Part 1: The Basics
Building an ISP Business Plan
???
Whether you believe it or not, a well-wrought business plan is the foundation of any successful business. Building it is a big job, but the effort will pay handsome dividends down the line.
by Jason ZigmontM
You choose your destiny, and your business plan is your road map. As a service-provider operation progresses from being a BBS in someone's basement to becoming a profitable ISP business, you need to shift from thinking day-to-day to actually planning your future.
I've heard all the reasons why this isn't necessary. Here are of the some familiar arguments:
"I'm too busy fighting fires to sit down and write a plan."
"I've done fine with out a business plan before, why do I need one now?"
"I do have a plan. I want to get a bunch of customers and sell out, why do I need to write it down?"
The concise answer to all these objections is that writing a business plan helps to guide your company and keep you focused. And without a business plan, you're far less likely to get funding. A complete business plan is the planning blueprint a growing ISP needs. A business plan will help you to make those hard decisions that inevitably come up, while keeping you focused on your overall goal.
Most ISPs suffer from a lack of focus. In nine out of ten cases, if you were to focus better and offer half of what you currently do, you will actually make more because of your focus. A business plan makes you look at what you are truly good at and where you want to be. Even if you were never to look at the business plan again, just the exercise of writing out a business plan will make you more profitable.
Good/bad
Here's the good and bad news about business plans. Bad news?writing a complete business plan will take you at least 60 hours. Good news?writing a business plan will keep you focused and you will easily gain one to two hours out of each day.
Business plans may be used for either internal planning purposes or external purposes, such as raising capital, but no matter what you use your plan for, you need to write one. As you grow, most banks, angels, or venture capitalists will not even talk to you if you do not have a business plan. (Something I will go into in more detail in Article 5.)
Components
What goes into a complete business plan? Whether you're using the plan for internal purposes or for external ones, the essential parts are the same, only the focus may be different. Most business plans contain the following sections:
Executive Summary
Financing Proposal
Business Description
Industry Analysis
Market Analysis and Sales Forecast
Marketing Plan
Operating Plan
Organization Plan
Financial Plan
While business plans are usually presented in this order, in the process of compiling the plan, you'll find that the Executive Summary, Financing Proposal, and Business Description are summaries of other sections and therefore should be done last.
Builder's blueprint
If the business plan is primarily for internal use, you should make sure that everyone in the organization understands that this plan will be the blueprint that will guide your business in the years to come?and that everyone buys into it. I truly believe that EVERYONE in your company should understand your business plan, since by understanding it they can tailor their work to advance your plan.
Every business plan should artilculate goals?both for yourself and for the company as a whole?and employees who help to reach those goals should be rewarded. Rewarding employees based on your business plan goals will help keep you on track and focused.
This doesn't mean that your goals or plan can't change, but any changes should be well thought out, and the decision based on furthering your original business plan. Business plan details often change, but the core beliefs and vision rarely, if ever change.
Face to the financial world
If you plan to seek outside investment for your ISP, your business plan will be a large percentage of what you are judged on. It may well be the ONLY thing you are judged by. In any case, in dealing with banks, angels, venture capitalists, or anyone else looking to give you money, your business plan will be the point of departure.
If your business plan is not well written and well laid out, you're not likely to get a very positive response. Potential investors will attack your plan, probing for weaknesses anywhere they might exist, so your plan needs to be strong and you need to be prepared.
When developing a business plan for external purposes, you will inevitably focus more intently on the financial plan and the overall summaries, as those are usually the first to be read.
ISP Business Plan - Part 1: The Basics - continued
Rooted in reality
An effective plan should cover both the best- and worst-case scenarios. Many plans I have seen make statements like "We have no competition," or similar implausible claims. Frankly, when I see claims like these, I tend to dismiss the plan as a whole. One of the things that you are displaying in any business plan is how much research you have done. If you think you have no competition?or no way to fail?you will fail. I guarantee it.
Be realistic. The FCC could wipe out the ISP industry as a whole; as an ISP you need to acknowledge this in your business plan. The key is to present a solution to any problem you identify. For example, if you state that a competitor could duplicate your unique selling proposition, you should offer a counterattacking tactic.
Also, be honest?especially in the organizational structure and management analysis. If you have failed at another business, state this, but also clearly what you've learned from that experience. Nobody is perfect, and problems come up. The key is how you react under pressure.
Where we're going
This article is the first of a series of six on developing a business plan that will appear in the upcoming weeks. The series itself is based on the sample business plan I wrote to help guide ISPs into developing their own. (It is available at HowToSell.net for $50 USD.)
The plan itself is based upon a virtual ISP in Connecticut, but it's a model that many ISPs can reasonably use as a framework. Just as fun facts for a true business plan creation; Time elapsed: 82 hours. Approximate research sources: 32. Total pages including appendixes and footnotes: 35.
Here's an overview of the complete series:
1: The Basics. (You're reading it now.)
2: Industry Analysis, and Market Analysis and Sales Forecast. This article will discuss how to do industry and market analysis and forecast your sales .
3: Marketing Plan. This article will discuss the essential parts to a good marketing plan. It will also discuss strategies, tactics, unique selling propositions and other marketing issues.
4: Operational and Organizational plan. This article will discuss being facilities-based vs. being a virtual ISP, and what you should be looking for in a management team.
5: Financial Plan. Topics include: Cash flow budgeting, income budgets, and all of the numbers that go into budgeting. This section will also cover how and where to get financing.
6: Putting it all together. By the time, you read article six, you should have a complete business plan, and this column will tell you what to do with it next.
Part 1: The Basics
Part 2: Industry Analysis and Forecast
Part 3: The Marketing Plan
Part 4: Operating & Orginizational Plans
Part 5: The Financial Plan
Part 6: Putting It All Together
Part 1: The Basics
Building an ISP Business Plan
???
Whether you believe it or not, a well-wrought business plan is the foundation of any successful business. Building it is a big job, but the effort will pay handsome dividends down the line.
by Jason ZigmontM
You choose your destiny, and your business plan is your road map. As a service-provider operation progresses from being a BBS in someone's basement to becoming a profitable ISP business, you need to shift from thinking day-to-day to actually planning your future.
I've heard all the reasons why this isn't necessary. Here are of the some familiar arguments:
"I'm too busy fighting fires to sit down and write a plan."
"I've done fine with out a business plan before, why do I need one now?"
"I do have a plan. I want to get a bunch of customers and sell out, why do I need to write it down?"
The concise answer to all these objections is that writing a business plan helps to guide your company and keep you focused. And without a business plan, you're far less likely to get funding. A complete business plan is the planning blueprint a growing ISP needs. A business plan will help you to make those hard decisions that inevitably come up, while keeping you focused on your overall goal.
