Business Plan Outline
Non disclosure
1.0 Executive Summary
   1.1 Mission Statement
   1.2 The Enterprise
   1.3 Key Personnel
   1.4 The Market
   1.5 The Offering
   1.6 Marketing Strategy
   1.7 Competition
   1.8 Projections
   1.9 Resource Requirements
   1.10 Key Issues
2.0 The Enterprise
   2.1 Objectives
   2.2 History
   2.3 Organization
     2.3.1 Key Personnel
     2.3.2 Personnel Count
   2.4 Operations
   2.5 The Future
3.0 The Market
   3.1 Market Segments
   3.2 Prospects
   3.3 Prospect Objectives
   3.4 Segmentation
   3.5 Size
   3.6 Environment
   3.7 Alternatives
4.0 The Offerings
   4.1 Description
   4.2 Market Status
   4.3 Value
   4.4 Cost to Produce
   4.5 Support
5.0 Marketing Strategy
   5.1 Targets
   5.2 Image
   5.3 Promotion
     5.3.1 Internet Web Site
     5.3.2 Publicity
     5.3.3 Advertising
   5.4 Pricing
   5.5 Sales
   5.6 Distribution
   5.7 Logistics
   5.8 Support
6.0 Competitive Analysis
7.0 Development Program
   7.1 Objectives
   7.2 Organization
   7.3 Market Status
   7.4 Schedules
   7.5 Technology
8.0 Operations / Production
   8.1 Organization
   8.2 Suppliers
   8.3 Sub-contractors
   8.4 Technology
   8.5 Quality
   8.6 Inventory
9.0 Investment Capital
   9.1 Initial Funding
   9.2 Use of Funds
   9.3 Return on Investment
10.0 Historical Financials
   10.1 Income Statement
   10.2 Balance Sheet
   10.3 Cash Flow
11.0 Financial Projections
   11.1 Year One Income Statement
   11.2 Year Two Income Statement
   11.3 Five Year Income Statement
   11.4 Year One Cash Flow
   11.5 Year Two Cash Flow
   11.6 Five Year Cash Flow
   11.7 Balance Sheet
12.0 Financial Alternatives
   12.1 Best Case
   12.2 Worst Case
13.0 Financial Addendums
   13.1 Assumptions
   13.2 Ratios
   13.3 Income Statement Comparison
   13.4 Balance Sheet Comparison

   Business Plan Charts

How to Write a Business Plan

This web page offers a tutorial on how to write a business plan. Follow these detailed instructions to produce a professional quality business plan that will attract investors, qualify for loans, or guide your operations.

Writing a business plan is a good way to solidify your thinking. By the time your document is complete, your objectives and strategies will become specific and concrete. The process of writing the document will force you to carefully review all the risks and rewards before you launch. The finished business plan will convince others of your potential and guide your team as you implement the plan.

Click on any topic in the outline to see a detailed explanation of what is required and a sample of that topic. The Sample topics were provided from the business plan of CitiLoc, Inc., a web service corporation that provides a forum for cities to communicate effectively with corporations looking for potential expansion sites.

     
A non-disclosure agreement is optional in a business plan. When used, it usually states that the information in the plan is proprietary and not to be shared, copied or disclosed. The agreement should have a unique "copy number" that is the same as a number on the front of the plan and a place for the recipient's signature. The agreement should be either a loose leaf page or a page that can be torn out of the plan and retained by the enterprise. ~COPY NUMBER ______________

CitiLoc, Inc.'s business plan is confidential, containing information proprietary to CitiLoc, Inc.. None of the information contained in this plan may be reproduced or disclosed to any person under any circumstances without express written permission of CitiLoc, Inc.. I have accepted and will protect the confidentiality of this business plan.

___________________
Recipients signature
The Executive Summary appears first in the final plan, but should only be written after you have completed all other sections of the business plan.

The Executive Summary should include a concise presentation of those aspects of your business that are critical to a potential investor or lender.

A prospective investor or lender will scan the Executive Summary to determine whether the details which follow merits their time.

Factors to consider:
Objectives of the business plan (to raise capital, to guide the team)
Profile of your enterprise
Qualifications of the founders
Market Opportunity (what is missing in the market)
Proposed Offering
Strategy for success
Financial Projections
Requirements (finances, technology, key personel)
Provide a clear and concise statement of the long-term mission of your enterprise. This should act as the "gospel" for your employees whenever they are asked to describe your enterprise. ~CitiLoc is committed to improving communications between government (city, state & federal) and businesses seeking to relocate.
This topic should be written after you have completed section 2 containing the detailed description of factors relevant to your enterprise. This topic should very concisely summarize that description by stating primary objectives, a short description of origin and financial achievements, key personnel and organization structure, current and projected size, facilities locations, scope of activities and plans for changes in the future. ~CitiLoc, Inc. is a newly established C corporation. We are located in Austin, Texas and are presently working out of one of the principal's homes.

There are four principals who have formed CitiLoc; Mark Hanson, Jim Jones, Donald van Pelt and Jessica Lane.

Our primary objective is to establish a presence on the Internet with a data base of information about every city in the U.S. with a population over 50,000. This data base will be of so much value to any business evaluating a move to a new city that it will be orders of magnitude more cost effective than any alternative method of evaluation.

The CitiLoc service will be unique in that it will be the only service that offers a data base specifically designed to help a business evaluate and locate the most appropriate city for their expanded business. It will offer a quick and effective way to evaluate all of the cities in the U.S. with populations over 50,000 on the basis of a wide variety of criteria.

There are about 570 cities in the U.S. with a population of 50,000 or more. We expect about 90% of these cities will be willing to pay a fee to be included in our data base.

There are an estimated 200,000 businesses in the U.S. large enough to consider expanding their operation to a new city. On an annual basis 2% - 3% of those will actively consider such a move. We project that more than half of these will choose to use our services in some manner.

To initiate this business, the first year of operations will involve collecting information about the cities, populating the data base and developing the web site. This will involve 40-45 permanent and temporary personnel. Following the initial development stage, the organizational objective is to be "lean and mean". Because the business will be web based and the majority of the prospect/customer interface will be achieved electronically there will not be a need for a large organization. Starting in the second year we expect to conduct business with twenty six personnel.

We are projecting a requirement for about 6,000 square feet of space for our operation. The cost will be about $4,500 per month with a one-time finish out cost of about $10,000. Additional equipment and software require a one time, up front expense of about $80,000.

List the key personnel in the enterprise, with name, position, responsibilities and a short description of their experience. In the Executive Summary you are "selling" your key personnel, so make a special effort to emphasize their past achievements. ~Mark Hanson, age 33, has a masters degree in political science, and has been the marketing director and chief operating officer of two successful businesses. His latest business was recently sold to XYZ, Corp. and Mr. Hanson chose to leave his position there in favor of starting CitiLoc. He is the president and COO of CitiLoc.

Jim Jones, age 30, has a masters degree in computer science and has participated in the development of two major web sites. He is a vice president and will be responsible for the initial development of our web site and thereafter the maintenance and expansion of the services we will offer.

Donald van Pelt, age 28, is a vice president and will direct the effort of data collection and population of the data base. Mr. van Pelt has a degree in economics and has worked with the city of Austin, Texas for four years. For the last two years he has been involved in the area of attracting and working with businesses that are considering locating a facility in the Austin area.

Jessica Lane, age 31, is a vice president and will be responsible for marketing, sales and public relations. Ms. Lane has a degree in public relations and has been working with an established company for three years as their director of marketing. She helped this company modify and expand their sales program from a field sales force orientation to a broader web based approach.

This topic should be written only after you have completed section 3 containing the detailed description of a variety of factors relating to your market.

First, describe the market in terms of the need that is being addressed by your product or service (don't discuss your product or service yet). Explain what is creating the need, what the market is currently doing to address that need and the opportunity this need is providing for the solution provided by your offering.

Then, provide a description of the overall market, how it breaks down into segments, geographical distributions, sizes, growth expectations and the share of the market your enterprise expects to capture.

Remember this is a summary and your objective is to convince the reader of the quality of your market. ~Our objective is to be recognized as the premiere data base for evaluating the pros and cons of moving a business operation to any given city.

We expect our data base to be populated with information from over 500 U.S. cities and 50 to 100 international cities that will pay for the service. We also expect about 500 businesses to pay to use the data base in the first year growing to about 2000 businesses in the fifth year.

This topic should not be written now, but only after you have completed section 4 containing the detailed description of your product or service. Provide a description of your products/services that will make the reader want to rush out and purchase them. The important thing in the Executive Summary is to convince the reader that the market will be excited about your products/services.

Factors to consider:
Name of your products/services
Benefit to user
Emotional/visual appeal
Ease of use
Return on investment for the user ~CitiLoc will provide, via the Internet, a service to both cities and businesses that helps cities attract new business and businesses determine which city is best for them.

This service is valuable to a city because it provides an opportunity for them to present their information to a wide audience of potential new businesses. Businesses benefit by having essential city information available in one data base. They will have the ability to specify qualifying criteria and get a list of cities that meet those criteria.

Initially the collection, organization and entry of data about the cities will be very time and people intensive. It will require about one year to construct a database with enough information to be of interest to businesses.

Explain how you are going to sell your products/services by describing your channels of distribution, your methods for generating publicity and your advertising plans with focus on each market segment.

Once again, remember this is a summary and your objective is to convince the reader of the efficacy of your marketing strategy. ~We will promote our service using literature, links with other relevant web pages, a strong push to gain publicity, advertising in strategic planning, financial and human resource publications and a direct mail program.

Pricing for cities to be included in the data base will range from $1,000 to $2,500 per year and for businesses to use the data base from $2,500 to $10,000 per year.

In addition to our web site being accessible through well indexed search engines, we will have an initial staff of five personnel contacting businesses on a daily basis to locate the person who would be involved in establishing a new business location. Their objective will be to get the business prospect to visit our web site.

