Starting a business or just maintaining an existing one is an exciting but also an incredibly challenging undertaking. While there are many procedural and legal requirements at both the Federal and State level, it’s important to capture in words what, where, when and how you intend to make your ideas and activities become a viable business. Traditional business law would say that a business plan must be created. There are, however, no federally or state (including Michigan) mandated requirements regarding business plans. A business plan is, however, an essential roadmap for business success. This is what an attorney would call a living document which usually projects 3-5 years ahead and outlines the route you intend to take to grow revenues. This is one of the many services our business law attorneys at Downriver Lawyer in Taylor, Michigan can render for you and your business.
Engaging the services of a lawyer to write a business plan helps the owner(s) take an objective, critical, unemotional look at the business project in its entirety. The written document assists the owner(s) in managing the business; clearly communicates the owner’s ideas to others; provides the basis for a financial proposal; provides insight into effective ways to approach prospective customers, and a business plan is always required as part of an application for commercial financing.
The business plan generally includes the following information:
1) Executive Summary
2) Company Description
3) Market Analysis
4) Organization and Management
5) Service or Product Line
6) Marketing and Sales
7) Funding Request
8) Financial Projections
Executive Summary – The executive summary is a snapshot of the business plan as a whole and touches on the company’s profile and goals. It is often considered to be the most important section of the business plan. The executive summary should highlight the strengths of the overall plan. Thus, while it usually appears first in the business plan document, it should be written last. It is not until the business plan is completed that the details come to light.
Key points should be included based on the stage of the business. If the business is established, the following should be included:
– Mission statement
– Company information such as owners and their roles, number of employees and business locations
– Growth highlights i.e. charts and graphs can be helpful
– Financial information
– Summarize future plans
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If the business is a startup or new business, there will not be as much information as an established company. Instead, the focus should be on experience and background as well as the decisions that led to starting the business.
It is important to demonstrate that thorough market analysis has been done. If there are gaps or needs in the target market, address how you plan to fill the gap. Upon reading this section, the reader should be convinced the company can succeed. Lastly, future plans should be addressed.
Company Description – This section provides a high level review of many components of the business. Describe the nature of the business and what needs in the marketplace it is trying to satisfy. Describe how the company’s product/service will meet these needs. List who or what group of consumers and/or businesses the company will serve. Make a statement relative to the competitive advantages you believe will be made that will result in making the company successful such as business location, superior personnel, efficiency in operations or ability to bring value to customers.
Market Analysis – Before launching the business, research must be completed regarding the industry, market and competitors you will encounter. Industry description and outlook; information about your target market; distinguishing characteristics; size of the primary target market; pricing and gross margin targets; potential for increasing market share; competitive analysis i.e. market share strength and weaknesses and regulatory restrictions, if any, are considerations for this section.
Organization and Management – This section should include the company’s organizational structure, details about ownership of the company, profiles of the management team and qualifications of the Board of Directors. It is important to list who does what and salary and benefit packages should also be in this section. Reassure the reader that the people on staff are more than just names on a letterhead.
Inclusion of an organizational chart with a description is an effective way to portray the structure of the company. This demonstrates that nothing has been left to chance. Things have been well thought out for potential investors and employees.
Service or Product Line – The next part of your plan is where you describe your service or product with emphasis on the benefits to potential and current customers. Always focus on why your service or product fills a need or is particularly desirable to your target customers.
Include details about your service or product’s life cycle; details regarding any existing or pending intellectual property associated with your offering such as patent filings or anticipated copyrights, trade secrets; research and development activities, and disclose any information pertaining to existing legal agreements, such as nondisclosure or noncompete agreements.
Marketing and Sales – The proposed marketing and sales strategies are an important section of the business plan. Marketing is the process of creating customers, the lifeblood of the business. The business strategy needs to be well defined. There is no single way to approach this, however, the strategy should be part of an ongoing business-evaluation process and unique to the company. There
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are some common steps that can be followed which will help you think through the direction and tactics that can be used to drive sales and sustain customer loyalty.
An overall marketing strategy should include four different strategies; a market penetration strategy, a growth strategy, channels of distribution strategy and a communication strategy. The overall sales strategy should include two primary elements; a sales force strategy and the sales activities. The sales force strategy should include details of whether you are going to have an internal sales force or perhaps independent representatives. How many salespeople and recruitment and training activities are also important details. An experienced business law attorney can give you all the detail you need to determine what marketing and sales strategy relative to your business should be included.
Funding/Financing – If there is a need for funding or financing, the following should be disclosed. The current funding requirement, any future funding requirements expected within a five year period, how the company intends to use the funds i.e. for working capital, fixed asset, debt requirement, acquisitions…and any situational plans for the future such as a buyout, being acquired by someone else, debt repayment plan or selling the business. These are all important for creditor’s making decision relative to funding/financing for the business.
Financial Projections – Both historical and prospective financial data are important in the business plan.
Both of these assist when seeking funding and financing. The historical information include income statements and balance sheets, cash flow statements and capital expenditure budgets. The prospective data include forecasts of future income, cash flow and expenditures. These are all used in decision making at various levels by various users.
Appendix – The appendix is not required but a useful place to include resumes, permits, lease information as well as other information that may be useful by potential customers, investors, employees or other inquiries of your business.
The business plan is indeed a very detailed account of how you see your business and how you want others to see your business. The business plan prepared by an experienced and knowledgeable attorney of business law can help you present your business as the unique and exceptional entity that it is now or that it will be in times to come. At Downriver Lawyer, www.downriverlawyer.com, business plans are prepared for small as well as potentially large businesses. Secure your investment today by having a business plan for your company.