Most ISPs suffer from a lack of focus. In nine out of ten cases, if you were to focus better and offer half of what you currently do, you will actually make more because of your focus. A business plan makes you look at what you are truly good at and where you want to be. Even if you were never to look at the business plan again, just the exercise of writing out a business plan will make you more profitable.
Good/bad
Here's the good and bad news about business plans. Bad news?writing a complete business plan will take you at least 60 hours. Good news?writing a business plan will keep you focused and you will easily gain one to two hours out of each day.
Business plans may be used for either internal planning purposes or external purposes, such as raising capital, but no matter what you use your plan for, you need to write one. As you grow, most banks, angels, or venture capitalists will not even talk to you if you do not have a business plan. (Something I will go into in more detail in Article 5.)
Components
What goes into a complete business plan? Whether you're using the plan for internal purposes or for external ones, the essential parts are the same, only the focus may be different. Most business plans contain the following sections:
Executive Summary
Financing Proposal
Business Description
Industry Analysis
Market Analysis and Sales Forecast
Marketing Plan
Operating Plan
Organization Plan
Financial Plan
While business plans are usually presented in this order, in the process of compiling the plan, you'll find that the Executive Summary, Financing Proposal, and Business Description are summaries of other sections and therefore should be done last.
Builder's blueprint
If the business plan is primarily for internal use, you should make sure that everyone in the organization understands that this plan will be the blueprint that will guide your business in the years to come?and that everyone buys into it. I truly believe that EVERYONE in your company should understand your business plan, since by understanding it they can tailor their work to advance your plan.
Every business plan should artilculate goals?both for yourself and for the company as a whole?and employees who help to reach those goals should be rewarded. Rewarding employees based on your business plan goals will help keep you on track and focused.
This doesn't mean that your goals or plan can't change, but any changes should be well thought out, and the decision based on furthering your original business plan. Business plan details often change, but the core beliefs and vision rarely, if ever change.
Face to the financial world
If you plan to seek outside investment for your ISP, your business plan will be a large percentage of what you are judged on. It may well be the ONLY thing you are judged by. In any case, in dealing with banks, angels, venture capitalists, or anyone else looking to give you money, your business plan will be the point of departure.
If your business plan is not well written and well laid out, you're not likely to get a very positive response. Potential investors will attack your plan, probing for weaknesses anywhere they might exist, so your plan needs to be strong and you need to be prepared.
When developing a business plan for external purposes, you will inevitably focus more intently on the financial plan and the overall summaries, as those are usually the first to be read.
ISP Business Plan - Part 1: The Basics - continued
Rooted in reality
An effective plan should cover both the best- and worst-case scenarios. Many plans I have seen make statements like "We have no competition," or similar implausible claims. Frankly, when I see claims like these, I tend to dismiss the plan as a whole. One of the things that you are displaying in any business plan is how much research you have done. If you think you have no competition?or no way to fail?you will fail. I guarantee it.
Be realistic. The FCC could wipe out the ISP industry as a whole; as an ISP you need to acknowledge this in your business plan. The key is to present a solution to any problem you identify. For example, if you state that a competitor could duplicate your unique selling proposition, you should offer a counterattacking tactic.
Also, be honest?especially in the organizational structure and management analysis. If you have failed at another business, state this, but also clearly what you've learned from that experience. Nobody is perfect, and problems come up. The key is how you react under pressure.
Where we're going
This article is the first of a series of six on developing a business plan that will appear in the upcoming weeks. The series itself is based on the sample business plan I wrote to help guide ISPs into developing their own. (It is available at HowToSell.net for $50 USD.)
The plan itself is based upon a virtual ISP in Connecticut, but it's a model that many ISPs can reasonably use as a framework. Just as fun facts for a true business plan creation; Time elapsed: 82 hours. Approximate research sources: 32. Total pages including appendixes and footnotes: 35.
Here's an overview of the complete series:
1: The Basics. (You're reading it now.)
2: Industry Analysis, and Market Analysis and Sales Forecast. This article will discuss how to do industry and market analysis and forecast your sales .
3: Marketing Plan. This article will discuss the essential parts to a good marketing plan. It will also discuss strategies, tactics, unique selling propositions and other marketing issues.
4: Operational and Organizational plan. This article will discuss being facilities-based vs. being a virtual ISP, and what you should be looking for in a management team.
5: Financial Plan. Topics include: Cash flow budgeting, income budgets, and all of the numbers that go into budgeting. This section will also cover how and where to get financing.
6: Putting it all together. By the time, you read article six, you should have a complete business plan, and this column will tell you what to do with it next.
Part 1: The Basics
Part 2: Industry Analysis and Forecast
Part 3: The Marketing Plan
Part 4: Operating & Orginizational Plans
Part 5: The Financial Plan
Part 6: Putting It All Together
Part 2: Industry Analysis and Forecast
Building an ISP Business Plan
???
The numbers-based sections we discuss here will not only be subject to intense scrutiny by potential investors, they'll serve as the foundation for your day-to-day operating realities. Take time to get them right.
by Jason Zigmont
In Part 2 of Building an ISP Business Plan, we'll look at developing an Industry Analysis, a Market Analysis, and the Sales Forecast that are fundamental to your business plan.
Developing the Industry and Market Analysis sections helps you to get to know your industry and target market intimately. These sections also help the reader of your business plan, be it a banker, VC, or other investor, to understand what you are marketing. And perhaps as important, they're evidence of your level of preparedness.
Info gathering
The hardest part of preparing the Industry and Market Analysis is finding the information to base your analysis on. Your best sources are going to be the filings of public companies. Not only do public filings such as S-1s and Annual Reports contain good industry background, they contain good competitive information.
Public companies are required to inform investors of their current state and the state of the market, which gives competitors -- and everyone else -- full access to their numbers. Visit the Securities and Exchange Commission's EDGAR database to search for public documents. The SEC filings of ISPs who have recently gone public, such as OneMain, have relatively current information, so you should start there.
The next step in finding information is to 'Search the Fine Web (STFW)'. You will find reports from Forrester, Jupiter, IDC, and other analyst organizations that may help you. In addition, the Boardwatch annual list of providers is often used as a resource.
Imposing order
Once you have your data in hand, you'll need to organize it into the appropriate section or sections.
The purpose of the Industry Analysis is to look at the over all state of the Industry from a '10,000 foot' level. The section is typically broken down into three major subsections:
Industry Description
Industry Competition
Industry Growth and Sales Projections.
The Industry Description describes the overall business model of providing Internet access.
