The Definitive Business Plan: The fast-track to intelligent business planning for executives and entrepreneurs, Second Edition

Table of contents

1. The Definitive Business Plan
   1.  
   2. Financial Times Prentice Hall
   3. About the author
   4. Acknowledgements
   5. Foreword
      1. Planning and leadership
      2. Planning and knowledge
      3. Planning and implementation
      4. Submitting the plan
      5. People can make a difference
   6. Introduction to the First Edition
   7. Introduction to the Revised Second Edition
      1. The business plan was flawed
      2. Symbols used
   8. 1. What’s it all about?
      2. 1. Have you heard the one about ...
         2. Who should read this book
         3. A quick fix or a longer-term tool?
         4. What is a plan anyway?
         5. Why bother?
         6. Key objectives for your plan
            1. Formal documentation
            2. Funding
            3. Approvals
            4. Operational management
         7. Your target audience
         8. Ten steps to a successful business plan
            1. Two more steps to making it work
            2. Getting it on paper
            3. Ten steps
            4. How many pages?
         9. Don’t trust consultants
         10. Who writes the business plan?
         11. How to use this book
   9. 2. A winning presentation
      2. 1. A concise communication
         2. Computer software
         3. Make it feel good
         4. First thoughts on layout
            1. The overall impression
            2. Keeping control
            3. Circulation
            4. Your legal adviser’s requirements
         5. Creating an outline document
            1. Page set-up
               1. Paper size
               2. Margins and columns
               3. Headers and footers
               4. Page numbering
               5. Subject headings
               6. Fonts
            2. Preliminary information
               1. Cover
               2. Contents page
               3. Contacts
               4. Document control
               5. References
               6. Definitions
            3. Body of the plan
            4. Financial tables
            5. Annexes
            6. Conclusion
   10. 3. Getting down to it
       2. 1. Why?
          2. When you don’t want to be a big fish
          3. What to do if you have several businesses
          4. Your list of contents
          5. The executive summary
          6. The conclusion
          7. Responsibilities – and the timetable
          8. Be a SWOT
          9. Where now?
   11. 4. Know yourself
       2. 1. Taking stock
          2. Start with the basics
          3. The central objective
          4. Are you visionary?
             1. Vision – how do you want to be remembered?
             2. Mission – what do you want to do right now?
                1. Frozen Pizza’s mission statement
             3. Philosophy and values
          5. How did you arrive here?
          6. Some numbers to please the bankers
          7. Building up value
             1. But is it correct?
             2. The value ladder and your organization
             3. Small parts are manageable
          8. The all-important management team
          9. Business organization
             1. Directors
             2. General managers
             3. Other line employees
             4. Administrative support
             5. Career development, training, etc
          10. Business infrastructure
          11. Products and services
          12. Core competencies
          13. The next step
   12. 5. Know the world
       2. 1. For or against you?
          2. The next steps
          3. Collecting information
             1. Look in your own files
             2. Listen
             3. Look
             4. Other research
          4. Understanding the world at large
             1. People
             2. The economy
             3. Government and politics
             4. Pressure groups
             5. Globalization
             6. Technology and the Internet
          5. Business partners
             1. Suppliers
             2. Channels to market
             3. Intermediaries
          6. The market – what you are fighting for
             1. Who are your customers?
             2. Segmentation
             3. Are you spending your money in the right places?
             4. Estimating total demand – how much can be sold?
          7. The industry – what you are up against
             1. Your competitors
          8. Competitive advantages
          9. Now write about it
          10. Moving on
   13. 6. The core of your plan
       2. 1. A strategy and an operating plan
             1. What is strategy?
                1. A strategy in action
          2. Portfolio strategy – what businesses should you have?
          3. Business strategies to satisfy your desires
             1. Be objective
             2. Make it work: Get buy-in
             3. Games people play
          4. Strategies for department managers
             1. Product strategies
             2. R&D strategies
             3. Production strategies
             4. Marketing and sales strategies
                1. Can you increase prices – or should you reduce them?
                2. What the market will bear
             5. Strategies for administration and support services
          5. Resource requirements
          6. Strategic objectives
          7. Documenting the strategy
          8. Creating an operating plan
             1. Operating plans in general
                1. PERT (program evaluation and review)
                2. CPA (critical path analysis)
                3. Network diagrams
                4. Gantt charts
                5. The critical path
                6. Fastest and slowest completion times
                7. Start and end dates for each activity
                8. Making it more useful
          9. Documenting the operating plan
          10. Onwards
   14. 7. About these numbers
       2. 1. ‘The time has come’, the walrus said, ‘to speak of other things’