In addition to our own efforts to promote and distribute our services, there will be a secondary distribution channel in the form of "links" to our web site from other web sites. We will actively pursue the establishment of links with sites we believe will have a viewer base that may be interested in our service.

Create a concise analysis of your competitors as a group describing number of competitors, whether the market is gaining or losing competitors, competitive profitability, any manufacturing or marketing advantages competition may have and any pricing pressures competition might create.

Then describe the main competitor's strengths and weaknesses and how you will address this competitor. ~At present there are two major forms of competition: consultants and information provided by the individual cities.

Consultants range in size from individuals to large international firms. The minimum consulting fee a business can expect to pay is $10,000 and it can easily reach $100,000. The quality of information a business can expect to receive from our service will be equal to or better than what they get from a consultant at a fraction of the cost and the information will be available in a fraction of the time.

Most cities have a web page today. The information they provide is designed to help visitors and citizens locate restaurants, parks, forms of entertainment, retail outlets and in some cases city government contacts. It is not designed to be user friendly to the business considering a move to the city. Cities that are aggressively trying to attract new business will often have a contact point to provide information to prospective businesses. This usually comes in the form of written literature and seldom addresses the majority of a business' concerns.

Describe your expectations for profit (or loss) over the five year planning period. Be sure to explain when you will start operating at a profit, when you expect to reach a break even point and what the profit margins will be following the break even point. If you are proposing a capital investment, explain your financial needs and how the investor can expect to achieve a return on their investment. ~There will be no revenue generated in the first year which will be dedicated to developing the web site and creating the data base. We expect to achieve break even cash flow by the middle of year two with a positive cash flow and a profit by the end of that year. Year three will see a major increase in revenue, a complete recovery of our investment and positive retained earnings at year end.

Years four and five will result in revenues of $5,485,000 and $7,885,000 respectively with after tax profits of $2,793,000 and $4,368,000. Revenues per employee will approach $225,000 by year five.

Describe the resources you will need to achieve the objectives of this business plan. This most likely will include:

Personnel
Equipment & materials
Access to technology
Access to distribution channels
Availability of external services ~The primary resource requirement during the first year will be personnel who can contact appropriate city employees and gather the information necessary to populate our data base. In support of these personnel we will require phone lines and computers (25 each).

During the same period we will be developing our data base software technology. The primary resources here are qualified programming personnel, support software and computers.

Describe the steps that must happen to get your plan on the path to a successful implementation. This might include acquisition of investment capital, technological breakthroughs, establishment of relationships, hiring of key personnel, advertising and publicity coverage or many other things. Be sure these really are the critical issues.

Include a spreadsheet listing the key milestones involved in implementing your business plan including specific dates and responsible personnel. If you are using business plan software to write your plan, this should be included for you automatically. ~There are only a few issues to address as we begin the business. They are, in order of priority:

Find and lease facilities
Acquire the necessary hardware, software and communication capabilities
Hire the necessary personnel to collect the data and develop the software
Get development and data collection under way
Establish appropriate accounting procedures
Create the contracts we will use with our customers

Milestones
What?Who?When?How much?
Web Site RegistrationELB1/1/20091/10/2009$0
Completion of DB DesignJAJ1/1/20092/28/2009$10,000
Data Gathering & DB PopulationDVP1/1/20099/30/2009$1,000,000
DB Search Technique Dev.ELB3/1/20095/30/2009$10,000
Web Site Dev.KAG3/1/20097/30/2009$50,000
On-line Help Dev.KAG3/1/20098/30/2009$15,000
Web Site/DB SecurityDVP5/1/20097/30/2009$10,000
Cross Browser TestingELB5/1/20098/30/2009$5,000
Search Engine RegistrationELB5/1/20098/30/2009$10,000
Web Site/Acctg. InterfaceJAJ7/1/20098/30/2009$10,000
Install site Activity tracking S/WJAJ8/1/20099/30/2009$5,000
Web Site Beta TestELB9/1/20099/30/2009$40,000
Web Site PromotionJL7/1/20096/30/2010$200,000
     
Totals 1/1/20096/30/2010$1,365,000
This topic should concisely describe your enterprise by stating primary objectives, a short description of origin and financial achievements, key personnel and organization structure, current and projected size, facilities locations, scope of activities and plans for changes in the future.

Other factors to consider:
Legal structure (partnership or corporation)
Enterprise ownership
Products/services
Critical operations
Patents, trademarks or proprietary technologies
Community relations
Ability to compete ~CitiLoc, Inc. will be structured as a C corporation, located in Austin, Texas. There are four principals who will all invest money in the enterprise and who will take primary responsibility for the various operational aspects of the business.

As a new enterprise our primary objective will be to secure funding so that we can develop the required data base and web site to provide service to our customers.

Our first year of operation will require 43 personnel, however, once the data base and web site are complete we will reduce staff to twenty six personnel.

Describe short and long term objectives for your enterprise. The long term objective should be somewhat philosophical, while the short term objectives should be more operational. For example, a long term objective might be;
Our enterprise will strive to be recognized as the leader in the field of exploration and mining.

A short term objective might be:
Our AA-1000 boring machine will capture 60% market share within the next two years as measured in the Exploration Monthly sales review. ~To achieve our primary objective we must, in the short term, secure funding, collect the necessary data and populate the data base and develop a high quality, professional looking web site.

Longer term we must develop a strong base of business clients and as opportunities occur expand the data base content to attract a wider range of business users.

Describe the origin of your enterprise, who the key personnel were and their current status. If previous investment capital was provided, explain how much, on what terms and what the performance has been in providing a return for that investment. Describe what markets your enterprise has been pursuing, what market penetration has been achieved and whether you have been profitable.

Factors to consider:
Founder names
Years in business
Market share
Distribution channel relationships
Distribution channel costs
Experience with regard to offering: quality, durability, uniformity, pricing.
Reputation of enterprise, offerings
Customer relations
Financials ~Since CitiLoc is a new enterprise, this section will not be included.

Provide an organization chart that shows structure and size for each of the functional units in The Enterprise.

If you are using a software program to write your business plan, it should provide a tool for creating an organization chart.

In the text associated with the organization chart describe the current and planned staffing, the skill levels available, and any internal or external factors that may influence your organization.

Factors to consider:
General management philosophy
Completeness of current staffing
Management access to counsel
Management access to legal support
Labor union relationships
Operations sharing between projects
Employee benefits: Insurance, Retirement plan, Health & fitness program, Profit sharing plan, Stock options, Stock purchase plan, Child care program ~Following the initial development stage, the organizational objective is to be "lean and mean". Because the business will be web based and the majority of the prospect/customer interface will be achieved electronically there will not be a need for a large organization.

The two areas requiring the most personnel will be the web site support and improvement group and the customer support and sales program. Starting in the second year we expect to have a total of about twenty six employees.

For each of the key personnel describe their functional responsibilities, how their experience prepares them for these responsibilities and their operational objectives for the next 12 months. The objectives should be measurable and the personnel prepared to review them at any time.

Factors to consider:
Name
Age
Marital status
Children
Education
Work experience
Position title
Placement in organization structure
Management responsibilities
Achievements

Key positions that need to be filled within the next twelve months should be described with an explanation of how you expect to fill the position.

Factors to consider:
Position title
Placement in organization structure
Experience level required
Management responsibilities
Staffing from inside or outside
Use of professional recruiters
Desired date for staffing
Drop dead date for staffing ~Mark Hanson, age 33, has a masters degree in political science, and has been the marketing director and chief operating officer of two successful businesses. His latest business was recently sold to XYZ, Corp. and Mr. Hanson chose to leave his position there in favor of starting CitiLoc. He is the president and COO of CitiLoc.

Jim Jones, age 30, has a masters degree in computer science and has participated in the development of two major web sites. He is a vice president and will be responsible for the initial development of our web site and thereafter the maintenance and expansion of the services we will offer.

Donald van Pelt, age 28, is a vice president and will direct the effort of data collection and population of the data base. Mr. van Pelt has a degree in economics and has worked with the city of Austin, Texas for four years. For the last two years he has been involved in the area of attracting and working with businesses that are considering locating a facility in the Austin area.

Jessica Lane, age 31, is a vice president and will be responsible for marketing, sales and public relations. Ms. Lane has a degree in public relations and has been working with an established company for three years as their director of marketing. She helped this company modify and expand their sales program from a field sales force orientation to a broader web based approach.

During the first year of operation, we will contract with two outside agencies to help us with the development program. One will supply 3-4 personnel to assist in the design and development of the web site. The other will supply about 25 personnel to collect information about the cities and enter it into the data base.

We will need to hire one other key manager prior to the end of the first year, responsible for finance and accounting. Mark Hanson will handle these responsibilities until such a person is hired.

Include a spreadsheet listing the headcount projected for every department in your enterprise for each of the next five years.

The total number of personnel in this list must be used to calculate the Revenue & Profit per Employee later in this document. If you are using business plan software to write your plan, this will be done for you automatically. ~
 20092010201120122013
Engineering/Development
Management 11111
Non-management35555
Production/Service Delivery
Management      
Non-management     
Marketing
Management11111
Non-management 1111
Sales
Management     
Non-management15678
Customer Support
Management11111
Non-management59101112
General & Administrative
Management11111
Non-management11233
Other
Management11111
Non-management27 111
 
Total Personnel4226303335
Describe the material assets of your enterprise including buildings, equipment, inventories, proprietary technologies, etc. If your plan is for a start-up business you will have little to describe. If your plan is for an on-going business your description should be consistent with the information provided in your historical balance sheet.

Describe what functions of your business are considered appropriate for performing in-house and those that could be or are done by sub-contractors.

Factors to consider:
Buildings
Office equipment
Production equipment
Inventories
Proprietary technologies
Company vehicles ~We do not currently have any facilities. However, we will quickly have to lease an estimated 6,000 square feet of space for our operation. We are aware of two new commercial office space areas where we can get a three year lease of that much space for about seventy five cents a square foot per month (about $4,500 per month). There will be a one-time finish out cost of about $10,000.

