Archive for April, 2011
How To Write a Business Plan That Works
April 29th, 2011 | 
Author: Article 2 Business Planning
How to Write a Business Plan that Works!
If you are a new then you should have already completed our Feasibility Study which you can grab by visiting our website and you have determined that your new business idea is in fact a viable business venture...Congratulations! Now we carry what you have found throughout your Feasibility Study and move that information into a plan that is going to work for you, every day in helping your drive your business forward towards a profitable success.
If you are a and you feel you may have lost your direction or you are lacking the ability to drive your business forward, then our business plan is going to change all of that and hand you back the reigns to your business! You will take this plan and implement it and immediately notice results easing the pressure on you as a manager and helping you see the light at the end of that tunnel.
Usually if you require funding for your business you are going to need a business plan to prove that you are going to spend the banks money in a way that they see is planned, fair and organised. recycled glass wine glasses . Hardwood Flooring Denver . You must prove that you know where you are heading, in great detail.
However the real reason every business owner must operate with a plan is because without one you are simply treading water. I know you are groaning at me right now because you believe all of your wonderful ideas are up there somewhere in your head and you believe that you are somehow implementing those ideas into your business everyday. Chances are if you are reading this article, that you have realised that ideas in head = confused business operator who cannot grow and drive their business forward.
Lets take a look at what your plan should include. We will then discuss how to implement it. Its dead simple.
The Primary Objective Section is simply a short paragraph that outlines your overall intention for the business, or your mission statement. Do not fluff or overdo your mission statement. Keep it clear, short and concise. IKEA Denver CO . medical marijuana doctors . All you are doing here is stating exactly what it is you intend to do.
In a nutshell, describe each section of your business so that it is clear in your mind just how this business will run.
- Where has your idea come from and what do customer need do you intend to fill by starting this business? - What do you intend to produce and supply and briefly how you to intend to do this? - What has your market research revealed? Is there a dire need for your product and service and how will your product or service fulfil that need? What will you do that your competitors are not? - What strategies are you going to outline in your plan that can demonstrate how you will reach your customers? - What will the initial funding be and where will it come from? What other funds do you have to pay for the first year of expenses and what earnings do you expect to see within the first 12 months of operation.
This is where you:
Describe the core activities of your business? Business name and details? The current position of the business; new or established? Where will the business be located/where is it already located? Where the business will be in 2 and 5 years? What Structure have you chosen and why?
Strengths, Weaknesses, Opportunities and Threats?
This is where you outline your strengths and weaknesses as a business and opportunities and threats outside the business. Under each heading, use bullet points to outline your advantages and disadvantages and be completely honest; especially when considering your weaknesses as a business or individual and what will threaten your business. Only by being honest in these areas can you identify which areas of your management ability and the business requires the most attention.
It is essential to show that there is a sound customer base for the business or that you get to know your customers better than they know themselves. Provide a description of the market in terms of the following:
Who are the customers?
What is their geographical location?
How many customers are there in this location?
What is their purchasing power?
How are they accessed?
What is the stability of the market and expected growth (or decline)?
What are the seasonal trends?
What influences the customers?
What is the price sensitivity?
What is the competitive edge?
How have you determined this knowledge? What proof do you have to support your research? Be thorough here and provide proof of your findings.
How do you intend to market your business both offline and online?
Break your marketing strategies into the following sections and bullet point your answers:
Customer Service Promotional Literature Advertising Location Website Online Advertising Unique Selling Position/Competitive Advantage
The BusiWizard ebooks can help you master this field.
In a dollar value and product amount, what do you intend to sell each month/year and how are you going to fund your working capital each week/month until you are paid? You must be able to outline where your funds are coming from to fund a service (if need be) until you are paid.
Outline in words how you intend to do this by breaking down your estimated profit per month and your estimated working capital requirements. Also determine how you will pay for your operating and advertising costs until you begin to see profit.
If your business is already operating, outline how you are doing this currently.
How do you intend to grow your business? How will you increase your sales, optimise the use of the business infrastructure that you have created?
How will you improve and become more efficient? What management skills do you have to be able to do this and how do you intend to do it step by step?
This is the most crucial part of your plan as this will determine whether your business grows with market trends and whether you have the ability to consistently give your customer what they want as your customer base grows and as you grow busier, prove how you are going to continue to drive your business forward whilst still running it each day?
