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How to Write a Business Plan PDF

290 Pages·2010·3.02 MB·English
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® “ An essential book to help entrepreneurs.” N O L O DALLAS MORNING NEWS 10TH EDITION A MM LL OO How to Write a LL FFOORRMMS ON CC DD--RR Business Plan • Write a winning proposal • Prepare cash fl ow and profi t & loss forecasts • Get backers to invest THE LEADING BUSINESS PLAN BOOK FOR 25 YEARS Mike McKeever Free Legal Updates at Nolo.com Th e Story Cofod ma m E Dear friends, Founded in 1971, and based in an old clock factory in Berkeley, California, Nolo has always strived to off er clear legal information and solutions. Today we are proud to off er a full range of plain-English law books, legal forms, software and an award-winning website. Everything we publish is relentlessly researched and tested by a dedicated group of in-house legal editors, who together have more than 150 years’ experience. And when legal changes occur after publication, we promptly post free updates at Nolo.com. Tens of millions of Americans have looked to Nolo to help solve their legal and business problems. We work every day to be worthy of this trust. Ralph Warner Nolo co-founder Products & Services Books & Software Get in-depth information. Nolo publishes hundreds of great books and software programs for consumers and business owners. Th ey’re all available in print or as downloads at Nolo.com. Legal Encyclopedia Free at Nolo.com. Here are more than 1,400 free articles and answers to common questions about everyday legal issues including wills, bankruptcy, small business formation, divorce, patents, employment and much more. Plain-English Legal Dictionary Free at Nolo.com. Stumped by jargon? Look it up in America’s most up-to-date source for defi nitions of legal terms. Online Legal Documents Create documents at your computer. Go online to make a will or living trust, form an LLC or corporation or obtain a trademark or provisional patent at Nolo.com. 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Th e Trusted Name (but don’t take our word for it) “ In Nolo you can trust.” THE NEW YORK TIMES “ Nolo is always there in a jam as the nation’s premier publisher of do-it-yourself legal books.” NEWSWEEK “ Nolo publications…guide people simply through the how, when, where and why of the law.” THE WASHINGTON POST “ [Nolo’s]…material is developed by experienced attorneys who have a knack for making complicated material accessible.” LIBRARY JOURNAL “ When it comes to self-help legal stuff , nobody does a better job than Nolo…” USA TODAY “ Th e most prominent U.S. publisher of self-help legal aids.” TIME MAGAZINE “ Nolo is a pioneer in both consumer and business self-help books and software.” LOS ANGELES TIMES 10th edition How to Write a Business Plan by Mike McKeever TENTH EDITION JANUARY 2011 Editor RICHARD STIM Cover Design SUSAN PUTNEY Production MARGARET LIVINGSTON Proofreading CATHY CAPUTO CD-ROM Preparation ELLEN BITTER Index MEDEA MINNICH Printing DELTA PRINTING SOLUTIONS, INC. McKeever, Mike P. How to write a business plan / by Mike McKeever. -- 10th ed. p. cm. Includes index. Summary: “Contains the detailed forms and step-by-step instructions needed to prepare a well-thought-out, well- organized business plan. Th e 10th edition has been completely updated with the laws, banking regulations, and resources”--Provided by publisher. ISBN-13: 978-1-4133-1280-5 (pbk.) ISBN-10: 1-4133-1280-2 (pbk.) ISBN-13: 978-1-4133-1297-3 (e-book) ISBN-10: 1-4133-1297-7 (e-book) 1. Business planning. 2. New business enterprises--Planning. 3. New business enterprises--Finance. 4. Small business--Planning. 5. Small business--Finance. I. Title. HD30.28.M3839 2010 658.15’224--dc22 2010021162 Copyright © 1984, 1986, 1988, 1992, 1999, 2002, 2004, 2007, 2008, and 2010 by Mike McKeever. All rights reserved. Th e NOLO trademark is registered in the U.S. Patent and Trademark Offi ce. Printed in the U.S.A. No part of this publication may be reproduced, stored in a retrieval system, or transmitted in any form or by any means, electronic, mechanical, photocopying, recording, or otherwise without prior written permission. Reproduction prohibitions do not apply to the forms contained in this product when reproduced for personal use. For information on bulk purchases or corporate premium sales, please contact the Special Sales Department. Call 800-955-4775 or write to Nolo, 950 Parker Street, Berkeley, California 94710. Please note We believe accurate, plain-English legal information should help you solve many of your own legal problems. But this text is not a substitute for personalized advice from a knowledgeable lawyer. If you want the help of a trained professional—and we’ll always point out situations in which we think that’s a good idea—consult an attorney licensed to practice in your state. Dedication This book is dedicated to the memory of my late grandmother, Elizabeth Eudora Woodall Darby, whose influence I acknowledged only recently. Acknowledgments After more than a decade of working with many people, I am amazed at the uniform spirit of goodwill and cooperation. My first editor, Ralph “Jake” Warner, showed patience working with a first-time author. My second editor, Lisa Goldoftas, challenged the grammar while gracefully deferring to my knowledge about the subject. Also at Nolo: Steve Elias designed many charts; Adam Stanhope educated me about computers; Mark Stuhr tuned sections