The Entrepreneur’s Guide to Writing Business Plans and Proposals The Entrepreneur’s Guide CJ Rhoads, Series Editor The Entrepreneur’s Guide to Writing Business Plans and Proposals K. Dennis Chambers Library of Congress Cataloging-in-Publication Data Chambers, K. Dennis, 1943– The entrepreneur’s guide to writing business plans and proposals / K. Dennis Chambers. p. cm.—(The entrepreneur’s guide, ISSN 1939–2478) Includes bibliographical references and index. ISBN-13: 978–0–275–99498–3 (alk. paper) 1. New business enterprises—Planning. 2. Business planning. 3. Proposal writing in business. 4. Business writing. I. Title. HD62.5.C423 2008 658.4 0 012—dc22 2007035294 British Library Cataloguing in Publication Data is available. Copyright  C 2008 by K. Dennis Chambers All rights reserved. No portion of this book may be reproduced, by any process or technique, without the express written consent of the publisher. Library of Congress Catalog Card Number: 2007035294 ISBN-13: 978–0–275–99498–3 ISSN: 1939–2478 First published in 2008 Praeger Publishers, 88 Post Road West, Westport, CT 06881 An imprint of Greenwood Publishing Group, Inc. www.praeger.com Printed in the United States of America The paper used in this book complies with the Permanent Paper Standard issued by the National Information Standards Organization (Z39.48–1984). 10987654321 This book is dedicated to Elijah, JC, and Tess Contents Acknowledgments ix Introduction xi I. How to Write a Business Plan 1 1. Start from Strength: What’s in It for Me? 3 2. Capture the Elusive Readers: What’s in It for Them? 20 3. Conquer the First Draft: The Easy Part 29 4. Edit for Power: The Hard Part 44 5. Prepare for Success: Develop a Realistic Marketing Plan 60 6. Demonstrate Financial Credibility: Money Still Makes the World Go ’Round by Gerry Young 68 7. Writing in the Twenty-First Century: A Guide to Today’s New Mechanics 105 II. How to Write a Business Proposal 123 8. Raise the Bar: What You Are Really Proposing 125 9. Tie the Knot: Why Your Proposal Makes the Prospect so Nervous 131 10. The Art and Science of Persuasion: Convince Readers to See It Your Way 143 11. Watch Winners at Work: A Model Proposal 149 Appendices by Gerry Young 169 Appendix A: Financial Ratios 169 Appendix B: Estimating and Calculating Direct Costs 169 Appendix C: Key Financial Terms 175 Appendix D: Financial Resources on the World Wide Web 177 Index 181 About the Author and Contributor 185 viii Contents Acknowledgments Hundreds of people have contributed knowingly or unknowingly to my development as a writer. So many others have generously given of their time and advice for this book that it is impossible to name them all. Gerry Young, Grant Chambers, Kenneth Peters—submariners all! Len D’Innocenzo, Jack Cullen, Kristie Janes, Philip Madell, Dr. Linda Coleman, John Connorton, Peter Raisbeck, Steve Delchamps, Erica Neal, John Fredette, Paula Chambers, Nora and Peter Waystack, Mike Irwin, Bradford Moses, Don Hudson, Brian Harwood, Don Balducci, Dr. Stephanie Hancox, Paul Faulkner, and Don Koonce all contributed directly in some fashion, with my thanks. I’m also grateful to the friendly and professional staff of the Newburyport Public Library, and to the thousands of partici- pants and students in my writing workshops and college classes. And to Jeff Olson, editor extraordinaire, without whom [...]... want everything that happens to be fast 4 Our customers are different We can’t find them as easily as we used to They are watching network television less than they did ten years ago They don’t read any particular magazine or listen to radio stations that have commercials the way they used to They are biking down 6 The Entrepreneur’s Guide to Writing Business Plans and Proposals mountain trails or working... parties 4 The Entrepreneur’s Guide to Writing Business Plans and Proposals While we are in the rarified company of flag officers, here’s another from a man who ought to know: ‘‘A good plan executed right now is far preferable to a perfect plan executed next week’’ (General George S Patton, Jr) Plans change But that is no reason to resist writing one For example, if you were writing the first business plan... We are writing for readers who have names and job titles and babysitter problems and insecurities about their 401(k)s We are going to the effort of writing, not for their pleasure, but to get some sort of action out of them Our aim is to motivate them to do something Therefore, our task is all about the reader As I write this, there is a crane operating on the street just beyond my window On the long... whether you are the right choice for them And also whether they are right for you Regularly Recited Think of some organizations that have been around for a long time: The Catholic Church The Marine Corps United Auto Workers The Boy Scouts General Motors Procter & Gamble Crest toothpaste One thing they have in common is a regular habit of reminding themselves who they are and what they stand for and. .. as an example of the toughest, most jaded readers you will have Sell your idea to these people, and you can sell to anyone The important thing to remember about them is that they are not philanthropists They won’t lend you money because they like you or because you make a spectacular pitch to them They lend money when they are convinced that your financials are sound and they will get their investment... simply sitting at her desk and reading about it The only way to do this successfully is with powerful truth, and that comes only from a world-class mission statement Because a mission statement is not about you—it’s about the image you wish to have in the minds of your customers 10 The Entrepreneur’s Guide to Writing Business Plans and Proposals YOUR MISSION STATEMENT: THE FOUNDATION ON WHICH YOU... Second, the fundamental nature of finding customers and selling to them has changed And if that’s true, as I believe it is, it means your writing must reflect these new realities and use that awareness to make things happen Case in point: On October 30, 2006, newspapers across the country reported that the Yale School of Management is reinventing itself I found the story in the Boston Globe According to Joel... they stand for and why they do what they do Some long-standing organizations are faltering and in danger of collapsing because they have forgotten who they really are 11 12 The Entrepreneur’s Guide to Writing Business Plans and Proposals SOME MISSION STATEMENT EXAMPLES Here are some famous mission statements: Mary Kay Cosmetics: ‘ To give unlimited opportunity to women.’’ 3M: ‘ To solve unsolved problems... literature write on the side, for pleasure, after working at their day jobs The myth of the starving full-time writer is often not far from the truth Nowhere is applying these principles more important than when it comes to the challenges of writing business plans and proposals that bring us profit today The way we used to write them yesterday is over That way no longer works Think of the premier maker... BUSINESS WRITING This book emphasizes the writing of plans and proposals Of the dozen or so books available on business plans, none deals exclusively with how to write them using twenty-first century sensibilities except this one That being so, you and I must make important assumptions: You have a product or service for which there is demand in the marketplace You have clearly defined your customer . The Entrepreneur’s Guide to Writing Business Plans and Proposals The Entrepreneur’s Guide CJ Rhoads, Series Editor The Entrepreneur’s Guide to Writing. century. 4 The Entrepreneur’s Guide to Writing Business Plans and Proposals First, free nations and free enterprise are devoting much of their wealth to increased