What systems and structure will you have in place to do this?
Be very, very specific throughout this section and break it into the following areas:
what account and customer management processes will be in place to ensure the business runs smoothly?
how will you monitor your financial position? What percentage of your profits will you allow to grow the business?
How will you continue to monitor your products and services compared to that of your competitors?
What marketing and advertising will you use to ensure your business grows?
Provide an outline of how the products and services will be produced:
The skills, qualifications and experience of the proprietors
The equipment required
Sources of raw materials
Subcontracting
Technical requirements
Personnel
It is vital to assess total funds required to set up a business and cover its operating costs until it becomes profitable. At first glance, it may appear that all that is required is stock, basic fixtures and perhaps the first months rent. However, there are many other costs and expenses in starting a business and you should consider every possible expense.
Above you have already outlined in words what kind of profit you intend to see, what type of funding you are going to acquire and how. Now you are simply going to pinpoint what your exact expenses will be and whether your funds will support your expenditure.
Our Pull Out Business Template supplied with a video tutorial in our Ebooks cover this section in great detail so be sure to grab yourself the course if you require further assistance fleshing out the following areas of expense.
Pre Business Costs Initial Costs Capital Costs Possible Direct/Renovation Costs Possible Overhead Expenses for the First Year
Now that you have outlined your expenses, you can project your profit for each month of the year and establish your profit or loss...
When estimating your profit, it is important to be realistic about what you are going to sell. Work on minimal figures to be safe. For example, if you are an electrician and you are starting a new business. You may estimate an average of two small jobs per week for the first 2 months and then build your job list from there. You would estimate the profit received from those jobs and this will become your profit projection for each month and for a whole year.
To calculate your projected profit and loss simply add all outgoings for the first year to establish your required capital (this will include all direct or initial set up costs). Subtract your outgoings from your incomings and there you have your estimated profit or loss. When costing your products or services be sure to include your profit in the price so that the business is sure to stay afloat. To establish what your bottom line will be, simply take out the estimated profit and there you have the bottom line financials that you must make to stay afloat.
It is possible that for the first year you will have a loss so you will need to determine how you are going to fund your business until you begin to see profit.
Factor into your monthly profit or loss statement that your business will require cash flow. Cash flow shortages can arise from customers not paying on time or from an over order of stock etc so you must understand that your projection is simply that, a projection. Allow a certain amount of profit or funds to be available for business cash flow. Talk to your accountant or book keeper to certify what kind of cash flow you will require and to double check that your estimated figures are realistic estimates.
To grab yourself a free profit and loss projection form googling Microsoft Templates and searching for a P and L Projection.
The proprietors and staff are the most important resource of a small business and good arrangements between the business and its personnel is necessary to ensure the success of a business, especially in the long term. The following matters need to be considered:
Arrangements between the proprietors?
Involvement of family members?
Assessment of staff and subcontractors performance?
Contribution of staff to the development and implementation of business plans?
Training programs?
What records do you have to keep and how are you going to keep them?
Some items to consider may be:
Cash book
Receipt book
Invoices, received and sent
Bank deposits and statements
Petty cash expenditure
Wage, WorkCover, superannuation, long service leave records, and employee details
Capital assets register
Materials purchased and allocated to each job or temporarily as floating stock
Contact details of all enquirers, existing clients, suppliers and subcontractors
Individual job records showing progress
Job estimates
Provide a detailed summary as to what type of account, customer relationship management and office organisation system you intend to use.
Outline your experience in using these types of systems and if none, outline personnel who will be hired to undertake the job for you or training that you will undertake to ensure you can manage the administration side of your business.
I know what you are thinking... You are cringing at the thought of putting a document like that together. But heres the good news. It doesnt have to be long and complicated, it can be 3 pages long if you stick to the important information and
This is the really easy part. Gab a white board and a diary and plan ahead every month including everything from your plan you decided to work on for the whole year. Yes this requires effort, but once you begin to start using your plan everyday by taking what you set out to do and sticking it right under your own nose everyday it will become like second nature and yo will start to see your processes streamlined as your business continues to grow with ease.
