Writing a Business Plan
(From the January 1998 issue of Demolition, published by the NADC)
By Ron Dokell
Iíve noticed in the last few years that our industry is giving rise to a lot of new companies and many former employees are starting out on their own. Of course, this is the American way and for those who work hard and are successful, itís a wonderful thing to be your own boss.
One of the things that anyone who starts a business, or is trying to expand an ongoing business, usually runs into is the necessity to borrow money, or at least, get a line of credit. Generally, in order to do this, you need to write a business plan. Whoever you are going to borrow money from, whether its a bank or private individuals, will want to see this plan.
Many of the basic for a business plan can be found on various computer programs. However, for general information, here are eight items that must be part of any good business plan.
- THE INDUSTRY Describe the industry and identify industry trends. Also, discuss the legal or regulatory problems faced by the industry and how you will handle them.
- THE MARKET. Describe your market size, analyzing the strengths and weaknesses of your competition (usually by name), identify ways you plan to reach your market and how decisions are made by your potential customers. State your sales goals for the next five years.
- MARKETING STRATEGY Specify how you will find customers and market to them. List any promotional activities you plan and how your pricing policies compare with those of your competition.
- YOUR COMPANY Describe your company, including its history and background. Stress your company goals. Talk about your organization and any licensing requirements.
- MANAGEMENT PERSONNEL. Identify the skills needed to run your business and the individuals in your business who can provide those skills. Discuss what compensation arrangements have been made, including any ownership percentages or employee incentives.
- FINANCIAL PROJECTIONS. Project your cash flow on a monthly basis for the first year or until you can show positive cash flow on your projections. Project year end statements, balance sheets and your projected annual cash flow over the next five years.
- CAPITAL NEEDS. Specify what your needs are going to be, what the funds will be used for, how you plan to pay for this capital and, most importantly, how you plan to repay it. Everyone who loans you money wants to know "How much am I going to make for doing this?" and "How and when do I get my money bank?" Identify the ownership participation in the capital, if there is any.
- PLAN SUMMARY. Make a summary of your plan describing what you do, what your market potential is, how you are going to reach that market, what your management skills are, what your financial projections are and what your funding needs are. This should appear as an "Executive Summary" in your business plan.
This is just an idea of what you need for your business plan. You can probably find a lot of information either online or at your local public library. It's not rocket science. It's just something that you need to do if you want to borrow money.
Ron Dokell is past president of Olshan Demolishing Company and is currently president of Demolition Management Consultants, a demolition management consulting firm.