Chapter 6: PLAN SECTION 1: INTRODUCTION

CHAPTER 6

Plan Section 1: Introduction

It is better to know some of the questions than all of the answers. – JAMES THURBER

YOUR INTERNATIONAL BUSINESS PLAN will begin with an introduction or executive summary. This introduction is composed of three parts: cover page, table of contents and executive summary. In addition, many plans begin with a mission and vision statement. The specific contents of the introduction will depend on the intended audience for the plan. For example, in the case of a business plan that is to be circulated extensively to outsiders, such as prospective investors, the introduction will include various warnings and disclaimers to protect the confidentiality of the information and satisfy the requirements of applicable securities laws. Obviously, when the plan is intended solely for the internal use of the company, securities law legends are not necessary although it is still appropriate to include notices pertaining to safeguarding the confidentiality of the plan. As noted earlier, however, some cultures may take these disclaimers as warnings or as a representation of a lack of good faith. Plan and format accordingly.

Cover Page

The cover page should, when appropriate, address the confidentiality of the information included in the business plan. The plan should include a statement or legend that provides: ■ Information in the plan is your property ■ Information in the plan is confidential and proprietary to you ■ No copies can be made ■ No disclosure of the plan or its contents may be made, except with your written approval ■ The plan must be returned to you on request

Each plan should be numbered on the cover page and a space left for inserting the name of the recipient. A distribution log should be maintained and the legends on the cover page should refer to the named recipient as having a duty and obligation to maintain the secrecy of the plan and limit copying and distribution.

In addition, the cover page should include the full name and address of the company, as well as telephone, facsimile and e-mail addresses. The reference should be to the main executive offices of the company. Addresses of other offices, including foreign offices, can be included in the body of the plan.

When the plan is being used in connection with the offering of securities of the company, the cover page will also include various legends (legal statements) that may be required by securities law administrators. If the offering occurs in multiple

jurisdictions, each jurisdiction may have its own legend requirements. Additional pages should be inserted behind the initial cover page to include these legends, which generally should be in bold type and capitalized. Counsel can advise on the content and placement of the legends. PLAN NOTE: When the plan is circulated internationally, confidentiality information and disclaimers may only be binding when (and as) presented in the local language.

Table of Contents

Each reader of a business plan has certain sections of particular interest and not all will read the same parts. In addition, some readers will want to read the plan in a different order than what you have prepared. For example, Lance Parish, a VC analyst, in his insight at the end of Chapter 3, reads the executive summary and then the management description. Only if the plan meets his criteria in these two areas does he read the rest of the plan. A reader who cannot find a particular section of interest is likely to lose interest.

Readers need a “road map” to your plan. This means they need a table of contents. The table of contents should not be limited to section or chapter titles. Most readers are seeking specific issues, such as pricing, competitors or intellectual property. Be sure to list the key topics appearing as subsections in the plan parts. This will make it easier for them to find what they want. On the other hand, the table of contents should not be so voluminous that it is difficult to find key topics. Keep it on one page.

The reader should be able to scan the table and immediately understand the organization of the plan. This means the wording should be kept to a minimum, with indentations to set off different topics and subtopics. This page should be presented as an easily read outline and not be overburdened with text.

Errors in the table of contents give readers the impression that you are inefficient, disorganized or lacking in quality control. Alignment, spelling and title or page errors do not reflect well on your commitment. When too many people get involved in writing the plan, the table of contents can get put together without double checking the information. Often they forget to make adjustments for last minute changes in the plan body that affect titles or pagination. A careful presentation from the beginning will leave the right impression with your reader.

Some business plan writers prefer to place the table of contents after the executive summary, thinking that the most important part of the plan is the executive summary, which the readers will want to see first. Only after reading the executive summary will they care about seeing other parts of the plan and need the table of contents. There is no hard and fast rule, so the choice is yours.

Executive Summary

The executive summary is the most important section of your plan. It is where readers start. If the summary is poorly written and unclear, it probably will be the place where readers stop.