You have outlined in your plan your marketing principles, your projections for profit, your management and structural processes and much more. Now take that information and decide for the first 3 months what you are going to achieve. Tick it off as you go. Lawn Care Denver . Internet Advertising . Now for the next three months repeat the process ensuring that you are taking on more marketing and systemising your business as you go. This is how you drive yourself forward. Allow time to implement and take responsibility for your plan.
So off you go, right now write your plan and start implementing it immediately.
Dont forget our comprehensive Ebooks cover everything from planning to management and marketing for small business operators just like you. A Step By Step Guide that is absolutely packed with resources, useful information, templates, tutorials and more to walk you through your daily journey as a business manager. It will save you hours of time, oodles of cash and give you the freedom you deserve to have as a business owner. Best Wishes!
Heidi Shannon
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How to Business Plan – Top 10 Reasons to Write One
Copyright (c) 2009 Marco Carbajo
You've probably heard the importance of'business plans' but do you know the real benefits of having one?
Not every entrepreneur who starts and runs an online or offline business begins with how to write a business plan, but it definitely helps to have one. If you're seeking funding from a venture capitalist, angel investor or other source of private capital then you will definitely need a comprehensive business plan that is well thought out and shows sound business reasoning.
However, too many entrepreneurs believe that business plans are only needed when you require business capital or financing to launch your business.
When it comes to the internet many entrepreneurs can start their business on a shoe string budget so in their minds 'business plans' don't apply to them right?
WRONG!
Nothing can be further from the truth. Keywords . It's like building a home without using any plans or blueprint. Banner Advertising . LEED Training . Imagine making the mistake of believing that just because you have all the materials, laborers, and tools needed to build a home you figure why do we need the plans? Let's just start building away!
A business plan is your blueprint that lays out every necessary ingredient for the success of your business. WordPress Dating Theme . Now for internet entrepreneurs how can you expect to build your business online without a simple business plan? If you plan to build your business on the internet using internet marketing and social media you're going to need a plan?
You've probably heard me say this 'A sign of no business plan is a sign of no business'.
Still not convinced?
If you ever decide to approach a banker for a loan for your business, your loan officer will require a startup business plan. If you have an existing business and you are approaching a bank for capital to expand the business, they may not require a business plan, but it will look much more favorably on your application if you do have one.
Here are '10 Reasons Why You Should Have a Business Plan'
Supports a loan application
To raise equity funding
Define objectives and describe programs to achieve those objectives
Compete in the marketplace (through an analysis of what your competition lacks)
Make money from the start by devising an effective marketing strategy
Provide a revenue estimate (by defining your market who your customers will be and the percentage of the market you can expect to reach)
Define agreements between partners
Set a value on a business for sale or legal purposes
Evaluate a new product line, promotion, or expansion
Determine whether your business has a chance of making a good profit
What's in a business plan?
A business plan should prove that your business will generate enough money to cover your expenses, but a business plan may vary depending upon who your target audience is.
If you are writing a plan for your associates and partners, for example, to expand an existing business, then the focus of that plan may be more on the operation side than it will be on the financial side. Top Affiliate . This plan would show your partners how the expansion will mean more revenues, but they are going to want to know the nuts and bolts of how this new venture is going to be implemented.
If you are writing a business plan for a bank, your bank manager will want to see that your ideas are well thought out, but the most important aspect to him or her will be your financials. Are your projections realistic? And will the cash flow of the business be enough to ensure that you can make the monthly payments for the loan that you have requested? If your business is making ,000 a month and your payments are ,200 a month, the bank is likely to reject your application.
When considering an investment opportunity, most venture capitalists will look at the obvious trends and market niches. The most important factor in a decision to invest in a company is the quality of the people.
In real estate, the three biggest factors are "location, location and location." The venture capital factors are "people, people and people." VCs will ask, how experienced are the people that are going to run this business? Do they have knowledge of the industry? Have they started successful businesses in the past?
I know it's quite a bit to digest but are you seeing all the benefits to having a business plan?
Excellent!
What makes a successful business plan?
Presents a well thought out idea
Contains clear and concise writing
Has a clear and logical structure
Illustrates management's ability to make the business a success
Shows profitability
Lets bring it all together...
Your business plan is your business blueprint and like a calling card, it will get you in the door when you'll have to convince investors and loan officers that you can put your plan into action. You want your calling card to look impressive, so make sure your business plan is printed out on good quality paper, you have checked the spelling and grammar and that your numbers add up. casino postepay . Anyone who sees errors while reading your plan will wonder whether you are going to make similar errors in running your business.