The first thing investors look for is a Standard Industry Classification (SIC) code. SIC codes are a system designed by the US Government to classify businesses. Unfortunately, ISPs do not fit precisely into the SIC system. I use SIC code 7375, "Information Retrieval Services" to classify ISPs. MindSpring, on the other hand, uses code 7389, "Business Services, Not Elswhere Classified." Your best bet is to use SIC Code 7375, or visit OSHA's SIC Search for a complete list of SIC codes.
Getting descriptive
Next, you want to write an accurate description of exactly what an ISP is. For example: "ISPs provide end user access to the set of networks of computers that make up what is commonly known as the 'Internet.' These computers are interconnected to help disseminate information and enable commerce and business transactions."*
Within the Industry Description, you also want to discuss the future of the industry and the impact that changes may have on the ISP industry. You need to be candid and discuss both positive and negative events that may happen to the industry. For example, it is true that the FCC could put independent ISPs out of business overnight, although it is unlikely. It is your responsibility to lay out in your business plan the risk factors. After all, wouldn't you rather explain things up front then have your investors/bank chasing after you later?
ISP Business Plan - Industry Analysis and Forecast - page 2
Getting competitive
Industry Competition is the second major division of the Industry Analysis. Here, you analyze the direct and indirect competitors that you expect to face. Direct competitors are easy. You have local, regional, and national competitors. Name a few of each and a brief pro/con on each.
Indirect competitors are harder and require a bit more thinking. Indirect competitors are services or other methods your users may use to completely circumvent your type of Internet access altogether. This could be wireless, cable, or DSL access, with which you may or may not be able to compete at any level. Again, state a brief pro/con for each, and explain how you plan to compete against them.
Within the Industry Competition section, you also want to discuss financial/pricing competition. For example, your pricing comments might run along these lines: "The ISP end user pricing model has been somewhat determined by the market, and has fallen into the '$19.95 Unlimited Access model.' This model is a misnomer and deceives users as they do not truly have 'unlimited access'. QEI.net is positioning itself as a high-quality, high service provider, and will be charging 20% more then industry average in return for this higher quality of service. ($23.95 per month for residential dial-up access)"
Tip: Don't take it for granted that your readers know everything about the state of the Industry. Lay it out so that someone who does not know the industry will understand what you are saying.
Crystal balling
The final section of your Industry Analysis is the Industry Growth and Sales Projections. This is where you throw in the broader statements we all see in analyst organizations' reports, such as:
"Forrester Research, Inc. (Forrester) projects that revenue from Internet access services in the United States will grow from $4.7 billion in 1997 to $15.3 billion in 2001. Additionally, a 1997 Jupiter Communications Research report projected that independent ISPs would serve approximately 79% of the households with Internet access in the US."
Tip: The most useful survey I've ever seen is from USA Today. This data should be used by all ISPs, although it should be updated. It states:
"An October, 1998 USA Today poll found that about 42% of adults overall say there is a personal computer in the home. Of the 42% of adults with computers, 74% have a modem, and 65% have Internet access. The poll also stated that in households with a household income of over $75,000/year over 75% have computers."
Scoping the market
Market Analysis is broken down into four major sections;
Market Area and Market Sales Potential
Target Market Description
Market Competition
Sales Forecast.
The overall purpose of the Market Analysis is to look at your target market in detail and describe your niche in your market.
The Market Area and Market Sales Potential covers a description of your target market, and uses your target market to determine the overall sales potential. For example, if your target market is residential users in the state of Connecticut, part of this section might say:
"There are 1,230,479 occupied households in Connecticut. An average of 57% of households in Connecticut with computers yields a target market of 701,373 households. On average, 74% of those households with computers have modems, or 519,016 and 65% or 455,892 with Internet access."
Where do you find this data? A good place to start is with the U.S. Census. From the Census, you can extract information such as populations, households, average incomes, etc. on national, state, and county level. You can also use the census and other government resources to find similar information about the number, the size and the breakdown of businesses by SIC codes.
ISP Business Plan - Industry Analysis and Forecast - page 3
Thinking locally
The second section of a Market Analysis, the Target Market Description, defines what niche you will be marketing to and discusses that niche in detail. You should explain whether you are marketing to business or residential users and what segment of each market you are targeting.
A frank discussion of your strengths and weaknesses in targeting that market will help your readers to understand why you picked that target market. For example:
"The company's target market consists of those residential customers, and Small Office/Home Office (SOHO) customers who are looking for high-quality service and are willing to pay for it. QEI.net expects 90% of its business to come from residential customers and 10% from SOHO customers. This market has currently been buying from 'value priced' providers, but at the expense of service down time, busy signals, and bad service."
The other guys
The Market Competition section can often show an entrepreneur's depth of research and understanding?or lack thereof. I have read multiple business plans that stated 'We do not currently have any competition,' or the like. This is almost always wishful (suicidal?) thinking; you have competition.
A good Market Competition section should cover local, regional and national providers with whom you will be directly competing. You should describe their strengths and weaknesses and how you plan to compete with them. Be realistic; do not underestimate your competition. In addition, any information you can find out about your subscribers, such as number of users, length of time in business, pricing models, etc., should be included.
Cry$tal balling
The final, and perhaps the most complex, section of a Market Analysis is the Sales Forecast. This section generally takes the form of a statistical projection spreadsheet accompanied by a detailed discussion and explanation.
Determining your sales forecast can be tricky. Existing businesses can extrapolate a growth rate based on curent sales with adjustments for changing market conditions and planned marketing campaigns. If you are a start-up with no historical data, you can use competitive information?along with adjustments based on your marketing plan?to determine your sales forecast. You may also use a market penetration number to determine your sales forecast.
Tip: A word of caution on the sales forecast. Your financials are going to be based largely on your sales forecast, and if your sales forecast is unrealistic, it can mean the difference between making and missing payroll. The best thing you can do is to design your marketing plan first (we'll discuss this in the next piece of this series), and then figure out the sales that will result from your marketing.
Part 1: The Basics
Part 2: Industry Analysis and Forecast
Part 3: The Marketing Plan
Part 4: Operating & Orginizational Plans
Part 5: The Financial Plan
Part 6: Putting It All Together
Part 2: Industry Analysis and Forecast
Building an ISP Business Plan
???
The numbers-based sections we discuss here will not only be subject to intense scrutiny by potential investors, they'll serve as the foundation for your day-to-day operating realities. Take time to get them right.
by Jason Zigmont
In Part 2 of Building an ISP Business Plan, we'll look at developing an Industry Analysis, a Market Analysis, and the Sales Forecast that are fundamental to your business plan.
Developing the Industry and Market Analysis sections helps you to get to know your industry and target market intimately. These sections also help the reader of your business plan, be it a banker, VC, or other investor, to understand what you are marketing. And perhaps as important, they're evidence of your level of preparedness.
