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Business Plans For Dummies®, 2nd Edition

Book Description

A full updated and extended second edition of an established UK bestseller Business Plans For Dummies 2nd Edition features new and updated information on formulating a solid business plan to build a secure business – even in an economic downturn. Complete with a brand new business plan template to get you started this expert guide offers fresh advice on reading the competitive marketplace and assessing your business in the current economic climate. It walks you step-by-step through every aspect of planning achievable business goals and diversification strategies, identifying trends, exploring new technologies and advertising routes, and predicting your business’ commercial future. Whether you’re looking to start up a small business or streamline an existing one this book is all you need to boost your business know how and prepare a watertight plan. 

Business Plans For Dummies 2nd Edition contains new and updated information on:

Determining Where You Want to Go

  1. Starting Your Business Plan

  2. Charting the Proper Course

  3. Setting Off in the Right Direction

Sizing Up Your Marketplace

  1. Checking Out the Business Environment

  2. Taking a Closer Look at Customers

  3. Dividing Customers into Groups

  4. Scoping Out Your Competition

Weighing Your Company’s Prospects

  1. Establishing Your Starting Position

  2. Focusing On What You Do Best

  3. Figuring Out Financials

  4. Forecasting and Budgeting 

Looking to the Future

  1. Preparing for Change

  2. Thinking Strategically

  3. Managing More Than One Product

A Planner’s Toolkit

  1. Making Your Business Plan Work

  2. Learning from Others: A Sample Business Plan

The Part of Tens

  1. Ten Questions to Ask About Your Plan

  2. Top Ten Business-Planning Never-Evers

  3. Ten of the Best-Planned Organisations Around

Table of Contents

  1. Copyright
  2. About the Authors
  3. Authors' Acknowledgements
  4. Publisher's Acknowledgements
  5. Introduction
    1. Why You Need This Book
    2. How to Use This Book
    3. How This Book Is Organised
      1. Part I: Determining Where You Want to Go
      2. Part II: Sizing Up Your Marketplace
      3. Part III: Weighing Up Your Company's Prospects
      4. Part IV: Looking to the Future
      5. Part V: A Planner's Toolkit
      6. Part VI: The Part of Tens
    4. Icons Used in This Book
    5. Where to Go from Here
  6. I. Determining Where You Want to Go
    1. 1. Starting Your Business Plan
      1. 1.1. Getting the Most Out of Your Plan
        1. 1.1.1. Looking to the future
        2. 1.1.2. Accounting for your history
        3. 1.1.3. Anticipating your audience
      2. 1.2. Naming Your Planners
        1. 1.2.1. Using business planning software
        2. 1.2.2. Getting help with the plan
      3. 1.3. Putting Your Plan on Paper
        1. 1.3.1. Executive summary
        2. 1.3.2. Company overview
        3. 1.3.3. Business environment
        4. 1.3.4. Company description
        5. 1.3.5. Business strategy
        6. 1.3.6. Financial review
        7. 1.3.7. Action plan
    2. 2. Charting the Proper Course
      1. 2.1. Creating Your Company's Mission Statement
        1. 2.1.1. Getting started
        2. 2.1.2. Capturing your business (in 50 words or less)
      2. 2.2. Introducing Goals and Objectives
        1. 2.2.1. Why bother?
        2. 2.2.2. Goals versus objectives
        3. 2.2.3. Efficiency versus effectiveness
        4. 2.2.4. Management by objectives vs Management by exception
        5. 2.2.5. Management by exception
      3. 2.3. Setting Your Own Goals and Objectives
        1. 2.3.1. Guidelines for setting goals
        2. 2.3.2. Guidelines for setting objectives
        3. 2.3.3. Getting it right