A sound business plan accomplishes two main goals:
1) It provides you a blueprint for building your business including but not limited to product development, target marketing, operations, and revenue projections
2) Show bankers, venture capitalists, and angel investors that you are worthy of financial support.
Make sure that your plan is clear, focused and realistic. sonicare rebate . Then show them that you have the tools, talent and team to make it happen.
Business Planning For Recession Survival and Recovery
With unemployment continuing to rise, home prices falling due to a surplus of inventory, and small business lending at a standstill, this recession doesn't seem likely to end soon. The recovery will be slow and Americans will certainly not enjoy the prosperity of a few years ago for a long time to come. It's not just economists who think this way. "Half the population in [a] new ABC News poll thinks both job security and retirement prospects in the years ahead will remain worse than their pre-recession levels." ("Poll: Less Job Security is the 'New Normal,'" ABC News The Polling Unit, June 15, 2009, analysis by Gary Langer) This confidence, or lack thereof, is an integral part of an economic cycle. The analysis goes on to say, "Those diminished expectations - plus the pain of the current downturn - are fueling retrenchments in consumer behavior that could fundamentally reshape the economy."
Basically, consumers are hunkering down to limit spending, save money, conserve resources, and change the way they've been living. The major influence on the health of an economy is the psychological state of its consumers. When there exists a broad belief that spending beyond necessity is unwise, people will change their habits and as a result, some businesses will have to close their doors. The economy is molting into a new, leaner animal. Rather than react in desperation to avoid doom, firms should interact with the current situation with innovative and forward thinking actions.
No matter the economic slump, increasing profits is typically the number one goal of any business. To ensure profitability, a company must demonstrate a competitive advantage over others in its industry, either by (same product as competitors, lower price), (same price, better services), or focusing on an exclusive segment of the . For long term maintenance of competitive advantage, a firm must ensure that its methods cannot be duplicated or imitated. This requires constant analysis and regular reinvention of competitive strategies.
A recession is the optimal time to because the pressure of a feeble economy will separate the strong businesses from the weak ones, with the weak falling out of the game entirely. Your business will be strong if you have a plan of action based upon a little industry research, an analysis of what you have and what you want, and continuous monitoring of the results of your plan. This kind of innovation is not only a necessity right now, but it is an opportunity to improve the quality and efficiency in the way you do business.
The three basic actions for growing a business in any economic climate are: (maintain output while reducing inputs, such as time and money); (produce more in order to spread fixed costs); (change goals, methods and/or philosophy). If you plan to implement one of these, you may as well plan to implement them all. By focusing on one of the above strategies, you will find a ripple effect that causes a need to address the others. This is a good thing.
Right now, growth may sound like an unattainable goal as businesses are grappling just to survive, but hey, "flat is the new up." If a business can keep its doors open and lights on, then it's doing better than many others. But lights and open doors don't make sales, so making changes that attract business is in a sense, striving for growth. It won't be this tough forever, but for now, putting some growth strategies into action may be what keeps your business alive, if not thriving.
Without a plan, there is little hope for growth, let alone survival. As my small business development counselor, Terry Chambers says, "If it's not written, it's not real." That doesn't mean it's unchangeable, but it does show that you mean business. In order to accomplish your strategies of improving efficiency, increasing volume, and reorganizing your business, you've got to examine what you have, what you want, and how you plan to get there.
Sometimes it takes a significant event or change in existing conditions for a business to create a written plan. I think it's safe to say that the state of the economy is a significant change that should prompt business owners to alter the way they've been doing things. If you already have a business plan, it's time to get it out and revise it. Make sure your plan includes answers to these questions:
What do I want to accomplish? What do I have to work with? How have I done in the past? What might I do in the future? What will I do now? How will I do it? Is it working?
A business plan can be used as a vehicle for accurate communication among principals, managers, staff, and outside sources of capital. It will also help to identify, isolate, and solve problems in your structure, operations, and/or finances. Along with these advantages, a business plan captures a view of the big picture, which makes a company better prepared to take advantage of opportunities for improvement and/or handle crises.