Info gathering
The hardest part of preparing the Industry and Market Analysis is finding the information to base your analysis on. Your best sources are going to be the filings of public companies. Not only do public filings such as S-1s and Annual Reports contain good industry background, they contain good competitive information.
Public companies are required to inform investors of their current state and the state of the market, which gives competitors -- and everyone else -- full access to their numbers. Visit the Securities and Exchange Commission's EDGAR database to search for public documents. The SEC filings of ISPs who have recently gone public, such as OneMain, have relatively current information, so you should start there.
The next step in finding information is to 'Search the Fine Web (STFW)'. You will find reports from Forrester, Jupiter, IDC, and other analyst organizations that may help you. In addition, the Boardwatch annual list of providers is often used as a resource.
Imposing order
Once you have your data in hand, you'll need to organize it into the appropriate section or sections.
The purpose of the Industry Analysis is to look at the over all state of the Industry from a '10,000 foot' level. The section is typically broken down into three major subsections:
Industry Description
Industry Competition
Industry Growth and Sales Projections.
The Industry Description describes the overall business model of providing Internet access.
The first thing investors look for is a Standard Industry Classification (SIC) code. SIC codes are a system designed by the US Government to classify businesses. Unfortunately, ISPs do not fit precisely into the SIC system. I use SIC code 7375, "Information Retrieval Services" to classify ISPs. MindSpring, on the other hand, uses code 7389, "Business Services, Not Elswhere Classified." Your best bet is to use SIC Code 7375, or visit OSHA's SIC Search for a complete list of SIC codes.
Getting descriptive
Next, you want to write an accurate description of exactly what an ISP is. For example: "ISPs provide end user access to the set of networks of computers that make up what is commonly known as the 'Internet.' These computers are interconnected to help disseminate information and enable commerce and business transactions."*
Within the Industry Description, you also want to discuss the future of the industry and the impact that changes may have on the ISP industry. You need to be candid and discuss both positive and negative events that may happen to the industry. For example, it is true that the FCC could put independent ISPs out of business overnight, although it is unlikely. It is your responsibility to lay out in your business plan the risk factors. After all, wouldn't you rather explain things up front then have your investors/bank chasing after you later?
ISP Business Plan - Industry Analysis and Forecast - page 2
Getting competitive
Industry Competition is the second major division of the Industry Analysis. Here, you analyze the direct and indirect competitors that you expect to face. Direct competitors are easy. You have local, regional, and national competitors. Name a few of each and a brief pro/con on each.
Indirect competitors are harder and require a bit more thinking. Indirect competitors are services or other methods your users may use to completely circumvent your type of Internet access altogether. This could be wireless, cable, or DSL access, with which you may or may not be able to compete at any level. Again, state a brief pro/con for each, and explain how you plan to compete against them.
Within the Industry Competition section, you also want to discuss financial/pricing competition. For example, your pricing comments might run along these lines: "The ISP end user pricing model has been somewhat determined by the market, and has fallen into the '$19.95 Unlimited Access model.' This model is a misnomer and deceives users as they do not truly have 'unlimited access'. QEI.net is positioning itself as a high-quality, high service provider, and will be charging 20% more then industry average in return for this higher quality of service. ($23.95 per month for residential dial-up access)"
Tip: Don't take it for granted that your readers know everything about the state of the Industry. Lay it out so that someone who does not know the industry will understand what you are saying.
Crystal balling
The final section of your Industry Analysis is the Industry Growth and Sales Projections. This is where you throw in the broader statements we all see in analyst organizations' reports, such as:
"Forrester Research, Inc. (Forrester) projects that revenue from Internet access services in the United States will grow from $4.7 billion in 1997 to $15.3 billion in 2001. Additionally, a 1997 Jupiter Communications Research report projected that independent ISPs would serve approximately 79% of the households with Internet access in the US."
Tip: The most useful survey I've ever seen is from USA Today. This data should be used by all ISPs, although it should be updated. It states:
"An October, 1998 USA Today poll found that about 42% of adults overall say there is a personal computer in the home. Of the 42% of adults with computers, 74% have a modem, and 65% have Internet access. The poll also stated that in households with a household income of over $75,000/year over 75% have computers."
Scoping the market
Market Analysis is broken down into four major sections;
Market Area and Market Sales Potential
Target Market Description
Market Competition
Sales Forecast.
The overall purpose of the Market Analysis is to look at your target market in detail and describe your niche in your market.
The Market Area and Market Sales Potential covers a description of your target market, and uses your target market to determine the overall sales potential. For example, if your target market is residential users in the state of Connecticut, part of this section might say:
"There are 1,230,479 occupied households in Connecticut. An average of 57% of households in Connecticut with computers yields a target market of 701,373 households. On average, 74% of those households with computers have modems, or 519,016 and 65% or 455,892 with Internet access."
Where do you find this data? A good place to start is with the U.S. Census. From the Census, you can extract information such as populations, households, average incomes, etc. on national, state, and county level. You can also use the census and other government resources to find similar information about the number, the size and the breakdown of businesses by SIC codes.
ISP Business Plan - Industry Analysis and Forecast - page 3
Thinking locally
The second section of a Market Analysis, the Target Market Description, defines what niche you will be marketing to and discusses that niche in detail. You should explain whether you are marketing to business or residential users and what segment of each market you are targeting.
A frank discussion of your strengths and weaknesses in targeting that market will help your readers to understand why you picked that target market. For example:
"The company's target market consists of those residential customers, and Small Office/Home Office (SOHO) customers who are looking for high-quality service and are willing to pay for it. QEI.net expects 90% of its business to come from residential customers and 10% from SOHO customers. This market has currently been buying from 'value priced' providers, but at the expense of service down time, busy signals, and bad service."
The other guys
The Market Competition section can often show an entrepreneur's depth of research and understanding?or lack thereof. I have read multiple business plans that stated 'We do not currently have any competition,' or the like. This is almost always wishful (suicidal?) thinking; you have competition.
A good Market Competition section should cover local, regional and national providers with whom you will be directly competing. You should describe their strengths and weaknesses and how you plan to compete with them. Be realistic; do not underestimate your competition. In addition, any information you can find out about your subscribers, such as number of users, length of time in business, pricing models, etc., should be included.
Cry$tal balling
The final, and perhaps the most complex, section of a Market Analysis is the Sales Forecast. This section generally takes the form of a statistical projection spreadsheet accompanied by a detailed discussion and explanation.
Determining your sales forecast can be tricky. Existing businesses can extrapolate a growth rate based on curent sales with adjustments for changing market conditions and planned marketing campaigns. If you are a start-up with no historical data, you can use competitive information?along with adjustments based on your marketing plan?to determine your sales forecast. You may also use a market penetration number to determine your sales forecast.