In addition to the space we will need desks, office equipment, communication lines and equipment, computers and software. This will require a one time, up front expense of about $80,000.

Project any organizational changes, growth in personnel count and changes in material assets. Discuss any new product or business concepts that have some likelihood of affecting your enterprise. Explain new technologies on the horizon that could influence your way of doing business. ~Technology associated with the Internet is changing at a rapid pace. Our web site is designed to isolate the various aspects of the process so that if new technology affects a portion of our design we can incorporate it without impacting the total design. Isolated areas include the browser interface, the e-commerce process, security measures, the data base processes and the report generation and return to the customer.

Our data base is designed to be modified or extended with minimal impact on existing processes and we fully expect that as the service matures this will happen.

Describe the general characteristics of the distinct segments of prospects that make up the market for your offerings.

Factors to consider:
Extent of market (local, regional, national, international)
General description of segments
Current versus new customers
Size of the typical prospect
Prospect profitability
Current ability of prospects to use your offerings
Prospect's incentive to buy
Prospect's decision process ~Our market involves two segments; cities and businesses. The cities will provide about 10% of our service income with businesses providing the rest.

Cities will find this of value because they will be able to present their information in a format specifically designed to assist and attract businesses. Businesses will derive great value from the service because, from a single source, they will be able to evaluate all of the major cities in the United States against a wide variety of selection criteria.

Our objective is to have over 500 cities represented in our data base and between 1,000 and 2,000 businesses using the data base annually to assist in their location of a new operations site.

The modern business world is focusing on communications and information technology as the driving force for growth. Support for this growth involves production of communications equipment, data storage equipment, computers (and related technologies such as chips, monitors, etc.), software and much more. Because these businesses are accustomed to using high-tech solutions for their business, we believe they will embrace our service when planning their expansion.

Alternatives, such as individual city web sites and city information packets represent competition, however the benefits of our centralized data base of all the cities far outweighs the effort involved in using these alternatives.

Create a spreadsheet containing a list of descriptive names for each of the current market segments and the percent of the total industry market that segment represents. The total of the percentages should be 100% of the available market. If you are using business plan software to write your plan, this will be handled for you automatically.

Include all segments of the market whether you will be selling to them or not. It is just as important to understand the segments you will not address as those that you will. For example, if you are planning on a fine dining restaurant you will not be attracting the fast food segment but you should understand that segment as a part of the overall market. Choose the segments most important to the market and group the remaining segments into an "Other" category.

For example, if you were AMTRAK, you might describe yourself as being in the transportation business and offering your services to two market segments, recreational and business travelers.

If you were DELL Computer, you might say you were in the PC, Server and ISP markets addressing the business and individual consumer communities. Each of these would then be broken down into segments. EG: the PC market might segment into individual consumers, small business and large business.

If you are selling to other businesses (B2B) some examples might be:

Industry by SIC code
This is especially beneficial for vertical market offerings.
Size - revenues, # employees, # locations
In general if your offering is highly sophisticated, requires significant resources or provides greater value based on volume, then the target should be the larger enterprises.
Climate
Examples of offerings might be dehumidifiers in areas near the ocean or snow plows in northern areas.
Language
An example of a language specific service is a Spanish TV channel.
Status in the industry
You might want to target businesses that are the technology leader or revenue leader or employee satisfaction leader, etc.
Accessibility
To minimize promotion and sales expense you may want to target urban rather than rural or local rather than national prospects.
Access (or lack of access) to competitive offerings
Cable TV business's significant investment in their service delivery system has allowed a near monopoly for some time. IBM's service reputation insured minimal competition during the mainframe days.

If you are selling to individual consumers some examples might be:
Creation of or response to a fad
Examples are hula hoops, Jurassic Park T-shirts, pet rock, physical fitness, etc.
Geographic location
Marketers take advantage of location by selling suntan lotion in Hawaii, fur coats in Alaska, etc.
Time related factors
You may be able to target vacationers in summer, impulse buyers during the holidays or commuters at 7AM.
Social status
This could include country club memberships, philanthropic contributions, etc.
Education
Product and service examples are encyclopedias, scientific calculators, learning to read tools and financial counseling.
Avocation
This could include products for hunting, fishing, golf, art work, knitting, etc. ~Our market is segmented by the size of the cities we will serve.

Small cities75%
Medium cities15%
Large cities4%
International cities6%
Create a spreadsheet containing a list of descriptive names for each of the specific market segments you will be targeting for your marketing efforts. Show the percent of your total revenue that each segment represents. They may be some of the same segments you described earlier or you may plan to create a new segment. The total of the percentages should be 100% of your revenue. If you are using business plan software to write your plan, this will be handled for you automatically.

If you are selling business to business (B2B) some examples might be:
Job position/responsibility
Examples of offerings might be planning software for managers or cleaning agents for maintenance managers.
Future potential
A good example is how Apple Computer supplied products to schools at all levels to condition students graduating into the marketplace.
Ability to make a quick purchase decision
Targeting individual purchasers (EG: product manager or HR manager) versus business committees can significantly reduce marketing expense and increase the probability of a quick close.
Need for customization
Offerings such as police cars or busses to city governments or specialized computer systems for specific departments fall into this category.
Product or service application to a business function
Examples are specific departments responsible for data processing, accounting, human resources or plant maintenance.

If you are selling to individual consumers some examples might be
Physical Size
Offerings might be big men's clothing, golf clubs for shorter players, etc.
Time related factors
You may be able to target vacationers in summer, impulse buyers during the holidays or commuters at 7AM.
Demographics/culture/religion
Ethnic products would fall into this category.
Gender
Product examples are scarves for women, ties for men, etc.
Age
Product examples are toys for children, jewelry for women, etc.
Special Interests
You could target cat lovers, science fiction readers, jazz music collectors, etc.
Accessibility
Because the individual is more difficult to reach you may want to segment by urban versus rural, train commuters, people who read Wall Street Journal, etc.
Need for specific information
Based on features or content of your offering you can target a market segment. A product might be books on how to start a business or a service might be seminars on how to quit smoking. ~

Describe who the prospective buyer is, why they want an offering like yours and what their objectives are with the use of your offering.

Factors to consider:
Individual consumer description or if a business, purchaser's job title
Secondary influencers of the purchase decision
Does offering improve prospect's financial situation or day to day operations?
Is "prestige" involved in the purchase?
Can the prospect measure the benefits?
Does the prospect require a customized offering?
Will prospect purchase more than one unit of your offering?
What are prospect's requirements for: Dependability, Durability, Economy, Efficiency, Reliability, Productivity, Uniformity? ~We have two market segments for our services.

A city (city manager) interested in attracting new businesses to their locale.

Businesses looking for a city where they can establish a new site to expand their operations.

Longer term we will probably have others who would like to be included in our service (for a fee) such as real estate agents, attorneys and a variety of local vendors wanting to attract the attention of new businesses moving to their city.

Describe the distribution and characteristics of the various prospect segments. Segments may have descriptions like government versus commercial or homeowners versus large businesses. Market distribution might be described as local versus international or urban versus rural. Characteristics include factors such as profitability, growth rates, knowledge of your industry, whether they are past customers, etc. You should be exhaustive in these descriptions whether or not you intend to address all of the segments.

This is a critical factor in your marketing strategy, so close attention should be given to insuring accurate and detailed descriptions.

Factors to consider:
Geographic locations
Concentrations of prospects
Accessibility
Segments that require different marketing strategies
Purchasing power by segment
Numbers by segment
Segments with past customers
Segments with greatest need for the offering
Segments with shortest purchase decision cycle
Segments more willing to take risks to use a new concept
Segments impacted by external factors such as unions or buyer protection groups ~The content of our data base consists of information about cities. We will start the process of populating the data base by gathering information for cities having a population of 500,000 or more. The next stage will be cities between 250,000 and 500,000 population. Finally we will add cities with populations between 50,000 and 250,000.

We realize there are a number of international cities where a business may wish to locate a part of their operation. After completing the U.S. portion of the data base we will include selected cities from around the world.

Each of these cities will be approached with a request to provide information to be included in the data base at no charge for the first year. At the end of that year, if they find the inclusion of their information to be of value, they will be asked to pay an annual "exposure fee". We expect that over 90% of the cities will be willing to pay the fee.

The other market segment will be the businesses wanting to gather information about potential sites for an expanded operation. These are usually well established businesses in high growth industries that have outgrown their current facilities or for strategic reasons wish to establish multiple operating sites.

Using the breakdown provided in the market segmentation topic, for each segment show the past and present sizes. Then make a growth projection for each with a rationale in support of the projections. When specifying market sizes, include supporting information from sources that will be credible to an investor.

Some investors like to see numbers that represent the Total Available Market (TAM) and the Served Available Market (SAM). The TAM represents all of the buyers that could potentially use your offering while the SAM represents the number who will actually buy an offering like yours in any given time period. Your sales, represented as "market share", will be some percentage of the SAM.

Factors to consider:
Number of buyers
Number of units (yours or competitors) to be purchased by each buyer annually
$$ value of the market
Size projections over time
Special considerations that could cause projections to change ~The number of cities that will be represented in our data base (based on 2008 U.S. Census bureau reports) includes:

PopulationNumber
>500,00026
250,000 - 500,00041
50,000 - 250,000505
International cities100

It is estimated that over 4,000 businesses establish a new operation or move their operation to a new city each year. We expect that the majority of these will use our data base to evaluate that move.

The following are announcements of businesses locating new facilities, taken from a January, 2008 edition of CC NEWS, a small customer support publication.

Boise Express opens second call center - Boise Express is in the process of investing $5 million to open its newest sales facility in Norman, OK.

Directory assistance opens Boston Center - Metro One Telecommunications Inc., .... has opened a new call center here.

