Page 103 - Business Plans that Work A Guide for Small Business

94 • Business Plans that Work

in the eyes of potential investors because they show that you understand
the nuances of your industry.

Sales Strategy

This section provides the backbone that supports all of the above. Specifi-
cally, it illustrates what kind and level of human capital you will devote
to the effort. How many salespeople and how much customer support do
you need? Will these people be internal to the organization or outsourced?
If they are internal, will there be a designated sales force or will differ-
ent members of the company serve in a sales capacity at different times?
Again, this section builds credibility if the entrepreneur demonstrates an
understanding of how the business should operate. In our pet food exam-
ple a start-up could use a direct sales force or a series of pet food distribu-
tors. Of course, a blend of the two sales strategies is also possible.

Sales Forecasts

Gauging the impact of the foregoing efforts is difficult. Nonetheless, to
build a compelling story, entrepreneurs need to show projections of rev-
enues well into the future. How do you derive these numbers? There are
two methods, the comparable method and the buildup method. The com-
parable method models sales forecasts after what other companies have
achieved, adjusting for age of company, variances in product attributes,
support services such as advertising and promotion, and so forth. After
detailed investigation of the industry and market, entrepreneurs know
the competitive players and have a good understanding of their history. In
essence, the entrepreneur monitors a number of comparable competitors
and then explains why her business varies from those models.
Lazybones has an advantage over a brand new startup. Specifically,
they have an operating history at their existing laundries. In essence, Dan
will take the performance of one of his typical stores and use that as a com-
parable for all new franchisees Lazybones secures. The buildup method,
in this case, is the number of franchisees that Lazybones expects to sell
each year. So one might argue that Lazybones doesn’t need to bench-
mark with comparable companies, but that would be a mistake. Moving
from four company operations to a franchisee network will require new