The purpose of this business plan is to raise and examine the allocation of $225,000 for a Bitcoin and cryptocurrency trading business located in Philadelphia. Bitcoin Trader, Inc. (“the Company”) will be actively engaged in the buying and selling of digital currency (both long term and short term strategies). The Company will also use a number of computer nodes in order to generate ancillary streams of revenue from mining digital and cryptocurrencies. The business was founded by John Smith. Revenue generating operations will commence in 2020.
1.1 Operations
As stated above, the principal revenue stream will come from the ongoing acquisition of digital currencies for capital appreciation purposes. The business will also use trading strategies that provide short-term yet consistent profits on a day-to-day basis. Regarding the pricing of crypto currencies and digital tokens, the founder sees a substantial opportunity to generate ongoing profits by examining the market and making appropriate investments on both a short-term and long-term basis.
On a secondary basis, the Company will be actively engaged in the mining of digital currencies. This will consist of acquiring large inventories of computers – equipped with high-powered processing systems (CPUs and GPUs) – that will allow the business to generate income by processing transactions on block chain ledgers. Unlike the trading business, the Company will be able to generate ongoing profits by providing this service. A substantial portion of the capital sought in this business plan will be used for the acquisition of computers that can allow the business to cost-effectively engage in the mining of digital currencies.
1.2 Financing
At this time, the founder is seeking $225,00- in capital in order to commence revenue-generating operations. The terms of this investment are to be determined during negotiation. The funds will be used for the following:
Capital for treating it coin and related digital currencies
Acquisition of computer equipment for digital currency mining
General working capital
Office development
The next section of the business plan will further discuss the usage of investment funds.
1.3 The Future
As time progresses, the Company will make continued and sustained investments into the businesses operating infrastructure. Given that the business will operate within exchanges of digital currencies, there is no need to create a marketing campaign and less the business decides to accept funding from third-party investors that want to use the company for digital currency trading.
2.0 The Financing
2.1 Use of Funds
Below is a breakdown of how the $225,000 of capital will be used:
Use of Funds Table and Chart
2.2 Investor Equity
This will be discussed during negotiations
2.3 Management Equity
Mr. Smith anticipates that he will retain 50% ownership of the business once the capital in this business plan is secured
2.4 Exit Strategies
In the event that management finds it financially prudent to do so, a qualified business broker or mergers and acquisitions focused investment bank will be hired in order to manage the sale of the business to a third-party. Although this is a nascent industry, be price-to-earnings multiple for a digital currency trading firm typically ranges around 2 to 3 times the previous year’s earnings.
3.0 Operations
3.1 Buying and Selling of Digital Currencies
The primary focus of the Company’s operations will be on the acquisition of popular digital and cryptocurrencies that will allow the business to profit once the price of these instruments increases. The business will use both long-term and short-term strategies in order to provide daily profits, which will be smaller, as well as larger long-term gains.
Given the prevalence of digital currencies, the founder sees a
substantial opportunity to invest among a number of different types of digital
currency asset classes with the intent of producing capital appreciation. The
business may also use options and short selling techniques to profit from
declines in these currencies.
Digital currencies traded by the business will include BitCoin, LiteCoin, Ethereum, Ripple, and Libra.
3.2 Digital and Cryptocurrency Mining
A strong secondary aspect of the company’s operations, as discussed in the executive summary, will come from the ongoing mining of digital currencies. This is an important revenue stream for the business given that it will provide highly predictable streams of daily income. The business will spend approximately $2.5 million (leased) on computer equipment that can process block chain ledger transactions. For providing the service, the business will receive digital currency that can then be converted into traditional US dollars. The revenues generated from this aspect of operations will generally finance the entire operation the business.
4.0 Market Analysis
4.1 Economic Analysis
Currently, the worldwide economy is going through a continued growth spurt. Although unemployment rates have declined sharply and asset prices have increased substantially – worldwide interest rates remain relatively low. It should be noted that the revenues generated by the Company will be relatively immune from negative changes in the economy. This is due to the fact that the business will be engaged in open market transactions, and as such – the business will be able to remain profitable and cash flow positive at all times.
4.2 Industry Analysis
Although this is a nascent industry, there are approximately 200,000 people and companies that are actively engaged in the trading and mining of digital currencies and cryptocurrencies. Each year, these firms generate approximately $8 billion in fees as it relates to these operations.
It should be noted that there are
now a number of major investment banks that have developed trading desks as
well as options exchanges specific for a number of different types of digital and
cryptocurrencies. This trend is expected to continue in perpetuity as the
prevalence of digital currencies as a form of payment becomes more prevalent.
4.3 Competition
Given that there are now more than 200,000 firms
actively engaged in the trading and sale of crypto currencies, it is very
difficult to determine the competitors that the business will face moving
forward. The company will need to engage in a number of best practices in order
to ensure that it remains on the forefront of technology related to digital currency
trading and mining. The Company will reinvest a substantial portion of its
after-tax profits in order to ensure that it’s infrastructure is
state-of-the-art.
5.0 Marketing
Plan
As the business will be engaged in open market
transactions, the Company will not need to maintain a formal marketing plan or
advertise its operations to the general public. However, as the company
develops a strong track record for engaging in digital currency trading – the Founder
may seek to acquire capital from third-party investors that can be managed by
the company.
This would require a substantial marketing campaign that specifically targets qualified and accredited investors that are able to properly place funds with the Company for this purpose. In this event, Bitcoin Trader, Inc. will hire a qualified advertising firm as well as a law firm to properly develop advertisements that can be shown to prospective investors.
6.0 Financial Plan
6.1 Financial Assumptions The Company will acquire $5 million in capital in order to engage in the activities outlined in this business plan
The Company will have a annual revenue growth rate of 20% per year in each of the next three years
Bitcoin Trader, Inc. will settle most short-term payables on a monthly basis
6.2 Financial Highlights
Profitability in a positive cash flow in each year
Assets that are highly liquid in the digital currency exchange market
6.3 Sensitivity Analysis
The Company’s revenues are not sensitive to changes in the economy. The business will employ tactics will that will allow the business to generate profits regardless of whether the prices of digital currencies are increasing or decreasing. Additionally, the business will maintain a very low cost infrastructure that will ensure that any short-term losses will not impact the company’s ability to operate on a day-to-day basis
There are five primary sections to a well-written marketing
plan. First, is the introduction. In this section, an overview of all the
different marketing strategies that will be used to create visibility for a
brand or its products and services should be briefly outlined. This includes
discussing specific online marketing strategies, print advertising strategies,
and any type of public relations campaign that will be undertaken from the
onset of operations. This section of the marketing plan should be about one
page in length given that it will provide a top-level view of the overall
operations of the marketing department while providing a guide for the rest of
the marketing plan. Including graphics and charts, most marketing plans run
anywhere from 18 to 24 pages. Approximately half of the work of the marketing
plan is specific for the costs associated with each type of advertising,
marketing, or public relations campaign that will be carried out.
Specific parts of the introduction can be done
in a bullet point fashion to provide a brief overview of the rest of the
document. Examples of this include briefly discussing local print
advertisements, sponsorship of local sports teams, any type of regional
advertising will be completed, and what online marketing campaigns will be engaged.
The next chapter of your marketing plan deals
specifically with online marketing strategies. There are many different ways
that you can expand and create visibility through usage of the Internet as well
as social media. Of all the different sections within the marketing plan, this
has become the most important. Nearly everyone has a mobile phone that can be
used to find local businesses, read reviews about businesses, and receive
contact information for any specific organization. As such, a bulk of the text
of your marketing plan should be specific for online marketing strategies.
An example of this would be discussing things
such as use of social media in order to create a greater degree of brand
awareness. This includes maintaining profiles on popular social platforms
including FaceBook, Twitter, Instagram, and YouTube. Special important should
be made as a release discussing how much money is going to be spent on a
monthly basis for online marketing activities. This includes carefully crafting
a budget that showcases what percentage of overall marketing expenditures will
be geared towards paid social media promotion, search engine optimization, as
well as pay per click marketing.
Generally, the online marketing strategy chapter
is broken down into two sections – social media and search engine marketing.
Again, as it relates to social media – this should focus substantially on usage
of FaceBook, Twitter, and YouTube as these are the most popular social media
platforms in the world.
By developing videos as well as well-crafted social media posts, a business can receive a substantial amount of traffic to their website via viral marketing messages. If you are unfamiliar with this type of marketing than it may be in your best interest to hire a social media consultant that can aggressively handle this aspect of your marketing operations. Although social media consulting firms are expensive, a substantial amount of time can be saved by outsourcing this work to a company note knows exactly what they’re doing.