RightNow Technologies opens Dallas center - RightNow Tech. (of Bozeman, Mont.) announced the opening of its new sales office in Dallas, TX.

Financier brings center to Knoxville - Associates Housings Finance LLC announced the opening of its new collections center in Knoxville, TN. The facility will house 250 employees.

Rockwell Electronics expands worldwide - Rockwell Electronics is opening five new offices.

EGain opens office in Australia - EGain Communications, a provider of customer communications solutions for e-commerce, is launching operations in Australia.

Discuss environmental factors influencing the sale of your products/services. These might include factors such as new government regulations, fuel oil shortages, an aging population, greater health consciousness, etc. You should be very specific as to why these factors are positive or negative for your enterprise and how you expect to use that knowledge.

Factors to consider:
Changing technologies
Changing social values
Resource limitations
Taxes
Fashion trends
Life style trends
Age of the society
Government price controls
Government subsidies
Licensing requirements
Safety regulations
Education changes
Changes in geographic preference
Changes in usable income ~We are experiencing a strong period of growth and expansion in nearly all areas of our economy. While the future is open to debate, most economists are predicting continued growth for several years.

The modern business world is focusing on communications and information technology as the driving force for growth. Support for this growth involves production of communications equipment, data storage equipment, computers (and related technologies such as chips, monitors, etc.), software and much more. Because these businesses are accustomed to using "high-tech" solutions for their business, we believe they will embrace our service when planning their expansion.

In most cases, the prospect has a variety of alternatives to solve their problem. First you should explain the prospect's motivation for solving the problems your products/services address. Then explain the alternative solutions. For instance, if you are selling chain saws, the prospect could buy your product, a competitive chain saw product, an axe, or a tree saw. They could also be influenced by tree conservationists and decide to purchase nothing. This description should explain the prospect's alternatives and why they would choose your offering. ~Most cities now have some sort of presence on the Internet. Some of the information of interest to a business considering the city as an expansion location is probably available on the Internet site. It will however, be sporadic and organized differently for each city.

Also, most of the larger cities have an information packet available to any business that requests it. However, many businesses would prefer to conduct their preliminary evaluation in private, contacting the city personnel only after they have determined that the city is a viable location for their operation.

Address capabilities relative to competition, industry standards, environmental influences and the impact on the user's day-to-day operations.

Factors to consider:
Benefit to user
Comparison to competition
Patent/trademark
Adherence to industry standards
Emotional/visual appeal
Environmental influences
Ease of use
Impact on user operations
Use of proprietary technology
Pricing ~CitiLoc will provide, via the Internet, a service to both cities and businesses that helps cities attract new business and businesses determine which city is best for them. Getting started will involve setting up a web site, finalizing data base design, contacting city management, collecting city data and entering it into the data base, developing the user interface, insuring the security of the data and making sure that our web site is properly indexed in all of the most popular search engines.

This service is valuable to a city because it provides an opportunity for them to present their information to a wide audience of potential new businesses. Businesses benefit by having essential city information available in one data base. They will have the ability to specify qualifying criteria and get a list of cities that meet those criteria.

Initially the collection, organization and entry of data about the cities will be very time and people intensive. We estimate that each new city we add to the data base will require about two man weeks (on the average) of effort. It will require about one year to construct a database with enough information to be of interest to businesses. Once the data base is on-line, a primary service objective will be to review the information on every city no less than once every six months. In addition we encourage the cities to provide us with updated information anytime a change occurs (especially personnel changes).

This is a technical description of each product or service that will be offered by your enterprise.

If it is a product, describe the function performed, the physical characteristics, operational characteristics, technological factors of import and unique aspects that make it more desirable to the market than competitive products.

If it is a service, describe the purpose, content, method of delivery and unique aspects that make it more desirable to the market than competitive services.

Factors to consider:
Function(s) performed
Sizes
Tolerances
Quality
Durability
Special/unique abilities
New/proprietary technology
Product or service family relationships ~Businesses are regularly faced with the problem of expanding their operation. In many cases it is strategically appropriate to do so in a new city. When they make this decision they must then select a city. CitiLoc will provide, via the Internet, a service to both cities and businesses that helps cities attract new business and businesses determine which city is best for them.

Businesses will have access to information about every city in the United States with a population of over 50,000. City management can get a regular report comparing what they offer a business with every other city in the data base.

The data base will contain a wide range of information. The types of information include:

Demographics: work force size, % unemployment, salary ranges
Major forms of transportation: highways, trucking, bus lines, air lines
Direct access to major cities by each form of transportation
Communication: phone lines, digital/optical lines, newspapers (affiliations)
Commercial real estate: quantity, occupancy rates, prices, expected growth
Housing: quantity, occupancy rates, prices, expected growth
Educational institutions: availability, occupancy, grade levels, planned growth
Breakdown of major businesses by industry and size
Three year history of businesses that have located in the city
Availability and cost of utilities and water
Taxes of all forms, any tax abatement programs for new businesses
Any limitations on the types of industries allowed to locate in the city
Review of all EPA conformance issues
Geographic boundaries of the city, including ETJ's
City government structure and contacts

Explain whether the product or service is ready for the market or still in development. If still in development, provide a schedule for delivery that includes a "PERT" chart showing critical decision and completion points. You should also include the projected cost to complete the development. ~This service concept has been thoroughly thought out, several city managers have been interviewed with an almost universal positive response to the concept and a prototype data base has been developed. A number of strategic planning managers from various businesses have also been contacted. Their response has been positive and in some cases they have offered good advice on the kind of features they would like the service to have. The basic features of the user interface for the Internet have been defined, however, additional work is required in this area.

From start-up to initial market entry will require about one year. This will involve setting up a web site, finalizing data base design, contacting city management, collecting city data and entering it into the data base, developing the user interface, insuring the security of the data and making sure that our web site is properly indexed in all of the most popular search engines.

As the service matures, new sets of information will be collected that will be of value to the customer and of financial benefit to CitiLoc. For example, real estate agents capable of meeting the needs of a business looking for property could include their information in the data base. The same would be true for many other services such as attorneys, parts suppliers and numerous other vendors of products or services.

Explain why the product or service is of value to a purchaser and attempt to present the value in measurable terms. For example, a product might "reduce rejects by 20% and eliminate one person from each assembly line". A service might "educate middle management in personnel review techniques, thus significantly reducing employee dissatisfaction". Your explanations should be specific and detailed.

Factors to consider:
Trial usage
Measurable results
Impact on buyer's operation/product
Time required to benefit
Return on investment
$$$ savings
Useful life of offering
Installation considerations
Education of purchaser or purchaser's employees
Maintenance requirements
Technical assistance requirements ~This service is valuable to a city because it provides an opportunity for them to present their information to a wide audience of potential new businesses. If they so choose they can also get information comparing what their city has to offer a new business with all other cities in the data base.

Businesses benefit by having essential city information available in one data base. They will have the ability to specify qualifying criteria and get a list of cities that meet those criteria. When they have chosen their target cities they will have access to the information necessary to contact the appropriate city personnel to begin discussions. For each business a "customized" and secure interface will be created at the time they begin their city search. Each time they re-enter the web site they will have access to all the information they collected in prior visits.

If you offer a product, itemize the typical bill of materials and other expense factors in manufacturing the product. If you expect to improve manufacturing costs as you gain experience, explain and show specific numbers.

If you offer a service, while you may not have a manufacturing operation, you will still probably deliver materials which will need to be inventoried and organized prior to delivery to the customer, all of which involves costs. For example, if you were a consultant offering a seminar your production costs might include hand out materials, facilities for the seminar, presentation slides, lunch or refreshments for the attendees, etc.

Factors to consider:
Part numbers
Part cost
Labor costs
Sub-contractor costs
Benefits of volume purchases
Effect of experience on labor costs
Total cost to produce
Change in costs over time ~Essentially all production costs for the CitiLoc service will be personnel costs. There will be costs for communication and for data storage, but these represent a small portion of the total. Initially the collection, organization and entry of data about the cities will be very time and people intensive. We estimate that each new city we add to the data base will require, on the average, about two man weeks of effort (more for larger cities, less for smaller). Thereafter, we will accept updates to the data base (as provided by a member city) on a daily basis. In addition we will initiate a regular (once every six months) review of each city's data by our personnel and the city's personnel.

As the service matures we will be expanding the data base with new information content and with new ways for the businesses to search, review or print the information.

If you are selling a product, indicate whether the customer will expect maintenance of the product and who will provide the service. Project the Mean Time To Failure "MTTF" for the product and show a chart that projects the growth of support demand over time. If hands on repair will be required, show most probable parts requirements, cost to customer, personnel and inventory requirements. If on-site maintenance will be required, show travel and living expenses as well.

For a service you are always in a support situation. You should concentrate on how to insure that the on-going quality and content of the service is meeting your customer's needs.

Factors to consider:
Warranty commitments
Most likely part(s) to fail
How critical is offering to customer's day to day business?
Repair time requirements
Location of maintenance/service sites
Contract with an another enterprise to maintain your products
Customer's ability to maintain product
Spare parts availability
Is maintenance operation a profit center? ~The information in the data base is of no use to our customers unless it is current. Therefore, a primary service objective will be to review the information on every city no less than once every six months. In addition we encourage the cities to provide us with updated information anytime a change occurs (especially personnel changes). We will back our data base up on a daily basis and, if and when necessary, rebuild the data base to eliminate any fragmentation problems.

We know that providing information to us will be far down on a city manager's priority list so we must regularly maintain contact and present a positive service image. To this end we will assign an individual the task of preparing a monthly newsletter and a set of data base statistics to send to each of the city contacts.

Describe your strategy for achieving your goals. Explain why this strategy will succeed.

Factors to consider:
Pricing strategy
Promotion strategy
Market shares
Type of sales force
Sales support activities
Critical dependencies
Channels of distribution
Advertising commitment
Promotional commitment
Use of outside agencies ~Our objective is to be recognized as the premiere data base for evaluating the pros and cons of moving a business operation to any given city.

