Financial Plan – Validating Assumptions and Projections
Published January 14, 2011 | 
The Financial Plan must also describe the key assumptions such as, operating margins, penetration rates, headcount, and so on. It is crucial that these assumptions are reasonable. For example, if the business is classified as a networking infrastructure business, and the business plan forecasts 80% operating margins, investors will question the assumption as inflated or exaggerated. This is because investors can quickly retrieve the actual operating margins of similar publicly-traded networking infrastructure firms and discover that not any have operating margins this excessive.
As mentioned previously, while every business is distinctive, each has similarities to other businesses. Assessing and developing financial projections based on those of similar firms will to a great extent validate the practicality and reliability of the financial projections.
Strategic Source and Uses of Funds
The Financial Plan must feature both the sources and uses of funds. The sources of funds for the most part consist of outside investments (e.g., equity-based capital, debt-based capital, etc.) and operating revenues. The Uses of funds may well contain expenses concerned with marketing, staffing, technology development, office space, and so on.
Exit Strategy
All equity investors to a great extent wish for and are highly motivated by an obvious portrait of the business’s exit strategy, or the timing and process through which they can “bank” on their investment. 
This portrayal best comes into focus when the strategic valuation and liquidity drivers of the business are plainly described. An exceptional process to achieve this is through descriptions of equivalent business’s that have had winning liquidity dealings either through acquisition, or merger of public offerings.
The most frequent exit strategies in business plans are Initial Public Offerings or acquisitions. While the specific process of exit is not always critical, the investor frequently desires to see the evaluation to appreciate the team’s driving force and commitment to creating long-term value.
Financial Plan
Published January 13, 2011 | 
The Financial Plan describes how the implementation and execution of the company’s vision will produce great financial results for the investors. By itself, it is the segment that investors frequently expend the most time and energy analyzing.
Detailed Streams of Revenue
The Financial Plan must in words impart the revenue model of the business and include each area in which the business receives revenue. These revenue streams may possibly include, together with others (1) Sales of products/services, (2) Referral revenues, (3) Advertising sales, (4) Licensing/royalty/commission fees, and (5) Data sales.
The comparative significance and relevance of each revenue stream ought to be noted to help investors better ascertain the business. 
For example, the investor(s) may not have faith in the businesses capability to immediately produce substantial sales of its data. This would be a difficulty if this were the business’s primary revenue stream. Nevertheless, by making a note of in the plan that data sales will only comprise 2% of total revenue and will not begin until Year 3, the investor’s apprehension would be eased greatly.
Pro-Forma Financial Statements
The Financial Plan should numerically feature the revenue model through both historical if relevant and pro-forma projected Income Statements, Balance Sheets and Cash Flow Statements.
It is crucial that the numbers used in these statement flow directly from and commencing with the analyses in every other section of the business plan. For example, the applicable market size (found in the Industry Analysis) ought to be reflected, as should competitors’ operating margins (found in the Competitive Analysis), customer purchase costs (Marketing Plan), employee requirements (found in the Operations Plan), and so on.
A summary of the financial projections must be presented and accessible in the text segment of the plan, while complete projections must be found in a separate financial section or Appendix. For existing businesses, the Financial Plan ought to make a note of any substantial variations (e.g., increases in margins) between historical and projected results.
Operations Plan – Management Team
Published January 12, 2011 | 
This is often marked as the most important component of any business, since it is a widely stated fact that even the best new idea or existing plan will fall short if executed unsuccessfully. The Management Team portion of the business plan must demonstrate to the investor or lender why the vital company personnel are highly qualified to implement and execute on the business model.
Description of Key/Vital Team Members
The Management Team portion should consist of biographies of vital team members and feature their primary responsibilities. Biographies should take account of the previous positions that the individuals have held and specific detailed successes in each.
These accomplishments could consist of the launch and growth of new innovative businesses or managing branches or departments of recognized businesses. Biographies must also contain educational experience and additional relevant information.