The same applies for search engine optimization strategies given that this is a complex method of marketing that requires time, effort, and patience. Many search engine optimization firms estimate that it takes anywhere from three months to six months for this type of marketing campaign to become effective. As it relates to the cost of these expenditures, most SCO firms charge anywhere from $500 all the way up to $10,000 per month to carry out a moderate to large scale search engine marketing campaign. A substantial amount of this work is done through content marketing.
The third chapter of the marketing plan deals with your demographics. This should include discussing the types of customers that your targeting, their age, annual household income, and specific aspects of their life that will make your product or service stand out to them. A thorough demographic analysis should be developed as almost all marketing campaigns center around targeting this very specific type of customer. Many marketing firms on a regional level can assist you with developing appropriate demographic analysis given the product or service that you offered to the general public.
The fourth chapter of your marketing plan to deal with your print advertising strategies. It should be noted that many companies have decided to either eliminate or heavily scale back their print related marketing given that most businesses are now found online. However, for some businesses – like restaurants – it is still important to distribute flyers and coupons to these customers so that they will come to the location. Most print advertising that is distributed is specific for retailers as well as food /beverage businesses there trying to drive traffic specifically to their locations.
The fifth chapter of the marketing plan is specific for the differentiating factors that are taken into account regarding products and services offered. This analysis should focus heavily on the benefits of using your products or services, and how the business is differentiated from other competitors in the target market. Usually, this chapter runs about one to two pages.
The final section of the marketing plan deal specifically with the anticipated return on investment for all of the different types of marketing and advertising that will be undertaken by the business. This includes having a number of tables that showcase the anticipated revenues of the company as a function of how much money you spent on marketing activities. Below are images of how these charts look and how these calculations are made:
A complete step-by-step guide (with pictures and free downloadable business plan template) that guides you through the entire business planning process.
For many entrepreneurs, writing a business plan can be an
extremely daunting task. Many people are intimidated by the amount of content
that needs to go into the business plan, and they are often unsure of how to
properly write one. In this guide, we will down each of the steps that are
necessary in order to complete a comprehensive business plan.
First, our sales pitch. If you are having difficulties developing a business plan on your own, our website provides a number of templates that you can use to assist you in this process. Each plan that is showcased on this website is specific to its title. The package includes a word document with a completed business plan that you can alter or modify to your needs. Additionally, each package includes a number of other support materials including Excel files that will assist you in developing the financial portion of your business plan.
Please download both files. Also, please note that the purchased version is far more comprehensive. We have 550 different business plan templates available.
On the quick side note, if you are truly struggling with developing a business plan then there are many professionals that can assist you without the process. Over the past 14 years, I have written more than 4,000 business plans on a domestic and international basis. At this point, writing a business plan is basically bodily function. Many people do feel that it is sort of cheating to hire someone to develop a business plan on your behalf. However, and although I may be biased here, this is simply not the case. Many entrepreneurs have a perfect vision of how they want to develop their business and simply struggle with putting down their concept onto paper in a presentable format. My firm specializes in developing comprehensive documents that are specific for capital raising among investors as well as financial institutions. We take our clients vision and simply transform into a beautiful presentation that any person can read and understand. As such, if you find yourself continuing to struggle with developing a document then it may be in your best interest to hire a third party to help you.
Now onto the guide. First, let’s talk about how a good business plan is written. When we develop business plans, we first produce the market research for the document. As this serves as the foundation for a good business plan, it is important to do this that first. Many people try to start the work by writing out their executive summary. However, I have found that it is best to wait until the very end to write the executive summary as a well written executive summary acts as a guide for the rest of the business plan.
Completing the Market Research
There are a number of online resources that you can use when developing your market research. First, let’s look at the important sections that need to be included in this part of the business plan. The first section is generally an overview of the economy as a whole and how a negative change in the economy can impact your business operations. Specific points that should be discussed in a one to two paragraph section including the current unemployment rate, current interest rate environment, prices of assets among all classes, as well as of where the economy is heading. At the time of this writing, October 2019, unemployment rates have remained very low while interest rates have remained low as well despite substantial increases in asset prices. The trade war between China and the United States may impact the economic climate moving forward. Tariffs have caused the prices of many common goods to increase substantially as a majority of consumable products within the United States are manufactured in China and other overseas markets. Additionally, other issues pertaining to currency valuations can impact the economy moving forward. This is a strong example of specific things that should be discussed in the economic section of your market research.
The next section of most business plans deal with the industry analysis. This includes taking a look at the industry or industries in which you are going to be operating, the number of people that are employed by the industry, annual revenues generated from all businesses included within the industry, as well as any market trends. For most industries, they are highly established. For instance, an industry like the food and beverage service is not going to have very many changes in the way that they conduct business moving forward. Restaurants and other eateries have been around for hundreds of years, and they typically have growth rates that are in lockstep with the economy as a whole. However, if you are in a business such as financial technology – then you may need to conduct a much more in-depth analysis regarding trends within this industry. This would include discussing major competitors, any pieces of legislation or regulation that may impact your business, and other facets of operation that are going to need to be addressed on an ongoing basis.
Third, in this section it is also important to outline the average customer profile or user profile of your services or buyer of your products. This includes examining annual median household income, age, gender, as well as any specific types of character traits that are specific to the type of product or service that you are offering. In this section, many people also outline the estimated number of people within the target market that would be potential buyers. This is extremely important especially for local or regional businesses as you want to ensure that you’re going to have enough people within your market to support an economically feasible business. For instance, returning to our discussion regarding a restaurant, you’re going to want to look at population size and population density as compared to the number of other restaurants within your target market. This will ensure that in any given night there are a number of people that are willing to come to your restaurant so that it operates near 100% capacity. For other businesses, such as online businesses, you may want to take a look at the number of people within a specific country or on a worldwide basis that are potential users of your services.
Fourth, in this section we typically discuss the competitive issues that a business will face as it progresses through its launch as well as ongoing expansion. For local and regional businesses, conducting a competitive analysis is relatively easy given that you’re familiar with the area and can simply find what competitors are offering products or services that are similar to yours. An examination of competitors should include their estimated annual revenues, number of employees, and how long they have been in business. A more subjective overview of a competitor includes the strength of their brand name, how long they’ve been in business, and their market reach. For larger scale businesses, such as online businesses, it is slightly more difficult to carry out a competitive analysis given that you’re going to have to find companies that operate throughout your entire country or on a worldwide basis. Conducting this type of market research is little more of an involved process but can be easily achieved through use of search engines. When carrying out these types of operations you should use specific keywords and phrases that are specific to the products and services that you’ll be selling. This will allow you to see the more prominent competitors within your field.
One of the ways that you can make your market research stand out is by developing a number of charts and graphs that are specific to your industries. Below are some links to companies that you can use to acquire graphics specific for the industries that you operate within:
After the market analysis is done, it is time to develop the financial plan. Most business plans have a three-year to five-year pro forma financial model included. Generally speaking, it is very difficult to estimate anything beyond a three-year period. A financial plan consists primarily of three parts: a profit and loss statement, cash analysis, and balance sheet. It is also important to include other metrics such as the breakeven analysis as well as important business ratios that are applicable to your operations.
As it relates the profit and loss statement, this table showcases your revenues, cost of goods sold, your operating expenses, as well as your pre-tax profit. The profit and loss statement showcases your estimated taxes as well as any interest expense that you may incur. Below is an image of a standard profit and loss statement:
Profit and Loss Statement
Profit and Loss Graph
Relating to the profit and loss statement is the cash flow analysis. Here, in overview of the cash coming in and cash going out is showcased. Although this may seem very similar to the profit and loss statement, it is actually very different. The top line of the cash analysis showcases the net profit of the business. The net profit is the income that is generated after all expenses including taxes and interest are paid. The cash flow analysis showcases any equity investment that has and made into the business, any increase in borrowings, accounts payable, accounts receivable, as well as any asset purchases that are made and any dividends that are distributed. Below is an image of a standard cash flow analysis:
Cash Flow Analysis
Cash Flow Analysis Bar Graph
When developing a financial plan, this is where most people start to have some issues. Most people commonly understand the concept of a profit and loss statement as it is simply a measure of income generated minus all expenses. With a cash flow analysis, certain metrics and deductions are made that do not impact the profit and loss statement. One of the key things to note as well is that if you are taking on a business loan to develop your business then the interest is deducted from the profit and loss statement while the repayment of principal is deducted from the cash flow analysis.
Once the cash flow is completed then it is time to finalize the balance sheet. This is a measure of all assets owned by the business minus all liabilities. Common assets that are acquired by businesses include furniture, fixtures, and equipment, the cash that is held in a bank account, as well as any inventories that are carried. A balance sheet looks like this:
Balance Sheet
As it relates to liabilities, this includes any payables that are owed to third parties, tax liabilities, as well as any outstanding business loans or lines of credit that have been taken out in order to launch or expand the business. The value of the company is calculated by subtracting the total value of assets minus the total value of liabilities. It should be noted that there are certain instances where you may have negative equity. However, this is done more of a managerial standpoint basis. If you are having certain issues developing your balance sheet or if you are an existing business then may want to consult with a certified public accountant that can assist you with developing this part of your business plan.