We expect our data base to be populated with information from over 500 U.S. cities and 50 to 100 international cities that will pay for the service. We also expect about 500 businesses to pay to use the data base in the first year growing to about 2000 businesses in the fifth year.

We will promote our service using literature, links with other relevant web pages, a strong push to gain publicity, advertising in strategic planning, financial and human resource publications and a direct mail program.

Pricing for cities to be included in the data base will range from $1,000 to $2,500 per year and for businesses to use the data base from $2,500 to $10,000 per year.

In addition to our web site being accessible through well indexed search engines, we will have an initial staff of five personnel contacting businesses on a daily basis to locate the person who would be involved in establishing a new business location. Their objective will be to get the business prospect to visit our web site.

In addition to our own efforts to promote and distribute our services, there will be a secondary distribution channel in the form of "links" to our web site from other web sites. We will actively pursue the establishment of links with sites we believe will have a viewer base that may be interested in our service.

We will provide customer support to city personnel in maintaining the integrity of the information in the data base and to business customers using the data base.

Describe each of the target segments described in the Market Description section and why you believe they are appropriate.

Factors to consider:
Immediate need for your offering
Purchasing power
Accessibility
Willingness to make a decision ~There are about 570 cities in the U.S. with a population of 50,000 or more. We expect about 90% of these cities will be willing to pay a fee to be included in our data base.

There are an estimated 200,000 businesses in the U.S. large enough to consider expanding their operation to a new city. On an annual basis 2% - 3% of those will actively consider such a move. We project that more than half of these will choose to use our services in some manner.

As we grow, a third market segment will be services and vendors within each of the cities that want to attract the attention of new businesses. A special section that presents their business will be available for a fee.

Describe how your enterprise is perceived in the market today and how you want it to be perceived in the future. If you are changing the image, explain why and how you expect to achieve the change. If the image change requires operational changes explain them and the impact they will have on your day to day operations.

Factors to consider:
Product/service quality
Past promotional objectives
Past ad contents
Sales organization
Service organization
Industry peer perception
Customer/prospect perception
Past market segments ~CitiLoc is a new service and therefore currently has no image. Our objective is to be recognized as the premiere data base for evaluating the pros and cons of moving a business operation to any given city.

Through the process of constant communication with city management, regular exposure of our service offerings to the business community and consistently excellent service to our customers we expect to build our image.

There are two basic promotion strategies, PUSH and PULL.

The PUSH strategy maximizes the use of all available channels of distribution to "push" the offering into the marketplace. This usually requires generous discounts or commissions to achieve the objective of giving the channels incentive to promote the offering, thus minimizing your need for advertising.

The PULL strategy requires direct interface with the end-user of the offering. Use of channels of distribution is minimized during the first stages of offering promotion and a major commitment to advertising is required. The objective is to "pull" the prospects into the various channel outlets creating a demand for the offering the channels cannot ignore.

Describe your promotion strategy. Factors to consider:
Offering price
Offering quality
Relationships with channels
Competitors relationships with channels
Channel discount requirements
Potential for publicity
Avenues for advertising
Kind of offering ~There are a number of ways we will promote our service, all basically being a PULL strategy. These include:

A CitiLoc employee acting as the personal coordinator for each city in the data base.
A one page flyer in each city's packet of literature sent to prospective businesses.
A link from each city's web page (if one exists) to our web page.
Links with other relevant web pages throughout the Internet.
Each search engine on the web will be fully indexed to find our site.
A strong push to gain publicity about our web site.
Advertising in strategic planning, financial and human resource publications.
A direct mail program to inform top level business management of our service.

It is very important in today�s market to have a presence on the Internet. Some sites actually allow the viewer to purchase products or services directly while others act only to supply information and promote products or services. If you plan to have a web site, describe the objectives for the content. While it is not essential that you document the implementation and support considerations for your site in the plan it is critical that you understand them if you are planning on presenting your plan to a venture capitalist.

Factors to consider:
Domain name simplicity and relevance to the product/service
A description of your web site content
How you will get registered with the search engines?
What key word search criteria you want to locate your site?
Links with other web sites
Will you provide e-commerce capability?
Integration concerns between Internet sales and field/direct sales
Understand the relationship between web site access and revenue
How you plan to keep web site information current
Requirements for and ability to support web site customers
Will site content and projected traffic attract advertisers?
Your ability to insure security for viewers ~Our web site will be professionally constructed with respect to presentation, content, navigation, security and usability across browsers. The business customer will immediately feel comfortable with the interface, because it will be customized to his or her needs. All of the customer's analysis will be stored in a secure entry in the data base and will be instantly available for as long as the business is a customer.

Describe what media you are targeting for publicity, how you intend to generate the interest, what form the publicity will take and when the publicity will occur.

Factors to consider:
New offering announcements
Offering update announcements
Offering application articles
Press conferences
Endorsements from customers or experts
Trade show presentations
Local/national news articles
Talk shows - TV/radio ~We will aggressively pursue as much free publicity as we can get.

To address the city market segment, starting in the fourth month of the development project we will be sending press releases to a wide range of city planning publications. This should cause the publicity to appear in the various publications during months six through nine.

We will be contacting every city manager of the cities we want in our data base, describing our service, providing them an access code to a secure sight describing the service in more detail and, of course, asking them to provide us with the desired information.

In addition, there is a national Governor's conference being held in Miami, FL in the month of May and a national Mayor's conference being held in Phoenix, AZ in the month of June. Because our service is Internet based (the hot topic these days), we would expect to be included on the agenda of each of these conferences to present the concepts of our service.

To address the business market segment, starting in month nine we will send press releases to about 500 strategic planning, accounting and business publications. To complement the press release, we will conduct a press tour in New York City, Chicago, San Francisco and Los Angeles making personal visits to appropriate editors and writers of key publications.

We will also offer a white paper to several fall and winter business conferences describing the concepts of our service. Again, because of the Internet hook, we expect to be included on the agenda of a number of these conferences.

Advertising can take many forms, from calendars to coffee mugs to billboards to magazine ads to radio and TV spots. In most cases advertising is expensive, so you should plan carefully, making sure that the advertising is well focused on your target markets with a high exposure per dollar invested.

Describe each form of advertising planned, specifying the market it is aimed at, the form it will take, what it will cost and the expected return.

Factors to consider:
Literature:
Article reprints
Competitive comparisons
Feature explanations
Benefits explanations
Concepts education
Advertising thrust:
Corporate image
Product/service family
Product/service features
Competitive comparisons
Media:
Magazines
Trade journals
Newspapers
User letters
Television
Radio
Trade shows
Conferences
Direct mail
Card decks
Media focus on your market segment
Cost to expose each prospect to your message ~We will judiciously use advertising to promote our service. There are a few key publications that we believe will reach the right management personnel in businesses that might use our service. These include Harvard Business Review, CEO, Red Herring, two or three financial and accounting publications, The Wall Street Journal, The Christian Science Monitor and some major city newspapers. Beginning in the eleventh or twelfth month we will begin placing ads in these publications.

Beginning in the first month of year two we will begin a direct mail campaign directed at CEO's, COO's and CFO's in high growth industries. The mailings will be followed up with a phone contact and where available an email contact.

We will also pay major Internet search engines such as Yahoo and Google to display our ad whenever specific search criteria is used.

Your pricing strategy is heavily influenced by whether your objective is cash generation or market penetration.

Cash generation is possible if you can price the offering significantly higher than your cost to produce. To achieve this there must be minimal competition. This could be because you are the first to the market, you have a monopoly on the market or because you are the only one willing to offer such an offering due to market decline, liability, social pressures, market location, etc.

Significant market penetration is usually only feasible in the early stages of an offering form's life cycle and is often accompanied with very competitive pricing. In later life cycle stages, market penetration might be feasible if you are able to offer much greater value for the same price or you have been able to substantially reduce your cost to produce as compared to the competition.

Describe your pricing strategy in terms of dollars per unit and how that compares to the competition. If you plan pricing specials or volume discounts, describe them. If you intend to use dealers or distributors, discounts or commissions will be required and should be described.

The mix of sales from full price to your deepest discount will result in an average selling price (ASP) that is lower than your retail price. You should project this mix and the resulting ASP.

Factors to consider:
Cash requirements
Long term staying power
Market penetration objectives
Competitive pricing
Competitor's objectives
Strength of competitors
Average selling price considering all channel discounts
Prospect's sensitivity to price versus product value
Use of pricing specials or trade allowances
Impact on sales organization ~We will generate revenue by charging each city to be listed in the data base, by charging businesses to search the data base and by charging vendors to advertise their services on the data base.

There will be two pricing levels for cities. The basic level, priced at $1,000 per year, will include our effort of accumulating and storing the city data on our data base and keeping the data current. The advanced level, priced at $2,500 per year, will include quarterly reports comparing the data for all cities in the data base plus a listing of businesses that have made a commitment to locate in a specific city.

There will also be two pricing levels for businesses wishing to use the data base. The basic level, priced at $2,500, will allow a business to access and search the data base for up to one year using the search tools provided by our system.

For example, the business could search for all cities that offer a tax abatement program, have an average price per foot for commercial space of less than $1.75/month, have an occupancy rate of less than 90%, have direct airline connections to San Jose and have a major university within 50 miles.

The advanced level, priced at $10,000, will provide extensive analysis tools plus evaluations, written by our staff, for up to three cities. The evaluations will review over fifty important factors to consider before making a commitment to a new city.

We may also offer to provide consulting support to businesses. If so, we will make proposals on request from the prospect. Minimum consulting rates will be $1,200 per day.

In addition, we expect that service and product vendors in the various cities will be interested in promoting their business in the data base. We have not established pricing for this as yet, but, in any case, do not expect it to be a substantial portion of our revenue.

