There are many types of symbols. Money from investors, banks, or financial organizations is one such kind of symbol.
A successful Business Plan (=a successful manipulation of symbols) is one that brings in its wake the receipt of credits (money, another kind of symbol). What are the rules of manipulating symbols? In our example, what are the properties of a Successful Business Plan?
(1) That it is closely linked to reality.
The symbol system must map out reality in an isomorphic manner. We must be able to identify reality the minute we see the symbols arranged.
If we react to a Business Plan with incredulity (“It is too good to be true” or “some of the assumptions are nonrealistic”) – then this condition is not met and the Business Plan is a failure.
(2) That it rearranges old, familiar data into new, emergent, patterns.
The symbol manipulation must bring to the world some contribution to the sphere of knowledge (very much as a doctoral dissertation should).
When faced with a Business Plan, for instance, we must respond with a modicum of awe and fascination (“That’s right! – I never thought of it” or “(arranged) This way it makes sense”).
(3) That all the symbols are internally consistent.
The demand for external consistency (compatibility with the real world, a realistic representation system) was stipulated above. This is a different one: all symbols must live in peace with one another, the system must be coherent.
In the example of the Business Plan:
Reactions such as: “This assumption/number/ projection defies or contradicts the other” indicate the lack of internal consistency and the certain failure to obtain money (=to manipulate the corresponding symbols).
(4) Another demand is transparency
All the information should be available at any given time. When the symbol system is opaque – when data are missing, or, worse, hidden – the manipulation will fail.
In our example: if the applicant refuses to denude himself, to expose his most intimate parts, his vulnerabilities as well as his strong points – then he is not likely to get financing. The accounting system in Macedonia – albeit gradually revised – is a prime example of concealment in a place where exposition should have prevailed.
(5) The fifth requirement is universality
Symbol systems are species of languages. The language should be understood by all – in an unambiguous manner. A common terminology, a dictionary, should be available to both manipulators and manipulators.
Clear signs of the failure of a Business Plan to manipulate would-be remarks like: “Why is he using this strange method for calculation?”, “Why did he fail to calculate the cost of financing?” and even: “What does this term mean and what does he mean by using it?”
(6) The symbol system must be comprehensive
It cannot exclude certain symbols arbitrarily. It cannot ignore the existence of competing meanings, double entendres, ambiguities. It must engulf all possible interpretations and absolutely ALL the symbols available to the system.
Let us return to the Business Plan
A Business Plan must incorporate all the data available – and all the known techniques to process them. It can safely establish a hierarchy of priorities and of preferences – but it must present all the possibilities and only then make a selection while giving good reasons for doing so.
(7) The symbol system must have links to other, relevant, symbol systems
These links can be both formal and informal (implied, by way of mental association, or by way of explicit reference or incorporation).
Coming back to the Business Plan
There is no point in devising a Business Plan which will ignore geopolitical macro-economic and marketing contexts. Is the region safe for investments?
What are the prevailing laws and regulations in the territory and how likely are they to be changed? What is the competition and how can it be neutralized or co-opted? These are all external variables, external symbol systems. Some of them are closely and formally linked to the business at hand (Laws, customs tariffs, taxes, for instance). Some are informally linked to it: substitute products, emerging technologies, ethical and environmental considerations. The Business Plan is supposed to resonate within the mind of the reader and to elicit the reaction: “How very true!!!”
(8) The symbol system must have a discernible hierarchy
There are – and have been – efforts to invent and to use non-hierarchical symbol systems. They all failed and resulted in the establishment of a formal, or informal, hierarchy. The professional term is “Utility Functions”. This is not a theoretical demand. Utility functions dictate most of the investment decisions in today’s complex financial markets.
The author(s) of the Business Plan must clearly state what he wants and what he wants most, what is an absolute sine qua non, and what would be nice to have. He must fix and detail his preferences, priorities, needs, and requirements. If he were to attach equal weight to all the parts of the Business Plan, his message will confuse those who are trying to decode it and they will deny his application.
(9) The symbol system must be seen to serve a (useful) purpose and it must demonstrate an effort at being successful
It must, therefore, be direct, understandable, clear and it must contain lists of demands and wishes (all of them prioritized, as we have mentioned).
When a computer faces a few tasks simultaneously – it prioritizes them and allocates its resources in strict compliance with this list of priorities.
A computer is the physical embodiment of a symbol system – and so is a bank doling out credit. The same principles apply to the human organism.
All-natural (and most human) systems are goal-oriented.
