Yes, we have come to the end
of talking about a business plan—its contents, style, and uses. Hopefully, you have been an active reader and have prepared each chapter’s “Your Turn” section. Congratulations! Now transfer all these specifics into a single document and draft your executive summary, remembering to clearly state what business you are in, what customer need or problem you are solving, how your solution is different than the competition, the strength of your management team, why you will be successful, and the amount of any funding being requested. Remember, the executive summary is being written with a particular reader in mind. When you have finished this draft, compare it with the good practice checklists in Section I.Although we have reached the end of the book, the journey for you is just beginning. Now that you have a business plan, you need to use it—take it to a banker or angel for funding, implement the marketing action plan steps detailed in Chapter 10, establish your legal form of organization, set up your accounting and record-keeping system, and take care of all the other details you spent time thinking about and planning for. As you will have several versions of your business plan—updates as you receive feedback and different styles for different readers—keep track of what you send to whom by giving each a version number either on the cover page or in a header on each page. Once your business is up and running and gaining customers, making sales and generating cash flow, it is important to set year-ahead goals and key performance factors. Convert your business plan financial projections to a monthly financial report with a budget and monthly actual results comparison as noted in Chapter 13.
As stated at the outset of this guide, a business plan becomes dated soon after it is completed, so I suggest that after a year’s experience, it is time to update, as opposed to rewrite, your plan to incorporate what you have learned.
GLOSSARY
Accredited Investor:
Within securities law, companies may sell shares to accredited investors without registering those shares with the Securities and Exchange Commission. There are eight criteria for qualifying as an accredited investor. The two of most interest are: 1) a person with a net worth exceeding $1 million but not including principal residence and 2) a person with an annual income of more than $200,000 in each of the two most recent years, $300,000 if jointly with spouse and with a reasonable expectation that that will occur again in the current year.Accounts Payable:
Money that a company owes to vendors for products and services purchased on credit. Most usually the time to pay is less than a year and thus accounts payable is included on the balance sheet in the current liabilities section for those companies using accrual accounting.Accounts Receivable:
Money that a customer owes to the company for products and services sold on credit. Most usually the time to pay is less than a year and thus accounts receivable is included on the balance sheet in the current assets section for those companies using accrual accounting.Accrual Basis Accounting:
Accounting method that recognizes and reports revenues when earned (when the work is done and title and/or possession is transferred to customer) and expenses when incurred (even if the item is not yet paid for). See cash basis accounting for the other accounting method.Angel Investor:
An individual, alone or in a group, who provides capital to start-ups or early-stage companies. Angels are usually accredited investors and may have a personal stake in the success of the venture. These investments are characterized by high levels of risk and a compensating, potentially large return on the investment. Investments are usually local to the investor and in the range of $50,000 to $2 million.Balance Sheet:
One of three principal financial statements (see income statement and cash flow statement for the other two) that shows at a single point in time the company’s financial condition by listing its assets (what is owned), liabilities (what is owed), and net worth (the difference between owned and owing).other operating metric, required to just cover costs, with less volume generating a loss and more volume generating a profit. Break-even analysis focuses on the relationship of revenues with fixed and variable costs.