tents, copyrights, and the like? Why should customers choose you over the competition, and have they so far? How long should this advantage last if you do nothing more? What will you need to do to create, maintain, or expand upon the advantages (R&D, sales team development, customer partnerships, law suits, etc)? What is the current R&D effort and what are its goals and milestones? What R&D efforts are underway at competitors.

6. Marketing & Sales Plan.

This section explains how you plan to reach your target customers.

How will you acquire customers, and how much will that cost? What distribution channels do you plan to use, and what methods of marketing communication make sense? Will you build an internal sales force, use independent reps, use telemarketing, etc., and how will you compensate each. What is your revenue and unit break-even, and how does that tie to your sales strategy?

7. Manufacturing/Operations/Logistics.

This section should cover how you design, develop, manufacture the product or provide the service(s).

Is this handled internally or by subcontractors? Who are key subcontractors and what is their expertise and background? How proprietary is the design and manufacturing component? Is ISO 9000/9001/GMP important to your organization, and if so, how do you manage the process? Is manufacturing capital-intensive or people-intensive? What is capacity utilization on average and at peak? What economies of scale are possible? Do you have critical suppliers?

8. Financial Data.

You should provide historical financial data such as income statements, balance sheets and cash flow statements for the past 3-5 years if available, and note whether the results were audited, reviewed by an outside accountant, or compiled. Additionally, year-to-date results should also be provided. Also you should explain significant items in the results, and analyze the trends and key ratios.

The other major component of the financial section is the forecast. Here you should project the next 3-5 years (including the current year) of performance for the income statement, balance sheet, cash flow statement, and if appropriate, provide detail on capital expenditures. The projections should be done on both an annual as well as either quarterly or monthly basis, since cash needs during the year can often far exceed cash needs at the end of a year.

The major assumptions behind your projections should be explained. Changes in key ratios from historical results should also be explai

ned. Often it is helpful to show some sensitivity analysis - the effect of changes in key variables such as growth, gross margins, sales cycle, and the like on the income statement and cash position. (Additionally it is useful to provide compensation history and projections on each member of the management team.)

9. Appendices.

Here you should include resumes of the key management members, any product literature or brochures, analyses of the market or industry, or relevant articles that would help an outsider understand the significance of your company and the need that you are meeting.

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