(10) The last – but by no means the least – requirement is that the symbol system must be interfaced with human beings
There is not much point in having a computer without a screen, or a bank without clients, or a Business Plan without someone to review it. We must always – when manipulating symbol systems – bear in mind the “end-user” and be “user friendly” to him. There is no such thing as a bank, a firm, or even a country. At the end of the line, there are humans, like me and you.
To manipulate them into providing credits, we must motivate them into doing so. We must appeal to their emotions and senses: our symbol system (=presentation, Business Plan) must be aesthetic, powerful, convincing, appealing, resonating, fascinating, interesting. All these are irrational (or, at least, non-cognitive) reactions.
We must appeal to their cognition. Our symbol system must be rational, logical, hierarchical, not far-fetched, true, consistent, internally and externally. All this must lead to motor motivation: the hand that signs the check given to us should not shake.
THE PROBLEM, THEREFORE, IS NOT WHERE TO GO, NOT EVEN WHEN TO GO IN ORDER TO OBTAIN CREDITS.
THE ISSUE IS HOW TO COMMUNICATE (to manipulate symbols) IN ORDER TO MOTIVATE.
Using this theory of the manipulation of symbols we can differentiate three kinds of financing organizations:
(1) Those who deal with non-quantifiable symbols. The World Bank, for one, when it evaluates business propositions, employs criteria that cannot be quantified (how does one quantify the contribution to regional stability or the increase in democracy and the improvement in human rights records?).
(2) Those who deal with semi-quantifiable symbols. Organizations such as the IFC or the EBRD employ sound – quantitative – business and financial criteria in their decision-making processes. But were they totally business-oriented, they would probably not have made many of the investments that they are making and in the geographical parts of the world that they are making them?
(3) And there are those classical financing organizations that deal exclusively with quantifiable, measurable variables. Most of us come across this type of financing institution: commercial banks, private firms, etc.
Whatever the kind of financial institution, we must never forget:
We are dealing with humans who are influenced mostly by the manipulation of symbol systems. Abiding by the aforementioned rules would guarantee success in obtaining funding. Making the right decision on the national level – would catapult a country into the 21st century without having first to re-visit the twentieth.
How to write a startup business plan
Why Do I Need A Business Plan?
Why do you need to write a business plan? There are a number of reasons. Writing a plan dramatically increases your chances of success as an entrepreneur.
Here are just a few reasons why you would want to write a business plan.
1. Evaluating initial startup costs.
2. Determining what it will take to make a profit.
3. Analyzing your competition and its success and failures (which you can capitalize on)
4. Well-defined roles of all people involved in the company.
5. Investigating your market and developing a strategy.
6. Anticipating problems before they occur.
7. Defining a clear goal and exit strategy for your business.
8. Convincing investors to fund your business
Some may scoff at all of the parts of a business plan but remember that you are undertaking this endeavor to make money, not to just produce a product or service. Most businesses fail because they are hit by unforeseen expenses — or situations — that they should have anticipated ahead of time.
To give yourself the best chance of success, do your homework ahead of time and you’ll be way ahead of most people.
Plan Your Work, Work Your Plan
A business plan is not a document set in stone and you will probably change it in the future as your business develops. When you are stuck on an issue refer back to your business plan and remember what your initial goals were and whether the situation has changed significantly enough that the plan needs to be reworked.
Planning your work is when you write your plan, but you can’t just stop there. You must work the plan and stick to it as you move forward in order to meet your exit strategy or other goals for the company.
Step 1: Defining Your Product Or Service
The first step to writing your business plan is defining exactly what your product or service is. This is what you will approach a potential customer with.
How would you explain your product or service to a potential client?
What would you tell them about it?
How would your product or service relate to other businesses?
Describing your product or service should fit within 1 paragraph with supporting paragraphs underneath it. Most people, when dealing with something innovative or something that is identical to a competitor, try to cop out of this and say “it’s just too complex for my product to be described”. That’s hogwash.
Every product or service can be defined. If your product or service is so innovative that it can’t be defined then the chance of it succeeding is very low.
Here are a few examples.
* Google was simply “a better search engine that works”
* Apple was simply “a computer that can fit on a desk”
* Microsoft was “an operating system that can be mass distributed”
* Amazon.com was “a mail-order bookstore with an online front end”
Describing your product is not a hard thing to do. Implementing a strategy to sell, distribute or market your product in the long-run has the most impact on whether your business will succeed.
Step 2: Who Are Your Customers?
Defining your target market may be a little difficult if you think your product can be used by anyone, but it can be done. Simply putting “everyone on Earth” is not a practical target market.
Whether your product or service can be used by everyone is not the key, it’s who can afford and needs your product.