Team member biographies ought to be adapted to the company’s growth stage. For example, a start-up business must call attention to its management’s achievement launching and growing businesses. A more established business must highlight how team members have effectively operated in the structure of larger enterprises.
Management Team Openings
Reflecting the phase or stage of the business, strategic operative parts may be absent from the team. This is okay given that the plan directly defines the responsibilities that these parties will assume the part of, and recognizes the important characteristics of the persons that will be engaged. Conversely, it is generally not to your advantage if personnel are absent for highly crucial responsibilities. For instance, a plan that is essentially a marketing plan should not search for financing lacking a tremendous marketing team.
Board Member Descriptions
The Management Team portion must additionally contain biographies of the business’ Advisory Board and/or Board of Directors. At the same time as having well-known advisors/board members adds standing and credibility, it is extremely effective to make clear how these advisors will absolutely have an effect on the business through strategic guidance and/or providing channels to major clients, partners, suppliers, and so on.
Operations Plan – Business Milestones
Published January 11, 2011 | Long-Term Processes
The second section of the Operations Plan is demonstrating that the team capability to execute the long- term business vision. The best way to present this is using a chart. On the left side, list the key milestones that the Company must reach and on the right, the target date for achieving them. Like the chart in the Company Analysis (detailing past accomplishments) these new milestones should include expected dates when (1) New products and services will be introduced to the marketplace, (2) Revenue milestones will be attained (e.g., date when sales will surpass million dollar mark), (3) Key partnerships will be executed, (4) Key customer contracts will be secured, (5) Key financial events will occur (future funding rounds, IPO etc.), (6) and Key employees will be hired.
Always use additional text where necessary in order to support the projections presented in the chart.
The milestone forecasts or projections presented in the Operations Plan must be in agreement with the projections in the Financial Plan. In both areas, it is important to be aggressive but believable. 
Presenting a plan in which the company grows too rapidly will show the naiveté or inexperience of the management team, while portraying too conservative a growth plan will frequently fail to enthuse the potential investor (who will require a high rate of return over a relatively short time period).
Once again, proving believable milestones is crucial. Confident knowledgeable investors and lenders know how rapidly businesses grow and if you are unrealistically aggressive, you will waste valuable credibility.
Operations Plan – Processes
Published January 10, 2011 | 
To help you better understand the role of the Operations Plan, up until this point, the business plan has clearly defined and scaled the business’s vision, explained and chronicled the business’s historical record, reviewed and appraised the industry, customers and competition and charted out marketing strategies to catch the attention of and draw customers. The Operations Plan portrays the business’s action plan for the execution of the vision.
In addition, the Operations Plan features the developed processes that have got to be executed in order to provide quality service to customers each and every day (short-term processes) and the overall established business milestones that the company has to attain in order to be successful (long-term processes).
Everyday Processes (Short-Term Processes)
Every company has processes to provide its customers with products and services. For instance, Wal-Mart has a unique distribution system to effectively move products from its warehouses, to its stores, and finally to its customers’ homes. Technology products manufacturers have processes to convert raw materials into finished products. And service-oriented businesses have processes to identify new areas of customer interest, to continually update service features, and so on.
The processes that a business uses to best serve its customers are what actually transforms a business plan from theory and concept to certainty and reality. You must understand that most anyone has the capability of having a concept. And more significantly, investors do not invest in concepts – they invest in realism and actuality. Your reality is demonstrating that the management team is capable of executing the concept or idea much better than anyone else, and the Operations Plan is the segment of the plan that proves this.
While the Marketing Plan lays out the plan for catching the attention of consumers, the Operations Plan should lay out the most crucial operational processes for serving them. Charts and graphics augmented and supported with text are frequently the best way to make clear the strategic relationships connecting the parties involved in ultimately serving the consumers turned customers. These participants could include departments within an organization, partners, suppliers, distributors/resellers, and so on.