On a quick side note, your certified public accountant will be an invaluable resource not only for managing your tax issues and accounting issues, but also for business advisory perspective. They can assist you greatly with developing your business plan while providing you with insightful advice about the best way to expand your business or organization. Most CPAs are very affordable for most small business owners.
Once the profit and loss statement, cash analysis, and balance are completed then it is time to carry out some other calculations. First, you’re going to want to take a look at your breakeven analysis. This segment of your financial plan will showcase how much revenue you need to generate on a monthly or yearly basis in order to reach breakeven. This is a very important metric that most business owners use in order to ensure that they can reach profitability quickly. This calculation is completed by taking a look at your total fixed operating expenses and dividing by the amount of gross profit that needs to be produced on a monthly or yearly basis. A sample breakeven analysis is shown below:
Breakeven Analysis
A common metrics table is usually included within the financial planning part of the business plan document. Key metrics that are examined in this table usually include sales growth, assets to liabilities, assets to equity, as well as certain metrics regarding liabilities to amount of cash on hand. Some of these metrics are a little bit more theoretical in nature given that certain circumstances do not occur in the actual business world. However, many of these metrics showcase the overall financial health of the business. Many lenders as well as many investors frequently want to see these metrics charted within a business plan.
Business Ratios Chart
Products, Services, and Operations
In this section analysis, it is time to showcase the products and services that will be offering to your customers or clients. This is the section of the business plan that can be a little bit more sales focused as a relates to connecting with your investor or funding source. Generally speaking, a more scientific and clinical approach is taken to writing the rest of the business plan to showcase the feasibility and economic viability of your planned business. In this section, however, you can thoroughly discuss why you are offering an outstanding product or service that will be in demand among a number of consumers or clients. In most business plans, this section of the business plan ranges anywhere from one to four pages. If you are offering a number of products or have developed a proprietary product then you can also include images in this section of the document.
One of the other things that is frequently discussed in this
section of the document as well is the overall operations of the business. This
includes discussing matters such as customer service, hours of operation,
layout of any retail facility, and other pertinent information as it relates to
properly providing the service or selling your product to the general public.
Another point that is discussed in the products
and services section is the pricing that is associated with your product line.
It should be noted that if you offer a number of products, such as hundreds of
products, it is in your best interest to reference a product catalog that can
be seen separately from the business plan. One of the common mistakes that I
see when I’m reviewing business plans that people have written on their own is
that they list every single product that they offer in this section of the
business plan. In order to keep the business plan as short as possible, a
product catalog can be included as a separate document so that a funding source
can review it should they choose to do so.
The
Financing
In this section of the business plan, in overview of the capital you are seeking to raise is discussed. Most importantly, a table should be created that allows you to show the funding source to see exactly how these funds are to be used. If you are purchasing substantial pieces of tangible assets then you may want to list them all within the section, but keep in mind that brevity is important. Below is a sample table that showcases what a use of funds chart generally looks like:
Use of Funds Table and Chart
Other important aspects of this section of the business plan include discussing the equity that we provided to a potential investor should they place money with your company. Additionally, the current ownership structure the business is discussed in the section as well. Finally, this section generally ends with an overview of the exit strategies that will be associated with your business.
In nearly all circumstances, as it relates to exit strategies, a business is sold, in whole, to a third-party. While many people discuss the usage of an initial public offering, the fact of the matter is that very few companies actually go public. In fact, there are only tens of thousands of business is in the United States are publicly traded. The remaining 100 million businesses are privately owned and operated, and are eventually sold to third parties for substantial earnings premium. One of the key things that should be discussed with in your exit strategy is the anticipated price to earnings multiple that similar businesses in your industry self or on an ongoing basis. This will assist the funding source, especially an investor, with an understanding of how much the business could potentially be worth by the 3rd to 5th year of operation. In many other instances, you can also include a pro forma valuation table that showcases the potential valuation based on profitability.
The Overview of the Organization
In this section the business plan, general information regarding launch dates, mission statements, mission statements, and organizational values are showcased. This section of the business plan is usually placed in the middle of the document. In business plans that I write professionally for people, I put this as the fourth section of the business plan.
One of the key components of this section of the business plan is the development of a proper mission statement. For many smaller businesses, this can be less of a priority as are simply trying to convey that you are trying to provide a great product or service to the general public, while developing a profitable enterprise. For larger companies, especially those with proprietary technology or a proprietary operating methodology, this is a little bit trickier as you want to clearly state exactly what you’re organization is looking to achieve on a very large scale level. This is something it takes a little bit of time to develop, and you can actually keep this part of the business plan open ended as you complete the rest of the work. Many people often take one month or two to develop the proper mission statement. It should be noted that this is a relatively small aspect of the overall business plan, and most financial institutions – especially for smaller businesses – do not place much weight on a properly developed mission statement.
The Marketing Plan
Of all the sections of developing a business plan that I enjoy writing, the marketing plan is my favorite. This is primarily due to the fact that you can outline exactly how you want to position your product or service and business to the general public. In this section, is important to start with a bullet outline of specific objectives that you’re going to look to achieve on a yearly basis. This includes discussing how to maintain a major presence on social media, carrying out comprehensive print campaigns, as well as developing a loyal customer base that will refer customers or clients to your business on an ongoing basis.
One of the things that I often include in the section of the business plan is a breakdown of all revenues generated by the business by product category. Below is an image of what this table looks like:
Revenue Center Chart
As you can see, in this example I show that three different products and two different services are being provided to the general public. This is an important table as well as an important part of the marketing plan as it shows exactly where your revenue centers and profits are coming from on a yearly basis. This is something that can be thoroughly discussed within the marketing plan as it relates to pushing specific services to your potential customer base.
An overview of the yearly sales, in word format, is often discussed as well in this section. Primarily, in overview of first-year sales and second-year sales are thoroughly discussed while third year to fifth year sales are mentioned briefly to showcase the operations of the business once it is fully established.
The marketing strategies that you’re going to use to promote your business need to be thoroughly discussed within the section of the business plan. Generally, this section should run one to two pages. This includes, again, discussing all the ways in which you will promote your business. One of the interesting things about writing a marketing plan these days is that a heavy focus must be placed on online marketing activities. This includes the use of a proprietary website as well as maintaining a presence on popular social media platforms such as FaceBook, Twitter, and Instagram. Many marketing plans also include a discussion regarding usage of platforms like YouTube to develop video commercials and presentations that will showcase products and services to the general public. One of the interesting things about online marketing is that many of these platforms are completely integrated with one another. If you develop a video presentation for your business you can seamlessly share it on other social media platforms once it has been uploaded to YouTube. These are all topics that should be very thoroughly discussed within your business plan.
For local and regional businesses, special importance remade in regards to showcasing a traditional print marketing campaign, distribution of mailed flyers and brochures, as well as establishing relationships with other organizations in your target market. Many small business owners find that they are able to generate a substantial amount of business by becoming members of their local chambers of commerce as well as joining a number of other small business organizations. For instance, when we develop a business plan specific for a real estate brokerage we focus heavily on that individual and business becoming enrolled in his many organizations as possible in order to develop a referral and business network.
The Personnel Summary
In this section of the business plan, we outline of the organizational structure is provided. Below is an image of a simple organizational structure specific for a delivery business:
Organizational Chart
Additionally, this section of the analysis also includes a chart showcasing the different types of employees will be hired, their pay, and headcount of the business. A sample chart showcasing this looks as follows:
Personnel Summary Chart
One of the other common things that is put into this section business plan is the biography of the founder. This includes discussing all relevant biographical information, work experience, and educational credentials. This can be kept somewhat short and it should not exceed more than three to four paragraphs. Generally, we write a biography for the owner and then reference the fact that a resume or curriculum vitae is available upon request or is it included as part of the overall business plan package. SWOT Analysis
This is usually one of the appendices that we include in each of our business plans. A well-developed SWOT analysis focuses on the strengths, weaknesses, opportunities, and threats that are going to be faced by the business on ongoing basis. Generally, we do this in a bullet point fashion and it should not be more than one page. Critical Risks and Issues Section
As any entrepreneur knows, nothing ever goes
according to plan. As such, it is important that a page that is specific to the
issues that a business may face is included as well. This is of tremendous
value to any potential reader – including private investors and financial
institutions – as it will show that you have properly prepared for major issues
that may occur as you progress are your business operations. Generally, we
break this down into five sections.
