By Craig Frank

As businessmen wrapped up in the fast paced world of high technology and finance, we often lose perspective with regard to the skills and knowledge required to perform certain business tasks that have come to be viewed by us as formalities and processes. The business plan is perhaps the most misunderstood and least appreciated in this category.

The logic for a business plan prepared by professionals seems glaringly obvious to Tudog. Would you have a non-tech person develop your technology? Would you allow a person with no marketing experience to head up your marketing campaign? So why would you - or someone else with little or no business plan experience - write the most important document your company will ever produce?

Some business leaders seem to think that if they have basic language skills -can read and write English - they have the skills they need to write a compelling business plan that presents the company and its plans in a manner that creates excitement and encourages confidence. That's sort of the same as us saying that just because we write great business plans we can also write award winning screenplays and Pulitzer Prize deserving novels. We can't. Our skills are of a different kind. So are yours. Go with your strengths and bring in professionals to cover the gaps.

We know that there are many who, in spite of our overwhelming evidence supporting professional preparation of business plans, will still attempt to write their document on their own. We know we can't convince you otherwise, and yet we care about our clients and their success - even when they refuse to listen to us. So here are some hints in business plan preparation.

Getting Started

The first step is the gathering of materials you have and that you will need to include in the business plan. Build a structure for your business plan and see what information you will need in order to answer all the questions relevant to the chapters in your structure. This includes management CVs, an ownership chart, any press that may have covered your company, all signed agreements, a list of targeted customers, technical white papers and other information about your company, your products, and your market.

By gathering the information you have, you will also discover what information you lack. Your next step is to perform the necessary research to find the information you need. This includes information on your market (size, trends, forecasts), your competitors and their products, sales channels, pricing standards, marketing tactics and reasonable financial performance expectations. Some places you might look for information include competitor websites and materials, industry publications, web searches, analyst reports, annual reports of publicly traded companies in the sector, and research firms.

Following your in-house research, you may wish to engage in some field research by going into your targeted market to actually question people involved in your sector. This might have been (should have been) a step you took while you were in the product development stage, but should be revisited at this point as well. You can find industry players at trade shows and conferences, as well as one-on-one meetings.

Once you have completed all aspects of your research, you are able to begin the analysis phase - making sense of all the information you have gathered. Your analysis will be crucial, because your interpretations of the information will be the foundation of the strategies you develop. The strategies, essentially the next step in the process, are to be clearly expressed in the body of your business plan. You must convey an in-depth understanding of your market, the existing sales channels, the competing technologies, price points and every other operational matter - and what strategies you will employ to overcome challenges, maximize revenues and create company value.

Finally, you need to construct you financial forecast using assumptions grounded in the research and analyses you performed. The forecasts should be prepared five years into the future.

Some General Advice

There are some general rules we believe you should adhere to while preparing your business plan. These include:

• Don't let your enthusiasm and faith in your project dictate which information you seek and how you interpret the information you find.
  
  
• Don't make assumptions that are not supported by independent research findings, industry trends or actual events.
  
  
• Don't misrepresent or exaggerate claims you make with regard to product potential, price points, revenue expectations, market response or any other matter. Getting caught exaggerating will wipe out the credibility of the entire business plan.
  
  
• Don't use a "wide-net" approach when preparing your financial forecast. Some companies start with the total potential market - as in the number of humans on the face of the earth - and then start to narrow from there. It's okay to show a broader market by way of explaining how you arrived at your more focused market, but general numbers that "assume" a specific percentage of an overall (inflated) market are figures that will have zero credibility.

Business Plan Structure

Tudog's business plan structure was developed in-house as a result of our extensive experience in preparing business plans and our in-depth understanding of the needs of entrepreneurs and investors. There are many acceptable business plan structures. Here's what a Tudog business plan includes:

• Executive Summary - in general your executive summary should provide a concise overview of the critical elements of your business plan. These include your mission statement, an overview of the company and its market, your product and its benefits, your corporate objectives, the size and status of your market (the business opportunity), your competitors, your business strategy and sales and marketing tactics, your business model (revenue sources), an overview of your management team, and a review of your financial forecast and exit strategy.
  
  
• Investment Highlights - a review of the compelling reasons an investor should consider your company. These could include the market need, the benefits of your product, the potential of your technology, the trends within your sector, the solid nature of your strategies, and the experience and skills of your management team.
  
  
• Market Overview & Competition - the objective of this section is to illustrate an awareness and understanding of your market. You need to show where the market is in terms of size and trends, and where it is expected to go, by way of expert forecasts. Your competitive analysis should demonstrate your understanding of your competitors' products, their position within the market, their strategies and, when possible, their plans.
  
  
• Company Overview - this section provides formal information about your company, as well as a status report. Formal informal includes company location, number of employees, type of corporation, company history and company organizational diagram. The status report includes company objectives, milestones and achievements to date.
  
  
• Your Company - an entire section dedicated to your company's product, technology or services. The sub-sections detail what your company does, how it does it, and what its benefits are.
  
  
• Business Strategy - this section details your business model, target market, positioning, pricing models, revenue streams and partnering strategies.
  
  
• Marketing & Sales - this chapter should detail your marketing objectives, your marketing tactics, your sales channels, and your sales targets. Examples of marketing objectives include exposure goals, branding and partnering. Marketing tactics could be advertising, public relations and industry events. Sales channels might include strategic partners, direct sales or sales agencies (VARs, integrators, etc.). Sales targets are the companies you expect to focus your sales effort on.
  
  
• Management - the presentation of the CVs of all your senior management with the goal of expressing the quality of experience and business knowledge inherent in your team. If you have an Advisory Board or Board of Directors their biographical information should be included as well.
  
  
• Ownership - you should present an ownership chart that details the division of shares in your company, including what has been awarded to investors, what has been awarded to founders and management, and what has been set aside for employees.
  
  
• Risks - risks should be divided into technology related, human failure related, and market factor related risks. Even if you are certain your company is a sure thing, you need to present the risks openly and honestly to your potential investors. You also need to know and evaluate them for your own purposes. You can also include what the company is doing to minimize, neutralize or eliminate the risks.
  
  
• Financial Data - this section includes your financial requirements, use of proceeds, and five year financial forecast.
  
  
• Notes to Financial Forecast - usually included as an appendix, this section explains your assumptions for the financial forecast in detail so that people reviewing your numbers will be able to understand how you arrived at the figures being presented.

So that's how professionals research, plan and structure your business plan. On top of it they deliver expert writing skills. So, it isn't just smart to call a professional to do your business plan. It's also easier.