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REFERENCE ARTICLES

  • Basics of Investors Relations : Why investor relations? An introduction covering the purpose, the decision process, the tactics and how to measure returns.
For details on each service, please click on the above highlighted wordings.
(Note: The articles listed above are for reference only. They should not be relied upon for any business or investment decisions. The contents, including guidelines, regulations, estimates and figures may be changed by the concerned organizations and authorities from time-to-time without notice.)
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Financial Tips for Small to Medium Enterprises (SMEs)

5 Tips for Finding and Keeping a Bank
  • Understand the basics. Large or small, banks are interested in the same fundamentals—such as cash flow, collateral and the viability of your business.
  • Sell the bank on your company. Provide solid information on its financial history, your business plan, and information about the kinds of loans you need and the terms you want.
  • Look for a good fit. Let prospects know what kind of a relationship you want with a bank.
  • Ask the right questions. Find out where decision making takes place, how many people you will have to deal with, and if the bank is open to meeting with you and your advisors fairly regularly.
  • Commit time and energy to developing your relationship with the bank you choose. Get to know more than one person at the institution so that if your bank is merged or acquired, someone familiar with your business will probably still be there.
5 Tips on Finding Angel Investors and Venture Capitalists
  • Do some research. Identify the most likely candidates by asking your accountant, banker and lawyer.
  • Keep an open mind—potential investors may be anywhere. According to Success magazine, one entrepreneur found an angel investor among the motorcyclists he rides with on weekends.
  • Surf the Web. Good places to start are www.nvca.org., the Web site of the National Venture Capital Association and www.mavf.com., the site of Mid-Atlantic Venture Funds, a venture-capital firm in Bethlehem, PA.
  • Make presentations at venture capital forums or fairs. Your local university business school or Small Business Administration office should have information on such events.
  • Check your library or the Web for such references as Pratt’s Guide to Venture Capital Sources and The Directory of Buyout Financing Sources, both published by Thomson Financial Securities Data at www.tfsd.com
5 Tips to Creatively Search for Funding
  • Contact your state, county and local development departments. Many offer funding programs to foster business within a certain geographic area.
  • Take advantage of organizations aimed at helping you. The National Organization of Women Business Owners offers special funding programs for women entrepreneurs, for example, and the National Minority Supplier Development Council has an arm that works with minority entrepreneurs.
  • Call on the community banks in your area. These smaller banks pride themselves on helping small business owners.
  • Find out of there are any revolving loan fund (RLF) programs for which you might qualify. They provide “gap financing” that your bank won’t or can’t offer. Your banker should know of any RLFs available.
  • Visit www.sba.gov/financing, the finance section of U.S. Small Business Administration’s Web site. It provides details on SBA’s many funding programs. Perhaps you qualify for one.
5 Tips on State and Local Funding
  • Don’t overlook city, county or state governments when you seek capital. Many economic development offices have funding-assistance programs for qualified small firms.
  • Understand the purpose and the requirements of the program you’re interested in. It may call for raising matching funds or creating jobs.
  • Be modest in making projections. For example, don’t inflate the number of jobs you think you can generate in hopes of getting a larger grant.
  • Take advantage of “in-kind” credits. Like cash, these can be used as matching funds. In one case, a state program counted a company’s $200,000 local property tax abatement as part of the matching requirement.
  • Remember that having a good business plan and strong management team in place will help you make your case.
5 Tips on Vendor Financing
  • Know that vendors can sometimes play a significant role in financing a new business. Partners in one start-up persuaded vendors to give them net-30 terms in order to stock a retail store. They made enough money to pay the vendors back in 30 days.
  • If you need financing for equipment or supplies, ask your suppliers first. They may be willing to work out an arrangement with you to keep you as a customer.
  • If you haven’t established vendor relationships, shop around. Your trade association may be able to point you to suppliers that offer financing.
  • Check the vendor’s credentials and reputation before you sign an agreement. Look for stability.
  • Keep in mind that a number of major suppliers own financial companies that can help you, such as GE Small Business Solutions and IBM Global Financing
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Primer on Reverse Merger

Primer on Reverse Merger:
By Alan Phan, Ph.D., DBA.
Benefit Of Going Public In The US And Europe:
  • Realization of company value based on tangible market price; normally higher than non-recognizable private valuation;
  • Providing shareholders with clear-cut exit strategy;
  • Using public shares as currency for merger and acquisition as well as for capital funding (equity or financing);
  • Creating better corporate image and public standing as a listed company;
  • US and European stock exchanges are still the most capitalized markets of the world.