Whether you are offering a product or a service you have to convince the prospect to buy it. This requires a sales organization in some form. Describe your sales organization with respect to structure, personnel, experience, size and location. Show how this relates to your target markets. Explain how the sales personnel will sell the product or service and how they will be compensated.

Factors to consider:
Sales method:
     Full service retail
     Self service retail
     Wholesale
     Mail order
     Field sales force for on-site sales
Management experience
Current sales personnel
Sales personnel recruiting
Motivation techniques
Commissions
Education of sales personnel
Technical support for sales
Demonstrations of offering
Sales offices
Generation of leads
Ability to contact prospects ~Selling an Internet service is not much different than selling any other service. However, we have an edge over traditional services. Prospects can find us more easily by searching the Internet. (The key here is to insure that the search engines have our site indexed in a way that will position us in the top one or two pages of the search results.)

However, we can't depend on that alone. We will have an initial staff of five personnel contacting businesses on a daily basis to locate the person who would be involved in establishing a new business location. When that person is reached, our personnel will explain the basic features of our service and how they can get more information by looking at our web site. A primary objective will be to get their email address so we can follow up the call with an e-mail that will link them directly to our web site.

As can be determined from the above, a very critical part of the sales process is the content of our web page. It will be designed to educate the prospect, lead them through a decision process and then propose a closure. The prospect can make a commitment "on the spot" using the e-commerce capabilities. They can pay using a credit card, enter a purchase order number and a phone number for verification or request that a representative contact them.

If they pay with a credit card, the card will be verified and an access code will be provided to the new customer. If they provide a purchase order number or request to be contacted, our personnel will receive the information within seconds after the e-commerce transaction. Their response will be to take whatever steps are necessary to close the sale.

Often products or services are sold through channels other than direct sales to the customer. Describe the channels of distribution you will use, their reputation, financial stability, ability to address your target markets, the discounts or commissions they expect and the volume of sales you expect to achieve through each channel. Make some assessment of how your success depends on each of the channels.

Factors to consider:
Competitors use of channels
Channel's locations
Channel's reputation
Channel's financial stability
Channel's discounts as compared to alternative channels
Channel's access to desired market segment
Channel's experience with your kind of offering
Conflict between in-house sales and selected channels ~We and our web site represent the major distribution channel for our services. There is a secondary distribution channel in the form of "links" to our web site from other web sites. We will actively pursue the establishment of links with sites we believe will have a viewer base that may be interested in our service. These sites will be defined as "Referral Partners". If a prospect links to our site from a Referral Partner and contracts for our service within a 10 day period, we will pay a "referral fee" to the partner. Our objective is to establish over 100 Referral Partners by the time we put the data base on-line.

Once a product or service is sold, whether direct to a customer or to a channel of distribution, it must be delivered to them.

If your offering is a product, describe your ability to inventory, ship, warehouse and deliver product when and where needed.

If your offering is a service, describe your ability to deliver the service when and where needed and especially how you handle peak demands.

Factors to consider:
Access to transportation
Use of transportation services versus in-house service
Size of offering
Fragility of offering
Delivery time expectations of customer
Alternative methods of delivery
Offering availability when ordered
Warehouse locations and space
Implications of late or lost deliveries
Delivery prices part of offering price or additional
Requirement for insurance ~For the most part, our service consists of making the data base and its search tools available to the customer. This is all done through our web site and does not require any intervention by our personnel.

For advanced city subscribers we will distribute a quarterly report via email.

For advanced business customers there will be email communication to request and deliver customized city reports.

There is always a need to provide customer support. Describe your policy for product or service warranty and what form of support will be required to meet the warranty commitments including organization structure, personnel, experience, size and location.

Factors to consider:
Warranty commitments
In-house versus on-site support
Service after warranty
Proof of purchase
Delivery to and from service area
Parts sales
Parts inventories
Service site locations
Service personnel experience requirements
Education of service personnel ~Support falls into two categories.

Cities who wish to add or modify information stored in the data base will interface with one of our personnel who has been assigned as their personal representative. New or changed data will be reviewed with the customer to confirm its validity and then entered into the data base, usually on the same day it is provided. City personnel can contact their personal representative at any time with questions or data changes. We will initiate contact with each city at least every six months to determine if the data base needs any changes.

Business users may have problems using the search tools or have questions regarding the data. If so, there is an on-line help facility that will answer most questions. There will also be an email facility that allows the user to pose a question via e-mail. Our commitment will be to respond to all e-mail queries within 24 hours. If neither of those methods satisfy the user, we will also have a 1-800 customer support line that will be available during normal working hours (7AM to 7PM CST).

Provide a summary of the competition as a group. Factors to consider:
Number of competitors
Is market gaining or losing competitors?
Are competitors profitable?
Do competitors have manufacturing or marketing advantages?
Do you expect more or less pricing pressure from the competition?

Describe each competitor and their offering and why they are such strong competition. Describe how your enterprise is positioned as one of the competitors.

Factors to consider:
Image
Names of key competitors/offerings
Leader or follower
How long have they been in business?
Employee relations
Pricing record
Growth record
Manufacturing/marketing experience
Record of response to competition
Record of technological innovation
Market share
Record in other markets
Offering
Price
Price versus value
Ease of installation
Ease of use
Education requirements
Technical support requirements
Reliability
Operating costs
Proven return on investment
Proprietary technology
Offering differences
Service/warranty record
Marketing
Marketing organization
Promotional techniques
Financials
Return on investment record
Profitability record
Current level of profitability
Liquidity
Cash requirements
Commitment to the market
Investment in specialized equipment
Strategic importance to competitor's business objectives
Percent of total income derived from competitive offering
Commitment to channel relationships
Labor contracts involving termination costs
Responsibility to installed customer base ~At present there are two major forms of competition: consultants and information provided by the individual cities.

Consultants range in size from individuals to large international firms. The minimum consulting fee a business can expect to pay is $10,000 and it can easily reach $100,000. The quality of information a business can expect to receive from our service will be equal to or better than what they get from a consultant at a fraction of the cost and the information will be available in a fraction of the time.

Most cities have a web page today. The information they provide is designed to aid visitors and citizens locate restaurants, parks, forms of entertainment, retail outlets and in some cases city government contacts. It is not designed to be user friendly to the business considering a move to the city. Cities that are aggressively trying to attract new business will often have a contact point to provide information to prospective businesses. This usually comes in the form of written literature and seldom addresses the majority of a business' concerns.

Once again, our service provides more relevant information on any given city and, in addition, the business has immediate access to "every other" city that might be a candidate.

Another service could pursue the same business model as CitiLoc, however, we will be first and have at least a year's head start. The commitment by all of the cities to our service will make them reluctant to enter into a second agreement with another service and the high up-front development investment for a "me-too" business will represent a significant barrier to entry.

If you are offering a product, describe what must be done to get the product ready for market.

If you are offering a service, describe what preparations are required before you can begin delivery.

Factors to consider:
Management experience
Technologies involved
Facilities
$$$ involved
Offering availability dates
Critical factors: Personnel, Equipment, Materials, Technological breakthroughs, Test results ~Our objective is to create a web site that incorporates a data base of information about the 500+ largest cities in the U.S. and about 100 international cities. The web site is projected to be ready for use within 12 months from the time we receive funding. The development and testing of the web site will require about 35 personnel during the 12 month period. On completion this will drop to about 10 personnel for maintenance and new development.

The technology involved is all fairly straightforward. We will purchase our own Internet server, but will contract a local Internet service to provide the communications interface and to maintain our server.

Our development program will be directed by Mr. Jim Jones. He will direct in-house personnel and an outside web site design service in the creation of our site.

Mr. Donald van Pelt will direct the effort of data collection and population of the data base. It is our intent to use about twenty five (25) temporary personnel hired either through personnel agencies or through our local university's job placement program.

Describe the basic objectives of your development program.

Factors to consider:
Direction of technological investigations
Improvement of existing offerings and technologies
Market demands
Use of existing versus new technologies
Commitment to patents
Manufacturing versus application technology
Reduction of cost to produce
Improvements to: Quality, Durability, Reliability, Maintainability ~Completing the web site development and data base population will be our first year objective. This will involve completing the design of the data base, populating it, developing the user interface and the data base search engine, insuring the security of the data and making sure that our web site is properly indexed in all of the most popular Internet search engines.

There is nothing technologically new involved in this development project with the possible exception of some of the search techniques we expect to provide for the data base users. The service uniqueness will be due to the centralized collection of data about the cities and the ability of the user to quickly qualify cities of interest.

Describe the organization structure, facilities, equipment and number of personnel. Describe the key personnel in your development program, specifying their skills and responsibilities in the effort. Discuss the potential for losing key people through promotion, transfer or attrition, how you would respond if that occurred and what impact it would have on the program.

Key positions that need to be filled within the next twelve months should be described with an explanation of how you expect to fill the position.

Factors to consider:
Organization chart
Key management responsibilities
Key management capabilities
Vacancies to be filled
Group morale
Commitment to assigned projects
History of successes/failures
Stability of the group
Interaction with other organizations in the enterprise ~Our development program will be directed by Mr. Jim Jones. Mr. Jones has a masters degree in computer science and has participated in the development of two major web sites.

We intend to hire two additional Internet development personnel and a data base management programmer. They will report to Mr. Jones, and all of them will work together with an outside consulting organization that will help to design and develop the web site.

We are located in a city that is very involved in high tech development projects and feel certain that we can find and hire qualified personnel quickly. We have talked with three Internet development consulting groups and will choose one of them as soon as we are funded.

When the development is complete we expect to be able to maintain and improve the web site with in-house personnel.

Data collection and population of the data base will be a very time intensive effort. Mr. Donald van Pelt will direct that effort. It is our intent to use about twenty five (25) temporary personnel hired either through personnel agencies or through our local university's job placement program. The personnel will all go through a three day training session explaining the project, the data we need from each city and how to make contact with city personnel. We have a data input form with very detailed instructions explaining the exact meaning and necessary content for each data field which our personnel will use to interface with the city personnel. Our objective is to complete the data collection effort in about nine months.

