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10/31/06

BUSINESS PLAN FORMATION PART 2

After your ES, there are two different places you can take your plan. If you are pitching an idea, concept, or something intangible, then your next section should be your Marketing Plan. However, if you are pitching a product, clothing line, or something tangible, then your next section should be your Product Presentation. (NOTE: You can get creative with your section titles, but I caution you not to stray too far from the norm. For example, instead of “Marketing Plan,” you can title your section “Marketing Campaign,” “Customer Marketing,” etc...)

I will discuss the Marketing Plan first. The Marketing Plan is the section of your business plan that discusses how you are going to make the public aware of your idea/concept/product in order to accomplish your objective. Your objective can be whatever you want, as long as it pertains to the Marketing Plan. For example, if you are pitching a restaurant idea, your objective may be to achieve 100% occupancy every night with a 3.5 time turnover rate. Once you have defined your objective, you can then formulate a plan to accomplish that objective.

As you write the Marketing Plan section, be aware that financial figures are not needed for this section. The Marketing Plan is just discussion on what you plan to do to create sales, revenue, and money! For example, let’s say you are pitching a clothing line. Your idea may be “time-frame” orientated, meaning that you plan is broken down by dates. So, you might write something like:

This plan will be broken down into a three year effort to raise both local and national awareness of X clothing line. During the first year, X clothing line will be introduced to the public through BRAND Y store. At first, X clothing line will only be in 5 BRAND Y stores to test the public response. Throughout the year, approximately every two months, X clothing line will be introduced into 5 more BRAND Y stores. By the end of year one, X clothing line will be available for sale in 35 BRAND Y stores. During year two, X clothing line will continue its expansion. BRAND W and BRAND Z stores will be the next targets of X clothing line. However, because X clothing line will have already been introduced to the public, year two expansion will be far more aggressive. Instead of starting in only five stores, X clothing line will be introduced into 15 stores each of BRAND W and BRAND Z. 15 new stores will be added at the same rate of approximately 15 stores every two months for the rest of the year....

You get the idea. Make your plan easy to read and easy to follow, but make it creative and feasible enough to be attainable. For example, do not state that you are going to expand to different stores without having reached such an agreement with the stores you plan to expand in. Instead, you may want to start small with a Marketing Plan that incorporates the internet, direct marketing, and print media advertising. Remember, you do not have to worry about putting actual financial figures in this section, so be creative with you plan. However, also remember that the cost of marketing will be incorporated in your plan later on, so do not go crazy with you advertising/marketing ideas.

I will now discuss the Product Presentation section. For people who want to pitch an actual, tangible product, this section is necessary. Please note that a Marketing Plan is still necessary for you people that have a tangible product to pitch. The only difference is that the Product Presentation section is also needed in addition to the Marketing Plan. Getting back to the point, like I stated before, your ES should be something dramatic that captures the attention of the investor and therefore, little is said about your product. The Product Presentation section is where you get to lay it all out. Just as the title of this section suggests, this section is where you present your product to your investor. Writing styles vary, so I will not try to tell you how to write this section, but just make sure that this section includes:

1. What the product is. You would be very surprised how many times people describe their product without specifically stating what it is. Make sure you write, “This product is a _____.”;

2. The description of your product, including size, dimensions, weight, etc...(if applicable); and
3. Materials used in making your product. This does not mean that you state that you used a sewing machine to make your clothing line. This means that you say that your clothing is made of cotton, rayon, nylon, etc., and that you point out specific “quality points,” such as hand stitching or expensive fabrics.

At the end of this section, the investor should know what the product is and everything relevant about the product. Some people add pictures to this section. I feel that this is okay, but if I were an investor, I would much rather have an actual prototype in my hands to explore. Once again, this comes down to a matter of style, so I leave that decision up to you.


Look for more to come in the next installment when I discuss the Market Analysis section...

10/12/06

BUSINESS PLAN FORMATION PART 1


Many people in our community have asked me to talk about business plans. I decided that it was the next logical step and am proud to present the business plan series! Over the next couple of weeks I will discuss a different portion of a typical business plan. KEEP IN MIND, there are many different ways to organize a business plan and that sections have many different names. However, for the most part, each section in a business plan, regardless of name used, accomplishes a specific task. The importance of each section depends on the product/idea/situation you are pitching and to who you are pitching. I am only going to give you a general layout of a business plan. Could you use the layout I give you for a business plan? Absolutely, I have used this very format in some of my business plans. However, as I mentioned above, there are many formats. If you do not feel comfortable with my format, do some research and find a format you are comfortable with.