The development risk paragraph focuses on issues
that could occur during the course of start up. The primary development risk
for most startup companies is their ability to acquire the capital that is
being sought in the business plan, while concurrently launching
revenue-generating operations.
The financing risk paragraph focuses heavily on
the usage of funds, and what would happen in the event that the business does
not work out as planned. For instance, an example of discussing the financing
risk for restaurant would be to focus on the fact that a substantial amount of
furniture, fixtures, and equipment as well as other tangible assets are going
to be purchased with any debt capital or equity capital from a funding source.
The high margins that are generated from food and beverage sales generally
offset ongoing risks relating to this type of financing. In the event that a
business is liquidated, the tangible assets can be used to pay back any funding
source.
The marketing risk paragraph is followed after
the financing risk paragraph. This discusses the marketing strategies that will
be used in order to promote interest in the business and its products and
services. It should be noted that many marketing strategies are relatively
expenses, and they can often not produce the revenue results that are
anticipated in a business planning document.
Valuation risk is followed by the marketing risk
section. This discusses the potential returns on investment for an investor
should the business not produce as much profit as anticipated in the financial
plan. This can be done on a bulleted point basis.
Finally, exit risk is discussed. For many
businesses, it takes anywhere from 1 to 2 years to properly prepare and sell a
business to a third-party. As such, issues pertaining to liquidity as well as
how long it would take to properly sell the business for an appropriate price
to earnings multiple should be discussed in this paragraph.
Although this is a lot of content, this can all
be included on one page.
Reference
Sources
In this section of the analysis you should include a list of all reference sources ever used in regards the business plan.
Executive Summary
This now takes us to the executive summary. Of all the sections of the business plan, this one is the most important sections is it is designed to capture a reader’s attention immediately. There are a number of different ways that you can go about writing your executive summary, but we have developed a streamlined approach that allows the executive summary to state exactly what you’re looking to achieve all acting as a guide for the rest of the business plan. A well-written executive summary should be about two pages in length.
First, your opening paragraph to discuss the type of industry they are operating within, the name of the business and where you’re located, and how much capital you’re looking to receive in order to launch or expand operations. The names of the founder and owners should also be included within this paragraph. One of the other things that we include is the anticipated start date or quarter of starting or expanding revenue-generating operations.
Second, a two paragraph overview of the products and services that you are selling should be included next. This includes any specific information regarding any proprietary technology or proprietary service that you will be offering to the general public.
Third, an overview of the management should be included as well. This is important if your business requires specialized expertise is required by the owner or any key member of the management team. You do not need to put a substantial amount of biographical information in this section edits it is covered in the personnel summary. References to varying aspects of the business plan should be included as well. For instance, if you reference your background in having a substantial amount of retail experience then you should direct readers to the section of the business plan that discusses your background by chapter name.
Fourth, a quick overview of the anticipated profit and loss statements over a three-year period should be included as well. A sample image of house this looks is shown below:
Profit and Loss Summary Chart
Finally, an overview of how you intend to expand the operations of the business should be included as well. This includes discussing substantial reinvestment into marketing infrastructures, developing new product lines, creating new service lines, expanding inventories, as well as the potential development of additional locations if this is applicable to your business.
Expanded Profit and Loss Statements and Cash Flow Analysis
In this section business plan, it is common to include a profit and loss statement and casual analysis that is showcase monthly for the first year of operation as well as quarterly for years two and three. These charts looks as follows:
Profit and Loss Year 1Profit and Loss Year 1 Cont.
Year 2 Profit and Loss Statement
Year 3 Profit and Loss Statement
Year 1 Cash Flow Analysis
Year 1 Cash Flow Analysis Continued
Year 2 Cash Flow Analysis
Year 3 Cash Flow Analysis
Preparing Your Business Plan For Distribution
The vast majority of business plans that are developed are transmitted electronically as either a word or PDF document. We strongly recommend that if you are distributing the business plan that you send as a PDF document as this is locked and cannot be edited by any third party. Additionally, if there is a substantial amount of sensitive material in your business plan then you can create a watermark that acts as a numbering system to parties that have received the document. This will ensure that any proprietary information or intellectual property cannot be shown to a third party. One of the common things that is also included in a business plan is a standard nondisclosure agreement. This can be included in the business plan right under the table of contents or it can be attach as a second document that must be signed by a third party before the business plan is distributed.
If you are planning to submit your document in paper format, then we strongly recommend that you take it to a printer that can put the business plan into a binder or nicely laminated folder. These companies typically charge a minimal fee for printing out a 30 to 50 page business plan and including them in a bound manner.
The Table of Contents
Most business plans follow a 7 to 9 chapter format. How you structure the business plan is completely up to you, but this is the common two types of formats that we use when developing a business plan. The seven chapter business plan our formatting is as follows:
Chapter 1 – Executive Summary
Chapter 2 – The Financing
Chapter 3 – Products, Services, and Operations Overview
Chapter 4 – Strategic and Market Analysis
Chapter 5 – Marketing Plan
Chapter 6 – Personnel Summary
Chapter 7 – Financial Plan
SWOT analysis
Critical Risks and Problems
Reference Sources
Expanded Profit and Loss and Cash Flow Analysis
In a full-scale nine chapter business plan, which include certain elements additional to a standard format a plan we use the following table of contents
Chapter 1 – Executive summary
Chapter 2 – The Financing
Chapter 3 – Products, Services, and Operational Overview
Chapter 4 – Overview of the Organization
Chapter 5 – Strategic and Market Analysis
Chapter 6 -Key Strategic Issues
Chapter 7 -Marketing Plan
Chapter 8 – Personnel Overview
Chapter 9 – Financial Plan
SWOT analysis
Critical risks and issues
Append reference sources
Expanded Profit and Loss and Cash Flow Analysis
Conclusion
Overall you can you can see that developing a business plan is a pretty in-depth and involved process. Generally speaking, it takes about two weeks to four weeks to develop a proper business plan. Professional writing services, like the ones that we offer on a customized basis typically take about a week to complete. One of the ways that you can greatly expedite this process is by acquiring a template that already has the necessary market research and financial model ready to be modified.
On this
website, again, we have 550 different business plans that are all specific to
their title. Each of these plans includes all the necessary industry research,
economic analysis, and Excel model that would be needed to complete a business
plan on your own. In areas that you need to determine on your own, we provide a
comprehensive guide on how to most effectively complete the sections of the
document.
In closing, thank you very much for taking the
time to read this article and we always encourage everyone who has any
questions to leave feedback in the comments below or you can email us directly
at info@bizfundingresource.com. You can also reach us during normal
business hours via the live chat.
Writing a business plan is a very difficult process for most people. This is primarily due to the fact that an individual entrepreneur always has a number of very good ideas in their head, but often has trouble putting together the documentation that clearly expresses their vision to a third party. Most importantly, many business plans are written specifically for raising capital. As such, entrepreneurs are looking to put their best foot forward as it relates to showcasing with their business intends on doing, how much capital they need, where the business will be over a five-year period, and other information relating to the day-to-day operations of the company.
One of the things that most people have the most trouble with is developing the financial model. It is no secret that forecasting with the potential revenues of a business can be can be excruciatingly difficult given that it is very much uncertain. Even for small businesses that are able to examine a retail space – the revenues and profits can difficult to estimate. In some cases, entrepreneurs have either been spot on were drastically off as it relates to their anticipated revenues. In most cases, it is very prudent and conservative to underestimate what the expected revenues will be while concurrently overestimating with the expenses. One of the common mistakes that many entrepreneurs make when developing a business plan is at the drastically undercut with their ongoing expenses. This is especially true as it relates to salary and ongoing operating costs.
It is important that an entrepreneur that is developing a business plan for a new venture understand with their personal month-to-month capital needs are as it relates to their living expenses. This needs to be heavily factored in into the business plan and the financial model so that an entrepreneur can focus on growing and developing the business rather than making their month-to-month salary needs. Generally, it is wise to seek an amount of capital that will allow the entrepreneur to develop the business over a 12 month to 18 month timeframe. It usually takes most businesses one year or more to reach profitability. As such, this needs to be factored in as it relates to the start up cost as well as the profit and loss statement.
One of the other more difficult challenges in developing a business plan for a new or expanding venture is sourcing the industry information. If you go on the Internet there are literally thousands of sources that focus on providing industry research, local market research, and related information to the general public. As such, it can be difficult to discern which information is credible and what is not. Most importantly, when sourcing information from a private research source this organization should have an extensive amount of usage as it relates to NAICS and SIC codes. The United States government maintains extensive databases of the amount of revenues that are generated for any given industry. As such, this can be an excellent place to start if an entrepreneur that is developing a business plan is stuck trying to source the industry research. One of the nice things about using these research sources that they are completely free and open to the general public. There are times when purchasing a private market research report is important given that the government simply maintains an overview of the number of people operating with any field as well as the amount of revenues that are generated on a yearly basis. More in-depth research regarding industry trends, market trends, and other relevant information can typically be sourced from a private company.