Reverse Merger Vs Traditional IPO:
  • To get a major underwriter to sponsor an IPO, the company needs at least $2 Million net profit for a consecutive 3-year period; or a minimum $50 Million in net tangible assets. Without a major underwriter, the IPO candidate would have a very slim chance of getting approved, even after paying an equally high cost;
  • The IPO process would take at least 12 months to complete;
  • The new IPO company would need plenty of public relations and brand marketing to get its name known by the investing company; and to get proper distribution of its shares by market makers;
  • In merging with a public shell, the process could be completed within 3 months, especially if the company has on hand its audited financial statements;
  • The reverse merger would provide the company with a ready distribution system of its shares, as well as network of market makers and public relation channels.
The Cost Of Going Public (an OTC company):
  • In a traditional IPO, a major underwriter would require a minimum upfront cost of about $700,000 to cover their fees as well as legal and accounting cost. After the completion of the IPO, the total cost will come to about 12 percent of the IPO plus another 10 percent in warrants.
  • The reverse merger would cost the company about $1,000,000 cash and 15 percent of the company. Of course, all of these costs are negotiable according to the individual financial condition of each candidate.;
The Cost Of Maintaining Public Status:
  • Legal cost in SEC filings and other administrative expenses: $60,000 to $150,000.
  • Accounting and auditing expenses: $60,000 to $150,000.
  • PR-IR and market making cost: $100,000 to $300,000
  • Other fees for directors, insurance: $80,000 to $150,000
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Basics of Investors Relations

By: Alan Phan, Ph.D., DBA
Investor relation (IR) is defined as the building and maintaining good relationships between company management and its investors. Good relationship requires communication, transparency and delivery of superior performance. However, IR practices are challenging in today’s environment as companies must compete for attention of brokers, analysts, corporate finance executives, fund managers, business journalists, and other professionals who can influence the price and liquidity of their stock.
Objective:
The objective of IR is simple: to add new shareholders and to retain existing ones. IR is like the sales and marketing any other product, except this product is “company stock or shares”. Brand name would help building a premium over its true value; supply and demand would dictate its price and volume; market trend and industry environment are uncontrollable influencing factors; post-sale service is a requirement; and good distribution network and sales force are the essential elements for a successful campaign.
Strategy
Unlike strategy for any other product, the marketing and sale of shares require a complete plan including the understanding of the market, brand name premium, product position among competitors, pricing as an auctioned item, customer behavior and motivation, advertising, market segmentation, post-sale service and other elements such as promotion, public relation and crisis management.
Corporate Governance
Corporate governance is the cornerstone of an IR program. Without good corporate governance practices by management, IR would become simply an advertising campaign with dubious or even fraudulent intent. Corporate governance is a set of internal rules and regulations imposed on management to insure transparency, check-and-balance, full disclosures, market disciplines and rights of minority shareholders. With proper corporate governance, there will be less common abuses of power by management such as insider trading, family control of public assets, personal benefits, arbitrary decision-making, false news or accounting, share manipulation etc… Management has to focus on core business and financial fundamentals (return on investment, P/E ratio, internal growth rate, technology) instead of jumping into all kinds of business models for personal glorification or benefit.
Decision-Making Process of Shareholder
Shareholders could be classified into individual and professional investors. Their behavior is basically motivated by same objective: make money from their buy or hold decision and avoid loss in their sell decision. However, they are very different from each other on the degree of knowledge, time and resources.

For professional investors working for a financial institution, the decision process goes through 7 phases: setting objectives, determining strategy, collecting information, analyzing data, understanding constraint and bias, controlling risks and making decisions. For individuals, the process goes through these phases too, but they are much simpler and quicker and more influenced by personal emotion or preference.

The objective of a fund in seeking “alpha” (absolute) return or “beta” (indexed) would require the traders to make decision according to this fundamental goal. Alpha is a rate of return independent of market indices whereas beta is mirrored after these indices. Hedge fund managers use up to 14 strategies to match their objective: from long/short to distressed, from market timing to value, from industry sectors to geographical selection. Helping them nowadays are vast database and technical charts available in the digital explosion of information. Analyzing these data to locate strategic and systematic advantages would also require enormous software programs and sophisticated individual mindset. Even after this long process, the buy-sell opportunities must be refined by corporate constraints, personal biases and risk control parameters set forth by the financial institution.

Finally, when the buy/sell decision is made, it can still be influenced by breaking news, current market conditions, and availability of shares at desired pricing.
Factors Influencing Decision-Making Process
The top 5 major factors that influence the investment decision by fund managers in emerging markets include:
  • Global trend: Despite denials by fund managers, the herd mentality is well and alive. Trendy news and analysis tend to attract capital flows.