        4. 2.3.4. Avoiding the pitfalls
        5. 2.3.5. Stretching for targets
        6. 2.3.6. Timing is everything
    3. 3. Setting Off in the Right Direction
      1. 3.1. Why Values Matter
        1. 3.1.1. Tough choices
        2. 3.1.2. Lost and unprepared
        3. 3.1.3. The value of having values
      2. 3.2. Identifying Your Company's Values
        1. 3.2.1. Investors
        2. 3.2.2. The rest of the crew
        3. 3.2.3. Existing beliefs and principles
      3. 3.3. Putting Together the Values Statement
        1. 3.3.1. The quick way to develop a values statement
        2. 3.3.2. The long way to develop a values statement
      4. 3.4. Creating Your Company's Vision Statement
  7. II. Sizing Up Your Marketplace
    1. 4. Checking Out the Business Environment
      1. 4.1. Defining the Business That You're In
      2. 4.2. Analysing Your Industry
        1. 4.2.1. Structure
          1. 4.2.1.1. The arrangement of rivals
          2. 4.2.1.2. New technologies
          3. 4.2.1.3. Can anybody play?
          4. 4.2.1.4. Cashing out
        2. 4.2.2. Markets
          1. 4.2.2.1. Just how big is big?
          2. 4.2.2.2. Growing or shrinking?
          3. 4.2.2.3. Choices
          4. 4.2.2.4. Something altogether different
        3. 4.2.3. Relationships
          1. 4.2.3.1. Supply and demand
          2. 4.2.3.2. Keeping customers happy
          3. 4.2.3.3. Delivering the sale
        4. 4.2.4. Finance
          1. 4.2.4.1. The cost side
          2. 4.2.4.2. The profit motive
        5. 4.2.5. Researching your market
      3. 4.3. Recognising Critical Success Factors
        1. 4.3.1. Technology
        2. 4.3.2. Manufacturing
        3. 4.3.3. Operations
        4. 4.3.4. Human resources
        5. 4.3.5. Organisation
        6. 4.3.6. Services
        7. 4.3.7. Location
        8. 4.3.8. Marketing
        9. 4.3.9. Distribution
        10. 4.3.10. Government regulation
        11. 4.3.11. Outsourcing
      4. 4.4. Preparing for Opportunities and Threats
        1. 4.4.1. It's a beautiful morning
        2. 4.4.2. Dark clouds on the horizon
    2. 5. Taking a Closer Look at Customers
      1. 5.1. Checking Out Who Your Customers Are
        1. 5.1.1. The good customer
        2. 5.1.2. The bad customer
        3. 5.1.3. The other guy's customer
      2. 5.2. Discovering Why Your Customers Buy
        1. 5.2.1. Understanding needs
        2. 5.2.2. Determining motives
        3. 5.2.3. Monitoring complaints
      3. 5.3. Finding Out How Your Customers Make Choices
        1. 5.3.1. Perceptions are reality
        2. 5.3.2. The five steps to adoption
      4. 5.4. Remembering the Big Picture
      5. 5.5. Dealing with Business Customers
        1. 5.5.1. Secondhand demand
        2. 5.5.2. Decision making as a formal affair
        3. 5.5.3. Forces to be reckoned with
    3. 6. Dividing Customers into Groups
      1. 6.1. Defining Market Segments
      2. 6.2. Ways to Make Market Segments
        1. 6.2.1. Who is buying?
          1. 6.2.1.1. Where do they live?
          2. 6.2.1.2. What are they like?
          3. 6.2.1.3. What do they do?
          4. 6.2.1.4. How do they act?
        2. 6.2.2. What do they buy?
          1. 6.2.2.1. What can it do?
          2. 6.2.2.2. How is it sold?
          3. 6.2.2.3. What does it cost?
          4. 6.2.2.4. Where is it found?
        3. 6.2.3. Why do they buy?
          1. 6.2.3.1. What do they get?
          2. 6.2.3.2. How do they decide?
      3. 6.3. Finding Useful Market Segments
        1. 6.3.1. Is the segment the right size?
        2. 6.3.2. Can customers be identified?
        3. 6.3.3. Can the market be reached?
      4. 6.4. Figuring Out How Market Segments Behave
    4. 7. Scoping Out Your Competition
      1. 7.1. Understanding the Value of Competitors
      2. 7.2. Identifying Your Real Competitors