As it relates to the actual writing of the business plan this is something else that many entrepreneurs go with given that they are not good writers. In many instances they will turn to hiring a professional business plan writer in order to ensure that their vision is encapsulated in a document appropriately. This is always a smart move, and as the owner of this business we develop a number of business plans on the customized basis. This is primarily due to the fact that the entrepreneur were struggling with writing their business plan and then turn for professional advice. This website also has a number of templates that will give an entrepreneur a running head start as it relates to the development of their profit producing project.
While it may seem daunting, writing a business plan is not as difficult as it seems. Although it can usually take anywhere from 40 hours to 100 hours to produce a highly polished document – the effort is worth it given that it will provide the entrepreneur with a clear understanding of what they can expect in terms of revenues, profits, and as a guide for business over a three-year to five year period so that they can follow the plan exactly as needed.
Business plans are complex documents that usually have anywhere from seven chapters to nine chapters of information that are presented to a potential business partner, funding source, or a related entity that is going to be reviewing a business. This article is going to focus on the varying chapters of the business plan and certain points about how they should be developed so that the business can be clearly understood by the reader of the document.
First, every business plan starts with an executive summary. In this portion of the business plan and overview of how much money is looking to be raised or the nature of the business plan is provided. Beyond that there should also be a discussion regarding what products and services offered by the business, how much capital is being raised if any, a brief overview of the anticipated profit and loss statement of the business over a three year to five year period, and an overview of the management team. Usually, a well-written executive summary runs about two pages to three pages in length. This is the most important section of the business plan given that many readers will go through the section and depending on what they see will continue to go through the rest of the business plan. In fact, the way that most people read a business plan is that they first start with the executive summary, flip to the financial section, and then read through the rest of the document once they see the potential growth of the business. An executive summary should focus modestly on the products and services being offered unless this is a business that offers a highly unique and patented piece of technology or related product.
The second section of the business plan should discuss the amount of money that is being raised by an entrepreneur. Here, many business plan writing firms will insert a table that clearly showcases the usage of the funds being sought. This section of the analysis also provides preliminary terms as it relates to the amount of the business being sold in exchange for the capital, the management teams equity positions, who sits on the board of directors, and the potential exit strategies that can be used by the business. Most importantly, the exit strategies should be reasonable in length and should discuss with the potential value of the business would be over a three-year to five-year period. Some businesses will side to take a ten year approach to this, however – usually a five-year valuation overview is sufficient as it relates to varying exit strategies.
The third section of the business plan often encapsulates H the products and services that are being offered by the business. Usually, this section shouldn’t range anywhere from one page to three pages depending on the number and types of services being offered with the products being sold. For proprietary products this section can include images of prototypes and schematics for the actual production.
The fourth section of the business plan usually discusses the overview of the organization as it relates to its corporate structure. Common corporate structures that are used for these types of for profit making entities include limited liability companies, corporations, partnerships, sole proprietorships, limited liability partnerships, and related corporate entities in order to carry out business operations. As always, if an entrepreneur is determining what type of entity to use than it would be in their best interest to speak to a business attorney or a certified public accountant as to what types of corporate entities are appropriate given the backgrounds of the management team, investors, and the nature business operations. This section of the business plan often discusses the mission statement and vision statements of the business as well is well as any organizational values and objectives.
Fifth, this section should outline the industry research, economic overview, customer profile, and competitive issues that the business will face on a day-to-day basis. For many people, this is the most difficult part of the business plan to write as a number of reports and information must be sourced in order to complete the section. This is especially true as it reads relates to local and regional demographic profiles of individuals that are going to be the customers of the business. However, as it relates to industry research a substantial portion of this information can be found online through both private and publicly available information sources.
The sixth section of the business plan often focuses on the competitive advantages that the business will have over other market agents. This section usually lasts about one page and is usually in a bullet point format showcasing why people will use this service over other competitors in the industry. One of the things is also frequently included in this section is an overview of the ways of the business will grow over the first five years of operation.
The seventh section of the business plan discusses marketing. Here, organizational objectives as it relates to increasing the brand-name visibility of the business can be provided in-depth. A three page to four page overview of the different marketing strategies that will be used should be included as well and this should discuss print advertising, social media management, online sales operations, and the relationships of the business were developed with potential customers over a significant time frame. This is usually one of the easier sections of the business plan to write given that the owner typically has a number of ideas that allows the business to easily reach its potential customer base very quickly. In some cases, an entrepreneur that is developing a business plan will also have the section of the document overview the pricing for any products and services that are being sold.
The eighth section of the business plan should include a discussion regarding the personnel and employees of the business. Here, an organizational chart is provided to showcase the varying hierarchies of management within the organization. A table showcasing the employee headcount, payroll per employee, and total payroll expenses should be included here as well. In some cases, an entrepreneur will also provide extensive job titles and job descriptions within the section so that the reader understands exactly who is being employed and what their role will be within the organization or corporation.
The ninth section of the business plan is the financial model. As has been discussed at this website thoroughly, the financial model is usually the most difficult section of the business plan for most entrepreneurs to create given that pro forma financial models are forward-looking. This financial plan should include a three-year profit and loss statement, common size income statement, cash flow analysis, balance sheet, breakeven analysis, and business ratios page. General assumptions regarding the growth of the business as well as underlying information regarding federal tax, estate tax, and personnel taxes should be included within this section of the document as well.
Once the nine chapters are complete usually many business plan writers will include 3 to 4 appendices that showcase where the information for the business plan came from and other relevant statistics. Usually, the first appendix is the SWOT analysis. Here, there is a focus on the strengths, weaknesses, opportunities, and threats that are normally faced by any organization. This portion of the document is about 1 to 2 pages in length and is done in a bullet point format.
The second appendix is usually the critical risks and issues page. It is naïve to think that every business is going to run smoothly at all times. As such, many entrepreneurs take to developing this section of the business plan so that the reader understands that the individual comprehends that there will be ongoing issues and problems that must be dealt with on a day-to-day basis. In this section of the document there is also a risk scoring table that discusses any of the issues on a points based system so that these more important matters can be dealt with as a priority.
The third appendix usually focuses on the reference sources that were used in the business plan. This includes appropriate citations and other information that should be included.
The last appendix of the business plan is usually the expanded profit and loss and cash flow statements. Generally, most business plans provide for month-to-month profit and loss and cash flow analysis statements while the remaining years are done on a quarterly basis. For an entrepreneur or business person that is looking to raise capital this is imperative given that most financial institutions want to see a month-to-month and quarterly financial statements is a standard yearly profit and loss is showcased within the business plan.
Overall, a well written business plan will contain all of those elements in one way or another. Usually, if all these elements are included within a business plan appropriately the length of the document usually ranges anywhere from 35 pages to 45 pages. However, there may be times where it is appropriate to have a shorter business plan or longer business plan depending on need. The key is not to make it too short for any longer than it has to be.
A small business administration loan can aggressively assist a new entrepreneur or an established business owner with expanding or developing their operations. The SBA was founded to provide loans to smaller businesses given that many banks have in the past reluctantly shied away from providing large amounts of credit to small business owners. This is primarily due to the fact that small businesses do carry a significant amount of startup risk and operating risk. As such, the government created the small business administration in 1953 with the intent to provide guarantees to individual borrowers so that a bank would feel far more comfortable providing capital to them. Most financial institutions love SBA loans given that approximately 80% to 90% of the total amount of principal is guaranteed by the federal government. As such, banks are able to generate a extremely high return on their investment as it relates to the capital was at that is at risk. Generally, most SBA loans carry a premium of two to five points over the prime rate. If there is a tremendous amount of collateral involved in the loan rate is typically two points over prime. One of the most important things as it relates to obtaining an SBA loan is that a properly developed business plan is going to be required. In almost all instances, lending banks require that a three-year financial statement is provided. This financial statement needs to include a cop and loss statement, cash flow analysis, balance sheet, breakeven analysis, and business ratios page.
Small business administration also requires that a complete demographic and competitive analysis is submitted as part of the overall loan application. One of the important things as it relates to developing a SBA loan package is that the owner is going to need to not only develop a comprehensive business plan but is also going to provide comprehensive financial statements as it relates to total assets, total liabilities, income in each of the last two years, and the anticipated revenues and profits generated by the business during the three-year period. This is one of the things that many entrepreneurs struggled to develop given that it is very hard to determine what the anticipated revenues and profits of the business are going to be when it is done on a pro forma basis. One of the ways that this issue can be remedied is that a business plan writing firm can be hired to assist the owner with the developing the documentation that is going to be required by the bank.