  • Potential growth: Investors are easily dazzled by growth rate and projected earnings.
  • Size of company: Bigger companies always enjoy more coverage and analysis.
  • Trading volume (liquidity): Liquidity eases the process of entry and exit into a stock.
  • Market conditions: Hong Kong and Singapore attracts more investments than their bigger neighbors in China and Indonesia.
The next 5 considerations are also important in their decision-making process:
  • Market timing: Fund managers are obsessed with beating the markets, hence, the timing gamble.
  • Tax and accounting system: International standards are easier to follow and understand for evaluation.
  • Information and data flow: Investors are reassured when transparency and data availability are ready at any time for inspection.
  • Quality of management: Management team is the top tenet of Buffet’s investment philosophy. Many managers agree.
  • Institutional buying/selling: It is safer for a manager’s career and reputation to follow the crowd.
Communication Tactics
  • Web site and company brochure: Professionally prepared and designed site or brochure creates the first and more lasting impression.
  • Press release and newsletters: News keeps the company in limelight and gives the perception that company management is proactive.
  • Corresponding: Replies to all emails, phones, or letters from shareholders and potential investors are a must for all IR executives.
  • Annual shareholders’ meeting: A well-organized meeting with satisfied attendees will spread the company goodwill far and long among shareholders.
  • Conference calls and analyst meetings: Discussion of annual or quarterly results allows management to put the best face in the numbers and explain forward plan.
  • Road shows and investors’ meetings: This is still the most effective route to enlist support of institutional investors and retain existing shareholders.
  • Trade shows and conferences: Attendance is part of the brand building process and creates favorable impression among potential investors.
  • Crisis handling: It could turn into an opportunity for good publicity if the management team is honest and skillful.
Measuring IR Value
Brian Rivel of Rivel Research Group completed a study on IR measure in 2003. He found out that on an average, IR adds about 9.2% on a company share price and 8.4% on its trading volume. If a company market cap is about $100 million, at $10 a share, the company share price should increase to $10.92, giving its new market cap an extra gain of $ 9.20 million. Meanwhile, the average cost of a good IR campaign is averaging about 0.08% of the market cap, or only $800,000 in this case.
Execution
To be successful, IR program must be formulated into an IR plan with specific details on process, personnel, action steps, schedule and budget. The most important element of this plan would be the strong commitment of management in carrying out the proposed plan. Long-term perspective must be maintained as market conditions can fluctuate due to external environment independent of company control or desire.
Conclusion
There are many metrics that one can look at beyond absolute stock price performance to grade the effectiveness of an IR program:
  • Stock performance versus peers/competitors
  • Stock performance versus industry indexes
  • Long-term investment returns (5 years or more)
  • Revenue multiples
  • Earnings multiples
  • Short positions
  • Beta factors (volatility)
  • Market capitalization versus peers
  • Average daily trading volumes (share liquidity)
  • Ownership profiles
  • Turnover among top shareholders
  • Quantity and quality of analyst coverage
  • Analyst recommendation breakdown
  • Investor marketing activity
  • Size and quality of IR database
However, a simpler way is to look at IR on this perspective:
If a company is performing well, has been meeting or exceeding expectations, and is in good financial position, then shareholders should be rewarded by a higher moving stock price.  If not, then we need to look at the IR program to see what is going wrong.
If a company is not performing well then the stock will get hit (in some cases, quite badly) no matter how great the IR program is. However, in this scenario, if the reputation of the management team and the company remains in tact, and investors and analysts see optimism in the future of the company, then the IR program has also succeeded.
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Essential Elements of a Good Business Plan for SMEs

A business plan should be a work-in-progress. Even successful, growing businesses should maintain a current business plan.
As any good salesperson knows, you have to know everything you can about your products or services in order to persuade someone to buy them. In this discussion, you are the salesperson and your products represent your business. Your customers are potential investors and employees. Since you want your customers to believe in you, you must be able to convince them that you know what you are talking about when it comes to your business.
To become an expert (or to fine-tune your knowledge if you already believe you are one), you must be willing to roll up your sleeves and begin digging through information. Since not all information that you gather will be relevant to the development of your business plan, it will help you to know what you are looking for before you get started. In order to help you with this process, we have developed an outline of the essential elements a good business plan.
