160 | HOW TO WRITE A BUSINESS PLAN
their interest. So put all your strong points in
the first few paragraphs, saving the details for
later. Absolutely follow these rules:
• Keep it short.
• Be specific.
Your plan summary needs a statement
of the total cash you need to begin or
expand your business. This is the sum of
the preopening costs and the maximum
negative cash flow. (See Chapter 7.)
exAmple:
This summary introduces Juanita’s
Waffle Warehouse.
“My Waffle Warehouse requires
$45,000 in preopening costs, which
are detailed on the following pages. I
have researched my equipment costs
carefully, resulting in a potential savings
of $15,000 by buying second-hand
(reconditioned and guaranteed) cooking
equipment. Also, my grand opening
costs are firm estimates resulting from
verbal quotes from the ad agency
recommended by the Waffle Warehouse
franchising company. I am confident
that these are accurate estimates and I
look forward to proceeding.”
CAUTiON
Businesses seeking investors. If you
will solicit equity investors instead of applying
for a loan, you’ll need a statement delineating
what investors will receive for their money
rather than information about how a loan
will be repaid. As a small business, you will
almost certainly not propose selling stock
to the public at large. Therefore, you will
need to propose that investors will receive a
significant share of ownership of the business
and perhaps some monthly or annual cash
payment as well. (For more details on equity
investments, see Chapter 4.)exAmple:
An investment of $20,000 in John’s Roof
Repair business will result in the investor
receiving a 33% interest in the business.
Present plans are to distribute one-half of the
annual profit of the company to the owners
each year. Based on projections contained
in this proposal, this means a person who
invests $20,000 will receive $5,000 the first
year, $17,500 the second year, and $25,000
each year thereafter. In addition, investors will
be entitled to have any necessary roof repairs
done to their homes or business buildings
and those of immediate family members at
50% off the regular rate.Some people worry about their ability to
write in a businesslike style. If that applies
to you, you’ll probably want to follow the
same three-step process as Antoinette:
• First, list the positive facts you want to
cover; you’ll probably need to review
the work you’ve done to get that
information.
• Second, rearrange the facts in a logical
sequence that presents the most
positive facts in a coherent pattern.
• Finally, write the facts in simple prose.