Outline
In the preceding article, we discussed the purpose of a business and why it is useful to create one. In this article, we will work through the various sections more specifically. The general gist of the the sections is:
Executive Summary
Company Description
Products and Services
Marketing Plan
Operational Plan
Management and Organization
Startup Expenses and Capitalization
Financial Plan
Appendices
There are also some uncategorised pages as well as other frills that we will add to spruce up the document.
The Cover
There say you should not judge a book by its cover; but people do judge a book by its cover anyway. With the business plan, you can have an understated look to convey elegance if you want but keep in mind that this is a business plan for a brick-manufacturing business and not for a high-end bistro.
Font
Choose a nice font - this is a very important. A font will convey the tone of the document. If someone asks you for money to start a business and then gives you a document with a cartoon font, it will destroy both professionalism and serious integrity. Unless the business plan is for a cartoonist.
Let's start off with this first set of decisions. We need to choose three fonts:
Cover Title font
General Titles font
Paragraph font
This will be a locale-preference but generally a sans-serif will be modern enough. For this plan, we will go with Gill Sans MT. We'll simply use the BOLD version for the General Titles font and Gibson SemBd for the cover title. Substitute your own font preferences here.
Add the cover title, the date and some company contact information (such as the street address, phone number, email and website). For our template, we'll choose "Strong Bricks" as a working business name. If you do not yet have a business name, remember to keep it simple and to the point, where possible. Here is a list of random names for example:
Logo & Branding
Company logos are a first step to branding. Doing business will involve communications with other people and companies. Having some essentials like a company letterhead and business card will benefit from a clear business brand identity. Colour schemes, lettering and optionally a logo graphic will help people remember the business and reinforce advertising you might pay for.
Icon Samples:
Examples:
Executive Summary
While this section is the first on the table of contents, you must only write this section out when the rest of the business plan is completed. You will be summarising the overall plan and your summary will mostly follow the same outline:
What is your business idea? (1-2 sentences)
What problem is your business solving for your target customers?
What is the future outlook of the business (in a few years)?
Who are your intended customers?
What is your competition?
What makes your business different? What might help it succeed?
Who are the people in the management team?
How much money is needed? What will be done with it to make the business profitable?
By way of example, here is how a typical executive summary for a brick factory might read:
Strong Bricks LLC intends to open a brick-manufacturing business to make and supply bricks to the community. Using reputable Doubell brick machines, a strong quality product will be made to supply the increasing demand for concrete bricks in the area. After building a good reputation for strength and on-time delivery, the product range will be expanded to incorporate several other concrete products.
There are too few suppliers of bricks in the area and they are unable to meet the needs of individual customers and construction companies. The business plan outlays a plan of action to manufacture affordable bricks that will meet certification standards. Manufacturing bricks locally will also reduce the transport costs that current resellers must pay to bring in from afar.
The business will be run by a family of three members who were originally from the local area. They each have travelled and studied out of town, accumulating some experience in business as well as saving capital to contribute to the starting of this brick-manufacturing business. They are passionate and invested in the community, which is a good indicator for success.
The business requires $15'000 to obtain the machinery, equipment and site preparation needed to start. The owners will contribute a third of this amount as investment to show their commitment. Along with the capital assets, this money will fund the building material and wages for the expected lead time (until profit can be generated to start repaying the investment). The profitability turnaround time is anticipated to be ten months; with a return on investment of 38%
Company Description
The document flow of the business plan should be quite logical. Before you can explain to the investor the operational plan or what people will be hired, you should first describe the business. In doing so, you introduce topics that will be covered in more detail later in the document.
Mission Statement
Explain the reason that this business exists. One or two sentences should suffice to describe the purpose of the business.
Example:
Strong Bricks LLC produces and sells concrete bricks to the local market. Our mission is to ensure customer confidence in quality products that are delivered on time.
Philosophy and Vision
While the mission statement explains the reason the business exists, the vision will reflect a long-term goal that might not be achieved, but orientates the direction of the company. The philosophy is the value system the business holds to pursue the vision.
In the context of brick-making, the philosophy should be aligned with the users of concrete bricks. A brick that puts strength of product over production and profits; a brick that is made with due care and respect; a brick that is made to last forever; and a brick that is delivered when expected.
When tempted with sales money, it can be difficult to reject a deal; even if it means creating a delay for other customers. Having a good value system and philosophy means you don't have to challenge yourself when facing these situations. A good brick will bring renown reputation that will bring more total sales than a cheap brick that might cost less individually. Also, delivering on time will bring customer confidence for repeat sales; But delays and short-deliveries will hamper future orders. If you hold the long-term benefits in mind then compromising short-term gains will make sense if they contradict your business philosophy.
Example:
Strong Bricks LLC values product quality and timeously delivery. We foster integrity through consistent customer service. Strong Bricks LLC has a vision to become a national seller of all concrete bricks, blocks and paving products.