Every successful business plan should include something about each of the following areas, since these are what make up the essentials of a good business plan:
  • Executive Summary
  • Market Analysis
  • Company Description
  • Organization & Management
  • Marketing & Sales Management
  • Service or Product Line
  • Funding Request
  • Financials
  • Appendix
Part 1: The Executive Summary
The executive summary is the most important section of your business plan. It provides a concise overview of the entire plan along with a history of your company. This section tells your reader where your company is and where you want to take it. It's the first thing your readers see; therefore it is the thing that will either grab their interest and make them want to keep reading or make them want to put it down and forget about it. More than anything else, this section is important because it tells the reader why you think your business idea will be successful.
The executive summary should be the last section you write. After you've worked out all the details of your plan, you'll be in a better position to summarize it - and it should be a summary (i.e., no more than 4 pages).
Contents of the Executive Summary
  • The Mission Statement - The mission statement briefly explains the thrust of your business. It could be two words, two sentences, a paragraph, or even a single image. It should be as direct and focused as possible, and it should leave the reader with a clear picture of what your business is all about.
  • Date business began
  • Names of founders and the functions they perform
  • Number of employees
  • Location of business and any branches or subsidiaries
  • Description of plant or facilities
  • Products manufactured/services rendered
  • Banking relationships and information regarding current investors
  • Summary of company growth including financial or market highlights (e.g. your company doubled its worth in 12-month period; you became the first company in your industry to provide a certain service)
  • Summary of management's future plans - With the exception of the mission statement, all of the information in the Executive Summary should be highlighted in a brief, even bulleted, fashion. Remember, these facts are laid out in-depth further along in the plan.
If you're just starting a business, you won't have a lot of information to plug into the areas mentioned above. Instead, focus on your experience and background as well as the decisions that led you to start this particular enterprise. Include information about the problems your target market has and what solutions you provide. Show how the expertise you have will allow you to make significant inroads into the market. Tell your reader what you're going to do differently or better. Convince the reader that there is a need for your service or product, then go ahead and address your (the company's) future plans.
To assist the reader in locating specific sections in your business plan, include a table of contents directly following the executive summary. Make sure that the content titles are very broad; in other words, avoid detailed descriptions in your table of contents.
Part 2: Market Analysis
The market analysis section should illustrate your knowledge about the particular industry your business is in. It should also present general highlights and conclusions of any marketing research data you have collected; however, the specific details of your marketing research studies should be moved to the appendix section of your business plan.
This section should include: an industry description and outlook, target market information, market test results, lead times, and an evaluation of your competition.
Industry Description and Outlook
This overview section should include: a description of your primary industry, the current size of the industry as well as its historic growth rate, trends and characteristics related to the industry as a whole (i.e., What life cycle stage is the industry in? What is its projected growth rate?), and the major customer groups within the industry (i.e., businesses, governments, consumers, etc).
Identifying Your Target Market
Your target market is simply the market (or group of customers) that you want to target (or focus on and sell to). When you are defining your target market, it is important to narrow it to a manageable size; many businesses make the mistake of trying to be everything to everybody. Often times, this philosophy leads to failure.
In this section, you should gather information which identifies the:
  • Distinguishing characteristics of the major/primary market you are targeting. This section might include information about the critical needs of your potential customers, the degree to which those needs are (or are not) currently being met, and the demographics of the group. It would also include the geographic location of your target market, the identification of the major decision-makers, and any seasonal or cyclical trends which may impact the industry or your business.
  • Size of the primary target market. Here, you would need to know the number of potential customers in your primary market, the number of annual purchases they make in products or services similar to your own, the geographic area they reside in, and the forecasted market growth for this group.
  • The extent to which you feel you will be able to gain market share and the reasons why. In this research, you would determine the market share percentage and number of customers you expect to obtain in a defined geographic area. You would also outline the logic you used to develop these estimates.
  • Your pricing and gross margin targets. Here, you would define the levels of your pricing, your gross margin levels, and any discount structures that you plan to set up for your business, such as volume/bulk discounts or prompt payment discounts.
  • Resources for finding information related to your target market. These resources might include directories, trade association publications, and government documents.
  • Media you will use to reach your target audience. These might include publications, radio or television broadcasts, or any other type of credible source that may have influence with your target market.
  • Purchasing cycle of your potential customers. Here, you will need to identify the needs of your target market, do research to find the solutions to their needs, evaluate the solutions you come up with, and finally, identify who actually has the authority to choose the final solution.
  • Trends and potential changes which may impact your primary target market. Key characteristics of your secondary markets. Just like with your primary target market, here you would again want to identify the needs, demographics, and the significant trends which will influence your secondary markets in the future.
Market Tests
When you are including information about any of the market tests you have completed for your business plan, be sure to focus only on the results of these tests. Any specific details should be included in the appendix. Market test results might include: the potential customers who were contacted, any information or demonstrations that were given to prospective customers, how important it is to satisfy the target market's needs, and the target market's desire to purchase your business' products or services at varying prices.
