Plan Maker

Renewed Interest In Dial-up Surprises Old-Timers

2004-09-04T01:39:00.000-07:00

Around the world, naive computer enthusiasts want to build new ISPs, much to the surprise of veterans who left the business. Here's what these college graduates will need—and how they may fail.
by Max Smetannikov [June 21, 2002]

The first dial-up ISPs were startups ten to fifteen years ago. Now, a new wave of dial-up enthusiasts seems to be knocking on the established service providers' doors.
The world of the Internet has changed dramatically—but some simple truths that governed the last round of ISP buildouts remain.
First, the startups will learn to hate the local phone company (David Robertson, vice president of the Texas ISP Association (TISPA) describes the relationship between a local phone company and its ISP customer as similar to that between a car's windshield and a bug).
They'll need some cheap software. They'll need some servers. They should invest in a router. They are most definitely going to shop a lot for used networking gear.
"It's been almost ten years since I started my ISP and three since it went static on the ISP (dial-up) side," says Avi Freedman, chief technologist at Akamai and one of the very first commercial Internet entrepreneurs (he recently sold his ISP business to FASTNET). "After we finished the conversion to PRIs and to a commercial billing package (Optigold) four years ago, very little changed on the dial infrastructure side."
Much to the surprise of individuals like Freedman, there is a revival of sorts as entrepreneurs hope to launch small dial-up and dedicated access ISPs. These people are all over the world, and are looking for help and clues as to how to start an ISP.
"We, two brothers, freshly out of college, both graduates in Computer Engineering & applications, are very much willing to start a company providing Internet connectivity," writes Sourish Chandra to ISP-Planet from a Hotmail account.
Chandra is not alone. Bret Mingo, president of Annapolis, Md.-based CoreTel, says calls from small operators shopping for wholesale access have picked up considerably this year.
"I am not sure why," says Mingo, who aims to sell to mid-size service providers who compete with the regional phone companies.
Newbies like Chandra often come to entrenched providers like CoreTel with naïve questions about what they need to buy, both services and equipment, to get into the business. The good news is that the basics have hardly changed over the last decade.
Any ISP starts with a back end. There, start with a RADIUS server, which matches user names with passwords and e-mail addresses so that only paying subscribers can use your network. The necessary software is available either commercially or as an open source application (i.e. for free). It's a key piece of infrastructure. If it goes down, users can't log in. Most operators run it on two servers so that if one server fails, the other can take over. RADIUS software is typically optimized to run on Unix or Linux machines.
RADIUS has a role beyond security; this is also the machine that feeds the billing application. Keeping billing simple is important. It's a major reason why most ISPs went to flat rate plans. Flat rate plans (charging per month instead of per minute or per kilobyte) make it much cheaper to track users.
Even with a simple price plan, an ISP needs a good billing system. There's a lot of billing software on the market, and ISP-Planet has descriptions of most of the software in the Billing Software Directory.
While every ISP needs to have good billing software, no ISP can skimp on customer service and tech support. The current industry formula says that an ISP needs at least one tech support person for every 2,000 to 3,000 users (and more for smaller ISPs), and, for every 100 to 300 new users signing up each month, one or two technicians handling problems and complaints.
The second piece of must have ISP software is a DNS server. This is an application that matches Internet IP addresses with site names. Without this software, users will not be able to access Web pages. The most popular software for DNS is BIND, and it's free. But the application has to run on a server as well, and the hardware is not free. While the list of applications an ISP can sell online seems endless, it has become customary to offer e-mail with access. To support that, an ISP needs an e-mail program. Again, there are free software options like SendMail and a good array of commercial e-mail servers like Netscape. To process e-mail, an ISP will need to enable one or more of several e-mail transfer protocols, like Simple Mail Transfer Protocol (SMTP), POP3, or Internet Message Access Protocol (IMAP).
While the ISP is in startup mode, all of this software can live on one server, with a back up for redundancy. Linux is the operating system of choice for many Internet professionals because of its UNIX-like stability and Microsoft-like (don't tell anyone we said this) simplicity. It used to be that UNIX servers, like those made by Sun, were prohibitively expensive for startups. Now Sun's small machines, classified as 1U (one rack unit, the amount of space used on a server rack) go for about $1,000.