Tip: A word of caution on the sales forecast. Your financials are going to be based largely on your sales forecast, and if your sales forecast is unrealistic, it can mean the difference between making and missing payroll. The best thing you can do is to design your marketing plan first (we'll discuss this in the next piece of this series), and then figure out the sales that will result from your marketing.
Part 1: The Basics
Part 2: Industry Analysis and Forecast
Part 3: The Marketing Plan
Part 4: Operating & Orginizational Plans
Part 5: The Financial Plan
Part 6: Putting It All Together
Part 3: The Marketing Plan
Building an ISP Business Plan
???
You may have a first-rate organization and a winning product, but without solid marketing your prospects for success are limited. Here's how to supercharge your business plan with marketing power.
by Jason Zigmont
In our high tech world, it's often the case that it's not good technology but good marketing that makes a company successful. When you're planning your company, you need to keep marketing in the forefront of your mind.
Before you write the marketing plan section of your business plan, think about how you intend to position yourself; what will make your service different from your competitors' service. VCs, bankers, and outsiders who read your marketing plan will look closely to see if you have done your research and found a niche that you can conquer.
In the previous segment of this guide, we looked at the Market and Industry Analysis sections of a complete business plan. The research you did for those sections will be the foundation on which you'll build your marketing plan.
A complete Marketing Plan consists of the following sections:
?Marketing Plan Summary
?Situational Review
?Strategic Opportunities and Threats
?Marketing Goals
?Marketing Strategy
?Marketing Budget
?Marketing Controls
Marketing Plan Summary
As with most sections of a formal business plan, the Marketing Plan starts with a summary, which is used primarily as a reference for outside readers.
Tip: Since this section is a summary of the entire Marketing Plan, write it last and use the rest of the plan to develop a precise and strong summary.
Situational Review
The main section that follows the Summary, gives readers an overall review of the lay of the competitive landscape in your market. I suggest three subsections within the Situational Review:
?The Market
?User Sign-up Process
?The Competition.
The Market subsection should cover overall market size, characteristics, and buying patterns. Within The Market, you should be specific about how many households and businesses fall within your target market, how many of them are potential buyers, and why they would want to buy your service.
User Sign-up Process should read like a '10,000 foot' view of how users will sign-up and interact with you to receive your service.
The Competition is a high level review of who your competitors are, why you are different, and how much of the market you are attempting to capture?either as a percentage of the target market, or as a number of subscribers.
Strategic Opportunities and Threats
In marketing speak, this material is often referred to as "SWOTs" (Strengths, Weaknesses, Opportunities, and Threats). This is where you analyze your business vs. your competitors in depth.
A simple way to approach this section is to do a SWOTs analysis?set down a point-counterpoint description of strengths and weaknesses?and then take the data from that analysis and put it into this section. For example, if you provide quality service at a premium price, that would be a strength. The weakness in your positioning would be that cheap or free providers would be able to use their lower price against you.
The key in the Strategic Opportunities and Threats section (along with the rest of the business plan) is to be candid and realistic. Every company has weaknesses, but if you know your weaknesses, acknowledge them, and market accordingly, you will have a higher success rate. Your poetntial investors will be looking to see if you identify your weaknesses and how you plan to deal with them. If you don't, they'll certainly notice that?and react accordingly.
Marketing Goals
Whatever your goals may be, this is the place to discuss them. If your marketing plan is based on branding vs. user acquisition, for example, let readers know this. A typical Marketing Goals section addresses three main goals; number of users, gross profit, and market share. Other possible goals include; lowering churn, brand awareness, and product awareness, among many others.
A simple Marketing Goals section would look something like this:
Marketing Goals
Given QEI.net's stated dial-up price of $23.95 per month per user, the company's goal is $100,000 gross profit in planning year one.
Capture 1 percent of the target market or 5,000 users during planning year one.
Generate sales revenue of $750,000 in year one and a monthly recurring revenue stream of $145,000 per month by end of year one.
Conduct a wide-scale advertising program to build brand and product awareness and gain additional subscribers.
Expand the number of resellers, affinity groups, and companies who offer the company's services by 10 percent monthly.
Increase average ticket size to $30 per month per user by upselling additional services, higher speed connections, and training.
ISP Business Plan - Part 3: The Marketing Plan- continued
Marketing Strategy
Typically the most detailed section of any marketing plan, the Marketing Strategy section will determine your marketing budget. A good framework of subsections for Marketing Strategy is:
?Target Market
?Positioning
?Product
?Service
?Price
?Promotion
?Advertising.
The Target Market subsection discusses the niche you will be marketing to and what their qualities are.
Positioning talks about how you will position your product in the market, such as high quality and premium price, or as a filtered service, or any other niche you can identify and conquer.
The Product subsection discusses the product(s) you are going to sell. For example, you may sell dial-up connectivity, web hosting, and dedicated high-speed access. Remember that since your readers may not understand Internet connectivity products as well as you do you may have to provide detailed explainations, especially alphabet soup items such as ADSL.
Service discusses how you are going to service your customers and what level of service your users should expect. If you are going to provide a no-busy-signal guarantee and less-than-3-minute hold times, this is the place to state those facts. If you'll be providing services your competitors aren't, point that out here.
Price discusses the pricing schedule you've worked out for your products. It is essential that you describe the unit and the frequency of billing here. (Per account, per month, etc.) Also, if you are adopting an 'unlimited' pricing plan, you should provide a high-level view of your acceptable use policies (AUPs) such as attended use clauses.
User Sign-up should provide a slightly more detailed view of the user sign-up process that you described in your Situational Review. This section may also include a subsection on any sales force you may have to interact with the users and assist in getting new users to sign up.
Promotion discusses how you are going to promote your services, while Advertising discusses where you are going to promote your services. These sections should include a concise description of your marketing campaign as detailed in your Marketing Budget (below).
Promotion and Advertising are the meat and potatoes of your ISP marketing plan. Readers of your business plan should be able to determine exactly how you plan on reaching your target market by reading these sections. If you are going to do a phased or targeted approach, discuss it here. You should also explain what methods you plan on using and why you chose them over other methods. (For example, if you chose print advertising over direct mail due to a better return, you should explain that to your reader.)
Marketing Budget
Here's where you present the dollars-and-cents view of your marketing plan. Your complete, detailed marketing budget should go in an Appendix; a snapshot will do for this section of the main marketing plan. In addition to hitting the highlights of the spending plan, you should detail the metrics underpinning the plan. For example, is it tied to a percentage of sales, average user acquisition cost, or some other formula?