Essentially, the three main elements of a business plan are strategies, actions, and financial projections. In order to cover all of the principle elements, you will engage in other types of planning:
: Includes analysis of your target market (your customers), as well as the competition within that market, and your marketing strategy. This plan is usually part of the strategic plan. : Asses the impact of the business environment (STEER analysis: Socio-cultural, Technological, Economic, Ecological, and Regulatory factors). Includes company vision, mission, goals and objectives, in order to plan three to five years into the future. : With a focus on short-term actions, this type of planning usually results in a detailed annual work plan, of which the business plan contains only the highlights. : The numerical results of strategic and operational planning are shown in budgets and projected financial statements; these are always included in the business plan in their entirety. : Before you decide to start a business or add something new to an existing business, you should perform an analysis of its strengths, weaknesses, opportunities, and threats (SWOT analysis), as well as its financial feasibility, then asses its potential sales volume.
The process of business planning does not end when the written plan is complete. Business planning is a cycle, which includes the following steps:
Put your plan of action in writing. Make decisions and take action based upon the plan. Gauge the results of those actions against your expectations. Explore the differences, whether positive or negative, and write it all down. Modify your business plan based upon what you learned.
President of Palo Alto Software, Inc. and business planning coach Tim Berry says, "Planning isn't complete unless you've planned for review." Review is the fundamental action that initiates putting your business plan into action. In his blog at Entrepreneur.com, Berry lists some insightful strategies to making good use of your plan review, a few of which include keeping the review meetings as brief as possible and an emphasis on metrics as key to effective review.
Write your business plan in sessions. Don't think that you have to produce a business plan before go to bed tonight or you won't be able to open your doors for business tomorrow. I like Tim Berry's Plan-As-You-Go method of business planning. The practice of planning is an effective way to really get to know your business and you might end up discovering some important things about your company and about yourself.
There are various strategies and outlines available that will guide you in choosing the appropriate format for your business plan. Check out the collection of sample business plans for a variety of businesses at Bplans dot com. Every business is different, therefore every business plan will be structured differently, but for the purposes of this white paper, I will present the fundamental elements that make up strategic, operational, and financial planning. Here is a basic outline, thanks to NxLevel® for Entrepreneurs (2005, Fourth Edition):
General Description of the Business
Stage of Development
General Growth Plan Description
Mission Statement
Goals and Objectives
The Industry
Background Industry Information
Current/Future Industry Trends
The Business Fit in the Industry
Business Structure, Management and Personnel
Management
Personnel
Outside Services/Advisors
Risk Management
Operating Controls
Recordkeeping Functions
Other Operational Controls
Products/Services
Products/Services Description
Features/Benefits
Life Cycles/Seasonality
Growth Description (Future Products/Services)
The Market Analysis
Customer Analysis
Competitive Analysis
Market Potential
Current Trade Area Description
Market Size and Trends
Sales Volume Potential (Current and Growth)
Marketing Strategies
Location/Distribution
Price/Quality Relationship
Promotional Strategies
Packaging
Public Relations
Advertising
Customer Service
Financial Worksheets
Salaries/Wages & Benefits
Outside Services
Insurance
Advertising Budget
Occupancy Expense
Sales Forecasts
Cost of Projected Product Units
Fixed Assets
Growth (or Start-Up) Expenses
Miscellaneous Expenses
Cash Flow Projections
Break-Even Analysis
Monthly Cash Flow Projections - First Year
Notes to Cash Flow Projections (Assumptions)
Annual Cash Flow Projections - Years Two and Three
Financial Statements
Projected Income Statement
Balance Sheet
Statement of Owner's Equity
Additional Financial Information
Summary of Financial Needs
Existing Debt
Personal Financial Statement
Action Log
Supporting Documents (Resumes, Research Citations, etc.)
A business plan starts with an executive summary, which is a one or two page summary of your business plan, or an introduction to your business. Although this section is at the beginning of the business plan, it is the last thing to be written. You'll be able to condense your business plan more succinctly once you have the opportunity to work through the other parts of the plan. The executive summary may be the only thing a potential investor or financier will read, so write it last because it has to be the most compelling.
Start by writing a description of your business, including what stage of development it is currently in (conception, start-up, first year, mature, exit) and your plans for growth. Discuss the nature of your business, the main products and services you offer, the market for your products and services, and how and by whom the business is operated.