With all of this in mind, we begin with the first section of a business plan, the EXECUTIVE SUMMARY (hereafter “ES”). The ES is the first page, with the exception of the cover, that your potential investor will see. The ES is where you grab the investor’s attention. Think about an ES like this. The ES is the equivalent to the first paragraph in a novel. You have only a few sentences to impress the investor. DO SOMETHING STUNNING! The ES is the part of the plan that allows for the most creativity. My advice, GET CREATIVE!

Your ES should include your pitch. Do not write, “I am going to present you with X!” For example, in the business plan that my business partners and me wrote for our restaurant concept, our first paragraph read:

The world has never before experienced a restaurant of this nature. For too long have generations fantasized about this taboo subject; for too long has it sit idly by and watched; and for too long has it waited to come to fruition. The mood is about to change. A new concept will revolutionize this industry and break down the barriers of old. The threshold of tradition is about to be challenged. Dining has a new experience, and that experience is (our restaurant name.)”

Do you see what is going on here? This may grab some people’s attention and it may not others, but no matter who you are, I know this paragraph instills, at least, a small amount of curiosity. In fact it instills just enough curiosity to read on. If this happens when investors read your ES, mission accomplished!

There is another component to your ES. Once you have grabbed the reader/investor’s attention, talk a little about your idea/product/situation. Tell the investor what “it” is. Do not go on for pages, but in a few CONCISE paragraphs, tell the investor about your idea/product/situation.

Lastly, an ES should also have a brief paragraph about your potential customer base and why your idea/product/situation will be successful with the customer base you have identified. Your ES should encompass your entire business plan in only a page or two. You have a pitch, information about the idea/product/situation, potential customers, and why the customers will buy your idea/product/situation. These are important aspects of an ES and are necessary to ensure that you potential investor does not become a lost opportunity.

Keep working on it and e-mail me if you have any questions: cashspeak@yahoo.com. Also, no quote today because I want to wait until the end of this series, but I will say that success only comes to those who want it. So ask yourself this question, “Do I want success?”

10/2/06

PITCHING THE PLAN

by Marco Angioni II

So you have your business plan, now what?! Who do you pitch it to? What do you pitch? How do you contact the people who you want to pitch your plan? Although these questions can be answered in order, (investors; my business plan; and talk to them) preparation, planning, and persistence are key.

Your plan is complete, but is it really? I suggest you review and revise your plan at least one more time before the pitch. You must make sure that EVERYTHING is correct. Think about it from an investor’s point of view. Would you give your money to somebody who promises to take care of every detail, but at the same time misspells or misstates vital information in his/her business plan? Also, I strongly suggest you do a practice pitch. Pitch your plan to somebody you trust, but not to somebody that is going to give you a “sugar-coated” reaction. For example, you business family members, family members, and friends are out! Somebody that would be valuable to your cause could be a professor/teacher of yours, an “expert,” and/or a neutral third party that will give you honest advice.

Make sure you bring the whole package. When Chris Clifford (one of my business family members, and the author of the commercial real estate piece on this website) and I pitched our restaurant idea to the vice president of restaurant development for Station Casinos, we did not bring the whole package; therefore, even though he LOVED the idea, he could not accept it because pieces were missing. We had our business plan, but we did not create our management team or any visuals as to the restaurant layout. These overlooked items prevented a great idea from becoming a reality. Do not let this happen to you. If you’re pitching a restaurant concept, bring your plan, visuals, management team, and income source, if applicable. Always bring MORE to the table than the investor could possibly ask for. If he/she asks for a sample, show him/her three. If he/she asks for your management team’s credentials, show him/her your management team’s credentials, your credentials, and your operator’s credentials. The goal is to make the investor realize that because of your organization, drive, ambition, ideas, and credentials, investing in your idea is minimum risk and maximum return!

Although you may have compiled all this information, do not throw everything at your potential investor at once. Break your plan into parts. Give the potential investor each part as you pitch it. Do not overwhelm him/her. Remember, you are trying to get this person to give you his/her hard earned money, and their comfort in your idea and ability is key!

Last, but most importantly, how do you find investors to pitch your idea? The answer is simple, go out and look! Chris and I got our meeting by calling that guy’s secretary every day for two weeks. He finally said, “You have fifteen minutes to pitch your idea.” The meeting lasted one and a half hours. Be persistent. Find your investors. Ask yourself, “Who do I want to invest in this project?” Once you discover this answer, track him/her/it down and get your meeting. Use all your connections! Friends, family, business partners, business family members, colleagues, fellow students, teachers, professors, clergy members, and/or banks are all possible investors or can lead you to other possible investors. Remember, do NOT get discouraged and keep plugging away! You will find an investor, and once you do, the rest is up to you. If you believe in your idea and put sincere hard work into it, you will find investors!

Believe me when I say that although landing the deal feels great, there is no bigger adrenaline rush than the pitch! As Donald Trump once said, “Money was never a big motivation for me, except as a way to keep score. The real excitement is playing the game.”

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