        1. 7.2.1. Competition based on customer choice
        2. 7.2.2. Competition based on product use
        3. 7.2.3. Competition based on strategy
        4. 7.2.4. Competition in the future
      3. 7.3. Tracking Your Competitors' Actions
        1. 7.3.1. Determining their capabilities
        2. 7.3.2. Assessing their strategies
      4. 7.4. Predicting Your Competitors' Moves
        1. 7.4.1. Figuring out their goals
        2. 7.4.2. Uncovering their assumptions
      5. 7.5. Competing to Win
        1. 7.5.1. Organising facts and figures
        2. 7.5.2. Choosing your battles
  8. III. Weighing Your Company's Prospects
    1. 8. Establishing Your Starting Position
      1. 8.1. Situation Analysis
      2. 8.2. Identifying Strengths and Weaknesses
        1. 8.2.1. Frames of reference
        2. 8.2.2. Capabilities and resources
          1. 8.2.2.1. Management: Setting direction from the top
          2. 8.2.2.2. Organisation: Bringing people together
          3. 8.2.2.3. Customer base: Pleasing the crowds
          4. 8.2.2.4. Research and development: Inventing the future
          5. 8.2.2.5. Operations: Making things work
          6. 8.2.2.6. Sales and marketing: Telling a good story
          7. 8.2.2.7. Distribution and delivery: Completing the cycle
          8. 8.2.2.8. Financial condition: Keeping track of money
        3. 8.2.3. Critical success factors
      3. 8.3. Analysing Your Situation in 3-D
        1. 8.3.1. A glance at competitors
        2. 8.3.2. Completing your SWOT analysis
      4. 8.4. Measuring Market Share
    2. 9. Focusing On What You Do Best
      1. 9.1. Describing What You Do
        1. 9.1.1. Constructing a typical value chain
        2. 9.1.2. Comparing different value chains
        3. 9.1.3. Forging your own value chain
      2. 9.2. Staying in Business
        1. 9.2.1. Searching for competitive advantage
        2. 9.2.2. Focusing on core competence
        3. 9.2.3. Sustaining an advantage over time
      3. 9.3. Earmarking Resources
    3. 10. Figuring Out Financials
      1. 10.1. Understanding a Profit and Loss Account
        1. 10.1.1. Revenue
          1. 10.1.1.1. Gross revenue on sales
          2. 10.1.1.2. Dividend and interest income
        2. 10.1.2. Costs
          1. 10.1.2.1. Cost of goods sold
          2. 10.1.2.2. Sales, general and administration
          3. 10.1.2.3. Depreciation expense
          4. 10.1.2.4. Interest expense
          5. 10.1.2.5. Taxes
        3. 10.1.3. Profit
          1. 10.1.3.1. Gross profit
          2. 10.1.3.2. Operating profit
          3. 10.1.3.3. Profit before taxes
          4. 10.1.3.4. Net profit
        4. 10.1.4. Margins matter
      2. 10.2. Interpreting the Balance Sheet
        1. 10.2.1. Assets
          1. 10.2.1.1. Current assets
          2. 10.2.1.2. Fixed assets
          3. 10.2.1.3. Intangibles
        2. 10.2.2. Liabilities and owners' equity
          1. 10.2.2.1. Current liabilities
          2. 10.2.2.2. Long-term liabilities
          3. 10.2.2.3. Owners' equity
      3. 10.3. Growing Up
      4. 10.4. Examining the Cash-flow Statement
        1. 10.4.1. Cash in and cash out
          1. 10.4.1.1. Funds provided by
          2. 10.4.1.2. Funds used for
        2. 10.4.2. What's left over
          1. 10.4.2.1. Changes in liquid assets
          2. 10.4.2.2. Net change in cash position
      5. 10.5. Evaluating Financial Ratios
        1. 10.5.1. Short-term obligations
          1. 10.5.1.1. Current ratio = current assets ÷ current liabilities
          2. 10.5.1.2. Quick ratio = (cash + investments + debtors) ÷ current liabilities
          3. 10.5.1.3. Stock turnover = cost of goods sold ÷ stock
          4. 10.5.1.4. Debtor turnover = sales on credit ÷ debtors
        2. 10.5.2. Long-term responsibilities