Then work on your mission statement. Here is where you concisely state the focus, scope and hope of your business (or values, vision, philosophy, and purpose). What is the customer pain you are soothing, the need you fulfill? Here's an example from Coca-Cola:
“Our Roadmap starts with our mission, which is enduring. It declares our purpose as a company and serves as the standard against which we weigh our actions and decisions.
To refresh the world... To inspire moments of optimism and happiness... To create value and make a difference.”
PepsiCo has a different take:
“Our mission is to be the world's premier consumer products company focused on convenient foods and beverages. We seek to produce financial rewards to investors as we provide opportunities for growth and enrichment to our employees, our business partners and the communities in which we operate. And in everything we do, we strive for honesty, fairness and integrity.”
This is the mission statement of Inspiration Software®, Inc.:
“Our company strives to support improvements in education and business and to make a positive difference in our users' lives by providing software tools that help people of all ages use visual thinking and visual learning to achieve academic, professional and personal goals.”
Next, outline your company goals and objectives, including long-term and short-term goals. You will get into more detail on how the goals will be accomplished in your operational plan and annual work plan, so focus on brevity at this stage. There is a difference between goals and objectives and it's important to know what that is. I like how Andrew Smith explains it in The Business Plan Blog. Objectives are non-emotional, precise descriptions of what is needed to achieve a goal. Goals can involve emotion and don't have to be as specific as objectives. Objectives are the steps to actualizing the goal. Here's an example:
:
To have positive cash flow by the end of the year.
:
Increase sales by 50%.
Offer customers a 1% discount for paying invoices within 10 days.
Increase efforts to collect on accounts receivable before invoices have aged 60 days.
Of course, you will need a plan of strategies in order to accomplish each objective, but those details will be expounded upon in your annual work plan. A list of three short-term and three long-term goals, along with the objectives necessary to achieve them, is sufficient for most business plans. Remember to replace the goals and objectives with new ones as you check them off your list.
The section that details the background information should start with identifying the industry your business is in. Even if you are not a member or have no intention of becoming involved, you should list any trade associations within that industry; you never know when you made need those connections. Find out what publications, magazines or journals are available to businesses in your industry. Use these and other sources of business information to identify how past trends (economic, social, political) affected the industry, as well as any current or future trends that may have an impact.
How does your business fit in the industry? What is the history of your business, including who started it, what changes have occurred, when was it started, where was and is it located, how was it started and operated, and why it was started? What barriers to entry, if any, have you recognized?
The ownership hierarchy of your business, the management structure, and the personnel are described in the section on organizational matters. This part of the plan deals with who, what and how your business runs. Who is in charge of what and how are they qualified? Discuss how the various parts of your business interact together; include details about outside contractors and consultants and what functions they perform. See the example below, thanks to Edraw Soft Vector-Based Graphic Design.
The organizational section of the business plan also needs to include an explanation of your record keeping process, checks and balances, and control management systems. Anyone who reads your business plan should be able to understand the organizational procedures for running your business day-to-day, as well as in an emergency situation.
The risk management plan needs to be fleshed out in the organizational section as well, including your risk strategy, the different types of insurance required, your contingency plans, and problem-solving protocols. What will you do if a natural disaster ruins part of your inventory? How will you handle the sudden illness or long-term absence of a key manager? What happens if you are unable to finish a project on schedule? What are some early warning signs to watch for?
It may not be pleasant to imagine all the "what ifs," but doing it now and planning for those unexpected events will improve your company's chances of surviving a storm. For an excellent step-by-step guide on the details of developing a risk management plan, see the article "How to Develop a Risk Management Plan," by Charles Tremper at wikiHow.com.
The next section, themarketing plan, gets into the details of what your business offers and what market it serves. Marketing is the communication of how your products and services "ease customer pain." Show the problem and how your business solves it. Marketing is a necessity for every business because once your doors are open, you must invite customers to come in. Everything you do in your business that affects customers is marketing because it sends a message about your company.
This part of the plan details the features and benefits of your products and services, their seasonality and life cycle, as well as any future products and services you are planning. It also includes a thorough market analysis, in which you will study your customers, your competition and the market itself. Here you should include a PEST analysis, in which you will consider the impact of various factors upon your business. The factors include combinations of the following, depending upon your business: social, technological, economic, environmental, political, legal, ethical, and demographic.
