and imports.

Airex

Airex offers contract disposal and management of industrial residues based upon the specialized engineering expertise of the founders.

Nepkar

Detailed, technical business plan in the field of drug screening for pharmaceutical companies using yeast genetic engineering in the discovery of new drugs.

Walking Peru

Walking Peru is a recreational tourism company that offers opportunities to visit choice tourist attractions through passive recreational sports.

Products:

Breeze Technology, Inc.

Breeze has designed a new athletic shoe that is air-cooled with both cost and performance advantages over existing products. The Business Plan documents a strategy for licensing the technology to existing manufacturers.

J.H. Reid Corporation

J.H.Reid Corp. manufactures a revolutionary chair for watching television in a home entertainment center.

Application Technologies

Application Technologies introduces a packaging product which is unit-dose and disposable including a built-in applicator, aimed at the medical and personal care markets.

Expert Application Systems, Inc.

EASI develops packaged software systems for growth markets and needs capital for market expansion.

True Dimensions, Inc.

True Dimensions manufactures and markets ultra-contemporary, ergonomic furnishings and is looking for funding to expand their market.

EcoClear, Inc.

EcoClear developed an innovative self-cleaning water filtration technology and plans to expand their market.

In the Pipeline

Identifies, develops, and promotes innovative products from concept to commercialization for repair, redesign and installation of PVC pipe.

Independence Marine

Independence Marine has completed production tooling and field testing of products that aid in environmentally sustainable harvest of ocean resources. They are seeking capital for production ramp and marketing.

Zif Medical Devices

Zif has developed a new safety syringe for protecting medical personnel from needle-sticks. The Business Plan discusses licensing the technology to others and a plan for manufacturing and distributing.