Is it small businesses? Does it fit the consumer market that cooks a lot? Is it Internet users who are looking for dolls?
Defining your exact target market is key to setting up a proper marketing strategy. Without knowing who your potential customers are you will be casting your line into a vast ocean rather than a stocked pond.
Another part of this is determining if your target market can afford your product and will they purchase it from you.
If your product can only be used by boys age 14-18 and the price of your product is $1000 your market will probably be very small.
This is all part of the plan, don’t be discouraged if you find that upon doing research your product or service doesn’t make sense. It’s better to evaluate things now and scrap the whole thing than to accept money from investors and finding out later that your business doesn’t stand a chance.
Step 3: Market Strategy
Who is your competition? How will you reach your target customer or client? These are all questions that need to be defined.
Find two or three competitors and evaluate them. Where are they successful? Where is their main revenue coming from? What things have they tried and failed? What things do they lack that you will provide?
Analyzing the competitive landscape is an important part of determining if you can succeed. You may even realize other areas that your product or service needs to focus on to have a chance of succeeding.
How are you going to reach your customer? Will it be through catalogs? Advertising in the local paper? Word of Mouth? Direct sales?
Investigate the costs of implementing a strategy of reaching your customer and client base.
If you are selling a product how much will it cost to get your products on shelves or to set up an e-commerce website?
What are the costs involved to place advertisements?
Simply having a product or service and not having people even knowing that it exists is a certain road to failure from the start.
Step 4: Financing And Capital
What are your initial expenses for starting your business?
You need to analyze all costs for beginning your business and how much capital you will need to keep the business running. If there is payroll involved you will need to factor in payroll taxes as well as salaries. You need to know how much in legal costs you will incur incorporating and for lawyer and accounting services.
If you are providing a product what is the cost of having it produced and an inventory for it?
Letterheads, logos, business equipment, software, and business cards all fit in this category.
There is no hard and fast rule for how much capital you will initially need in terms of months in advance. Most businesses underestimate how much initial expenses and ongoing monthly expenses they have.
How will you fulfill orders? If via mail you will need to factor in packaging and shipping expenses.
If you are stocking a store with your item you will need to factor in delivery charges and expenses.
Once you have determined both your ongoing monthly expenses and initial expenses then you can evaluate how much initial capital you will need and where you intend to get it.
Will your financing come in the form of angel investors, venture capital, self-financed or friends and family? Securing this financing could have expenses you have not counted on, be sure to include these expenses as well.
Step 5: Operations
You need to define the operations of your business and how your product or service will reach a customer from development all the way to end-user. If you are providing a product you will need to define the whole flow.
Here are a few questions for a product-based company.
How will the product be produced?
How will it be stored?
How will it be delivered?
How will customers place an order?
How will an order be processed?
How will a customer get a receipt?
Where will fulfillment take place?
How will money change hands?
When will the customer receive their product?
How will customer service be handled?
For a service-based company, most of the above questions have their equivalent.
These questions need to be answered. It shows that you have thought ahead on how your business will operate.
Step 6: Putting It All Together
Once you have analyzed your product, your customers, your competition, market strategy, and financing it’s time to put it all together in a document known as a business plan.
There is no single format for writing a business plan. The best way to write a business plan is to study business plans. You can find some business plans on the web to study.
Here is a basic overview of the things you should provide in a business plan.
1. Cover Sheet
2. Statement of Purpose
I. Part 1: Business Analysis
a. Description of the Business
b. Marketing Strategy
c. Competitive Landscaped. Operating Flow
e. Management and Personnel
f. Exit Strategy
II. Part 2: Financial Information
a. Equipment, Supply List and Assets
b. Balance Sheet
c. Break-even Analysis
d. Pro-forma Projections Including
i. 3-year summary
ii. Detailed projection by month of the first year
iii.Detailed quarterly projects for year 2 and 3
iv. Assumptions or how you reached your projections
e. Pro-forma Cash Flow
III. Part 3: Supporting Documentation
a. Tax returns of the principals involved in the business for the last 3 years
b. Franchise contracts, proposed leases, and purchase agreements
c. Any licenses or legal documents the business needs
d. Resumes of all the principals involved in the business
e. Letters of intent from suppliers and other services
Remember that not all of these things need to be included right off the bat. If you are not going to have proposed leases at this time while you are starting your plan, it can go on your task list of things to do.
The most important part is getting started on your business plan so that you can spot the things you need to get done to complete it.
Most investors are not going to just hand you money without a pretty solid business plan though, so if you’re not too good at doing the financials you better get to work on learning how to project Pro-forma cash flow and projections.
Once you have your business plan you are well on your way to creating a successful startup!