Lead Times
Lead time is the amount of time between when a customer places an order and when the product or service is actually delivered. When you are researching this information, determine what your lead time will be for the initial order, reorders, and volume purchases.
Competitive Analysis
When you are doing a competitive analysis, you need to identify your competition by product line or service as well as by market segment; assess their strengths and weaknesses, determine how important your target market is to your competitors, and identify any barriers which may hinder you as you are entering the market. Be sure to identify all of your key competitors for each of your products or services. For each key competitor, determine what their market share is, then try to estimate how long it will take before new competitors will enter into the marketplace. In other words, what is your window of opportunity? Finally, identify any indirect or secondary competitors which may have an impact on your business' success.
The strengths of your competitors are also competitive advantages which you, too, can provide. The strengths of your competitors may take many forms, but the most common include:
  • An ability to satisfy customer needs
  • A large share of the market and the consumer awareness that comes with it
  • A good track record and reputation
  • Solid financial resources and the subsequent staying power which that provides
  • Key personnel
Weaknesses are simply the flip side of strengths. In other words, analyze the same areas as you did before to determine what your competitors' weaknesses are. Are they unable to satisfy their customers' needs? Do they have poor market penetration? Is their track record or reputation not up to par? Do they have limited financial resources? Can they not retain good people? All of these can be red flags for any business. If you find weak areas in your competition, be sure to find out why they are having problems. This way, you can avoid the same mistakes they have made.
If your target market is not important to your competition, then you will most likely have an open field to run in if your idea is a good one - at least for a while. However, if the competition is keen for your target market, be prepared to overcome some barriers. Barriers to any market might include:
  • A high investment cost
  • The time it takes to set up your business
  • Changing technology
  • The lack of quality personnel
  • Customer resistance (i.e., long-standing relationships, brand loyalty)
  • Existing patents and trademarks that you can not infringe upon
Regulatory Restrictions
The final area that you should look at as you're researching this section is regulatory restrictions. This includes information related to current customer or governmental regulatory requirements as well as any changes that may be upcoming. Specific details that you need to find out include: the methods for meeting any of the requirements which will affect your business, the timing involved (i.e., How long do you have to comply? When do the requirements go into effect?), and the costs involved.
Part 3: Company Description
Without going into detail, this section should include a high level look at how all of the different elements of your business fit together. The company description section should include information about the nature of your business as well as list the primary factors that you believe will make your business a success.
When defining the nature of your business (or why you're in business), be sure to list the marketplace needs that you are trying to satisfy; include the ways in which you plan to satisfy these needs using your products or services. Finally, list the specific individuals and/or organizations that you have identified as having these needs.
Primary success factors might include a superior ability to satisfy your customers' needs, highly efficient methods of delivering your product or service, outstanding personnel, or a key location. Each of these would give your business a competitive advantage.
Part 4: Organization & Management
This section should include: your company's organizational structure, details about the ownership of your company, profiles of your management team, and the qualifications of your board of directors.
Who does what in your business? What is their background and why are you bringing them into the business as board members or employees? What are they responsible for? These may seem like unnecessary questions to answer in a one- or two-person organization, but the people reading your business plan want to know who's in charge, so tell them. Give a detailed description of each division or department and its function.
This section should include who's on the board (if you have an advisory board) and how you intend to keep them there. What kind of salary and benefits package do you have for your people? What incentives are you offering? How about promotions? Reassure your reader that the people you have on staff are more than just names on a letterhead.
Organizational Structure
A simple but effective way to lay out the structure of your company is to create an organizational chart with a narrative description. This will prove that you're leaving nothing to chance, you've thought out exactly who is doing what, and there is someone in charge of every function of your company. Nothing will fall through the cracks, and nothing will be done three or four times over. To a potential investor or employee, that is very important.
Ownership Information
This section should also include the legal structure of your business along with the subsequent ownership information it relates to. Have you incorporated your business? If so, is it a C or S corporation? Or perhaps you have formed a partnership with someone. If so, is it a general or limited partnership? Or maybe you are a sole proprietor.