Once the back end is ready, the ISP is one step closer to getting the business off the ground. The next key element is a termination device to receive modem calls—or terminate dedicated lines if leased line access is part of the business plan. A brand legendary in the ISP world in that regard is Ascend, which was bought out by Lucent several years ago. Ascend's Max TNT was the most popular multiplexer in the late 1990s, and is still one of the favorites. Besides Ascend, Nortel and Alcatel as well as several lesser known manufacturers now make similar boxes.
This is how the ISP works: a subscriber makes a modem call into a phone number provided by an ISP. The phone call is terminated into a multiplexer, which is connected to the ISP's back end. The user is authenticated by the RADIUS server, and the call is sent on to the Internet. While servers can support certain routing functions, no self-respecting ISP would be in business without a router, typically a 2500 or 7500 series Cisco machine. A good size ISP needs a router that can handle Border Gateway Protocol (BGP), the switching protocol used at the core of today's networks.
Many startups buy most of their equipment used, and nowadays lots of used equipment is available on eBay and other Internet auction and ecommerce sites. Street prices for servers hover between $1,000 and $2,500, and a server must have dual power supply and Ethernet ports for easy and reliable connectivity. While a new Ascend TNT box costs close to $200,000, a used one can be bought for about $10,000.
The router is connected to the Internet with a dedicated line of some sort—T1, frame relay, Ethernet, anything the ISP can buy. The telco and backbone options will be determined by the businesslocation. For more on non-phone company backbone providers, see ISP-Planet's Backbone Directory.
Dealing with the local phone company is a source of hardship and frustration for any ISP owner, especially at the startup stage. More often than not, a telco sees an ISP as just another customer, or even as a competitor, and is oblivious of the fact that service disruptions can destroy a service provider's business. Some ISP owners feel that phone companies even try to destroy their business. Says Freedman, "I still remember the time they needed UPS to deliver our phone bill."
Because the phone company can be difficult to work with, many ISPs choose to buy Internet access from larger ISPs. In the early days of the ISP business, when alternatives did not exist, a service provider would basically ask the telco for lots and lots of phone lines, and manage them through a multiplexer. Dial-up users would literally call the ISP's office location. As ISPs grew and became more geographically dispersed, many ISPs started to have telephone companies aggregate these phone numbers for them at a remote location (a stack of modems with no humans) and just send the calls to the ISP via a PRI (ISDN) line. So end users would call the switches of the telephone company, but get connected to the Internet via ISP's facilities.
In many parts of the globe, there is still no alternative to the above solution, which relies entirely on the phone company.
"People don't realize it, but it's actually harder to provide robust dial service than to provide quality leased line or colocation service," says Freedman.
In the United States, startups can now rent infrastructure—phone lines, RADIUS servers, PRIs—from wholesalers and become a "virtual ISP" (ISPs that build infrastructure are called "facilities based").
Take MegaPop, a StarNet subsidiary, originally a provider of wholesale dial-up exclusively. The company has a network covering the U.S. and Canada, and its latest program allows future ISP owners to set up their entire business through a Web portal.
"The cost for people who want to be ISPs these days is pretty much nothing except for marketing," says Michael Alonzo, StarNet manager of dial-up sales. "Large wholesalers like us enables end users to private label phone numbers and then resell them."
While large ISPs like MSN are among MegaPop customers, the company can go very low on price for smaller players. Its secret is in developing a low cost vehicle for ISP owners to add customers to the MegaPop network without letting end-users know they're on the MegaPop network.
Basically, an entrepreneur logs on to MegaPop's portal and assigns a name and an e-mail account to an end user. Users then log on to MegaPop's network under the name of their local ISP. MegaPop does require a $500 monthly minimum from its ISP customers, which its executives estimate means having 61 dial-up users on board.
"We feel like asking ISPs to have at least 61 users is pretty fair," says Alonzo.
— End
Related articles:

[June 12, 2000]
ISP Profile: bedford.net

[May 12, 2000]
Business Plan Basics

[Aug. 9, 1999]
Newbie's Guide to Starting an ISP
Online resources:

ISP-Planet Backbone Directory

ISP-Planet Billing Service Directory

ISP-Planet Guide to Building an ISP

Lucent PortMaster PRI Manuals

Max TNT Guides

More ISP Resources

Newbie's Guide to Starting an ISP - continued

2004-09-04T01:35:00.000-07:00

5. Marketing/Sales plan & budgetMost new ISPs skip this completely, and then wonder why they run out of money so quickly and have to sell out or go bankrupt. This is really the foundation for all of your ISP decisions. Here are some hard questions that require concrete answers before you begin:
What will make your ISP unique?
Why should someone buy access from you?
How are you going to acquire your first thousand customers?
How will you automate the order process?
How much should you pay to acquire new subscribers?
What are you going to do to retain your clients?
What will be your minimum standards for the level of service you wish to deliver to your subscribers?
What is your exit strategy?
While word of mouth can be a powerful sales agent for you, make sure you start out with a marketing budget; it will cost thousands of dollars to get the word out about your service. Moreover, it's foolish to believe that you can do it all (build, manage, support, and grow your ISP, no matter how small it is). You will need sales assistance—or at the very least, order taking—in the beginning.
6. Dialup kitsThis is what the customer receives to get on your service. The easier it is to use and install, the higher your chance of converting your new trial customers into long term subscribers. You don't have to design or create your dialup kit; there are many companies that can provide this. For example, both Microsoft and Netscape have custom kits you can implement.
Your entire growth and signup strategy is wrapped around how well your dialup kit gets your new users up and running on your service, so give it serious attention. Keep in mind that it can—should—serve as a marketing tool as well. For example, you may want to include a users guide for your ISP, some tips and tricks to help your new subscribers get the most out of their new service, and of course a toll free or local phone number they can call for help.
7. Technical expertise (tech labor)I'm not sure whether it's better to be starting an ISP as a techie without much business knowledge, or a business person without the technical chops. Either way, your up-time, reputation, and revenue all ride on your company's technical competence. Skimp, and you'll have hundreds of subscribers keeping you up at night, wondering why they can't get on the Internet, and eventually wanting to cancel.
There are many different levels of techies, and they range from front-line customer service techs to your Chief Technology Officer. Your front-line tech answers incoming calls, and if s/he can't answer them, refers them up to the Sys Admin. If the Sys admin can't handle the call, s/he refers it up to the Sr. Sys Admin on duty. If the Sr. Sys Admin can't answer the question, it isn't possible.
Sys Admins don't interact as much with clients as much as they are the secret behind keeping the back office running properly. Your Chief Technology Officer is your smartest tech person in the office, who also understands the business implications of budgets, uptimes, metrics, customer service, and he or she probably has years of experience in the real world. A typical ISP under 2,000 subscribers should budget at least $150K-$300K+ for first the year's tech labor expenses.
If there's an 8th thing you should have, it would be Cash, and lots of it. If you've read my past articles, you'd know that I'm a big friend of outsourcing dialup ports, and funneling your all-too finite war chest into marketing and sales activities to get the highest ROI (Return on Investment). If you outsource your ports, you not only save on the capital startup costs, but you may not need the same level of tech labor on staff to manage your business. There are real disadvantages to outsourcing your Internet access ports, such as not having ultimate control over your network and being at the mercy of someone else when your network is down.
One other article you should read is How Big Could You Be?, which covers some more of the exploratory thoughts on where to take your ISP—thoughts you'll move on to once you've gotten your new business off the ground..
Tip: A good rule of thumb to follow is that your ISP should make you more money than you could earn by day trading ISP stocks. (Many ISP friends have reported 6 and 7 digit gains on their ISP stock market plays, vs. losses their ISP businesses.) I'm not suggesting that you play the ISP stocks instead of starting an ISP business, just pointing out that for the business to be financially sane, its goal must be to out-earn what you could make in the stock market with your finite investment capital.
If this article opened up more questions than it gave answers, or if you've got a topic you'd like to see me address in a future article, send me your thoughts and feedback.
To Your ISP's Success!Christopher Knight, Founder & Managing Editor The ISP-Lists