Describe the market readiness of your product or service. If it is currently ready for market, indicate whether on-going development is planned to create improvements. ~The web site is projected to be ready for use within 12 months from the time we receive funding. The following section shows a breakdown of the development program with a complete set of milestones and schedules.
Describe schedules for delivery out of development for products or services. Show requirements over time for personnel and resources. Clearly specify any potential conflicts between programs for people or resources and explain the impact of the conflict. ~The development of our web site includes the following activities. The Man Months column indicates the amount of time required to complete the activity, the Start column indicates the month when the activity starts and the Completion column indicates the month in which the activity will be completed.

ActivityMan MonthsStartCompletion
Data Base Activities
Data base design412
Search techniques development435
Data gathering and data base population24019
Internet Activities
Registration of web site domain name011
Selecting a service to host web site111
General web site architecture and content837
Web site graphics437
HTML & ASP programming837
Development of on-line help facilities638
Development of various email interfaces368
Incorporation of secure credit card billing368
Data security and user access code457
Interface web site & accounting system278
Testing of site using cross browsers258
Registration with Internet search engines458
Installation of software to track web site189
Beta Test of all software12911
Total Months of Effort306  
Describe any critical technologies involved in the development or operation of the offering. Discuss any patent or copyright considerations (whether they belong to the enterprise or are external) for development or operational technologies. Explain how you can protect your technologies from being used by others.

Factors to consider:
Use of proprietary technology, yours or another party's
Legal restrictions to use of any technology
Royalties for use of technology
New versus existing technology
If new technology, probability of success/failure
Is use of new technology consistent with production capabilities?
Need/availability of special equipment
Will technology be consistent with other industry standards?
Can you protect your technology: Patents, Copyrights, Trade secrets, Employee agreements? ~The technology involved is all fairly straightforward. We will purchase our own Internet server, but will contract a local Internet service to provide the communications interface and to maintain our server. There are a number of software technologies involved including:

The Internet user interface which will require HTML and JavaScript expertise.

The data base storage and retrieval function which will require expertise in programming Active
Server Pages and whichever data base management software we select.

Security for our web site and for the data base. This will require expertise from both our personnel as well as the Internet service provider.

The e-commerce process which allows the customer to purchase the service on-line and then have secure and private access to the data base.

The process of registering our web site with each of the search engines and providing index information that will place us near the top of the search results.

It is also important that the whole project is designed to be "scalable". That is, as access demand increases there will be no problem expanding the resources to meet the demand.

Provide a concise description of the production program for all products or services.

Factors to consider:
Management experience
Personnel experience
Facilities
Technologies involved
Environmental impacts
Schedules
Production volumes
$$$ involved
Critical factors: Personnel, Equipment, Materials, Suppliers, Sub-contractors, Labor contracts

Describe the organization structure, facilities, equipment and number of personnel. Describe the key personnel in your operation, specifying their skills and responsibilities in the effort. Discuss the potential for losing key people through promotion, transfer or attrition, how you would respond if that occurred and what impact it would have on the operation.

Key positions that need to be filled within the next twelve months should be described with an explanation of how you expect to fill the position. If you expect a requirement for a significant increase in personnel, discuss the availability of a labor pool in the vicinity of your facilities.

Factors to consider:
Organization chart
Key management responsibilities
Key management capabilities
Vacancies to be filled
Experience level of personnel
Personnel training requirements
Attrition rate
Availability of replacement personnel
Worker safety/comfort considerations
Interaction with other organizations in the enterprise ~The operation of our web site will be a dual responsibility. Our server will be located at FastFind.net, a professional Internet service provider. They will maintain the hardware and make sure that the communications interface is available for Internet users to access our web site 24 hours a day seven days a week. They also have expertise in the Windows 2000 operating system that we will be using.

Our responsibility is to keep all of the web site code working. As we get customer feed back, there will be constant improvement as we add features and make the interface more user friendly. We will also be creating back up for the data base on a daily basis as well as updating it with data for new city customers or modified data for existing city customers.

Purchase information is routed to our accounting data base on a real time basis and both systems must be reviewed and maintained on a regular basis. Our accounting group will use this information to bill to purchase orders and to pay "reference fees" to other businesses who have referred a customer to us via a link from their web page.

A log of all user accesses will be maintained on the site which will be reviewed as weekly and monthly summaries. This will help us to better understand how our customers are using the web site and the data base providing more input to help us improve our service.

A key factor allowing an operation to meet schedules is on-time delivery of the components of the product or service. Component or sub-assembly suppliers are critical and their credentials should be carefully considered before you contract with them. Describe your suppliers, their financial stability, how they will deliver your orders (logistics), their reputation and whether they in any way might be a competitor. Indicate whether you have a second source for each of the suppliers and what the impact would be on your operation if the original supplier failed to meet their commitments and you had to resort to the second source.

Factors to consider:
Past record
References
Prices versus other suppliers
Financial stability
Proximity to your enterprise
Delivery methods
Might they be a competitor?
Do they supply your competitor?
Do they have labor problems?
How important is your business to the supplier?
How important is the supplier to your business? ~The cities could be considered as our suppliers. We intend to have a very close working relationship with them. And, since it is in their best interest to keep our data base current about their receptiveness to new business, we expect good response from them.

Describe any sub-contractors you will be using (name, location, reputation in the industry), what their responsibilities will be, how critical they are to the delivery of your product or service and how you will deal with any failure of a sub-contractor.
Describe any critical technologies involved in the manufacture of the product or delivery of the service. Discuss any patent or copyright considerations (whether they belong to the enterprise or are external). If appropriate, explain how you can protect your technologies from being used by others.

Factors to consider:
Use of proprietary technology, yours or another party's
Legal restrictions to use of any technology
Royalties for use of technology
New versus existing technology
If new technology, probability of success/failure
Is use of new technology consistent with personnel capabilities?
Need/availability of special equipment

Discuss the requirements for quality control of the production or service delivery processes. This ranges from incoming materials inspection to sub-contractor reviews, to sub-assembly and final assembly checks, to testing of the finished offering. Consider personnel, equipment, space, travel or any other pertinent factors involved in the quality control process.

Factors to consider:
Definition of "quality"
Tolerance specifications for materials / components / offering
Materials/components critical to offering quality
Personnel qualifications
Special measurement tools
Quality check points: Material/component source, Receiving dock, Storage facilities, In-production points, Finished product

Discuss what levels of inventory will be needed for various components of the finished offering. Consider order lead times, shelf life, storage space, logistics, personnel and any other factors pertinent to the inventory control process.

Factors to consider:
Material ordering processes
Order lead times
Storage space
Scarce materials
Volatile materials
Short shelf life materials
Movement from inventory to production
Reorder points
Reorder quantities
Alternative materials/sources
In-process inventory
Finished goods inventory

Explain the requirements for new or additional funding reflected in your financial statements. Alternative funding scenarios can be described if appropriate, and corresponding prospective financial statements can be presented in subsequent sections of your plan if necessary.
Describe the initial amount of funding required, the type of funding (investment for equity, debt, or other form) and the terms you consider to be appropriate for the investment.
Explain how the investment funds will be used, considering working capital, capital investments, debt retirement, acquisitions and any other uses.
Any investor will want to have a clear understanding of how you expect to provide them with a return on their investment. This might involve a public offering, a leveraged buyout, acquisition of another company or any number of other innovative mechanisms.

If you expect the debt to be retired in payments over time, then the amounts and timing should be described.

Remember that since the rate of return is their most important consideration, and that a public offering is sometimes not an alternative, investors will be looking for a variety of exit strategies. Therefore, be flexible and creative in developing these opportunities, taking into consideration concepts such as merger/acquisition or strategic partnering. Although details can be worked out later, investors need to know that you understand their primary objectives as you develop your overall business strategy.

The following are examples of several of the more traditional ways for investors to realize a return on their investment.

Dividends - Beginning in the third year following investment, the enterprise will pay to the investor a dividend. Dividends will be shared among investors on a pro rata basis. The amount of the dividend will be determined by the board of directors, but in no event will total dividends issued reduce the fiscal year end cash ratio to less than .75.

Investor redemption based on a pre-defined schedule - Beginning in the third year after investment the investor will have the right to redeem their equity to the extent that the enterprise's cash ratio can be maintained at or above .6. If more than one investor wishes to redeem their equity it will be done so on a pro rata basis. Redemption will be based on the following schedule.
Year three   -   125% of original investment (10% internal rate of return)
Year four     -   190% of original investment (18% internal rate of return)
Year five      -   250% of original investment (21% internal rate of return)

Enterprise buyout of investors based on a pre-defined schedule - Beginning in the third year after investment the enterprise will have the right to buy back the investor's equity at a pre-determined price. Buy back will be based on the following schedule.
Year three   -   400% of original investment (60% internal rate of return)
Year four     -   600% of original investment (57% internal rate of return)
Year five      -   800% of original investment (52% internal rate of return)

Merger, Acquisition, IPO
In any of these circumstances it is not possible to predict what the return will be for the investor. It is assumed that any such action would be done in the best interest of the stockholders.

Convertible Note - An alternative to a direct investment is a loan from an investor. A specified interest rate would be defined with payments due at regular intervals over the term of the loan. The investor would have the option to convert the loan to a percentage interest in the enterprise for some pre-defined period of time (usually considerably less time than the term of the loan).

If this business plan is for an on-going business, you should have some form of financial statement from your previous operations. Include spreadsheets that address your Income, Cash Flow and Balance Sheet statements. Ideally you should show three years of historical information. If you have less, enter the information you do have.

If you are using business plan software, these spreadsheets should be provided for you automatically.

This is a summary of your historical income statement. Include a spreadsheet with line items dealing only with the highest level of detail.

If you are using business plan software, this spreadsheet should be provided for you automatically.