SBA loans are going to continue to increase in popularity over the next 10 years given that more people have turned to entrepreneurship rather than working for another individual. The Congress and federal government have worked to ensure that these loans can be provided quickly and with. One of the things that is interesting that has been developed over the past 10 years is the SBA express program which allows for much more streamlined lending protocol for companies that are seeking $100,000 or less. If these types of financial instruments are completely appropriate for individuals such as freelancers, attorneys, people starting small retail locations, and service-based businesses that do not need a substantial number of assets to commence revenue-generating operations. A CPA can be consulted in order to have a good understanding of what loans may be appropriate for any specific financial situation.
Prior to submitting a package to the SBA lending bank, a CPA should review all documentation including prior tax returns to make sure that they are accurate. The SBA typically takes about 60 days to 90 days to render their decision as it relates to issuing a guarantee for the business. Once this guarantee is acquired and then the individual can take it to any number of SBA enrolled lending banks in order to obtain a business loan. These financial institutions may require additional documentation beyond what was requested by the small business administration. As such, it is important to have all of your financial matters in order so that if there are additional requests for information they can be fulfilled very quickly. Generally, from start to finish it takes about three months to four months to acquire a SBA loan for a new business or for expansion purposes. These financial instruments are also available for individuals who are purchasing existing businesses.
Banks and the small business administration love to lend to individuals that are looking to acquire an existing business given that the risks related to a startup are eliminated. In the event that an entrepreneur requires a company they’re going to required to submit tax returns as well as a business plan. Beyond these two documents, full tax returns for each of the last three years for the company that is being acquired needs to be provided as well. The owner of the business that is being sold should furnish either the entrepreneur or the business broker with all necessary documentation so that an SBA guarantee can be acquired quickly once all other documentation has been produced.
The small business administration has developed very good programs that actively assist entrepreneurs with launching new business operations. They will remain as one of the mainstay government departments that assists with entrepreneurship and the development of small business and employment within the United States. Although control of Congress and the presidency changes hands quite frequently – almost all politicians are committed to the continued advancement of small businesses given that they create jobs in local communities.
One of the frequent questions we get is whether or not an individual actually needs a business plan in order to start a new business. The short answer is no if the owner-operator is not seeking any capital from a third-party. Although there may be some handshake deals or a relative may provide a limited amount of startup capital for a new company without a formal business plan, any financial institution, professional investor, or other funding sources going to require a full scale business plan in order to render their lending or investment decision. One of the other things that should be noted is that it is very difficult to manage all the aspects of starting a new business keeping track of these matters in a person’s head. As such, even a very small business plan that is almost like a skeleton document can be very beneficial towards an entrepreneur that is looking to develop this business on a professional basis. One of the key elements to developing a business plan that is not geared towards capital raising is that it can be treated very much as a free-form roadmap as to what the entrepreneur will do in each month that the business is being launched. Most importantly, a well written business plan does feature a timeline of events that the entrepreneur will engage in order to boost the visibility of the business of providing a comprehensive amount of services and products to the general public.
One of the other benefits to having a business plan is that it can be continually modified and expanded as new things within the business occur. When an individual is starting a new business they are often going to run into situations, both good and bad, that need to be addressed that will impact the way that the business will operate moving forward. As such, many entrepreneurs take a look at a business plan is actually a living document that grows alongside the business. Many business plan writing firms will often take this view as well and will provide for the fact that the business is going to change shape as new money comes in, as new customers are acquired, and as economic circumstances change. One of the important things to focus on within a personal business plan as well is the fact that there will be recessions from time to time more the business environment will change and will require a significant amount of work on behalf of the entrepreneur.
As it relates to a small roadmap business plan there can be a section dedicated to what would happen if a regulation changes, if the economy does very well, if the economy does poorly, and other circumstances that are generally outside of the entrepreneur’s control. Good entrepreneurship is substantially about risk management and what to do when a risk becomes a reality. In a business plan that is going to only be developed specific for the entrepreneur, the management team, were key employees – in overview of how each risk can be handled and mitigated can be included and will be an invaluable source of the business over the life of its operation. This is something that is not often included in a formal business plan that is written specifically for funding source, but it can be great so that a very specific and detailed game plan can be enacted for each potential scenario that may occur. Of course, it is difficult to predict every single thing that can occur with the business but it does help to have in overview of what could be done in the event that there is a significant problem. This is especially true if the business is not generating as much revenue that will was anticipated in a formal pro forma financial statement.
One of the key issues that many people have when developing a business plan – whether it’s for a bank or just for the growth of the business – is that they often get distracted and will leave the document unfinished. It is difficult to write these documents and it can be kind of boring at times. One of the key things to know is that it really should just focus significantly on the current situation at hand and how to grow the business over a five-year period. Many people often take the entire vision of the company and put it directly within the document but this can lead to a lot of confusion and a scattered business planning document. As such, it is important that a laser sharp focus is applied when you are developing this type of documentation so that it is very clear not only to you but also to any reader as well as to the vision of the business, how certain matters are handled, and how the company will grow over a specified period of time.
This website has a significant amount of information as well as a number of different templates that can be used in conjunction with business planning activities. We thank you for taking the time to review our website and if you have any questions please feel free to contact us anytime via the contact us page.
The purpose of this business plan
is to raise and examine the allocation of $100,000 for the development of a
medical spa based in the greater Philadelphia
metropolitan area. Medical Spa, LLC will provide a host of skin treatments that
will be rendered by the owner, Dr. Peter Smith, as well as physician
assistants. Dr. Smith is a licensed dermatologist that will seek to provide
medical spa treatments with a focus on skincare. The business will generate
great substantial revenues not only from the direct patient payments, but also
from medical insurance when specific services are rendered.
The Financing
At this time, Dr. Smith is
seeking $100,000 of debt capital in order to launch the operations of the
medical spa. The terms of this loan are to be determined. However, this
business plan assumes that the business will receive a seven year loan carrying
a 7% interest rate. The funds will be used for the development of the company’s
location, medical equipment, and for working capital purposes.
The second section of the
business plan will further document the usage of debt funds. Dr. Smith will
contribute $25,000 towards the venture.
The Services
As stated above, the medical spa
will provide a number of laser focus treatments with a substantial interest in
skincare services. The business will also recognize revenues from the sale of
topical treatments their used in conjunction with the services. The company
will also provide laser hair removal in addition to other specific types of medical
spa services.
Management anticipates that each
visit will generate $300 to $600 for the business.
The third section the business
plan will further document the services rendered by the company.
Revenue Forecast
Management anticipates a very strong rate of growth upon the commencement of operations. Below is a chart showcasing the anticipated profits and revenues of the business during the first three years of operation:
Profit and Loss Statement
Expansion Plan
Dr. Smith will continually expand
the business not only by increasing marketing campaigns, but also by hiring
additional board-certified dermatologists and physicians assistants that can
render the services on-site. The company may establish additional locations
after the third year of operation.
2.0 The Financing
2.1 Use of Funds
The $100,000 sought in this
business plan will be used as follows:
$25,000 – Office Development
$50,000 – Medical Equipment
$10,000 – Initial Marketing
$40,000 – Working Capital
2.2 Management Equity
Dr. Peter Smith retains a 100%
interest in the business
2.3 Exit Strategies
In the event that Dr. Smith
wishes to retire or relocate, he will most likely transition the business to an
associate dermatologist or physician’s assistant that is able to operate the
medical spa on a day-to-day basis. Based on historical sales figures, medical
spas can have a sales price equal to one times revenue or approximately four
times the prior year’s earnings. Dr. Smith would hire a qualified business
broker to manage the transaction.
3.0 Medical Spa Services
As stated in the executive
summary, Dr. Smith will render a host of treatments to his patients. These medical
spa treatments include:
Laser skin treatments, prescriptions for topical
solutions to treat specific issues
Laser hair removal
Minor surgery on site
General wellness
Advisory services relating to anti-aging
Botox treatments
The company will receive substantial
revenues from these services directly from patients. Depending on the specific
service required, the company may be able to bill private insurance or publicly
funded health systems for specific procedures performed on-site. The company
will also receive a moderate amount of revenue from the sale of topical
solutions and related products for anti-aging.
4.0 Market and Industry Analysis
4.1 Economic Analysis
At this time, the economic
climate within the United
States is strong. Unemployment rates have
declined to historical lows, while acid prices have read risen substantially
among all major asset classes. Interest rates remain low despite substantial
improvements in the economy since the end of the economic recession. The last
10 years has seen substantial economic growth within the country.
