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November 21, 2005

Business Plans are Important: Technology can Help

Tim Berry, founder of business plan software company, Palo Alto Software; a business plan expert and speaker at the February 2006 Small Business Technology Summit is fanatical about small businesses having a business plan. Not just a one time exercise but a life time road map of business growth.

He writes - When embarking on your first business plan, keep in mind that you are writing the story of your company. A standard business plan outline includes a chapter topic on your company, which you may not need to include if you are writing an internal plan. However, any bank or prospective investors reading your plan will want to know about your company before they read about products, markets, and the rest. Here are some elements to include in the chapter on your company.

Summary Paragraph
Start the chapter with a paragraph that you can use as part of a summary memo or a loan application support document. Include the essential details, such as the name of the company, its legal establishment, how long it's been in existence, and what it sells to what markets.

Legal Entity and Ownership
In this paragraph, describe the ownership and legal establishment of the company. Specify whether your company is a corporation, partnership, sole proprietorship, or some other kind of legal entity, such as a limited liability partnership. You should also explain who owns the company, and, if there is more than one owner, in what proportion.

If your business is a corporation, specify whether it is a C (the more standard type) or an S (more suitable for small business without many different owners) corporation. Also, of course, specify whether it is privately owned or publicly traded.

Many smaller businesses are sole proprietor businesses. Some are legal partnerships. The protection of incorporating is important, but sometimes the extra legal costs and hassles of turning in corporate tax forms with double-entry bookkeeping are not worth it. Professional service businesses, such as accounting or legal or consulting firms, may be partnerships, although that mode of establishment is less common these days. If you're in doubt about how to establish a start-up company, consult a business attorney.

Locations and Facilities
Briefly describe offices and locations of your company, the nature and function of each, square footage and lease arrangements.

If you are a service business, you probably don't have manufacturing plants anywhere, but you might have Internet services, office facilities, and telephone systems that are relevant to providing service. For example, it is conceivable that your Internet connection might be critical to your business. Include this information.

If you're a retail store, then your location is probably a critical factor, so explain the location, traffic patterns, parking facilities, and possibly customer demographics as they relate to the specific location.

If you are a manufacturing business, you may have different facilities for production, assembly, and various offices. Include your manufacturing and assembly equipment, packing equipment, docks, and other facilities.

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