Marketing Controls
section should discuss what you are going to do to make sure you are spending your marketing budget wisely and that you are within budget. Bankers and VCs look for your tracking process and what you plan to do if your marketing is not as successful as you expected them to be.
An example of a Marketing Controls section might look like this:
Marketing Controls
The sales and profit performance of QEI.net will be monitored and evaluated on a monthly basis. The primary tool for this is the monthly budget with a concentration on the number of new users. Projected monthly values serve as targets against which actual monthly data are compared and evaluated. The monthly comparisons are made by calculating a variance for each budget item. The variances of revenue are calculated at the actual value minus the budgeted value. The variance calculations for expense or outflow items are reversed. Thus, a positive-valued variance indicates a favorable occurrence and a negative valued variance an unfavorable outcome.
Part 3: The Marketing Plan
Building an ISP Business Plan
???
You may have a first-rate organization and a winning product, but without solid marketing your prospects for success are limited. Here's how to supercharge your business plan with marketing power.
by Jason Zigmont
In our high tech world, it's often the case that it's not good technology but good marketing that makes a company successful. When you're planning your company, you need to keep marketing in the forefront of your mind.
Before you write the marketing plan section of your business plan, think about how you intend to position yourself; what will make your service different from your competitors' service. VCs, bankers, and outsiders who read your marketing plan will look closely to see if you have done your research and found a niche that you can conquer.
In the previous segment of this guide, we looked at the Market and Industry Analysis sections of a complete business plan. The research you did for those sections will be the foundation on which you'll build your marketing plan.
A complete Marketing Plan consists of the following sections:
?Marketing Plan Summary
?Situational Review
?Strategic Opportunities and Threats
?Marketing Goals
?Marketing Strategy
?Marketing Budget
?Marketing Controls
Marketing Plan Summary
As with most sections of a formal business plan, the Marketing Plan starts with a summary, which is used primarily as a reference for outside readers.
Tip: Since this section is a summary of the entire Marketing Plan, write it last and use the rest of the plan to develop a precise and strong summary.
Situational Review
The main section that follows the Summary, gives readers an overall review of the lay of the competitive landscape in your market. I suggest three subsections within the Situational Review:
?The Market
?User Sign-up Process
?The Competition.
The Market subsection should cover overall market size, characteristics, and buying patterns. Within The Market, you should be specific about how many households and businesses fall within your target market, how many of them are potential buyers, and why they would want to buy your service.
User Sign-up Process should read like a '10,000 foot' view of how users will sign-up and interact with you to receive your service.
The Competition is a high level review of who your competitors are, why you are different, and how much of the market you are attempting to capture?either as a percentage of the target market, or as a number of subscribers.
Strategic Opportunities and Threats
In marketing speak, this material is often referred to as "SWOTs" (Strengths, Weaknesses, Opportunities, and Threats). This is where you analyze your business vs. your competitors in depth.
A simple way to approach this section is to do a SWOTs analysis?set down a point-counterpoint description of strengths and weaknesses?and then take the data from that analysis and put it into this section. For example, if you provide quality service at a premium price, that would be a strength. The weakness in your positioning would be that cheap or free providers would be able to use their lower price against you.
The key in the Strategic Opportunities and Threats section (along with the rest of the business plan) is to be candid and realistic. Every company has weaknesses, but if you know your weaknesses, acknowledge them, and market accordingly, you will have a higher success rate. Your poetntial investors will be looking to see if you identify your weaknesses and how you plan to deal with them. If you don't, they'll certainly notice that?and react accordingly.
Marketing Goals
Whatever your goals may be, this is the place to discuss them. If your marketing plan is based on branding vs. user acquisition, for example, let readers know this. A typical Marketing Goals section addresses three main goals; number of users, gross profit, and market share. Other possible goals include; lowering churn, brand awareness, and product awareness, among many others.
A simple Marketing Goals section would look something like this:
Marketing Goals
Given QEI.net's stated dial-up price of $23.95 per month per user, the company's goal is $100,000 gross profit in planning year one.
Capture 1 percent of the target market or 5,000 users during planning year one.
Generate sales revenue of $750,000 in year one and a monthly recurring revenue stream of $145,000 per month by end of year one.
Conduct a wide-scale advertising program to build brand and product awareness and gain additional subscribers.
Expand the number of resellers, affinity groups, and companies who offer the company's services by 10 percent monthly.
Increase average ticket size to $30 per month per user by upselling additional services, higher speed connections, and training.
ISP Business Plan - Part 3: The Marketing Plan- continued
Marketing Strategy
Typically the most detailed section of any marketing plan, the Marketing Strategy section will determine your marketing budget. A good framework of subsections for Marketing Strategy is:
?Target Market
?Positioning
?Product
?Service
?Price
?Promotion
?Advertising.
The Target Market subsection discusses the niche you will be marketing to and what their qualities are.
Positioning talks about how you will position your product in the market, such as high quality and premium price, or as a filtered service, or any other niche you can identify and conquer.
The Product subsection discusses the product(s) you are going to sell. For example, you may sell dial-up connectivity, web hosting, and dedicated high-speed access. Remember that since your readers may not understand Internet connectivity products as well as you do you may have to provide detailed explainations, especially alphabet soup items such as ADSL.
Service discusses how you are going to service your customers and what level of service your users should expect. If you are going to provide a no-busy-signal guarantee and less-than-3-minute hold times, this is the place to state those facts. If you'll be providing services your competitors aren't, point that out here.
Price discusses the pricing schedule you've worked out for your products. It is essential that you describe the unit and the frequency of billing here. (Per account, per month, etc.) Also, if you are adopting an 'unlimited' pricing plan, you should provide a high-level view of your acceptable use policies (AUPs) such as attended use clauses.
User Sign-up should provide a slightly more detailed view of the user sign-up process that you described in your Situational Review. This section may also include a subsection on any sales force you may have to interact with the users and assist in getting new users to sign up.
Promotion discusses how you are going to promote your services, while Advertising discusses where you are going to promote your services. These sections should include a concise description of your marketing campaign as detailed in your Marketing Budget (below).
Promotion and Advertising are the meat and potatoes of your ISP marketing plan. Readers of your business plan should be able to determine exactly how you plan on reaching your target market by reading these sections. If you are going to do a phased or targeted approach, discuss it here. You should also explain what methods you plan on using and why you chose them over other methods. (For example, if you chose print advertising over direct mail due to a better return, you should explain that to your reader.)
Marketing Budget
Here's where you present the dollars-and-cents view of your marketing plan. Your complete, detailed marketing budget should go in an Appendix; a snapshot will do for this section of the main marketing plan. In addition to hitting the highlights of the spending plan, you should detail the metrics underpinning the plan. For example, is it tied to a percentage of sales, average user acquisition cost, or some other formula?