          1. 10.5.2.1. Times interest earned = earnings before interest and taxes ÷ interest expense
          2. 10.5.2.2. Debt-to-equity ratio = long-term liabilities ÷ owners' equity
        3. 10.5.3. Relative profitability
          1. 10.5.3.1. Net profit margin = net profit ÷ gross revenue on sales
          2. 10.5.3.2. Return on investment = net profit ÷ total assets
          3. 10.5.3.3. Return on equity = net profit ÷ owners' equity
      6. 10.6. Understanding Break-even
    4. 11. Forecasting and Budgeting
      1. 11.1. Constructing a Financial Forecast
        1. 11.1.1. Pro-forma profit and loss account
          1. 11.1.1.1. Projected revenue
          2. 11.1.1.2. Anticipated costs
        2. 11.1.2. Estimated balance sheet
          1. 11.1.2.1. Assets
          2. 11.1.2.2. Liabilities and owners' equity
        3. 11.1.3. Projected cash flow
      2. 11.2. Exploring Alternatives
        1. 11.2.1. The DuPont formula
        2. 11.2.2. What-if analysis
      3. 11.3. Making a Budget
        1. 11.3.1. What's in the budget
        2. 11.3.2. Capital Budgets
        3. 11.3.3. How budgets are made
          1. 11.3.3.1. Top-down budgeting approach
          2. 11.3.3.2. Bottom-up budgeting approach
        4. 11.3.4. Using ratios to improve your budget
        5. 11.3.5. Analysing variances
        6. 11.3.6. Flexing your budget
  9. IV. Looking to the Future
    1. 12. Preparing for Change
      1. 12.1. Defining the Dimensions of Change
        1. 12.1.1. Economic trends
        2. 12.1.2. Technological trends
        3. 12.1.3. Political trends
        4. 12.1.4. Cultural trends
      2. 12.2. Anticipating Change
        1. 12.2.1. Trend forecasting
          1. 12.2.1.1. Extrapolation
          2. 12.2.1.2. Judgement forecasting
          3. 12.2.1.3. Delphi study
        2. 12.2.2. Scenario planning
        3. 12.2.3. Demographic time bombs
        4. 12.2.4. Doing a PEST analysis
      3. 12.3. Assessing the Effects of Change
        1. 12.3.1. Rolling the dice
        2. 12.3.2. Win or lose
    2. 13. Thinking Strategically
      1. 13.1. Making Strategy Make a Difference
        1. 13.1.1. What strategy means
        2. 13.1.2. When strategy works
      2. 13.2. Applying Off-the-Shelf Strategies
        1. 13.2.1. Low-cost leadership
          1. 13.2.1.1. No-frills product
          2. 13.2.1.2. Experience curve
          3. 13.2.1.3. Low-cost culture
        2. 13.2.2. Standing out in a crowd
          1. 13.2.2.1. Product features
          2. 13.2.2.2. Product quality
          3. 13.2.2.3. Product packaging
        3. 13.2.3. A focus on focus
          1. 13.2.3.1. Niche markets
          2. 13.2.3.2. Targeted products
          3. 13.2.3.3. Limited territory
      3. 13.3. Checking Out Strategic Alternatives
        1. 13.3.1. Up, down, or sideways
        2. 13.3.2. Leading and following
          1. 13.3.2.1. Market-leader strategies
          2. 13.3.2.2. Market-follower strategies
      4. 13.4. The Marketing Mix
      5. 13.5. Coming Up with Your Own Strategy
    3. 14. Managing More than One Product
      1. 14.1. Facing the Product/Service Life Cycle
        1. 14.1.1. Starting out
        2. 14.1.2. Growing up
        3. 14.1.3. Middle age
        4. 14.1.4. Senior stretch
        5. 14.1.5. Where you are now
        6. 14.1.6. Milking cash cows
      2. 14.2. Finding Ways to Grow
        1. 14.2.1. Same product/service, same market
        2. 14.2.2. New market or new product
          1. 14.2.2.1. New market
          2. 14.2.2.2. New product
        3. 14.2.3. New product and new market
        4. 14.2.4. Understanding the adoption cycle
        5. 14.2.5. Protecting intellectual property
      3. 14.3. Managing Your Product Portfolio
        1. 14.3.1. Strategic business units
        2. 14.3.2. Aiming for the stars