Newbie's Guide to Starting an ISP

2004-09-04T01:25:00.000-07:00

You get an adrenaline rush every time you think about starting your own ISP. Although the cost of entering this game drops every day, competition is heating up, so this is a big decision.
by Christopher M. Knight[August 9, 1999]

[It says it right in the title, but I want to re-emphasize that this article is aimed at ISP newbies; it's not meant to be comprehensive. It also assumes you're not operating a business of any kind.]
Brief initial reality check: This not an easy business to navigate. You will work very long hours, you'll have to read tens of thousands of emails to educate yourself, and you can count on having it cost at least twice as much as you expected. Many critical items—such as your telco—will be out of your control, whereas your subscribers always expect you to be in control of everything. Finally, believe it or not, it's near suicide to start this business without having a clear ISP exit strategy.
Another note: If you're familiar with the differences between facilities based and non-facilities based ISPs (terms I reference later in this article), read on. If not do yourself a favor; take a few minutes to read my two-part ISP-Planet article on the subject: Make Your ISP Facilities-Based or Virtual?
Okay, now let's take a deep breath and look into the basics of what you must have in order to get started and open for business.
Top 7 Items You Will Need To Start Your ISP
1. Generic business underpinningsThis includes any licenses your state requires, your federal and state employer ID numbers (for ISPs in the U.S.), your domain name registration and trademark application, your business checking account and banking relationship—along with a possible preapproved credit line—and a merchant account so that you can accept credit cards and direct checking account drafts. You will also need some other business basics, such as a phone system, security service, CPA & Attorney.
2. ISP billing and accounting softwareThis can make or break your profitability and your ability to maintain your business as you grow. A sizable industry has grown up developing and offering customizable off-the-shelf ISP invoicing systems—many for under $2,000. (For more detailed information, you might want to join the ISP-Invoicing discussion list.)
Whatever billing program you buy should integrate with a general ledger, and be able to track accounts receivable, accounts payable, invoices, customers, usage, overages, and your checking register. Some packages even provide instant profit/loss balance sheets—along with reports that help you make better business decisions. You will also need a collection agency to help you collect on bad debts; I don't know a single ISP that doesn't have bad debts collections issues.
3. Internet feed and local loopIn order for you to provide Internet access, you have to get it from a regional or national backbone provider. The connection between your provider and your physical location is called the local loop. The cost for this can range from a few thousand dollars one-time charge—if you are co-located within an ISP building and own your local loop—to between $125 and $5,000 per month or more, depending on the size of your pipe and how many miles you are from your provider and your local telco central office or CO.
Internet feed will cost you $800 to $2,000 per T1 worth of Internet access per month. Assuming an 8:1 user-to-modem ratio on your dialup ports, a single T1 will be enough to feed 200 concurrent connections or about your first 1,600 customers. (This means for each modem port you have eight customers signed up. They won't all be trying to use it at the same time, you hope.)
While some small ISPs use POTS (Plain Old Telephone Service), adding a line when the old ones become crowded, this is not something you should even consider. Rather, start up with a 24 channel T1 or PRI (Primary Rate Interface) circuit for your first access switch. Shop around, because prices for these services vary a great deal. Unless you have no alternative, do not negotiate directly with the incumbent major telco. Many of the best deals or promotions are available through their resellers and distributors.
Many backbone providers include Usenet feed via NNRP (Network News Relay Protocol) as part of their package. If your does, take it and run. You do not want to have to run your own Usenet servers if you're just starting out. You can do a DNS trick which will fake it and make it appear that you have your own Usenet server, when you don't.
4. Your network of serversThis includes your PC based servers that will handle your primary functions, which include DNS, mail, Web (both regular: httpd and secure: https), athentication, and news (if you don't outsource it). Theoretically, you can do all this on just one PC, but in my opinion, anyone who starts an ISP with fewer than four separate dedicated PC's is asking for trouble.
If you're going to be a facilities-based ISP, you will also need access servers (a relatively recent innovation that combines terminal server and modems). Good ones range from $7,000 on up. Some of the popular names of access servers include US Robotics/3Com, Ascend, Livingston, Cisco, and Nortel.