In the event of an economic
recession, the medical spa will be able to remain profitable given the fact
that the high gross margins rendered from services will cover all underlying
expenses. Additionally, Mr. Smith is a licensed dermatologist that can render
medical services on-site and bill them to insurance entities. As such, drastic
sways in the economy may have an impact on top line revenue, but again – the
business will be able to remain profitable at all times.
4.2 Industry Analysis
Within the United States, or
approximately 4000 businesses that operate in a medical spa capacity with
either a physician, nurse practitioner, or physician’s assistant who is
appropriately licensed providing the services to the general public. Each year
these businesses generate about $13 billion revenue, and the industry employs
about 50,000 people. This is a fast-growing industry given that many people
from the baby boomer population are seeking medical treatments in regards to
anti-aging and skincare. The anticipated five year growth rate of this industry
is approximately 25%.
One of the common trends within
the medical spa industry is to integrate whole body and wellness services into
the overall service infrastructure. Medical Spa, LLC will provide the services
in conjunction with skincare, anti-aging, Botox, and other services that are
normally rendered within this type of setting.
4.3 Customer Profile
Among customers that we use the
medical spa services, Dr. Smith has developed the following demographic profile
that will be used in conjunction with the marketing plan:
Predominantly female
Annual household income exceeding $75,000
Lives within 15 miles of the medical spas location
Has private insurance for healthcare
4.4 Competitive Analysis
Within the greater Philadelphia metropolitan
area, there are a number of dermatologists and medical spas that render
services that are very similar to that of the company. Most importantly, Medical
Spa, LLC will maintain a strong competitive advantage given the fact that Dr.
Smith is a licensed dermatologist that will be rendering whole body wellness in
conjunction with the medical spa services. This includes medical weight loss
services as well. As such, given the large amount of services offered – the
business will be able to maintain a strong differentiating factor from the
onset of operations.
5.0 Marketing Plan
Medical Spa, LLC will use a
number of marketing strategies in order to drive traffic to the location. For
most, the business will use an expansive online marketing campaign coupled with
the social media in order to create awareness of the brand. Company’s website
will be mobile friendly and listed among all major search engines. Dr. Smith
intends to hire a search engine optimization firm that will ensure that when a
person does a search for medical spas in Philadelphia,
the website will appear on the first page of the search. Additionally, the
business will enroll in a number of online review portals that will ensure that
people have had a positive experience with the business can leave a strong
review for the company. This will allow the business to more effectively reach
a broad spectrum of potential clients moving forward.
Dr. Smith will also work with his
existing patient base in order to inform them that he is rendering medical spa
services the general public. As he has been in practice for many years, he has
developed a strong reputation among thousands of patients. Many of these
people, predominantly women, are expected to become clients of the medical spa.
Finally, Medical Spa, LLC will
maintain strong referral relationships with area physicians, nurse
practitioners, surgical clinics, and allied health professionals. This referral
network will be very important to the business given that many people trust
referrals from third-party medical professionals.
6.0 Personnel Summary
7.0 Financial Plan
7.1 Underlying Assumptions
Dr. Smith will receive a $100,000 loan carrying a
seven-year term and a 7% interest rate.
The owner will contribute $25,000 towards the venture
Medical Spa, LLC will settle most short-term payables
on a monthly basis.
7.2 Sensitivity Analysis
The medical spas revenues are
moderately sensitive to negative changes in the economy. In the event that
there is a severe economic recession, medical spa services are expected to
decline given that these are paid for with discretionary income. However, Dr.
Smith is also able to render dermatological services to the client base. These
fees are often paid by publicly funded health systems as well as private
insurance companies. As such, the business – given its high gross margins in
large revenues – will be able to remain profitable and cash flow positive at
all times.
The purpose of this business plan is to raise and examine the allocate thousand dollars of debt funding for the development of a halfway house and group home based in the Philadelphia area. Halfway house, LLC – the Company – planet time among people that need ongoing care or have been recently released from incarceration. The halfway house will provide counseling related to drug and alcohol matters as well among people I have substance abuse issues. The business was founded by Peter Smith. The company anticipates that revenue-generating operations will commence this year.
The Financing
At this time, the business is
seeking to acquire a loan of $350,000 in order to carry out the objectives in
this business plan. The terms of this loan are to be determined during
negotiation, however – this business plan assumes that the company will receive
a 20 year loan carrying a 6% interest rate. A majority of the capital on this
document will be used for the acquisition of real estate.
The Services
As discussed above, the halfway
house will be actively engaged in providing comprehensive care, supervision,
and rehabilitative services to people that are in need of assistance or are
transitioning back into society. The business will generate its revenues from
public contracts with municipal agencies as well as state-based agencies.
On-site counselors are properly trained to provide drug and alcohol treatments
will be provided to the facility’s residence.
It should be noted that the
revenues of the business are completely immune from negative changes in the
economy given the high gross margins generated from services coupled with the
fact that a majority of the revenues will be produced from municipal and
state-based entities.
The third section of the business
plan will further discuss the services offered by the halfway house.
Sales Forecast
Below is a chart showcasing the anticipated revenues and profits of the business over the next three years of operation
Profit and Loss Statement
Expansion Plan
As time progresses, the business
will continually seek to establish new halfway house facilities within the
greater Philadelphia
metropolitan area. This will include potentially acquiring a small apartment
complex from which the business can render its services to the general public.
However, these growth strategies would not occur until after the third year of
operation.
2.0 The Financing
2.1 Use of Funds
The $350,000 sought in this
business plan will be used as follows:
$275,000 – Real Estate
$50,000 – Furniture, Fixtures, and Equipment
$25,000 – Working Capital
$50,000 – Renovations
2.2 Management Equity
Peter Smith will retain a 100%
interest in the business.
2.3 Exit Strategies
In the event that management
wishes to sell the business to a third-party, a qualified real estate agent as
well as a business broker will be hired in order Mr. Smith anticipates that a
commission of 5% to 10% would be rendered for managing the sale. Bring halfway
houses and group homes, halfway house, LLC could receive a sales premium a month
of up to 10 times earnings.
3.0 Halfway House Services
As discussed in the executive
summary, the halfway house will be able to aggressively provide its services to
municipal and state agencies that outsource their halfway home and group home
operations to third-party operators. Management is currently securing the
necessary licensure in order to operate in his capacity including rendering
mental health services on-site. At the onset of operations, the company
anticipates it will have an influx of 10 residents that will be placed by
state-based agencies.
The halfway house will have a
number of medical professionals and mental health professionals on retainer in
order to ensure that the business can provide a very high quality level of
service to residents. The company will bill state-based agencies as well as
publicly funded healthcare systems in order to generate.
4.0 Market and Industry Analysis
4.1 Economic Analysis
At this time, the United States
economy is strong. Unemployment rates have declined sharply since the end of
the recession. Interest rates asset prices. Time to borrow money in order to
establish a new halfway house. It should be noted that the revenues of this
company will be very economically secure given the high gross margins generated
from services, and the fact that revenues will be generated from government
contracts. The services of a halfway house in group home or in demand at all
times.
4.2 Industry Analysis
Within the United States,
there are approximately 10,000 cop companies that own or operate one or more
halfway house facilities. Each year, these businesses generate approximately $9
billion revenue and provide jobs for about 45,000 people strong growth over the
past five years as more and more government agencies outsource their halfway
house activities to third-party privately owned businesses. This trend is
expected to continue in perpetuity.
One of the key trends within this
industry is to provide on-site drug and alcohol treatment services given that
many people that are in halfway houses have suffered from these issues in the
past. By providing comprehensive substance abuse counseling, the recidivism rate
can be substantially declined.
4.3 Competitive Analysis
Although there are number of
other operators within the greater demand for outpaces the supply. Government
agencies – on both the city and state level – are frequently looking to use the
services to place people that are in need of help and require ongoing
supervision. As such, while there are other facilities operate in a
substantially similar or identical capacity to that of halfway house, LLC –
these ongoing competitive risks are minimal.
5.0 Marketing Plan
Foremost, the company will seek
to develop ongoing relationships with area social workers frequently have cases
among individuals that have been recently been released from incarceration or
are in need of substantial ongoing supervision and care. This is important to
note given that many state-based agencies require that a social worker sign off
on a person going to a halfway house. The business will frequently take out
advertisements in mental health publications that circulate on a regional
basis.
The halfway house will also
maintain an expansive website that showcases the facilities, hours of
operation, government service information, and how to contact the business in
the event that a family member needs he placed in a group home setting. This
website will be mobile friendly and listed among all major search engines. To a
limited extent, halfway house, LLC will maintain a presence on social media
platforms including FaceBook. Many people who have family members that need
help often reach out for recommendations on these platforms – and as such,
there is a modest opportunity to source new clients from this platform. Usage
of social media also boost the visibility of the businesses website.
