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Rapid Prototyping Equipment Financing
Writing An Effective Business Plan


Introduction

A good business plan is not just for others to see.  It is also a valuable tool for managing your business, and for comparing your expectations with what you have actually accomplished.  If the material that follows is too detailed, or if you feel it does not fit well with your needs, you can create a completely original plan.

However, your plan will be more effective if it resembles those produced by others.  So, whether you follow our guidelines or not, please consider following a standard outline.  Also, you are more likely to include all the necessary financial details if you download our forms spreadsheet.

The Four Main Sections Of A Business Plan

  1. the description of the business
  2. the marketing plan
  3. the management plan
  4. the financial management plan

In addition, a business plan must include supporting documents and financial projections.

Description of the business

1. General Description

Start the first section with a cover sheet.  It should include the name, address, telephone number, fax number and email of the business and the names of all principals.  We also recommend an executive summary that immediately follows the cover sheet.  Follow that with the description itself.

When describing your business, you should explain (in whatever order you feel is logical):

A key point:  The description of your business should clearly identify your goals and objectives and it should clarify why you are, or why you want to be in business.

2. Services and Products

Try to describe the benefits of the service and products you will offer from your customers' perspective.  Describe:

The Marketing Plan

A successful marketing plan demonstrates that you know your customers:  their needs, their likes, their dislikes and their expectations:

Four Special Topics You Should Explore:
Competition, Pricing, Sales and Advertising

1.  Competition

Competition is a way of life.  It is important to know your competitors and their capabilities.

A bit of advice:  Start a file on each of your competitors.  Save their advertising and promotional materials and any pricing information you can gather.  Review these files periodically, determining when and how often they advertise, how they participate at industry gatherings and anything else you can about the way they bring in business.

2.  Pricing

Your pricing strategy is another marketing technique you can use to improve your overall competitiveness.  Although your pricing will be based on whatever is customary in the RP industry (or your segment), it may be a good idea to get a feel for the pricing strategies your competitors are using.  That way you can determine if your prices are in line and see if you can either do better or provide more value at the same price.

The key to success is to have a well-planned strategy, to establish your policies and to constantly monitor prices and operating costs to ensure profits.  It is a good practice to keep abreast of the changes in the marketplace or in the underlying technologies you use, because these changes can affect your competitiveness and profit margins.

3.  Sales

RP services can have a long selling cycle and fast turnaround requirements.  By this, we mean that is can take quite a while to get new customers, or to win a participation in a series of projects that are undertaken by one of your established customers.  By contrast, once you win business, it is very likely that your customer will want rapid response and instant reaction to any changes he requests.  This "hurry up and wait" characteristic of the business can be tough on nerves and tougher on budgets.  You must show that you are prepared to cope with this aspect of the business.

Specifically, you must show that you are prepared to locate more prospects than you will actually need to succeed, because not all the prospects will become customers and not all the customers will bring you work as quickly as you would like.  You must also show that you can provide customers with excellent support no matter how demanding they are . . . and do so without losing sales momentum at any accounts.  Finally, it will sometimes be necessary to redo work at your expense, or to do more than you included in your estimate (at no additional charge) to satisfy your customers.  Your sales plan and your overall financial plan must include allowances for the costs in sales time and production resources that might be consumed by an intensive and supportive marketing effort.  It is up to you whether you include any work done to prove your competency during the sales cycle in the sales budget or elsewhere, but you should make your reckoning explicit and explain how you arrived at your estimate.

4.  Advertising and Public Relations

How you advertise and promote your business is very important.  You may do all your selling by direct contact.  But there are many additional opportunities to make yourself known, including Yellow Pages listings, industrial reference listings, Internet sites, trade shows and trade press articles and ads.  Some of these options (e.g., the Internet) can be very inexpensive.

The Management Plan

Your management plan must demonstrate that you have the requisite skills in your firm to compete and succeed.  It also should show that you understand how to retain personnel as your business grows and changes.  Your management plan should answer questions such as:


The Financial Management Plan

To effectively manage your finances, plan a sound, realistic budget by determining the actual amount of money needed to open your business (start-up costs) and the amount needed to keep it open (operating costs).  The first step to building a sound financial plan is to devise a start-up budget.  Your start-up budget will usually include such one-time-only costs as major equipment, utility deposits, down payments, etc. The start-up budget should allow for these expenses, among others:

Once you are open, you will control your costs with an operating budget.  The operating budget will reflect your priorities in terms of the expenses you will incur and how you will meet those expenses (income).  Your operating budget should include sources of funds sufficient to cover the first three to six months of operation.  It should allow for the following expenses:

The financial section of your business plan should include any loan applications you've filed, a capital equipment and supply list, balance sheet, breakeven analysis, pro-forma income projections (profit and loss statement) and pro-forma cash flow.  The income statement and cash flow projections should include a three-year summary, detail by month for the first year, and detail by quarter for the second and third years.

If operational factors loom large in your plan, for example if you expect to handle many small accounts, describe the accounting system and controls you will put in place to keep overhead to an acceptable level.  Other questions that you will need to consider are:

Your plan should include an explanation of all projections.  Unless you are thoroughly familiar with financial statements, get help preparing your cash flow, income statements and balance sheet.  Your aim is not to become a financial wizard, but to understand financial tools well enough to gain their benefits.  Your accountant or financial advisor can help you accomplish this.

NCP Leasing, Inc.
2055 Reading Road, Suite 240
Cincinnati, Ohio 45202
Phone:  (513) 333 0221
Fax:  (513) 333 0887
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