Chapter 5 -
Elements of a business plan

If you have completed your strategic planning, you have accomplished the hardest part of writing a business plan: knowing what you need to do and how to do it. Your strategic plan answers most questions the business plan poses. Assuming your strategic planning has been thorough, your job now is primarily to put your strategy into a form that’s appropriate and useful for outside parties.

Regardless of your goal, all business plans should contain at least five sections:

• Your mission statement
• A description of your business
• Your action plan
• Financial projections
• Discussion of management strength

The space you devote to these sections may vary, but all should be addressed whether your company is a startup or a 25-year-old carrier that is planning expansion. A significant business change requires you to define how the change will affect your goal and to show how you will accomplish it. In this way, a business plan sounds much like a strategic plan. The major difference is the goal.

A strategic plan provides the steps you need to take to succeed. A business plan is aimed at proving that those steps are likely feasible and profitable. You must show that your marketing is sound, that your net income and cash flow will be positive, and that you and other managers are experienced and capable.

This approach to a business plan assumes that you are looking for money, either from lenders or investors, for expansion, working capital or some other business purpose. If this is the case, and the amount you are seeking is significant, your business plan should be as detailed as possible. If you think something is remotely relevant, find a place for it.

Sometimes you want a business plan just for internal purposes or simply to have a plan if someone asks for it. That is often the case for a trucking company that hasn’t grown in several years and has no plans to do so. If that’s true for your company, a short plan — perhaps no more than 10 pages long — probably will suffice. You can summarize your business, as well as how you manage and market the business, in just a few pages and tack on recent financial results. An action plan, which is the heart of an aggressive business plan, probably is unnecessary for such a static company.

Let’s assume that you need a strong and detailed business plan. Pretend that the reader is the most skeptical person imaginable and that your standard of proof is very high. Although a lending institution certainly could qualify, what if your business plan reader is someone even more discriminating? What if he is an individual looking to lay his own money on the line?

Few, if any, small trucking companies list their stock on any public exchange. Even venture capital — a common source of capital for many small businesses — is rarely available for small carriers because profit margins are so thin in trucking, at least relative to high-tech and emerging industries. But just because you aren’t looking for equity capital doesn’t mean you can’t present a business plan that provides the type of information an investor looks for.

A business plan aimed at attracting investors should satisfy lenders, whose financing usually is secured by collateral and whose return is built into the loan agreement. A shareholder has no such security. Aside from a lawsuit alleging that you failed to disclose material changes in your management, operation or financial situation, a shareholder has little recourse if you run the company into the ground. And a shareholder’s investment can decrease — as well as increase — in value.

Also, you are a shareholder. You might not think of your role in those terms, but if you own a trucking company, you are an investor. Shouldn’t you be as confident of your investment as someone who would buy stock in it if shares were available?

Put aside your salary for a moment. Is ownership of your trucking company a good investment? Your equity probably will never return what it would if you put your money in certain “dot-coms” that are so popular today. But then you’ll never control those companies, either. The question isn’t whether stock in your trucking company is the best possible investment; it’s whether your stock is a sound investment.

The business plan we will discuss will be loosely modeled after a stock prospectus. But rather than base it on the government forms for major exchanges, we will adapt a form used by small businesses to sell stock on their own without listing it on a public exchange.

The North American Securities Admin-istrators Association (www.nasaa.org), which represents state securities agencies, sponsors a program called Small Company Offering Registration (SCOR), which allows companies to sell less than $1 million in stock and act as their own stock exchanges.

NASAA sees the SCOR form as a roadmap to a business plan, saying that it includes the information, numbers and risks that investors and bankers need to make informed decisions. Also, all use of money raised by a SCOR offering must be used for specific business purposes, not, for example, to let owners cash in on their equity. This feature makes the program a more appropriate model for a business plan than a typical stock prospectus.

Not everything in the SCOR form is relevant to developing a business plan, however. The form, for example, seeks a description of the securities offered and how they will be sold. But for the most part, the SCOR form asks the type of information you would include in a plan.

Begin your business plan with a cover sheet showing your company name, address, telephone number, website address and other basic information. Next, leave space for a table of contents. Then include a page for just your mission statement. Now you are ready to prepare the meat of your business plan.

In Summary
There are countless ways to write a business plan, but one of the best approaches is to pretend that your reader is an investor. Could you convince someone that your business plan is so strong that he should risk his own money on the venture? Can you convince yourself that your business plan is that good?