The company will use government
based contracting and bidding in order to develop it influx of residence on an
ongoing basis. Mr. Smith anticipates that approximately 1% of all revenues will
be allocated towards general marketing and advertising expenditures. The strong
demand for halfway house services will ensure that the business is able to
remain your 100% occupancy at all times.
6.0 Personnel Summary
7.0 Financial Plan
7.1 Financial Highlights
The company will solicit a $350,000 loan during a 20
year term and a 6% interest rate.
Mr. Smith will contribute $50,000 towards the
development of the business.
All revenues will be generated from government
contracted services.
7.2 Sensitivity Analysis
The company’s revenues are not
sensitive to changes in the general economic climate. People require halfway
house services as well as a group home setting on an ongoing basis. This,
coupled with the fact that the company is going to receiving contractually
obligated revenues, will ensure that the business is able to remain profitable
and cash flow positive at all times. Even during an economic recession, halfway
house, LLC will be able to satisfy all underlying debt obligations.
The purpose of this business plan
is to outline the development of a daiquiri bar based in the greater Philadelphia metropolitan
area. Daiquiri Bar, LLC (“the Company”) will provide patrons with a
broad array of daiquiris, wines, and other mixed drinks and a comfortable
atmosphere. The Company intends to model its interior as a lounge style bar. At
this time, the founder – Peter Smith – is seeking to acquire $100,000 of debt
capital in order to commence revenue-generating operations. The Company was
founded in 2019. At this time, the owner is in the process of acquiring the
liquor license and securing the lease for the facility.
The Bar
As stated above, the business
will be actively engaged in providing small food plates coupled with a broad
selection of daiquiris, beer, wine, and other spirits. The primary focus of all
alcohol sales will be on daiquiris that feature a number of different flavors.
The location will also serve piña colada’s.
As it relates to food operations,
the business will have a number of small plates similar to top us that will be
served to the general public. The business will maintain a small sized kitchen
in order to prepare freshly made small plates for guests.
The second section of the
business plan will further document the operations of the daiquiri bar.
The Financing
At this time, Mr. Smith is
seeking $100,000 of debt capital either through a commercial business loan or
SBA backed loan. The terms of this debt are to be determined during
negotiation. However, this business plan assumes that the business will receive
a seven year term loan that carries a 7% interest rate. These funds will be
exclusively the we used for the build out of the facility, acquisition of
furniture, fixtures, and equipment as well as for inventory. Mr. Smith will
contribute $10,000 towards the venture which will be primarily used for working
capital.
The third section of the business
plan will further document the usage of funds.
Sales Forecast
Profit and Loss Statement
The Future
Over the next three years, Mr.
Smith intends to develop the daiquiri bar into one of the premier lounge styled
locations within the greater Philadelphia
market. Depending on the success of this location, Mr. Smith may seek to
develop subsequent locations within the same metropolitan area market. The Philadelphia area is an
expansive population center, and there is a substantial opportunity to develop
numerous locations.
2.0 Daiquiri Bar Operations
As stated in the executive
summary, the daiquiri bar will provide its patrons with a broad array of
specialty mixed drinks with a focus on daiquiris and other rum related
beverages. Of course, the business will maintain a full menu of other
cocktails, beer, and wine. Mr. Smith is currently in the process of securing
the liquor license so that alcohol can be sold on the premises.
It should be noted, that at all
times, the business will comply with all Pennsylvania
and Philadelphia
laws pertaining to the sale of alcohol. The Company will have proper employee
training so that liabilities resulting from improper serving of alcohol are
kept to an absolute minimum.
The small plates of food that
will be provided to customers include top a style small plates that will
feature a number of fusion style recipes developed by the to be hired chef.
Approximately 30% of revenues are expected to come from the sale of food.
3.0 The Financing
3.1 Usage of Funds
3.2 Investor Equity
At this time, the Company is not
seeking an equity investment from a third-party investor.
3.3 Management Equity
Peter Smith will retain a 100%
ownership in daiquiri bar LLC.
3.4 Exit Strategies
Based on historical sales
figures, most specialty bars typically carry a price to earnings sales multiple
of 2 to 3 times the previous year’s earnings. Mr. Smith intends to operate this
business for a substantial period of time, but in the event he wishes to sell
the business to a third-party a qualified business broker will be hired. This
business broker would most likely take a 10% commission for the successful sale
of the business.
4.0 Market Analysis
4.1 Economic Analysis
Currently, the economic climate
within the United States
is moderate. Unemployment have reached all-time lows while asset prices have
reached all-time highs. Interest rates have remained moderately stable despite
substantial improvements in the economy since the end of the recession in 2011.
The stock market has reached all-time highs, and the housing market has
corrected itself substantially. As such, now is a strong time to start a new
bar. It should be noted that the high gross margins generated from the sale of
alcohol as well as food products will ensure that the daiquiri bar is able to
remain profitable and cash flow positive at all times.
It should also be noted that bars
actually tend to see moderate increases in revenues during times of economic
recession as people seek lower-cost forms of nighttime entertainment. There are
very few economic risks that most bars have once they establish a strong brand
name in their local market.
4.2 Industry Analysis
Within the United States,
there are approximately 70,000 establishments that provide nighttime
entertainment and a bar atmosphere. Each year these businesses generate
approximately $30 billion in revenue and provide jobs for 400,000 people. The
growth of this industry typically mirrors that of the US economy
although the rate in which new bars are being established does exceed the
current economic growth rate.
This boost in industry growth is
primarily attributed to the fact that people are frequently wanting to have
lower-cost forms of nighttime entertainment in lieu of more expensive
vacations.
43 Customer Profile
Management has developed the
following demographic profile that will be used in conjunction with marketing operations:
Between the age of 25 to 40
Lives within 5 miles of the Company’s Philadelphia
location
Will spend $20 to $30 per visits the location
4.4 Competition
Given the ubiquitous nature of
nighttime entertainment venues, the daiquiri bar will face competition from a
number of different sources. Philadelphia
area nightclubs, sports bars, and restaurants that operate in a lounge capacity
will be primary competitors to the daiquiri bar. However, the founder intends
to maintain a strong competitive advantage over other competitors by
exclusively focusing its marketing efforts on the expansive number of daiquiris
offered at the facility. This will create a very strong differentiating factor
for the business as it progresses through its operations.
5.0 Personnel Summary
Personnel Summary
6.0 Marketing Plan
6.1 Marketing Objectives
Develop and maintain an expansive online presence so that people can find the business when they conduct searches via search engines or social media platforms.
Maintain an expansive presence on FaceBook, Twitter, and Instagram in order to make people aware of the location and specialty discounts.
Hire a bar promoter at the onset of operations in order to drive traffic to the location once the grand opening. Begins.
6.2 Marketing Strategies
Foremost, the Company will
distribute a number of print advertisements within a 5 mile radius of the
planned location. This includes discounts on food and beverages in order to
have people within the market familiarized with the daiquiri bar location. The Company
will also hire a bar promoter, for a period of two months, during the grand
opening marketing campaign. This bar promoter will be tasked with handing out
flyers and other print advertisements to people on the street and engaging in a
guerrilla style marketing campaign.
The daiquiri bar will also
maintain an expansive presence on social media platforms, including FaceBook,
that will allow the business to immediately develop a following within the
target market. Specialized discounted offers will be regularly shown on these
platforms once the business has an ongoing following. This is one of the
foremost ways in which these businesses are able to communicate with customers.
The Company will frequently post advertisements on it social media platforms as
well as images.
Beyond social media and print
advertising, the daiquiri bar will maintain and expansive website that showcase
the location, hours of operation, specialty events, and other information
regarding the location. Mr. Smith is currently hiring a web developer that will
produce a mobile friendly website that can be very quickly found among the
search engines.
The Company will also maintain
relationships with Philadelphia
area event planners that will have their clients host large-scale offense at
the facility. This is important because it will not only produce substantial
secondary income for the business, but will also increase visibility among
residents of the area.
7.0 Financial Plan
7.1 Financial Assumptions
The Company will receive a $100,000 loan carrying a
7% interest rate over a period of seven years.
The founder will pay most short-term payables on a
monthly basis, and the Company will not carry any accounts receivable.
Mr. Smith will inject $10,000 into the business.
7.2 Sensitivity Analysis
The daiquiri bar is revenues are
only modestly sensitive to negative changes in the economic climate. Bars,
nightclubs, and lounges tend to remain economically stable during negative
economic times. This coupled with the high gross margins from both food and
alcohol sales, will ensure that the business is able to remain profitable and
cash flow positive at all times. Only a major and sustained economic recession
would impact the revenues of the business. Additionally, revenues would need to
decline by more than 40% before the business is unable to satisfy its
underlying financial obligations.
