How to write a strong business plan - corporate mission statements

Keep it brief and to the point, and as accurate as you can make it.

There are some elements all business plans have in common. These include a cover page (drafted by your attorney) containing basic information about your private stock offering; a one-page table of contents; the principal risk factors (a legally required section that also must be drafted by your attorney); and legal and accounting information, which is simply the names and addresses of lawyers or outside accountants involved in the plan's preparation. The final section should be media clips. Right from the beginning, you should be after any press you can get, even if it's just the hometown paper. When outsiders report on your magazine, it goes a long way to validate the project for investors.

But the sections that will make or break your plan -- and where you should put your best effort -- are the following:

* Executive summary: This is probably the most important page of your entire plan. Here, you summarize in a few short paragraphs the information that will compel the potential investor to read further. Serious investors receive dozens of business plans every week, so if you write an executive summary that "hooks" the investor, your job is half finished.

* The company: At first all that will appear here is a brief description of the company's purpose (e.g., to publish a magazine about...) and a legal description (written by your attorney) of the securities being sold and how they will be used. Once you're established, you should update this section to include money raised, who owns stock and in what amounts.

* The magazine: Here, you describe in detail the concept of your magazine, outline its editorial mission and describe your design and production procedures. As you evolve, you should add editorial successes, such as awards won.

* Marketing: Here, you attempt to "prove" your concept. Include in-depth documentation of your market and competition, and detailed plans on your newsstand strategy, subscription sales and ad sales (including revenue and number projections in all three areas). The more specific you are on distribution avenues, direct-mail plans and advertising targets, the more credible you are. Once you've been publishing for a while, this section should also include a detailed performance history. We do ours in both prose and bar graphs. I also include a discussion of other marketing activities, such as trade shows, controlled circulation and syndication of editorial material.

* Projections and valuations: Most investors would like Profit & Loss and Cashflow projections summarized for five years, with detailed information on the first two years. Since magazine accounting can be quite complex, a good computer model makes this job easier.

This is one area where it pays to call in a good consultant -- particularly if this is your first magazine. It can be quite sobering to discover that those great response rates you've been counting on are so far from reality as to be humorous.

You should follow your projections with a short section on the valuation of your magazine. A few guidelines: Most investors are comfortable with a five-year investment, but because of the risk involved want to see an annual compounded return of around 30 percent. Magazines commonly sell at multiples of between five and 10 times earnings or one times revenue, but you may want to seek some professional guidance in fixing value. All investors want an eventual "out," so include payoff possibilities, such as a sale to another company, a buyback by employees, a public offering, etc.

Once you're under way, include past financial statements (independently audited) and budget comparisons of actual to projected numbers in order to preserve an accurate financial history.

* Personnel: At first you'll have no real staff, but you should have competent people "on board" when you begin to raise money. Investors scrutinize this section because ultimately they are investing in people, not an idea.

A good securities lawyer will make sure you're covered with other required legal elements, such as incorporation papers, subscription agreements and state and federal securities filings.

Once you've developed your business plan, make it your bible. You'll be amazed at how useful it will be throughout your publishing career.

Joseph E. Daniel is the founder and publisher of Buzzworm, a five-year-old environmental magazine.

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