Overcoming the Hurdle of Business Planning, part 2

Here is a sample of the simple version of a business plan. I later learned that http://www.miniplan.com has some problems with it. Specifically, the site won't allow you to email your business plan results to yourself. So, I registered my Business Plan Pro 7.0 software again, and I completed a simplified version of a business plan. It entitled, 'Business Plan for Allamericanmedsplus.com.'


The first step is to create an executive summary. This gives a short biography of your company, when it was founded, it's material goals, keys to success, and overall goals (mission). The keys to success are important because it gives yourself and any other person reading the plan a general idea of how you intend to succeed. Here is an example.


Executive Summary
Allamericanmedsplus.com was formed in December of 2007. It is actually a subsidiary of a larger company called American Web Tech. The goal of allamericanmedsplus.com is to provide medication, both prescription and non-prescription, at a discount to all consumers. Allamericanmedsplus.com also sells pet medications, beauty supplies, wholistic products, and nutritional supplement including vitamins.

Objectives

1. Sales of $30,000 in 2009.

2. Gross margin of 80%.

3. By 2011, we hope to net at 10% of our gross sales.

Keys to Success

Our keys to success are: 1. Identify those people who need our products by using basic online resources such as Facebook, Twitter, etc. to attract customers; 2. Use such basic resources to advertise; and 3. Use capital obtained via sales, grants, etc. to purchase mass email lists and other forms of proven, effective internet marketing to increase the number of customers.

Mission

Our mission at allamericanmedsplus.com is to satisfy the customer by providing him or her with the medicines that he or she needs. We believe that we can serve the customer best by providing and delivering such products to our customer. Allamericanmedsplus.com is a company that hopes to help the underinsured and uninsured by offering them inexpensive medicine while offering them the option of purchasing brand name or generic brands.

The next step is to provide a basic market analysis. The purpose of this is to show the reader to whom you intend to sell your product. This applies to service businesses as well as service agencies. Below is a simple example of a basic market analysis.

Market Analysis

Our target customer will include college-aged students, entrepreneurs (who are self-insured), retirees (who are receiving Medicare/Medicaid or AARP discount), and retail workers (who may be underinsured).

With this analysis, you need to include a basic market analysis chart. The one that appears here contains numbers that are based on a population total of 100,000 people.

Market Analysis Table

Market Analysis
Potential Customers Growth 2009 2010 2011 2012 2013 CAGR
College Students 40% 40,000 56,000 78,400 109,760 153,664 40.00%
Retirees 5% 5,000 5,250 5,513 5,789 6,078 5.00%
Entrepreneurs 30% 30,000 39,000 50,700 65,910 85,683 30.00%
Retail Workers 25% 25,000 31,250 39,063 48,829 61,036 25.00%
Total 34.50% 75,000 100,250 134,613 181,459 245,425 34.50%

The next step is to create a break-even analysis. This gives the reader a general idea of when the business will finally have reached the point that its revenue is able to match its costs. This is an example of such an analysis.


Break Even Analysis:
Monthly Units Break-even 19
Monthly Sales Break-even $1,519

Assumptions:
Average Per-Unit Revenue $80.00
Average Per-Unit Variable Cost $1.00
Estimated Monthly Fixed Cost $1,500

Basically, this means that allamericanmedsplus.com will have to sell 19 units per month in order break even each month. In the chart below, the numbers in parentheses represent negative numbers.


Break-Even Chart
Units Sales Profits
0 $0 ($1,500)
3 $240 ($1,263)
6 $480 ($1,026)
9 $720 ($789)
12 $960 ($552)
15 $1,200 ($315)
18 $1,440 ($78)
21 $1,680 $159
24 $1,920 $396
27 $2,160 $633
30 $2,400 $870
33 $2,640 $1,107

Once you've done this, you've created a basic business plan.