All entrepreneurs should prepare a business plan before starting to develop a new business. The plan will indicate if the business is viable and the plan will tell investors and banks what the business will do and what results it will achieve.
A #business plan is also a tool to compare expected results with reality after the business has been established. When the business is operational then the spreadsheets can be updated each month with investment, expenses and sales data in order to track the actual business results compared with the expected results. If the actual results deviate considerably from the expected results and the results do not meet cash flow expectations then it will be necessary to pivot the business in a direction that will improve the financial performance. Changes may include offering different services to different demographics.
A front-page single paragraph that will explain what the business will do and the results that the business will achieve. Prospective business partners, bank managers and investors are busy people and will not have the patience to read the whole plan to understand the business and what is expected from it.
Description of the business
Avoid using technical language and write for a non-technical reader.
Mission and vision statements
Write a short sentence for each statement. A mission statement focuses on the present and what an organization is doing to achieve its goals. A vision statement focuses on the future and what an organization will ultimately become. The statements direct the immediate and long-term goals for employees and tell customers what the business is doing and where it is going.
What are the products or services? What are the market demographics? Who is currently delivering the products and services and to whom? What are the various methods that the products and services can be delivered? What are the limitations of the industry? What is the demographic that currently has no access to the products and services proposed by the business?
The market opportunity
Who are the customers of the new business? Where are the customers? What service do the customers want? How much are the customers prepared to pay? How many customers are there? Do competitors provide similar services? If there are competitors what are their services and what do they charge?
What and how will the business deliver
Describe each service in detail and how each service fits each market opportunity, determine the rate-plans and on-demand plans where each plan should be justified by basing it on market research. Describe how each service will be provided for the customer and the infrastructure required for providing the service. Describe and identify the suppliers that will be required by the business so that it can provide the service to the customers. Describe the regulatory steps that the business requires to operate, including insurance, permits, and licenses. Describe the properties that the business requires to operate, offices, NOC, tower sites and relay sites. Describe the installation at the customer’s premises so that the customer can receive the services.
Sales and marketing
How are the potential customers going to be informed about the service through publicity and marketing? What is the process for customers to obtain the service through sales? How will the service be delivered to the customers through installation? How will the customers be charged for the service? What will happen if there is a failure with the service delivery? What will happen if the customer fails to pay for the service?
What are the strengths of the business? What are the weaknesses of the business? What are the opportunities for the business? What are the threats to the business?
Describe the areas of activity of the business departments, and the requirements and deliverables of each. What are the staffing requirements of each department? What is the staffing proposal as the business grows?
Roles and responsibilities
Who are the business founders and what are their biographies? What are the shareholders participation in the business? Do the founders have business start-up experience? What are the staff roles in the business and include a job description for each? What are the qualifications required for the staff roles?
What will the cost be for the business to become operational and begin delivering services to customers? Provide a spreadsheet to document startup costs.
Source of the startup investment
Will the entrepreneur provide the business funding? Does the entrepreneur have an investment partner? Will the entrepreneur require secured loans? How will the investment be provided, initial sum or as stage payments? Will the entrepreneur have access to additional investments to support the business until it reaches break-even?
Monthly operating costs
Prepare a plan of monthly operating expenditures to deliver the services to customers and include purchasing customer CPE kits, and sales and marketing costs. Provide a spreadsheet to document operating costs.
Expected monthly reinvestment costs
A monthly budget will be required for infrastructure maintenance and repairs, and infrastructure expansion to permit adding customers. Infrastructure expansion includes, adding PtMP towers, expanding NOC capacity, and increasing the ISP backhaul capacity. This budget may also include adding new towers with LEO satellite backhauls, and switching some existing towers to LEO satellites when the service becomes available. Provide a spreadsheet to document reinvestment charges.
Expected monthly income
How many customer sales are expected each month? What is the expected income per customer? What are the expected monthly sales? What is the expected monthly income? What is the expected month over month income growth? Provide a spreadsheet to document expected sales income.
Month by month cash flow for the first 12 months
Subtract monthly operating costs and monthly reinvestment costs from expected monthly income for each month showing monthly positive or negative revenue. Provide a spreadsheet to document cash flow over the first 12 month of operation. It may be necessary to prepare spreadsheets for 13 to 24 months and 25 to 36 months for the subsequent ROI calculation.
Set points along the cash flow timeline for achievement goals, the goals may be the number of subscribers connected by a certain date, or a numerical sales figure. Encourage staff to achieve the goals, possibly by giving rewards, to ensure the expected business performance parameters are met.
Identity the break-even point
This is the date on the cash flow timeline where the cash flow revenue becomes positive. Minimizing this time duration is critical and the entrepreneur should pre-sell the service so that the business has a number of customers initially to shorten the time to break even.
Calculate the operational investment required
Calculate how much additional investment is required to support the business over the period that the cash flow revenue is negative.
Calculate the time to obtain a return on the investment (ROI)
This is calculated by adding the startup investment to the operating investment over the negative cash flow period. Calculate the ongoing revenue after cash flow is positive and determine the time taken to recover the startup plus operating investments.
Future business growth
After the ROI period the business will generate a profit however ROI may take more then one year. When the ROI is completed the entrepreneur can consider increasing monthly reinvestment costs using profits to speed the growth of the business. Include a plan to show how the business can grow over a 3 to 5 year period based on the demographic of the customer base.
Does the entrepreneur expect to grow the business indefinitely without any plan for sale or merger? Does the entrepreneur have a plan to exit the business through a sale or acquisition partnership? After what milestones can the business expect to be sold or merged? What is the expected sale price or merger value based on similar business activities?
The business plan is a lot of work for the WISP entrepreneur but is worth it because it ensures that the #entrepreneur has considered all the important and relevant points before embarking on the #business.
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