Company Goals
This should specify the short-term and long-term goals and progress indicators. Some ideas for brick-manufacture could be:
100'000 or 1'000'000 products sold
100 or 1000 customers served
Second site opened
Monthly supply contract signed
10 different products offered
20 employees
10'000 bricks produced per day
etc.
Target Market
The target market analysis will be more comprehensive in the Marketing Plan section; But a brief introduction on the target consumer will set the context for the company in the industry, which will follow on.
Example:
Strong Bricks LLC plans to sell bricks to individuals who are doing home renovations themselves. While the quantity of bricks purchased by individuals is few, there are many individual DIY renovators in the area. The business will also sell to local construction contractors building housing and infrastructure.
Industry
Describe the state of the industry lifecycle - Is the industry growing, stable or mature? (Additional reading: https://www.investopedia.com/terms/m/matureindustry.asp ) The investor wants to know the short-term and long-term outlook and how this business will take advantage of projected trends. Competitors can also be mentioned in terms of how they will compete with this business in the industry.
Legal Structure
Globally, there are different types of businesses: Sole proprietorship, private company (LLC), corporation, etc. Explain what structure was decided on and how the ownership is divided. If there are existing investors, their shares percentage should be included.
Products and Services
This is the core of what the business will offer to generate income. Keep in mind that the business plan offers insight into why products or services were chosen to be offered. For that purpose, more detail is required in this section than simply listing products; Reasoning is needed to show an opportunity in the marketplace for the items as well as advantages the company will have in servicing the consumers in this area.
Further detail about the product pricing or service fees are needed here as well as evidence for any figures and claims made. Additional appendices for this section might include technical drawings, photos, patents, permits, etc.
Let's break this section down further:
What products or services are provided?
In the context of brick manufacture, the business plan hinges around the profitability of concrete units sold locally. These concrete bricks will have a manufacturing cost of raw materials and labour wages. The bricks will also have a selling price that must reflect the local marketplace (more or less). The product in question must have some specifications to be certain that it is a competing product in that marketplace - these will be the dimensions of the brick, the expected weight and strength, the colouring, the texture and appearance, etc.
Some insight into typical brick pricing is that bricks usually have a pricing structure split in three dimensions:
tax included vs. tax excluded
per single unit vs. per batch of 100/1000
collected vs. delivered
When gathering the evidence, make sure the quotations from competitors are presented in the same way (e.g. tax excluded, per unit, collected) so that your pricing decisions are comparative for the investor to analyse.
What need is there for this product or service?
With any business, there should always be a demand in excess of supply in order to service an opportunity. Selling bricks is no different. There are several ways to assess the need:
Get a letter of intent from a construction company or brick stockist
Show a quotation with a long wait time for delivery
Show a quotation with a high mark-up on the cost price you have calculated
Ask around!
Other than explicit demand, you could provide evidence indicating an imminent surge in demand (such as government increases in construction expenditure).
Another easy way to show a need is when providing a brick in a style that isn't available locally. It is an often-overlooked decision to sell premium-priced speciality bricks instead of highly competitive common ones. Keep in mind that the business plan is for this exact purpose: research & decision planning. If it is calculated that more money can be made by selling one type of brick over another, then that should be the choice of brick sold (and backed with evidence attached).
Even if a unique brick is sold, be sure that where demand is created supply will follow - that means competitors. The investor will want to know how you plan to stay ahead of new businesses that open up to compete with new products you introduce to the marketplace. It must be demonstrated that this business has a differentiation to other current and future businesses. This will build confidence in the business plan.
What competitive advantage is there?
This advantage needs competitive framing - are your competitors brick sellers or are they also brick manufacturers? If they are resellers, then they will always be at a disadvantage; however they would no longer be competitors if they agreed to sell your bricks. In fact, if they agreed to exclusively sell your bricks (provided you meet some product satisfaction requirements) then you would have a competitive advantage over other brick-makers, current and future both alike.
You can see that this is an example of something to negotiate with hardware stores before launching your business. If you can convince them to agree that if you beat their supplier prices (or improve on the quality) they will switch suppliers to you, then you will reduce the perceived risk of the investor. In the least, obtain a letter of intent to show the store is willing to sell your products.
What pricing structure will be used?
Bricks are sold individually or in batches. Mentioned earlier, there are three dimensions to the brick price: tax, delivery & quantity.
The unquoted dimension of price is for the quality of the product. If you are selling a brick that is below the quality standard of the competition, it is expected that it is for a lower price. Understandably, if there is a lack of availability of bricks the demand is higher therefore the price can be higher even if the quality is lower.
A decision to make is how strong the bricks should be made. They could be made at the same level as the competition; They could be made much stronger than the competition (and therefore charged at a premium price); Or they could be made weaker than the competition and sold at a lower price.
The best answer for this is to research and find out what the minimum quality requirements are from the potential customers; and then to add a level of safety to your mix design. You wouldn't want to make bricks on the bare minimum in case the strength falls short because of some unforeseen reason in production.