ISP-Planet Guide to Building an ISP

2004-09-04T01:19:00.000-07:00

Newbie's Guide to Starting an ISP Christopher Knight
Renewed Interest In Dial-up Surprises Old-Timers Max Smetannikov
Getting Into the ISP Business Christopher Knight Part 1: Viability Analysis Part 2: Which Niche to Conquer?
Decisions, Decisions Christopher Knight Part 1: Make Your ISP Facilities-Based or Non? Part 2: Pros and Cons of Non-Facilities-Based ISPs
Finding Financing Online Mark E. Battersby

Recommended Exercises: • Determine who your rival ISPs are at The List • Scour the archives or join the discussion at the ISP-Lists
Best of the ISP-List Discussions:
Business in a Box
Can I Start an ISP With $15,000?
An ISP in My Basement

Online Courses

2004-06-21T17:20:00.000-07:00

Click Here For Information

Using the Plan

2004-06-21T17:19:00.000-07:00

A business plan is a tool with three basic purposes: communication, management, and planning.
As a communication tool, it is used to attract investment capital, secure loans, convince workers to hire on, and assist in attracting strategic business partners. The development of a comprehensive business plan shows whether or not a business has the potential to make a profit. It requires a realistic look at almost every phase of business and allows you to show that you have worked out all the problems and decided on potential alternatives before actually launching your business.

As a management tool, the business plan helps you track, monitor and evaluate your progress. The business plan is a living document that you will modify as you gain knowledge and experience. By using your business plan to establish timelines and milestones, you can gauge your progress and compare your projections to actual accomplishments.

As a planning tool, the business plan guides you through the various phases of your business. A thoughtful plan will help identify roadblocks and obstacles so that you can avoid them and establish alternatives. Many business owners share their business plans with their employees to foster a broader understanding of where the business is going.

Sample Business Plans

Writing the Plan

2004-06-21T17:13:00.000-07:00

What goes in a business plan? The body can be divided into four distinct sections:

1) Description of the business
2) Marketing
3) Finances
4) Management

Addenda should include an executive summary, supporting documents, and financial projections.
Although there is no single formula for developing a business plan, some elements are common to all business plans. They are summarized in the following outline:

Elements of a Business Plan

1. Cover sheet
2. Statement of purpose 3. Table of contents
I. The Business
A. Description of business
B. Marketing
C. Competition
D. Operating procedures
E. Personnel
F. Business insurance
II. Financial Data
A. Loan applications
B. Capital equipment and supply list
C. Balance sheet
D. Breakeven analysis
E. Pro-forma income projections (profit & loss statements)
Three-year summary
Detail by month, first year
Detail by quarters, second and third years
Assumptions upon which projections were based
F. Pro-forma cash flow
III. Supporting Documents
Tax returns of principals for last three years Personal financial statement (all banks have these forms)
For franchised businesses, a copy of franchise contract and all supporting documents provided by the franchisor
Copy of proposed lease or purchase agreement for building space
Copy of licenses and other legal documents
Copy of resumes of all principals
Copies of letters of intent from suppliers, etc.
Sample Plans

One of the best ways to learn about writing a business plan is to study the plans of established businesses in your industry.