It SHOULD be a marketing tool designed to get readers to look at the rest of your plan and to take it seriously. It should NOT be merely an introduction, a preface, a collection of highlights, a condensation, an abstract or a summary.

PREPARATION OF THE SUMMARY In many ways, the executive summary is the most difficult part of the plan to prepare. Why? Because in writing it, you must come to grips with shortcomings in the rest of the plan and bring together the key messages regarding the company’s plans in a short and concise manner. It is written as a marketing device and must summarize everything your company represents. There is a difference of opinion on when to write the executive summary. You need your most persuasive arguments in the summary but may not have developed them until you are well into drafting the business plan. Therefore, some leave the drafting of the summary until after all or most of the plan has been completed. It is also possible to outline and roughly write the summary, which will give you an overview of the issues that you need to better research and define. You can then revisit the summary after writing the rest of the plan.

CONTENTS OF SUMMARY Begin by briefly telling readers why you prepared the plan. Emphasize the significance of the plan to the readers. In other words, is your purpose to attract investors or to provide internal company guidelines? Are you asking readers to study, analyze and comment on the plan, implement the plan or recall the company objectives and policies for purposes of comparing performance? Let the readers know your purpose so they can adjust their reading for the intended use. Remember, the executive summary is written for specific readers. You must know who your readers are, what they want and what they will do with your plan after reading it. In the span of 90 to 120 seconds, the reader should have all the basic information needed to understand the issues or problems and to move forward with further reading or questions for the drafter. Therefore, the executive summary must be adjusted to your audience. For example: ■ For investors, highlight characteristics considered important for investment decisions, such as a perceived need in the targeted market, how your business plans to meet that need and what the expected return might be. ■ For members of the board of directors, describe why the company should decide to invest in a given project, whether it is a new product or service, a new market or an arrangement with a new foreign partner. ■ For a foreign joint venture, quickly and succinctly define the target market and opportunities for exploitation of the company’s current goods, services or resources, the advantages associated with the proposed partnership, the investment required and the anticipated return. In terms of style, the summary should meet the 3-Cs test: Clear, Concise and

Compelling. At the same time, it should convey your enthusiasm and why you are working so hard to create your company or champion the new project. Don’t be wordy. Try to say it in two pages, or even one page, if you can effectively convey your message.

Always listen carefully to feedback you get from readers of the plan. Observe what questions they ask after reading it, and in particular, take note of questions that are the same or similar. These questions will indicate areas needing improvement. ADVISORY: When the readership of the plan is outside your domestic culture, customize the summary for different cultures. While the main body of the plan may remain in your native language (or the language of international commerce, English), translating the summary shows that you are willing to go the “extra mile” (or kilometer) to communicate.

Mission and Vision Statements

Business plans for start-ups or radical departures from an ongoing business may include mission and vision statements. These statements constitute a one- or two-sentence summary of what the company is all about–what it stands for, what it believes in and what its goals are. The two statements are distinctly different.

VISION STATEMENT Your vision is a long-term goal. It is your dream of what you want the company to be when it grows up. It should be a concise philosophical statement about the future of the firm. It is such a distant goal that you may never achieve it, but you will never stop trying.

MISSION STATEMENT Your mission is more immediate and achievable. It addresses what you intend to accomplish in the foreseeable future (the next several years). Because the statement is only a few sentences long, each word must be carefully chosen. They must be succinct and powerful, yet convey a clear message. The statements become motivation tools, so they should have passion and be inspirational. Pepsi’s “Beat

Coke” was both. Considered on a per-word basis, these two statements are the most time consuming part of your plan. To get them right, involve as many people as possible. In this way, you will develop statements that reflect your company’s employees and culture, not just your own views. Both statements should be based on the company’s unique competitive advantages. By doing so, they demonstrate to readers that you understand the market, your company, your goods or services and your competitors. Don’t confine your carefully drafted vision and mission statements to the business plan. Make them part of your corporate culture. Post them in the halls and add them to your company brochures and reports. Review them periodically.

Most of all, frequently discuss them and consider whether you are still achieving them.