Continuing with our series of “8 Essentials”, let’s take a look at the why, what and how that your business plan must address.
Every business plan has a specific purpose that can be either internal, external or both. The plan can serve as a strategic and flexible blueprint for you, your employees and for potential investors. Most importantly, make sure you take ownership of what is in the plan. Many entrepreneurs have outside consultants write their plans and never really emotionally or financially commit to being held accountable to what’s inside. With every step of writing or tweaking your plan, ask the following questions. Is it clearly written so that even someone unfamiliar with your business can understand it? Is it proactive? Does it match the skill sets of my employees? Does it include input from a management team? If the business already has an established business plan, is the plan reviewed quarterly after evaluating what is or isn’t working, or to address what new opportunities have arisen?
In addition to the body of the plan itself, a professional layout will include a “Title Sheet” with company name, address and phone number, a “Statement of Purpose” page explaining the intent behind writing such a plan, and a ‘Table of Contents”. What follows are the “8 Essentials” that every creative and extraordinary business plan will contain.
1) A description of the Business
- Vision Statement – what values are the driving force behind “why” this business came into existence in the first place? Why do you get out of bed each day and come to work? For example, the company may “believe” that every person, rich or poor, has the right to access innovative technology in order to live happier and more efficient lives. This vision is what adds meaning to your company and will always be there to keep you motivated through rough times. It will be the meaning behind your brand and tag line, which perhaps may be “innovation you can believe in”.
- Mission Statement – “what” will the company be doing to manifest that original vision into a product or service? For example, the company may manufacture affordable personal computers that are so easy to work with that even a caveman could use them.
- An Executive Summary providing a compact explanation of current activities, a list of short and long-term objectives and a time bound action plan reflecting “how” management intends to grow business and profits.
- A description of the company’s legal structure such as proprietorship, partnership or corporation.
2) Product and Service – a more in-depth description should answer the following questions
- What are you selling?
- How many product lines?
- What makes your products unique and profitable?
- How does your product benefit the consumer?
- Which of your products are the best sellers both in quantity and profit?
- How has demand for the different products changed for better or worse?
- Are any products seasonal or more suspect to external influences?
3) Market and Competition
- Who are your current and potential customers (example: women)?
- Are there sub-markets with common or specialized needs and priorities (example: single women)?
- Are certain markets growing or shrinking (example: single women over 40)?
- Are there certain markets that you plan on targeting more than others (example: entrepreneurial single women over 40)? Why?
- What is the geographical location of these markets?
- What is your geographical location and how does that impact your marketing efforts?
- Who are your competitors and where are they located?
- What advantages do they have that you need to address to close the gap?
- What share of the market do they have and how does it compare to yours both in unit sales and profit per unit?
- What is the quality of their product compared to yours?
4) Marketing and Selling Plan
- How will you brand your product?
- How will you advertise through traditional means?
- What will be your social media marketing strategy?
- Where and how will you prospect for leads?
- What strategy will you implement to create opportunities with those leads?
- What strategy will you use to convert an opportunity into a sale?
- Will you attend trade shows?
- Will you maintain a web site or blog?
- Will you maintain an inbound or outbound call center or both?
- How will you provide ongoing customer service?
- What outside expertise will you work with to help you?
5) Management and Personnel
- Who are you? What about your background gives you credibility, including what gives your life meaning, what gives you pleasure, what are your skill sets and how do all these serve you in your role as the right person to succeed in this business?
- Who is your management and why did you pick them?
- What does your company flow chart look like?
- Is there a company handbook?
- Are there job descriptions?
- Is there a hiring and training system in place?
- What future personnel needs will arise as the company reaches goals and expands?
6) Financial Data (must be up to date at all times)
- How was the business originally financed and has it needed additional outside investment since?
- What investors currently exist and how were decisions made in the past regarding financing options?
- What space in buildings, equipment, automobiles and IT Hardware exist? Were they purchased or leased and when?
- What insurance policies are in place?
- What accounting software system(s) do you have in place to account for company activity?
A record of past activity, which your accountant can help you with, including:
- Balance Sheet reflecting current balance of company’s assets and liabilities.
- Income Statement indicating company performance for a given period of time. Should include quarterly performances and annual as well as comparative to previous periods of the same duration or time of year.
- Cash Flow Statement showing how the company manages cash and highlighting problem areas that need to be addressed, most likely by securing outside investments.
Budgets and forecasts of future activity including:
- A measurable, realistic and relevant forecast analysis of the next quarter, 12 months, and 3 years projecting cash flow needs, break-even points and anticipated profit or loss. When creating these budgets it is best to show different “what if” projections that take into account both worse case and best case scenarios.
7) Potential Investor Returns
- What promise will you be making to your investors?
- Will you offer a piece of the pie such as equity?
- Will it be a guaranteed return?
- Will it be a loan with a fixed payback schedule?
- Will a third party be guaranteeing the loan?
- What other creditors may be in line already with liens on the business?
- What protection is in place to mitigate their risk?
8) Supporting Documentation
- Financial reports for any other businesses owned and personal financial returns for company owners
- Resumes of key members of management
- Letters of reference
- Legal documents such as leases or rental agreements
- Insurance policies
- Marketing materials
A professional Strategic Planning Consultant can guide you through the initial process of writing your extraordinary business plan. Once written, a dedicated Business Coach can work with you to make sure the intent behind the plan is actualized. Abe Rotbart, founder and CEO of Creating8 is available for both. To contact Abe click here.
Written by Abe Rotbart. © Creating8, Inc 2014. All rights reserved.