Review examples of real business plans.

For Additional Information:
See
SBA's Startup Guide
Business Plan Workshops

Business Plan Basics

2004-06-21T17:06:00.000-07:00

A business plan precisely defines your business, identifies your goals, and serves as your firm's resume. The basic components include a current and pro forma balance sheet, an income statement, and a cash flow analysis. It helps you allocate resources properly, handle unforeseen complications, and make good business decisions. Because it provides specific and organized information about your company and how you will repay borrowed money, a good business plan is a crucial part of any loan application. Additionally, it informs sales personnel, suppliers, and others about your operations and goals.

Plan Your Work
The importance of a comprehensive, thoughtful business plan cannot be overemphasized. Much hinges on it: outside funding, credit from suppliers, management of your operation and finances, promotion and marketing of your business, and achievement of your goals and objectives.

"The business plan is a necessity. If the person who wants to start a small business can't put a business plan together, he or she is in trouble," says Robert Krummer, Jr., chairman of First Business Bank in Los Angeles.

Despite the critical importance of a business plan, many entrepreneurs drag their feet when it comes to preparing a written document. They argue that their marketplace changes too fast for a business plan to be useful or that they just don't have enough time. But just as a builder won't begin construction without a blueprint, eager business owners shouldn't rush into new ventures without a business plan.

Before you begin writing your business plan, consider four core questions:

What service or product does your business provide and what needs does it fill?
Who are the potential customers for your product or service and why will they purchase it from you?
How will you reach your potential customers?
Where will you get the financial resources to start your business?

How to Start a Small Business

2004-06-21T16:55:00.000-07:00

Starting and managing a business takes motivation, desire and talent. It also takes research and planning.

Like a chess game, success in small business starts with decisive and correct opening moves. And, although initial mistakes are not fatal, it takes skill, discipline and hard work to regain the advantage.

To increase your chance for success, take the time up front to explore and evaluate your business and personal goals. Then use this information to build a comprehensive and wellthoughtout business plan that will help you reach these goals.

The process of developing a business plan will help you think through some important issues that you may not have considered yet. Your plan will become a valuable tool as you set out to raise money for your business. It should also provide milestones to gauge your success.

Review the online course: Entrepreneurship--Starting & Managing your own business

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Getting Started

Before starting out, list your reasons for wanting to go into business. Some of the most common reasons for starting a business are:
You want to be your own boss.

You want financial independence.

You want creative freedom.

You want to fully use your skills and knowledge.

Next you need to determine what business is "right for you." Ask yourself these questions:
What do I like to do with my time?

What technical skills have I learned or developed?

What do others say I am good at?

How much time do I have to run a successful business?

Do I have any hobbies or interests that are marketable?

Then you should identify the niche your business will fill. Conduct the necessary research to answer these questions:
Is my idea practical and will it fill a need?

What is my competition?

What is my business advantage over existing firms?

Can I deliver a better quality service?

Can I create a demand for your business?

The final step before developing your plan is the pre-business checklist. You should answer these questions:
What business am I interested in starting?

What services or products will I sell? Where will I be located?

What skills and experience do I bring to the business?

What will be my legal structure? (see overview below)

What will I name my business?

What equipment or supplies will I need?

What insurance coverage will be needed?

What financing will I need?

What are my resources?

How will I compensate myself?

Your answers will help you create focused, wellresearched business plan that should serve as a blueprint. It should detail how the business will be operated, managed and capitalized.