on computer- related material; Stephanie Harolde worked her word processing wonders on the manuscript; Terri Hearsh designed the book; Eddie Warner gave helpful suggestions on online information; and many more folks at Nolo improved the book greatly. A special thanks to a number of generous individuals, each of whom knows a great deal about starting and operating a small business. Peg Moran, Terri Hearsh, Roger Pritchard, Jason Wallach, Harry Keller, Dan Peters, Sharyn Simmons, Larry Healy, and finally, Hugh Codding and Leroy Knibb of Codding Investments. For these and all my readers, clients, and students who have shared their hopes, dreams, and problems with me over the years, thank you for your help. The best parts are yours—all the mistakes are mine. Many of your stories and suggestions appear here in disguised form. I hope all the readers will profit from your wisdom and generosity. Mike P. McKeever Santa Rosa, California About the Author Mike P. McKeever’s education, work experience, business ownership, writing, and teaching careers give him a broad and unique perspective on business planning. He has a BA in Economics from Whittier College and a Master’s in Economics from the London (England) School of Economics, and has done postgraduate work in financial analysis at the USC Business School. Mike has taught classes at numerous community colleges in entrepreneurship and small business management. He has published articles on entrepreneurship for Dow Jones publications, the Sloan Publications Business Journal, and numerous newspapers and periodicals. Mike has successfully purchased, expanded, and sold a number of businesses, including a manufacturing company, tune-up shop, gas station, retail store, and commercial building. He has worked for a variety of companies ranging from small groceries to multimillion-dollar manufacturers. As an independent business broker, he assessed the strengths and weaknesses of hundreds of companies. As senior financial analyst for a Fortune 500 company, he wrote and analyzed nearly 500 business plans. Currently, Mike enjoys email correspondence with a few readers relating to business plan issues. He also acts as consulting controller and financial advisor to an online retail business. You can contact him at [email protected]. Downloading Forms and Other Materials The printed version of this book comes with a CD-ROM that contains legal forms and other material. You can download that material by going to www.nolo.com/back-of-book/sbs.html. You’ll get editable versions of the forms, which you can fill in or modify and then print. Table of Contents Your Legal Companion ..................................................................................................................1 1 Benefits of Writing a Business Plan ..................................................................................5 What Is a Business Plan? ...................................................................................................................6 Why Write a Business Plan? ............................................................................................................6 Issues Beyond the Plan ......................................................................................................................8 2 Do You Really Want to Own a Business? ..................................................................11 Introduction ..........................................................................................................................................12 Self-Evaluation Exercises .................................................................................................................13 How to Use the Self-Evaluation Lists .......................................................................................17 Reality Check: Banker’s Analysis .................................................................................................17 3 Choosing the Right Business ..................................................................................................21 Introduction ..........................................................................................................................................22 Know Your Business ..........................................................................................................................22 Be Sure You Like Your Business ..................................................................................................24 Describe Your Business ...................................................................................................................24 Taste, Trends, and Technology: How Will the Future Affect Your Business? ........30 Break-Even Analysis: Will Your Business Make Money? ................................................34 What You Have Accomplished ...................................................................................................47 4 Potential Sources of Money to Start or Expand Your Small Business ...................................................................................................49 Introduction ..........................................................................................................................................51 Ways to Raise Money .......................................................................................................................51

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