a business plan

a business plan

Developing a Successful Business Plan

1. Executive Summary

The executive summary should be no more than one page in length and should focus on why there is a business, and why it will be successful. It will hit on the problem being solved and how big of a financial opportunity it presents. How the company will uniquely solve the problem, and no other; justification for a sustainable competitive advantage. Next the financial highlights, and how the when the company is scaling the returns will be colossal. Lastly, the projected return on investment will be addressed. If the investor is not compelled to read through the rest of the business plan, this is the last chance to convince him why he should be. The executive summary has to perform a host of tasks. If it does all of the above, it will give the reader an excellent initial impression of the business, provide a solid basis for further reading and entice the investor to take the next step, which would be to request a meeting with the company.

2. Company Overview

If there is a proven need for your product or service, the probability of success is much higher. Consider whether customers will be receptive to new entrants in the market; any products that are revolutionary can be very successful but also take time to gain acceptance. Name your target customers and discuss your market penetration strategy, keeping in mind that there are various ways to reach different levels of the market. Relate all strategies to the long-term success of the business and identify the expected results on sales and company reputation.

As above, you should set out what your business does, whether it is manufacturing a product or providing a service. Also define your market because an understanding of the overall market that you fit into gives an important perspective to your specific business and its potential profitability. By looking at your own business as an integral part of a larger picture, you can better understand your target customers and how to reach them.

It is also called company history, if there is none – its vision on becoming successful. Beginning with an accurate description of the company is imperative in laying the foundation for the rest of the plan. With few words, a good company description should answer the following questions and encourage interested parties to read on. What does your business do? What are the company’s long-term objectives? What are the secrets of its current success? How big is the company? What does it specialize in? A company description need not be confined to one paragraph; it can be as long as it needs to be.

Section 2: Company Overview

3. Market Analysis

Market analysis consists of market need, potential market size, growth rate, pricing and gross margin, competitors, channels, sales, and a communication strategy. The market need for EcoWash is very widespread. Essentially the entire market of car owners is a potential customer. The need is clear in the NW, where environmental concern is high. There is also an economic motivation. In drought-prone areas, regulatory limitations may be placed on the use of water for car washing. The same is true in many communities with respect to restrictions on the disposal of soapy water into storm sewers, which can damage aquatic habitats. This problem is acute for mobile detailers, as they often do not have good options for drainage. In the situation of mobile and on-site washing it is often desirable for the car to be washed where it is parked, to avoid an interruption of daily activity. This is true for vehicles in public parking, in apartment complexes, and even for some home owners. For some higher-end cars, the owner may want a more gentle and hand-oriented wash than is available at a gas station or quick wash conveyor-type facility. Primarily, customers who care about the appearance of their car are potential clients, as opposed to those for whom the vehicle is purely a transportation appliance. It is also important to note that many businesses with a fleet of cars – such as real estate companies, car rental agencies, or cab companies – are potential commercial clients. Now these types of clients are interested in a lower cost than what they are spending for their personal vehicles, but the service must still be of ultimate convenience and the finished product must reflect positively upon the company. Finally, there are many individual car owners with an affluent lifestyle, for whom a high-quality car-washing service is a staple errand. These customers are to some degree indifferent to price, and willing to spend around $40 or more on a full detail for a luxury vehicle. All types of customers desiring a superior car wash have a common interest in preserving the finish and value of their vehicle for as long as possible, incurring the least cost.

4. Business Strategy

Based on the current status of the company, the SBA will analyze business strategy and begin to implement a solidified business plan for the most potential businesses. This is very important as a business plan significantly aids a company in achieving its goals. The plan should and will encourage development in the company and ensure its longevity. The SBA will analyze both internal and external factors in determining solid business strategy. To this, SBA will first consider the revenue generated by a particular basketball league. With this approach, we will be able to see which leagues are most beneficial to our organization. Ideally, we would like to develop a program that will support a self-sustaining basketball league. This still may be premature to some of the younger leagues, but determining the steps needed to break-even are essential in developing a successful program. This will involve increased communication with park districts to learn their fees with regards to facility rentals. Assuming we will be utilizing a volunteer workforce, the only fixed cost will be equipment and facilities. By determining a break-even point for facility cost and other various calculations, we can construct a direct plan for some of our larger leagues. A cost-benefit analysis can be performed in depth for each specific program, but the fundamental goal is to shift focus of some leagues to competitive inter-town leagues. This will provide the best level of competition for the players and most volunteer referees. Usually these games are held at local area high schools, which then can lead to increased IHSA program participation. At this point it makes sense to target high school age groups comprised of 1 or 2 town teams. This is very specific and beneficial to area high school basketball players, and generally these teams look for non-parent volunteer coaches and experienced referees. Usually there is ample opportunity to recruit both coaches and referees at these games to SBA sponsored programs. The recent history of IHSA program participation has led to an increased amount of recruitment for officiating and coaching in SBA programs. Over time, the SBA can create mentor programs for high school students to coach over youth teams and further strengthen the tie between high school and youth basketball programs. The final analysis will be to compare the revenue of these types of leagues to the effort involved to set them up. We still aim to provide some form of youth basketball program at park districts, but for its benefit, it will not be a focus more than an entry level program for the younger age groups.

5. Financial Projections

The final section of your business plan outlines your financial projections. This section starts with a summary of your revenue projections. Use a table to show a breakdown of monthly sales, as well as unit sales. Above all, make sure the numbers you plug into the templates you have created are realistic. Even though investors and banks have their own models, it is always best to back up your own numbers as a backup. Projections should never be optimistic, only realistic. At the same time, do not sell your business short. Miscalculating the rate of growth can be costly. Therefore, be safe and conservative. It is always best to be optimistic with the upper limit and pessimistic with the lower limit when building your financial projections. Therefore, add best and worst case scenarios to your sales, costs and cash flow projections. We live in a world of uncertainty, so this really helps to show that you have thought your plans through. The second part of your financial projections is to provide a pro forma income statement broken down into monthly columns for the first two years. This will include sales, cost of sales, gross margin, expenses, EBITDA, Depreciation, Interest, Taxes, net income. This is essentially a profit and loss statement for your first two years. Since most businesses do not generate positive net income in the first year, do income years zero and one together. This is great for showing the rate at which your business will become profitable. On a side note, ever since the .com boom, the rate that businesses become profitable has decreased. Investors are now more interested in the growth of a company than its immediate profits. But don’t worry, we can show them both!