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Types of Business Organizations

When organizing a new business, one of the most important decisions to be made is choosing the structure of a business. Factors influencing your decision about your business organization include:

Legal restrictions

Liabilities assumed

Type of business operation

Earnings distribution

Capital needs

Number of employees

Tax advantages or disadvantages

Length of business operation

The advantages and disadvantages of sole proprietorship, partnership and corporation are listed below.

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Sole Proprietorship
This is the easiest and least costly way of starting a business. A sole proprietorship can be formed by finding a location and opening the door for business. There are likely to be fees to obtain business name registration, a fictitious name certificate and other necessary licenses. Attorney's fees for starting the business will be less than the other business forms because less preparation of documents is required and the owner has absolute authority over all business decisions.

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Partnership
There are several types of partnerships. The two most common types are general and limited partnerships. A general partnership can be formed simply by an oral agreement between two or more persons, but a legal partnership agreement drawn up by an attorney is highly recommended. Legal fees for drawing up a partnership agreement are higher than those for a sole proprietorship, but may be lower than incorporating. A partnership agreement could be helpful in solving any disputes. However, partners are responsible for the other partner's business actions, as well as their own.

A Partnership Agreement should include the following:

Type of business.

Amount of equity invested by each partner.

Division of profit or loss.

Partners compensation.

Distribution of assets on dissolution.

Duration of partnership.

Provisions for changes or dissolving the partnership.

Dispute settlement clause.

Restrictions of authority and expenditures.

Settlement in case of death or incapacitation.

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Corporation
A business may incorporate without an attorney, but legal advice is highly recommended. The corporate structure is usually the most complex and more costly to organize than the other two business formations. Control depends on stock ownership. Persons with the largest stock ownership, not the total number of shareholders, control the corporation. With control of stock shares or 51 percent of stock, a person or group is able to make policy decisions. Control is exercised through regular board of directors' meetings and annual stockholders' meetings. Records must be kept to document decisions made by the board of directors. Small, closely held corporations can operate more informally, but record-keeping cannot be eliminated entirely. Officers of a corporation can be liable to stockholders for improper actions. Liability is generally limited to stock ownership, except where fraud is involved. You may want to incorporate as a "C" or "S" corporation.

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Business Plan Outline
The following outline of a typical business plan can serve as a guide. You can adapt it to your specific business. Breaking down the plan into several components helps make drafting it a more manageable task.

Introduction

Give a detailed description of the business and its goals.

Discuss the ownership of the business and the legal structure.

List the skills and experience you bring to the business.

Discuss the advantages you and your business have over your competitors.

In-depth help on developing a sound business plan can be found on the SBA Web site in the Starting Area.

Marketing

Discuss the products/services offered.

Identify the customer demand for your product/service.

Identify your market, its size and locations.

Explain how your product/service will be advertised and marketed.

Explain the pricing strategy.

Financial Management

Explain your source and the amount of initial equity capital.

Develop a monthly operating budget for the first year.

Develop an expected return on investment and monthly cash flow for the first year.

Provide projected income statements and balance sheets for a twoyear period.

Discuss your breakeven point.

Explain your personal balance sheet and method of compensation.

Discuss who will maintain your accounting records and how they will be kept.

Provide "what if" statements that address alternative approaches to any problem that may develop.

Operations

Explain how the business will be managed on a daytoday basis.

Discuss hiring and personnel procedures.

Discuss insurance, lease or rent agreements, and issues pertinent to your business.

Account for the equipment necessary to produce your products or services.

Account for production and delivery of products and services.

Concluding Statement

Summarize your business goals and objectives and express your commitment to the success of your business.

Once you have completed your business plan, review it with a friend or business associate or a Service Corps of Retired Executives (SCORE) or Small Business Development Center (SBDC) counselor. (See SCORE and SBDC listings in this guide).

When you feel comfortable with the content and structure make an appointment to review and discuss it with your lender. The business plan is flexible document that should change as your business grows.

Let's discuss about the plan!

2004-06-14T05:59:00.000-07:00

Do you think you got some excellent ideas to share? Publish it for the right people.