This is a summary of your historical balance sheet. Include a spreadsheet with line items dealing only with the highest level of detail.

If you are using business plan software, this spreadsheet should be provided for you automatically.

This is a summary of your historical cash flow. Include a spreadsheet with line items dealing only with the highest level of detail.

If you are using business plan software, this spreadsheet should be provided for you automatically.

Financial projections should be based upon something more concrete than the enthusiasm of the author. The credibility of your numbers depends upon how you derived them.

All numbers in every financial spreadsheet must be consistent. Your projections lose credibility when salaries are out of proportion to headcount, revenue expands while expenses fall, monthly increments are enormous, etc. If you are using business plan software to write your plan, the consistency and completeness of these spreadsheets will be verified for you automatically.

Investors or lenders are primarily interested in whether your projections reflect an understanding of how cash flows through your enterprise, what needs to be tracked to measure risk and success, how expenses are distributed, and what risk you project will need to be covered by them.
The Income Statement subtracts all the costs incurred to operate your enterprise from the amounts received from selling goods and services. The result is a net income or a net loss for the year.

Factors to consider:
Sales projections
Cost of goods sold
Variable expenses (payroll, legal, marketing, etc.)
Fixed expenses (facilities, interest, depreciation, etc.)
Taxes

Include a spreadsheet with revenue and expenses for each month of the first year. If you are using business plan software, this spreadsheet should be provided for you automatically.

The Income Statement subtracts all the costs incurred to operate your enterprise from the amounts received from selling goods and services. The result is a net income or a net loss for the year.

Include a spreadsheet with revenue and expenses for each quarter of the second year. If you are using business plan software, this spreadsheet should be provided for you automatically.

The Income Statement subtracts all the costs incurred to operate your enterprise from the amounts received from selling goods and services. The result is a net income or a net loss for the year.

Include a spreadsheet with revenue and expenses annually. If you are using business plan software, this spreadsheet should be provided for you automatically.

The Cash Flow Statement will show the amount of cash you have available at any given time during your business plan. If a negative cash balance occurs you will have to examine your revenue and expense projections. To address the negative cash balance you will have to increase revenues, decrease expenses or arrange to get cash through a loan or capital investment.

Cash flow is projected for each month of the first year, for each quarter of the second year and annually for the remaining years.

Factors to consider:
Cash receipts (sales, loans, etc.)
Cash distributions

If you are using business plan software, the cash flow statement is generated automatically from the data you provided for your income statement. Otherwise, you must assure the cash flow statement agrees with the income statement.

The Cash Flow Statement will show the amount of cash you have available at any given time during your business plan. If a negative cash balance occurs you will have to examine your revenue and expense projections. To address the negative cash balance you will have to increase revenues, decrease expenses or arrange to get cash through a loan or capital investment.

Cash flow is projected for each quarter of the second year.

If you are using business plan software, the cash flow statement is generated automatically from the data you provided for your income statement. Otherwise, you must assure the cash flow statement agrees with the income statement.

The Cash Flow Statement will show the amount of cash you have available at any given time during your business plan. If a negative cash balance occurs you will have to examine your revenue and expense projections. To address the negative cash balance you will have to increase revenues, decrease expenses or arrange to get cash through a loan or capital investment.

Cash flow is projected annually for the 5 years.

If you are using business plan software, the cash flow statement is generated automatically from the data you provided for your income statement. Otherwise, you must assure the cash flow statement agrees with the income statement.

The balance sheet is divided into two sections: assets and liabilities plus shareholders� equity.� The two sections must always be in balance.� Each asset, liability, and component of shareholders� equity reported in the balance sheet is represented by a dollar amount or a "balance." The balance sheet is projected for each year of the plan.

Factors to consider:
Current Assets (cash, accessible resources)
Fixed assets (land, equipment, buildings, etc.)
Long-term investments (copyrights, patents, stocks, etc.)
Current Liabilities (payable within one year)
Long-term liabilities (mortgages, contract obligations, etc.)
Net Worth (owner equity)

Do not vary from standard accounting format and order.

If you are using business plan software, the balance sheet is generated automatically from the data you provided for your income statement. Otherwise, you must assure the balance sheet agrees with the income statement.

When presenting your business plan to an investor or to your management it is of value to show projections for revenue and expense that represent the best possible case and the worst possible case. It is recommended you provide some explanation for the circumstances that might precipitate either the best or worst case in the financial assumptions section. Duplicate your 5 year Income Statement and modify it to reflect each scenario.
Include a spreadsheet with optimistic projections for revenue and expense as an upside potential. Explain the circumstances that could bring about this optimistic result.

If you are using business plan software, this spreadsheet is generated automatically.

Include a spreadsheet with your most pessimistic projections for revenue and expenses. Explain the circumstances that could bring about this pessimistic result.

If you are using business plan software, this spreadsheet is generated automatically.

Numbers do not speak for themselves. In this section you must describe what your financial projections were based upon.
Anyone reading your financial projections will want to know what assumptions went into the creation of the projections. This includes assumptions about the size of the market and your ability to penetrate it, staffing plans, management salaries, inventory turnover, receivables and payables periods and expectations for investment or loans.

Receivables Period
While some enterprises conduct a "cash only" business, most enterprises will make sales for which they do not receive immediate payment. To analyze the cash flow for your business it is important for you to estimate your receivables period. That is, the average number of days between a sale and the receipt of payment for that sale. So some sales may result in 'payment on delivery' while for others payment may take as long as ninety days. Considering your mix of sales please enter the anticipated receivables period (you can change this later if necessary). If you are a cash only business, use zero.

Payables Period
In the course of business you will incur a variety of debts for everything from pencils to computers to legal advice. In many cases the vendor will invoice you for payment at a date following the receipt of the goods or services. Some of these invoices will be paid immediately, others you will hold for a while. The average number of days between receipt of the invoice and payment of that invoice for all purchased goods or services is called the payables period. This number is important for analyzing your cash flow.

Percent Reserved for Taxes
When we make a profit we pay a percentage of that profit in taxes to the federal government. For each year of the plan indicate the percent of your profits you reserve for taxes.

Depreciation Period
The period of time over which your capital assets in the form of buildings can be depreciated. Also, for equipment.

Depreciation Period
The period of time over which your capital assets in the form of buildings can be depreciated. Also, for equipment.

Cash on Hand
Cash available as you begin business for the period addressed by your business plan.

Start-up Costs
Initial, one-time expenses.

Investment Capital
The amount you expect to receive from selling an interest in your business.

Customer Deposits
The amount you expect to receive from payment in advance fro the planned delivery of your product or service.

Sale of Assets
The amount you expect to receive from the sale of specific assets to raise operating capital.

Loans
The amount you expect to receive from a lender and the terms of repayment.

Capital Expenditures
Expenses for buildings or equipment.

Dividends
The amount of dividends you plan to pay to your stockholders for each year of the plan.

Inventory
The value of inventory of finished goods or materials to produce your product or service. ~Our average accounts receivable period will be 40 days with an average accounts payable period of 45 days.

We will require capital investment as follows:


First Year       -   $1,250,000
Second Year   -   $500,000
3rd-5th Year   -   $500,000

We will make capital expenditures in the first year of $75,000 to acquire equipment. The equipment will be depreciated over a period of 7 years.

Taxes are calculated as 25% of revenue.

Your business plan should include calculations of the following ratios. If you are using business plan software to write your plan, these ratios will be calculated for you automatically.

Cash Ratio
A measure of the amount of cash available to offset current debt. A ratio below .5 may mean you are having cash flow problems, possibly because of a significant backlog in accounts receivable.

Quick Ratio
A measure of the amount of liquid assets available to offset current debt. A healthy enterprise will always keep this ratio at 1.0 or higher.

Current Ratio
A measure of the degree to which current assets cover current liabilities. A high ratio indicates a good probability the enterprise can retire current debts. A ratio of 2.0 or higher is a comfortable financial position.

Current Liabilities to Net Worth
A measure of the extent to which the enterprise is using creditor funds versus their own investment to finance the business. A ratio of .5 or higher may indicate inadequate owner investment or an extended accounts payable period. Care should be taken not to offend your vendors (creditors) to the extent it affects your ability to conduct day to day business.

Total Liabilities to Net Worth
A measure of the extent that the net worth of the enterprise can offset the liabilities. A ratio greater than 1.0 should be avoided, since it indicates the creditors have a greater stake in the business than the owners.

Fixed Assets to Net Worth
A measure of the extent of investment in non-liquid and often over valued fixed assets. A ratio of .75 or higher is usually undesirable as it indicates possible over-investment and causes a largge annual depreciation charge that will be deducted from the income statement.

Fixed Assets to Total Assets
A measure of the extent to which fixed assets are financed with owners equity (capital). A high ration of .5 or higher indicates an inefficient use of working capital which reduces the ability to carry accounts receivable and maintain inventory and usually meanas a low cash reserve. This will often limit your ability to respond to increased demand for your products or services. ~
 Ind. Avg.20092010201120122013
Cash Ratio 0.44-2.3215.8749.2791.84150.99
Quick Ratio 1.21-2.3239.7758.58103.42165.87
Current Ratio 1.28-2.3239.7758.58103.42165.87
Current Liabilities to Net Worth1.16 0.00 0.02 0.02 0.010.01
Total Liabilities to Net Worth 2.32 0.00 0.02 0.02 0.010.01
Fixed Assets to Net Worth 0.51 0.00 0.05 0.02 0.010.00
Fixed Assets to Total Assets 0.15 0.00 0.05 0.02 0.010.00
Include a spreadsheet showing the income statement projections compared to the average for your industry. Show all values as a percentage of total revenue. This comparison should show the reasonableness of your projections.

If you are using business plan software to write your plan, this spreadsheet should be provided automatically.

Include a spreadsheet showing the balance sheet projections compared to the average for your industry. This comparison should show the reasonableness of your projections.

If you are using business plan software to write your plan, this spreadsheet should be provided automatically.