Marketing Controls
section should discuss what you are going to do to make sure you are spending your marketing budget wisely and that you are within budget. Bankers and VCs look for your tracking process and what you plan to do if your marketing is not as successful as you expected them to be.
An example of a Marketing Controls section might look like this:
Marketing Controls
The sales and profit performance of QEI.net will be monitored and evaluated on a monthly basis. The primary tool for this is the monthly budget with a concentration on the number of new users. Projected monthly values serve as targets against which actual monthly data are compared and evaluated. The monthly comparisons are made by calculating a variance for each budget item. The variances of revenue are calculated at the actual value minus the budgeted value. The variance calculations for expense or outflow items are reversed. Thus, a positive-valued variance indicates a favorable occurrence and a negative valued variance an unfavorable outcome.
Part 1: The Basics
Part 2: Industry Analysis and Forecast
Part 3: The Marketing Plan
Part 4: Operating & Orginizational Plans
Part 5: The Financial Plan
Part 6: Putting It All Together
Part 4: Operating & Organizational Plans
Building an ISP Business Plan
???
Bankers or VCs who invest in your company are ultimately investing in you. These sections of the business plan are where you communicate your grasp of actually runnng an ISP.
by Jason Zigmont
With many ISPs, the thing that separates them from their competitors is the way they operate and manage their business. It may be a higher level of service quality, or a visionary as CEO; whatever it is, these sections are where you strut your operational/organizational stuff.
Operating Plan
This section of the business paln covers the details of how your ISP will actually operate. If it's a Virtual ISP (VISP)?an ISP that outsources all core functions?there are fewer details to be included than for a facilities-based ISP. Virtual ISPs should describe who they are buying their access from and how that provider is set up, from a high level prospective.
A facilities-based ISP has to describe in detail how the business will wor:. how access will be providd and what systems are in place to do this. You should also explain in detail what differentiates you from your competitor and how your service is better then others.
A complete Operating Plan consists of the following sections:
Operating Plan Summary
Situational Review
Operations
Quality Control and Customer Service
The Operating Plan Summary and Situational Review sections are an overall high-level view of the Operating Plan. Within the Situational Review, you should state where your base of operations will be, as it will serve as a reference point for your reader.
The Operations subsection covers all aspects of your business and how it operates, such as how you interact with subscribers and how you provide your service.
The Operations subsection should contain enough detail so that the reader, no matter what their level of experience is, can understand how you provide Internet access and support your users. Diagrams, which should be included in the appendix of your business plan, can be useful to explain what might otherwise be a difficult setp to understand.
The essential issues to cover in the Operations subsection include:
Customer Service
Technical Support
Internet Access Provision
Within your descriptions of Customer Service and Technical Support, you should label any direct measures of quality (DMOQs) such as hold times, call abandon rates, and any appropriate ratios.
Internet Access Provision should include all of the important details about your service, such as user-to-modem ratios, monitoring, and service provisioning.
For example:
"All Internet providers oversell their modems by a certain ratio, which therefore allows providers to make a profit. As a provider grows, they can have a higher user-to-modem ratio, and if the provider is willing to accept busy signals during peak times, they can raise the ratio. For example, AOL, during its peak time had a ratio of 35:1. Currently, AOL runs a 25:1 ratio. Average ISPs run a 10:1 ratio, with some of the better providers running a 6.5:1 ratio. QEI.net has decided to purchase enough wholesale ports for an operational user to modem ratio of 6:1. This, coupled with the 10% overage agreement with XYZ provider will allow the company to provide a 'no busy signals' guarantee."
The Quality Control and Customer Service section describes the metrics that you have defined to use in measuring quality of service and customer opinions. You should also discuss how often you plan on looking at the metrics and what you plan to do to assure a high level of service.
ISP Business Plan-Operating & Organizational Plans - cont.
Organizational Plan
The Organizational Plan gives your reader an insight into who is behind the company and whether or not you know your strengths and weaknesses. You can have the best Marketing Plan and Operations Plan, but if you cannot execute the plans, you're dead in the water.
Venture capitalists and banks make many decisions based on the people who are running the company, as those people can often make or break the company. Everyone has strengths and weaknesses, so the key is not to know everything, but to be able to bring in others whose strengths complement for your weaknesses.
Many companies have gone under because of egos: not being able to hire people who are smarter then the owner or manager. You should be upfront and honest with both yourself and your readers and explain how you plan on succeeding by bringing others in.
The Organizational Plan contains five sections:
Organizational Plan Summary
Situational Review
Management Philosophy
Key-Personnel Assessments
Compensation and Incentives
The Organizational Plan Summary and Situational Review sections provide an overall high-level view of the Organizational Plan. Within the Situational Review, you should reference an organizational chart in the Appendix.
The Management Philosophy section is your chance to explain your way of doing business, your ethics, and how you plan to interact with each other and your customers. Readers will use this segment to form a judgement as to whether you are capable of executing the plan. Your history?whether you have had successes or failures?is an important element. If you have a history of failures, stress what you learned from each failure.
For example:
"QEI.net's management philosophy stems from Mr. Doe's personal commitment to helping both employees and customers alike. This philosophy is best expressed in a quote by noted sales trainer and speaker Zig Ziglar. He states 'You can have everything in life you want if you just help enough other people get what they want.'
"This philosophy of helping others carries through all areas of the company. In helping end-users, and the company's employees, QEI.net will be able to retain both end-users and quality employees. Retaining quality employees will be one of the hardest challenges for management as the employment market for skilled people with Internet experience is fiercely competitive."
The Key-Personnel Assessments put you and your other key personnel under the spotlight. You should explain your strengths and weaknesses and how your key personnel fill in your weaknesses. Also, if you are missing key personnel, state what you need and how you are looking for them. Sometimes your bankers or investors may be able to help you find the people you are looking for. In addition, if you have outside board members label them in this section and use them to fill any weak spots you may have.
The Compensation and Incentives section is where you explain how much you and your employees are paid. Investors will look for exorbitant salaries or benefits, and will point them out. Investors and banks are looking to see if you have made sacrifices and/or have invested your own time and money in the business. The reason is simple. If you have not put your money or time into it, why should they? Also, if you have brought in an outside Board of Directors you should state it here.
For example:
"At the date of this writing, QEI.net has no outside members of the Board of Directors. Mr. Doe has however, discussed seats on the board with a local venture capitalist and a local financial consultant. Both individuals would bring much expertise and. possibly, opportunities for financing needed for expansion into additional states and growth of QEI.net. An annual stipend of $5,000 per individual has been discussed as possible compensation for their services."