Important ownership information that should be incorporated into your business plan includes:
  • Names of owners
  • Percentage ownership
  • Extent of involvement with the company
  • Forms of ownership (i.e., common stock, preferred stock, general partner, limited partner)
  • Outstanding equity equivalents (i.e., options, warrants, convertible debt)
  • Common stock (i.e., authorized or issued)
Management Profiles
Experts agree that one of the strongest factors for success in any growth company is the ability and track record of its owner/management, so let your reader know about the key people in your company and their backgrounds. Provide resumes that include the following information:
  • Name
  • Position (include brief position description along with primary duties)
  • Primary responsibilities and authority
  • Education
  • Unique experience and skills
  • Prior employment
  • Special skills
  • Past track record
  • Industry recognition
  • Community involvement
  • Number of years with company
  • Compensation basis and levels (make sure these are reasonable - not too high or too low)
Be sure you quantify achievements (e.g. "Managed a sales force of ten people," "Managed a department of fifteen people," "Increased revenue by 15% in the first six months," "Expanded the retail outlets at the rate of two each year," "Improved the customer service as rated by our customers from a 60% to a 90% rating").
Also highlight how the people surrounding you complement your own skills. If you're just starting out, show how each person's unique experience will contribute to the success of your venture.
Board of Directors' Qualifications
The major benefit of an unpaid advisory board is that it can provide expertise that your company cannot otherwise afford. A list of well-known, successful business owners/managers can go a long way toward enhancing your company's credibility and perception of management expertise.
If you have a board of directors, be sure to gather the following information when developing the outline for your business plan:
  • Name
  • Positions on the board
  • Extent of involvement with company
  • Background
  • Historical and future contribution to the company's success
Part 5: Marketing and Sales Strategies
Marketing is the process of creating customers, and customers are the lifeblood of your business. In this section, the first thing you want to do is define your marketing strategy. There is no single way to approach a marketing strategy; your strategy should be part of an ongoing self-evaluation process and unique to your company. However, there are steps you can follow which will help you think through the strategy you would like to use.
An Overall Marketing Strategy would include a:
  • Market penetration strategy
  • Strategy for growing your business. This growth strategy might include: an internal strategy such as how to increase your human resources, an acquisition strategy such as buying another business, a franchise strategy for branching out, a horizontal strategy where you would provide the same type of products to different users, or a vertical strategy where you would continue providing the same products but would offer them at different levels of the distribution chain.
  • Channels of distribution strategy. Choices for distribution channels could include: original equipment manufacturers (OEMs), an internal sales force, distributors, or retailers.
  • Communication strategy. How are you going to reach your customers? Usually some combination of the following works the best: promotions, advertising, public relations, personal selling, and printed materials such as brochures, catalogs, flyers, etc.
  • Once you have defined your marketing strategy, you can then define your sales strategy. How do you plan to actually sell your product?
Your Overall Sales Strategy should include:
  • A sales force strategy. If you are going to have a sales force, do you plan to use internal or independent representatives? How many salespeople will you recruit for your sales force? What type of recruitment strategies will you use? How will you train your sales force? What about compensation for your sales force?
  • Your sales activities. When you are defining your sales strategy, it is important that you break it down into activities. For instance, you need to identify your prospects. Once you have made a list of your prospects, you need to prioritize it. Next, identify the number of sales calls you will make over a certain period of time. From there, you need to determine the average number of sales calls you will need to make per sale, the average dollar size per sale, and the average dollar size per vendor.
Part 6: Service or Product Line
What are you selling? In this section, describe your service or product, emphasizing the benefits to potential and current customers. For example, don't tell your readers which 89 foods you carry in your "Gourmet to Go" shop. Tell them why busy, two-career couples will prefer shopping in a service-oriented store that records clients' food preferences and caters even the smallest parties on short notice.
Focus on the areas where you have a distinct advantage. Identify the problem in your target market for which your service or product provides a solution. Give the reader hard evidence that people are, or will be, willing to pay for your solution. List your company's services and products and attach any marketing/promotional materials. Provide details regarding suppliers, availability of products/services, and service or product costs. Also include information addressing new services or products which will soon be added to the company's line.
Overall, this section should include:
  • A detailed description of your product or service (from your customers' perspective). Here, you would need to include information about the specific benefits of your product or service. You would also want to talk about your product/service's ability to meet consumer needs, any advantages your product has over that of the competition, and the present development stage your product is in (i.e., idea, prototype, etc.).
  • Information related to your product's life cycle. Be sure to include information about where your product or service is in its life cycle, as well as any factors that may influence its cycle in the future.
  • Any copyright, patent, and trade secret information that may be relevant. Here, you need to include information related to existing, pending, or anticipated copyright and patent filings along with any key characteristics of your products/services that you cannot obtain a copyright or patent for. This is where you should also incorporate key aspects of your products/services that may be classified as trade secrets. Last, but not least, be sure to add any information pertaining to existing legal agreements, such as nondisclosure or noncompete agreements.