        3. 14.3.3. Looking strong and attractive
        4. 14.3.4. Hastening slowly
      4. 14.4. Extending Your E-Penetration
      5. 14.5. Buying Out Competitors
        1. 14.5.1. Knowing why you want to buy
        2. 14.5.2. Understanding what you want to buy
        3. 14.5.3. Starting to look
        4. 14.5.4. Investigate and approach
        5. 14.5.5. Valuing the business
        6. 14.5.6. Limiting the risks
        7. 14.5.7. Managing the acquisition
  10. V. A Planner's Toolkit
    1. 15. Planning in Turbulent Economic Times
      1. 15.1. Cycles and the Multiplier Effect
        1. 15.1.1. Downturns galore
        2. 15.1.2. Cycles are different
          1. 15.1.2.1. Kondratieff's long waves
          2. 15.1.2.2. Kuznet's Cycle
          3. 15.1.2.3. The Juglar Cycle
          4. 15.1.2.4. The Kitchin Cycle
        3. 15.1.3. Anticipating trouble
      2. 15.2. Preparing for the Worst
        1. 15.2.1. Deleveraging balance Sheets
        2. 15.2.2. Containing Working Capital
        3. 15.2.3. Pricing under Pressure
        4. 15.2.4. Maintaining market share
        5. 15.2.5. Conserving cash
        6. 15.2.6. Keeping key employees
        7. 15.2.7. Selling off assets
      3. 15.3. Preparing for the Upturn
        1. 15.3.1. Acquiring competitors
        2. 15.3.2. Planning short-term for the long-term
          1. 15.3.2.1. Rolling quarterly plans
          2. 15.3.2.2. Speeding up the information flow
          3. 15.3.2.3. Accelerating response rates
    2. 16. Making Your Business Plan Work
      1. 16.1. Shaping Your Company
        1. 16.1.1. Living the plan
        2. 16.1.2. Putting together an organisation
          1. 16.1.2.1. Basic design
          2. 16.1.2.2. Functional model
          3. 16.1.2.3. Divisional form
          4. 16.1.2.4. Matrix format
          5. 16.1.2.5. Your own way
        3. 16.1.3. Developing procedures
        4. 16.1.4. Using advisors
      2. 16.2. Preparing Your People
        1. 16.2.1. Encouraging leadership
        2. 16.2.2. Developing skills
        3. 16.2.3. Creating a culture
        4. 16.2.4. Building a team
        5. 16.2.5. Rewarding results
          1. 16.2.5.1. Paying a commission
          2. 16.2.5.2. Awarding bonuses
          3. 16.2.5.3. Sharing profits
          4. 16.2.5.4. Sharing ownership
        6. 16.2.6. Assembling your finances
          1. 16.2.6.1. Pilling on the debt
          2. 16.2.6.2. Raising Venture Capital
          3. 16.2.6.3. Finding business angels
          4. 16.2.6.4. Floating on a Stock Market
        7. 16.2.7. Planning for the exit
    3. 17. Learning from Others: A Sample Business Plan
      1. 17.1. Safari Europe: Business Plan
  11. VI. The Part of Tens
    1. 18. Ten Questions to Ask About Your Plan
      1. 18.1. Are Your Goals Tied to Your Mission?
      2. 18.2. Can You Point to Major Opportunities?
      3. 18.3. Have You Prepared for Threats?
      4. 18.4. Have You Defined Your Customers?
      5. 18.5. Can You Track Your Competitors?
      6. 18.6. Where Are You Strong (and Weak)?
      7. 18.7. Does Your Strategy Make Sense?
      8. 18.8. Can You Stand Behind the Numbers?
      9. 18.9. Are You Really Ready for Change?
      10. 18.10. Is Your Plan Clear, Concise and Current?
    2. 19. Top Ten Business-Planning Never-Evers
      1. 19.1. Failing to Plan in the First Place
      2. 19.2. Shrugging Off Values and Vision
      3. 19.3. Second-guessing the Customer
      4. 19.4. Underestimating Your Competition
      5. 19.5. Ignoring Your Own Strengths
      6. 19.6. Mistaking a Budget for a Plan
      7. 19.7. Shying Away From Reasonable Risk
      8. 19.8. Allowing One Person to Dominate the Plan
      9. 19.9. Being Afraid to Change
      10. 19.10. Forgetting to Motivate and Reward
    3. A. Glossary of Business and Accounting Terms