In the end, the Operational and Organizational plans will truly show your grasp of running your ISP. Readers of your business plan will use these sections, specifically the Operating Plan to determine what type of person you truly are and what you are capable of. After all, when a Venture Capitalist is looking at your business plan and thinking about investing in your company, ultimately, what they're really doing is investing in you. You need to show that you are worth investing in and that you are a sound business operator.
Part 1: The Basics
Part 2: Industry Analysis and Forecast
Part 3: The Marketing Plan
Part 4: Operating & Orginizational Plans
Part 5: The Financial Plan
Part 6: Putting It All Together
Part 4: Operating & Organizational Plans
Building an ISP Business Plan
???
Bankers or VCs who invest in your company are ultimately investing in you. These sections of the business plan are where you communicate your grasp of actually runnng an ISP.
by Jason Zigmont
With many ISPs, the thing that separates them from their competitors is the way they operate and manage their business. It may be a higher level of service quality, or a visionary as CEO; whatever it is, these sections are where you strut your operational/organizational stuff.
Operating Plan
This section of the business paln covers the details of how your ISP will actually operate. If it's a Virtual ISP (VISP)?an ISP that outsources all core functions?there are fewer details to be included than for a facilities-based ISP. Virtual ISPs should describe who they are buying their access from and how that provider is set up, from a high level prospective.
A facilities-based ISP has to describe in detail how the business will wor:. how access will be providd and what systems are in place to do this. You should also explain in detail what differentiates you from your competitor and how your service is better then others.
A complete Operating Plan consists of the following sections:
Operating Plan Summary
Situational Review
Operations
Quality Control and Customer Service
The Operating Plan Summary and Situational Review sections are an overall high-level view of the Operating Plan. Within the Situational Review, you should state where your base of operations will be, as it will serve as a reference point for your reader.
The Operations subsection covers all aspects of your business and how it operates, such as how you interact with subscribers and how you provide your service.
The Operations subsection should contain enough detail so that the reader, no matter what their level of experience is, can understand how you provide Internet access and support your users. Diagrams, which should be included in the appendix of your business plan, can be useful to explain what might otherwise be a difficult setp to understand.
The essential issues to cover in the Operations subsection include:
Customer Service
Technical Support
Internet Access Provision
Within your descriptions of Customer Service and Technical Support, you should label any direct measures of quality (DMOQs) such as hold times, call abandon rates, and any appropriate ratios.
Internet Access Provision should include all of the important details about your service, such as user-to-modem ratios, monitoring, and service provisioning.
For example:
"All Internet providers oversell their modems by a certain ratio, which therefore allows providers to make a profit. As a provider grows, they can have a higher user-to-modem ratio, and if the provider is willing to accept busy signals during peak times, they can raise the ratio. For example, AOL, during its peak time had a ratio of 35:1. Currently, AOL runs a 25:1 ratio. Average ISPs run a 10:1 ratio, with some of the better providers running a 6.5:1 ratio. QEI.net has decided to purchase enough wholesale ports for an operational user to modem ratio of 6:1. This, coupled with the 10% overage agreement with XYZ provider will allow the company to provide a 'no busy signals' guarantee."
The Quality Control and Customer Service section describes the metrics that you have defined to use in measuring quality of service and customer opinions. You should also discuss how often you plan on looking at the metrics and what you plan to do to assure a high level of service.
ISP Business Plan-Operating & Organizational Plans - cont.
Organizational Plan
The Organizational Plan gives your reader an insight into who is behind the company and whether or not you know your strengths and weaknesses. You can have the best Marketing Plan and Operations Plan, but if you cannot execute the plans, you're dead in the water.
Venture capitalists and banks make many decisions based on the people who are running the company, as those people can often make or break the company. Everyone has strengths and weaknesses, so the key is not to know everything, but to be able to bring in others whose strengths complement for your weaknesses.
Many companies have gone under because of egos: not being able to hire people who are smarter then the owner or manager. You should be upfront and honest with both yourself and your readers and explain how you plan on succeeding by bringing others in.
The Organizational Plan contains five sections:
Organizational Plan Summary
Situational Review
Management Philosophy
Key-Personnel Assessments
Compensation and Incentives
The Organizational Plan Summary and Situational Review sections provide an overall high-level view of the Organizational Plan. Within the Situational Review, you should reference an organizational chart in the Appendix.
The Management Philosophy section is your chance to explain your way of doing business, your ethics, and how you plan to interact with each other and your customers. Readers will use this segment to form a judgement as to whether you are capable of executing the plan. Your history?whether you have had successes or failures?is an important element. If you have a history of failures, stress what you learned from each failure.
For example:
"QEI.net's management philosophy stems from Mr. Doe's personal commitment to helping both employees and customers alike. This philosophy is best expressed in a quote by noted sales trainer and speaker Zig Ziglar. He states 'You can have everything in life you want if you just help enough other people get what they want.'
"This philosophy of helping others carries through all areas of the company. In helping end-users, and the company's employees, QEI.net will be able to retain both end-users and quality employees. Retaining quality employees will be one of the hardest challenges for management as the employment market for skilled people with Internet experience is fiercely competitive."
The Key-Personnel Assessments put you and your other key personnel under the spotlight. You should explain your strengths and weaknesses and how your key personnel fill in your weaknesses. Also, if you are missing key personnel, state what you need and how you are looking for them. Sometimes your bankers or investors may be able to help you find the people you are looking for. In addition, if you have outside board members label them in this section and use them to fill any weak spots you may have.
The Compensation and Incentives section is where you explain how much you and your employees are paid. Investors will look for exorbitant salaries or benefits, and will point them out. Investors and banks are looking to see if you have made sacrifices and/or have invested your own time and money in the business. The reason is simple. If you have not put your money or time into it, why should they? Also, if you have brought in an outside Board of Directors you should state it here.
For example:
"At the date of this writing, QEI.net has no outside members of the Board of Directors. Mr. Doe has however, discussed seats on the board with a local venture capitalist and a local financial consultant. Both individuals would bring much expertise and. possibly, opportunities for financing needed for expansion into additional states and growth of QEI.net. An annual stipend of $5,000 per individual has been discussed as possible compensation for their services."
In the end, the Operational and Organizational plans will truly show your grasp of running your ISP. Readers of your business plan will use these sections, specifically the Operating Plan to determine what type of person you truly are and what you are capable of. After all, when a Venture Capitalist is looking at your business plan and thinking about investing in your company, ultimately, what they're really doing is investing in you. You need to show that you are worth investing in and that you are a sound business operator.
Part 1: The Basics
Part 2: Industry Analysis and Forecast
Part 3: The Marketing Plan
Part 4: Operating & Orginizational Plans
Part 5: The Financial Plan
Part 6: Putting It All Together
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