  • Research and development activities you are involved in or are planning to be involved in. R&D activities would include any in-process or future activities related to the development of new products/services. This section would also include information about what you expect the results of future R&D activities to be. Be sure to analyze the R&D efforts of not only your own business, but also that of others in your industry.
Part 7: Funding Request (or Cash Flow Projection)
In this section, you will request the amount of funding you will need to start or expand your business. If necessary, you can include different funding scenarios, such as a best and worst case scenarios, but remember that later, in the financial section, you must be able to back up these requests and scenarios with corresponding financial statements.
You will want to include the following in this section: your current funding requirement, your future funding requirements over the next five years, how you will use the funds you receive, and any long-range financial strategies that you are planning that would have any type of impact on your funding request.
When you are outlining your current and future funding requirements, be sure to include the amount you want now and the amount you want in the future, the time period that each request will cover, the type of funding you would like to have (i.e., equity, debt), and the terms that you would like to have applied. How you will use your funds is very important to a creditor. Is the funding request for capital expenditures? Working capital? Debt retirement? Acquisitions? Whatever it is, be sure to list it in this section.
Last of all, make sure that you include any strategic information related to your business that may have an impact on your financial situation in the future, such as: going public with your company, having a leveraged buyout, being acquired by another company, the method with which you will service your debt, or whether or not you plan to sell your business in the future. Each of these is extremely important to a future creditor, since they will directly impact your ability to repay your loan(s).
Part 8: Financials
The financials should be developed after you've analyzed the market and set clear objectives. That's when you can allocate resources efficiently. The following is a list of the critical financial statements to include in your business plan packet.
Historical Financial Data
If you own an established business, you will be requested to supply historical data related to your company's performance. Most creditors request data for the last three to five years, depending on the length of time you have been in business.
The historical financial data you would want to include would be your company's income statements, balance sheets, and cash flow statements for each year you have been in business (usually for up to 3 to 5 years). Often creditors are also interested in any collateral that you may have that could be used to ensure your loan, regardless of the stage of your business.
Prospective Financial Data
All businesses, whether startup or growing, will be required to supply prospective financial data. Most of the time, creditors will want to see what you expect your company to be able to do within the next five years. Each year's documents should include forecasted income statements, balance sheets, cash flow statements, and capital expenditure budgets. For the first year, you should supply monthly or quarterly projections. After that, you can stretch it to quarterly and/or yearly projections for years 2 through 5.
Make sure that your projections match your funding requests; creditors will be on the lookout for inconsistencies. It's much better if you catch mistakes before they do. If you have made assumptions in your projections, be sure to summarize what you have assumed. This way, the reader will not be left guessing.
Finally, include a short analysis of your financial information. Include a ratio and trend analysis for all of your financial statements (both historical and prospective). Since pictures speak louder than words, you may want to add graphs of your trend analysis (especially if they are positive).
Part 9: The Appendix
The appendix section should be provided to readers on an as-needed basis. In other words, it should not be included with the main body of your business plan. Your plan is your communication tool; as such, it will be seen by a lot of people. Some of the information in the business section you will not want everyone to see, but, specific individuals (such as creditors) may want access to this information in order to make lending decisions. Therefore, it is important to have the appendix within easy reach. The appendix would include:
  • Credit history (personal & business)
  • Resumes of key managers
  • Product pictures
  • Letters of reference
  • Letters of reference
  • Details of market studies
  • Relevant magazine articles or book references
  • Licenses, permits, or patents
  • Legal documents
  • Copies of leases
  • Building permits
  • Contracts
  • List of business consultants, including attorney and accountant
Any copies of your business plan should be controlled; keep a distribution record. This will allow you to update and maintain your business plan on an as-needed basis. Remember, too, that you should include a private placement disclaimer with your business plan if you plan to use it to raise capital.
Appendix 1
SAMPLE OF A BUSINESS PLAN
(Establishment of a hospital in Vietnam)
Summary of subjects to be researched and written:
  • Overview of Local Healthcare Market
  • Insight into the Procedure for Setting up a Hospital
  • Industry Structure & Segmentation
  • Requirement of Floor Space, Machinery & Utility
  • Manpower Requirement
  • Capital Outlay
  • Financing
  • Profit & Loss Calculation
  • Ratio Analysis etc
  • Main points on above Summary:
  • Understand the Healthcare Industry
  • The Steps involved in setting up a Hospital
  • Reveal Management & Commercial Plans.
  • The Major Parameters involved in Financial Estimates
Scope of Report
This report is structured into 5 chapters consisting of Executive Summary, Project Concept, Industry Analysis, Project Details and Conclusion.
