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Small Business Guide

JUNE 20, 2000

SMART ANSWERS

Building Your Business Plan: Where to Begin, Part 1
The Internet is swarming with help. Here are some good cyber starting points


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Q: I'm writing a business plan for an e-commerce company. Where can I find guidelines, and how do I make it attractive to potential investors?

-- L.M., Farmington Hills, Mich.
This question will be answered in two installments. Part one addresses business-plan guidelines, and part two (on June 22) will discuss tips for making the plan attractive to investors.

A: When it comes to writing a business plan, you'll find an almost unlimited resources to choose from. The process is outlined in books, workbooks, and business-plan seminars. Do a little digging on the Net (you won't have to dig very far), and you'll discover general-interest and industry-specific Web sites that offer business-plan guidelines and sell interactive templates.

Business-plan consultants can help you gather data and refine your prose. You need to research your options and then narrow down the elements that will make your plan both unique and attractive. It's best to do the research yourself, because you're in the best position to judge what elements will work for you.

Centurion Consulting, a business-plan consultancy in Westwood, Calif., recently surveyed venture capitalists about the biggest holes they found in business plans. "The No. 1 problem they identified was the lack of a management team," says co-owner Barbara Lewis. "Understandably, it's hard for a new entrepreneur without the contacts or the ability to get contacts to come up with a high-powered management team. But at least they should try to find an advisory board that will help them find management-team members."

MISSING CLUES. The second big problem that VCs identified was the lack of market analysis, which came as no surprise to Lewis. "We see a lot of executive summaries come in for review, and often they don't include any analysis about how big their market is, how fast it's growing, or what the margins are," she says, noting that without those details it's almost impossible for a potential investor to evaluate a company's prospects.

How does an entrepreneur get market data, particularly for a new e-commerce concept? Again, more time-consuming research: "You've got to either take another e-commerce company that's doing something similar, or look at brick-and-mortars and try to extrapolate as best you can," Lewis says. To dig out data on specific markets, competition, risk, staffing, revenues, and profits, her company uses Web databases like those found at Hoover's Online (www.hoovers.com), the Securities & Exchange Commission's EDGAR database (www.sec.gov/edgarhp.htm), and eMarketer (www.emarketer.com), as well as Internal Revenue Service information on industry averages and key ratios. Those data are used to make business-plan assumptions that can be well defended through comparable business experiences, she says.

Start your research with a look at some of these resources: The U.S. Small Business Administration (www.sba.gov) offers a free business-plan outline, as does www.office.com and www.bulletproofbizplans.com. Lewis' Web site, (www.centurionconsulting.com/images/businessplans_com.htm) gives a plan outline. Suggested books on business planning are listed at www.e-businessplan.com/books.html. Business-plan software is sold by companies like www.businessplanpro.com and www.business-plan.com.

Have a question about running your business? Ask our small-business experts. Send us an E-mail at smartanswers@businessweek.com, or write to Smart Answers, BW Online, 46th Floor, 1221 Avenue of the Americas, New York, NY 10020. Please include your real name and phone number in case we need more information; only your initials and city will be printed. Because of the volume of mail, we won't be able to respond to all questions personally.


By Karen E. Klein

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