Studying your market will give you insight as to how you can make your business more appealing to people. Market research is more than just noticing trends in your customers' buying habits; it's discovering what motivates your customer to buy. Don't assume that you already know because you've been in this business for years. This study often unearths characteristics about your market that are hidden or new. It's best to discover these things before your competition.
Another key element to the marketing section of your business plan is an outline of your marketing objectives, strategies, and tactics. Writing down the avenues you travel in order to market your business will afford you the opportunity to record what worked and what didn't work. You must be able to measure and calculate the results of your marketing efforts, otherwise, what's the point? If you don't know if something is working for or against you, then it's working against you.
Include details about all of the following that are applicable to your business in the marketing section of your plan: location and distribution, and promotional strategies, such as packaging, public relations, advertising, and customer service. As a result of exploring these areas, you will naturally need to consider how much you will budget for your marketing efforts. This question is closely connected to your sales forecast, which leads us into the next section of the business plan.
The financial plan consists of four sections: Financial Worksheets, Cash Flow Projections, Financial Statements, and Additional Financial Information. All of these components will tell the story of how you plan to start or grow your business from a financial perspective. It is vital that you explain the assumptions under which you have based your projections, for example, "We assume that there are no unforeseen changes in economic policy to make our products and service immediately obsolete." or "We assume interest rates will stay the same over the next three years." (both quotes from Bplans.com sample business plans)
I suggest that you construct easy to read tables and graphs for the financial portion of the plan. The worksheets suggested are: Salaries/Wages and Benefits, Outside Services, Insurance, Advertising Budget, Occupancy Expense, Sales Forecasts, Cost of Projected Product Units, Fixed Assets, Growth (or Start-Up) Expenses, and Miscellaneous Expenses. You may find some of the worksheet templates at PlanWare.org to be useful.
The expected revenues and expenses for at least a year should be projected in the cash flow section of the Financial Plan. It's better to make conservative predictions rather than be too optimistic when it comes to cash flows. As part of this section, a break-even analysis is essential. This is the "amount of units sold or sales dollars necessary to recover all expenses associated with generating these sales." (NxLevel for Entrepreneurs, 2005) The formula for calculating the is Total Fixed Costs/(Price - Average Variable Costs).
The financial statements section should show the way things are now if you have an existing business, as well as a forward look at your checking account, or projected income statement. The only way a start-up company can provide an income statement and balance sheet is by projecting these figures based upon well defined assumptions. Both start-ups and existing businesses should include a statement of owner's equity.
An income statement shows revenues minus expenses, in order to calculate net income or net loss. Start-ups should project these expected results for the first twelve months of business, then quarterly for the next two years. A list of a company's assets (what you own), liabilities (what you owe), and net worth (assets minus liabilities) is called a balance sheet. The statement of owner's equity shows the owner's initial investment, additional investments, and retained earnings, minus owner withdrawals.
The additional financial information at the end of this part of the plan should give a summary of your business's financial needs in order to grow, show its debt position, and state the owner's financial status.
In the appendix, which is the final section, an action plan or timeline for implementing the business plan should be presented. This is where the detailed goals and objectives are expanded in a work plan. Also, include in this section any additional information or supporting documents that are relevant to your business plan, such as important research, marketing materials, product specifications, and owner and employee résumés.
Now that you have written the hard part of your business plan, it's time to write the fun part, the executive summary. As mentioned in the beginning of this white paper, this is the most important piece of the business plan because it illustrates the very essence of your business in a captivating and condensed form. If you ever share your business plan with a potential investor or potential buyer, the executive summary may be the only thing that is read.
Make the executive summary brief (no more than two pages), but make sure you showcase the best qualities of your business without glossing over important information; show why yours is a winning business. Write one to three sentences about each of the following:
General description of the business Mission statement Management structure Business operations Products/services, the market and your customer Your marketing plan, including the competition Financial projections and plans
A clear, concise, and convincing executive summary will intrigue your audience and inspire them to read the rest of your plan. If the plan is never seen by anyone outside of your business, don't assume it was a waste of time. During the planning process, you will have worked through an enlightening exercise that prepares you to run and grow a better business.
Having this written document available for frequent consultation and review will improve your chances of not only surviving, but coming out strong on the other side of this recession. Most people think that knowing in the back of their mind what they plan to do is sufficient for survival or recovery, but the difference between a written plan and an idea is usually the difference between failure and success.