This report provides an overview of local healthcare industry structure, its market information and growth drivers. It also gives insight into the procedure for setting up a hospital, type of machinery & floor space required, requirement of regulatory permissions & clearances, capital outlay, profitability, payback period, internal rate of return (IRR) and other project related analysis.
Content Outline:
Executive Summary
1. Project Concept
2. Industry Analysis
2.1 Overview of local Healthcare Industry
2.1.1   Introduction
2.2    Structure & Segmentation of Hospital Industry
2.2.1 Classification of Hospitals Based on Objective
2.2.2    Classification of Hospital Based on Ownership
2.2.3 Classification Based on System of Medicine
2.3   Market Size and Growth Rate
2.3.1 Market Size
2.3.1.1 Public Healthcare Expenditure
2.3.1.2 Healthcare Infrastructure
2.4   Growth Drivers
2.4.1 Medical Tourism
2.4.2 Medical Information & Telemedicine
2.4.3 Outsourcing
2.4.3.1 Diagnostic Services
2.4.4 Enhancement in Public Expenditure
2.4.5   Increasing Health Awareness
2.4.6 Medical Insurance
3. Project Details
3.1   Steps Involved in Setting up a Hospital
3.2 Technical Aspects
3.2.1 Location Details
3.2.1.1 Demographic Details
3.2.1.2 Major Players
3.2.2 Land Requirement
3.2.2.1 Floor Planning
3.2.2.2 Departments
3.2.2.3 Facilities Available
3.2.2.4 Service Offerings
3.2.2.5 Permissions & Clearances Required
3.2.2.6 List of Major Machinery
3.2.2.7 Brief Description of Major Machinery
3.3 Management & Commercial Plans
3.3.1 Brief Introduction about Hospital Management
3.3.2 Resumes of all Management Members and Medical Staff
3.3.2 Outpatient Services
3.3.3 Inpatient Services
3.3.4 Material Management
3.3.5 Manpower Planning
3.3.6 Advertising, Marketing & Promotional Planning
3.3.7 Mobilizing Bank Loan
3.3.8 Critical Success Factor
3.3.9 Hospital Accreditation
3.4 Financial Estimate
3.4.1 Project Cost
3.4.2 Sources of Fund
3.4.3 Disbursement, Moratorium Period & Repayment schedule
3.4.4 Revenue Model & Projection
3.4.5 Expenditure
3.4.6 Revenue & Profitability Projection
3.4.7 Working Capital Requirement
3.4.8 BEP & IRR
3.4.9 Ratio Analysis
3.4.10 Sensitivity
4. Analysis and Conclusion
5. Annex
Annexure- 1: Bibliography
Annexure- 2: Details of Project Cost
Annexure- 3: Financing Pattern
Annexure- 4: Loan Repayment Schedule & Interest Calculation
Annexure- 5: Projected P & L Statement
Annexure- 6: Working Capital Requirement
Annexure- 7: Projected Balance Sheet
Annexure- 8: Cash Flow Statement & IRR
Annexure- 9: DSCR in the Base Case & Different Scenarios
Annexure-10: Ratios
Annexure-11: Sensitivity Analysis
Annexure-12: Internal Rate of Return
Annexure-13: List of Hospitals in Vietnam and the Services Offered
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Basic Requirements of a 10K Filing

Part I – Business
  • Business description, including: how organized
  • Issues affecting operations
  • Industry conditions
  • Regulation
  • Properties
  • Legal proceedings
  • Matters submitted to a vote of security holders
Part II – Financials
  • Stockholder matters
  • Selected financial information and operating statistics
  • Management discussion of financial condition
  • Disclosures about market risk
  • Basic financial statements
  • Notes to financial statements
  • Changes in and disagreements with accountants on accounting and financial disclosure
Part III – Executive Matters
  • Directors and executive officers
  • Executive compensation
  • Security ownership and related matters
  • Accountant fees and services
Part IV – Supporting Documentation
  • Exhibits
  • Financial statements
  • Schedules
Annual Report
The annual report to shareholders is the principal document used by most public companies to disclose corporate information to their shareholders. It is usually a state-of-the-company report, including an opening letter from the Chief Executive Officer, financial data, results of continuing operations, market segment information, new product plans, subsidiary activities, and research and development activities on future programs. The Form 10-K, which must be filed with the SEC, typically contains more detailed information about the company’s financial condition than the annual report.
Reporting companies must send annual reports to their shareholders when they hold annual meetings to elect directors. Companies sometimes elect to send their Form 10-K to their shareholders in lieu of providing shareholders with an annual report.
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