          2. Varying views of the same numbers
             1. Three views of financial transactions
                1. 1. Sales
                2. 2. Capital outlays
                3. 3. Operating costs
             2. Three financial statements
                1. 1. The balance sheet
                2. 2. The income or profit and loss (P&L) account
                3. 3. The cash flow statement
             3. Three time periods
          3. The way that bean counters think
             1. Debits and credits
             2. Double entry accounting
             3. Matching
             4. Cash accounting
             5. Who owes whom?
          4. The planning horizon
             1. Forecasts and budgets
             2. How long is a month?
          5. Looking back
          6. Estimating the present
          7. Crystal ball gazing
             1. What if ...?
          8. Software tools
             1. Spreadsheet techniques
          9. Putting it to good use
   15. 8. Getting to gross profit
       2. 1. Breathe easily
          2. Forecasting sales volumes
             1. Trends, cycles and seasons
          3. The big picture – the economy
             1. Intimate relationships/leading indicators
             2. Economic forecasts
          4. Up close and personal – industry and product demand
             1. Product life cycles
                1. Development
                2. Introduction
                3. Growth
                4. Maturity
                5. Decline
             2. It is simple really
          5. Pulling it all together
          6. Cost of sales
             1. Cost of materials
             2. Other production costs
             3. Production (or purchasing) costs
             4. Manufacturing, trading and operating accounts
             5. When costs vary
             6. Valuing inventory
                1. 1. Specific unit costs
                2. 2. Averaging
                3. 3. FIFO
                4. 4. LIFO
          7. Gross profit
          8. Writing it up
   16. 9. Getting to net profit
       2. 1. Where the money goes
          2. Capital spending
             1. What capital spending is and isn’t
             2. What’s it worth?
          3. Capital assets that you already own
             1. Decision-making values
          4. Capital assets that you want
             1. What does it cost?
             2. How long will it last?
             3. Show off your assets
             4. Replacing fixed assets
             5. A new lease of life
          5. Accounting for fixed assets
          6. Operating expenditure
             1. Break it into small parts
             2. Employee costs
             3. Non-employee costs
             4. How much detail?
             5. Depreciation – again
             6. Forecasting tricks
                1. Fixed relationships
                2. Steady rates of change
                3. Seasonal pattern
                4. Seasonal with steady change
             7. Careful!
          7. Net profit
          8. Other income and expenditure
             1. Why include them?
                1. Contingency
                2. Investment income
                3. Interest
                4. Taxation
          9. Moving on
   17. 10. Funding the business
       2. 1. Balancing your cheque book
          2. Balance sheets and cash flow mechanics
          3. Balance sheet headings
             1. How long is long?
             2. Current assets
                1. Cash at bank
                2. Accounts receivable
                3. Inventory/stock
                4. Miscellaneous
             3. Long-term (or non-current) assets
                1. Investments
                2. Fixed assets
                3. Natural resources
                4. Intangible assets
             4. Current liabilities
             5. Long-term (non-current) liabilities
             6. Owners’ equity
          4. Producing the paper
          5. Watching cash flow
             1. How much cash do you need?
          6. Using a surplus
          7. Getting it funded
          8. Debt or equity?
             1. Comparing debt and equity
                1. Debt is repayable
                2. Equity is not repayable
             2. Choosing debt from equity
             3. Finding funding
                1. Start-up equity
                2. Later equity
                3. Debt
                4. Other
                5. Variations, hybrids
          9. What’s the deal?
          10. Putting a price on success
              1. The accountant’s approach
              2. What the markets do
          11. Does it all hold together?
   18. 11. Managing risks
       2. 1. Identify risks and improve planning
             1. Techniques for handling risk
          2. It’s normally like this
             1. Symmetrical or skewed?
             2. Measuring spread
             3. Be certain about how uncertain you are
             4. See the wood from the trees
             5. In the real world
          3. How many coconuts do you need to sell?
             1. A picture is worth a thousand words
             2. Break even and capacity planning
             3. The chances of breaking even
                1. The facts
                2. The arithmetic
                3. The conclusion
          4. Marginal likelihood of shutting down?
             1. Margins and the normal
          5. What you need, when you need it
             1. It’s normally in stock
          6. Will it pay off?
             1. Step 1: Make your cash flow forecasts
             2. Step 2: Choose your valuation technique
                1. Present value
                2. Internal rate of return
                3. Projects on the margin
                4. Choosing between twins
             3. Step 3: Identify the hurdle rate
                1. Cost of capital
                2. Non profitable projects
                3. Accounting for risk
             4. Step 4: Making the decision
          7. What if?
          8. The economy
             1. Are bankers useful after all?
          9. If the worst comes to the worst ...
          10. Grand finale
   19. 12. Getting it approved
       2. 1. Pulling it all together
          2. Focus
          3. What readers of the plan will look for
             1. Internal plans
             2. External funding
          4. Those financials again
             1. It depends what you mean by return?
             2. Key influences on return on equity
          5. Final check on the plan
          6. They don’t know what’s coming to them
             1. Delivery
             2. I’m not signing that
             3. Chasing it
          7. Preparing for the meeting
             1. Personal presentation
          8. At last, the first meeting
             1. Sell to the Queen Bee
             2. Coping with questions
             3. Body language
             4. Plan for action
          9. Meeting post-mortems
          10. Follow up
              1. Chasing again
          11. Back to the drawing board
          12. Due diligence
              1. Life is a two-way street
          13. The contract
          14. Cash in the bank
   20. 13. Now make it happen
       2. 1. Time for a break?
          2. From plan to reality
          3. A change of focus
          4. Communicating the plan
          5. Where do you draw the line?
          6. Policies, rules and procedures
          7. Who does what?
          8. Employee objectives
             1. Management by objectives
          9. How much freedom?
          10. Financial objectives
              1. Comparing the reality with the plan
                 1. Salaries
                 2. Travel
                 3. Total spending
              2. Extracting value from a budget report
          11. Monitoring other objectives
          12. Monitoring the world
          13. Confirming and revising strategy and plans
          14. Don’t forget the carrots
          15. And into the next business plan
          16. Trying to catch the tail
   21. Tetrylus Inc business plan
       2. 1. 1. Cover
          2. 2. Contents
          3. 3. Preliminaries
          4. 4. Executive Summary
          5. 5. Current situation
          6. 6. Current situation (continued)
          7. 7. Market analysis
          8. 8. Strategy and operating plan
          9. 9. Sales forecasts
          10. 10. Financial analysis
          11. 11. Financial analysis
          12. 12. Risk analysis
          13. 13. Conclusion
          14. 14. Annex A1. Production and sales
          15. 15. Annex A2. Capital outlays
          16. 16. Annex A3. Staff costs
          17. 17. Annex A4. Non-staff operating costs
          18. 18. Annex A5. Income/P&L and balance sheet
          19. 19. Annex A6. Cash flow
          20. 20. Annex B. Management biographies