Upgrade for a Better Experience

Canandaigua National Bank & Trust would like to encourage all of our customers to update their internet browsers as new releases are made available. Using the most recent browser version ensures the best security, design experience, speed and functionality.

Continue to CNBank.com

If you have any comments or concerns, please contact our Customer Call Center at 585.394.4260 ext. 0.

Your Bank > Education and Advice > CNB University

Preparing a Business Plan

B Lowenthal
Robert L. Lowenthal, Jr. is Senior Vice President - Group Manager and can be reached at BLowenthal@CNBank.com or (585) 394-4260 x36108.

I.    Introduction: 
      If you don’t know where you are going, how will you know when you are lost? 

    1. Why a business plan? 
        a. Provides a road of what is to be accomplished and to learn a great deal about your industry and market. 
        b. While Plan A is being written, consider what Plans B & C might consist of if A does not succeed. 
        c. The objective of the business plan is to create a successful business. 
        d. Narrowing of the focus of what is to be accomplished.

II.    Factors of a Successful Business Plan 

    1. Business concepts—Thomas Edison said: “Anything that won’t sell, I don’t want to invent.” 
        a. Something new or better. 
        b. An underserved or new market. 
        c. New delivery system or distribution channel. 
        d. Increased integration, i.e. manufacture and sell a product or more services & products from a single location. 

    2. Understanding the Market 
        a. Size of market to be served. This requires market research and evaluation. 

    3. Industry Health & Trends 
        a. Growing or shrinking market. 
        b. Old industries can be successful. Dunkin Donuts reinvented its concept to compete with Starbucks. 

    4. Clear Strategic Position & Consistent Business Focus 
        a. A crucial element for a successful business is the development of a clear strategic position that differentiates 
            your business from the competition. Failure can occur when management loses sight of its key objectives. 
            It is very important to stay focused. 
        b. Develop a company culture. 

    5. Capable Management 
        a. Experience—Best if it is in the industry. 
        b. Realism—Understands the needs and challenges of the industry and knows their limitations. 
        c. Flexibility 
        d. Ability to work well with people. 

    6. Ability to Attract, Motivate and Retain Employees 

    7. Financial Controls 
        a. Poor cash flow management can destroy a company. “Things take longer and cost more than anticipated.” 
        b. What does it take to open the doors each month? 
        c. What is the real profit center of the business? 
        d. How much expansion is needed to maintain growth? 
        e. Hidden costs of marketing the business. 
        f. What are the consequences of the credit policies? 
        g. 13 week cash flow is a plus for every business. 
            Controlling & understanding the finances of the business can make the business decisions easier. 

    8. Anticipating Change & Adaptation 
        a. Technology changes—cell phones to PC phones. 
        b. Sociological Changes—Health, demographic concerns 
        c. Competitive Changes—Ease of entry into the chosen industry. 

    9. Company Values & Integrity. 
        a. Establish Core Values—While profits are a must, what else—quality, cost optimization, corporate citizenship, quantity, material management, etc. 

    10. What is the motivation for the new venture? 
        a. Know personal strengths and weaknesses. 
        b. A need to be in control. 
        c. Need to be challenged. 
        d. Like being creative. 
        e. How much cash can be personally invested or can be raised from others?

III. Getting the Plan Started with 5 fundamental steps. 

    1. Laying out the basic business concept. 
        a. Type of business—retail, service, manufacturing, distribution, internet, etc. 
        b. Industry Group 
        c. Sell or provide what products or services 
        d. Potential customers & Markets served 
        e. Describe marketing and sales strategy 
        f. Specific competitors—list advantages & disadvantages for each. Determine your company’s “Blue Ocean” strategy. 

    2. Gathering data on the feasibility and specifics of the concept—sufficient information to prevent including inaccurate information in the plan. 
        a. How much information is enough? Much is needed, but brevity in the plan is important. 
        b. Start research with questions that are the basis of the business. 
        c. Keep the material well organized. 
        d. Informational sources. 
            • Internet 
            • Governmental sources—Small Business Administration, Fedstats, etc. 
            • Chamber of Commerce & Business Groups 
            • Libraries 
            • Publications 
            • Small Business Resource Centers 
            • Direct Market Research 



    3. Bring the business concept into focus by answering the following questions. 
        a. Is the business viable? 
        b. Does a real market exist? 
        c. Is there too much competition already? 
        d. How does the financial picture look? 

    4. Outlining the specifics of the business. 

    5. Making the plan compelling. 
        Write the plan with the reader in mind. Experienced business plan reader spend about 5 minutes reviewing a plan in this order. 
        a. Executive Summary 
        b. Financials 
        c. Management 
            Questions these 3 areas need to answer. 
                • Is the business idea solid? 
                • Is there sufficient market for the product or service? 
                • Are the financial projections realistic and in line with the investor’s/lender’s funding? 
                • Is key management experienced and capable? 
                • Does the plan clearly describe how investor/lender will get repaid? It should provide at least two repayment sources.

IV. Factors to Remember. 

    1. Get the facts right. 
    2. Length of Plan—15—35 pages plus financials. 
    3. Duration—3—5 years. 
    4. Use language that conveys success. 
        • Use superlatives sparingly 
        • Include positive comments from third party sources 
        • Use business terms 
    5. Ideas on Style. 
        • Numbers—Use them for impact 
        • Bullet Points 
        • Be redundant, but carefully 
    6. Use Visuals. 
        • Photographs and illustrations 
        • Graphs and charts 
    7. Remember that the Executive Summary should be Concise, Compelling and Convincing.