Honing Your Business Plan
by Jill Toole
Taking a trip? Looking for a new job? Starting your own business? When launching any new venture, it often helps to have a plan. Leading a successful business will impact almost every aspect of your personal and professional life.
With a small business, the first thing most stakeholders will ask is, "Can I see your business plan?" From potential partners and suppliers, to investors and future employees, folks want to know that you have thought it through and have a solid strategy for success.
There are many models and outlines published and available to help you to build a business plan. Though they all differ a bit, the one consensus you will find is the simple importance in having one. Even if no one ever sees your full business plan, it is still worth the time spent thoroughly thinking through your business goals, product and service offering, and your overall viability for success. You will likely find yourself referring back to the plan on a regular basis to remind yourself of the big picture and to ensure you are in line with your overarching mission.
The basic elements of a business plan include an overall description of the business, the environmental and competitive landscapes, a plan for positioning and marketing your offering, and a financial plan. Throughout the project of building your plan, you will want to incorporate goals, objectives, and tasks that are specific, realistic and measurable. Include both short- and long-range goals, prioritizing each and including deadlines when possible. You'll want to be careful to keep the long-range goals in mind when you determine what is most important to do each day.
Packaging your business plan
You can start with the fun stuff, but I recommend saving it as a treat for the end. Your creativity and personality will come shining through in the way you package and present your plan to the world. Of course, be realistic -- your immediate audience will determine the amount of time and money you spend binding individual copies. However, no matter how fancy the package, plan to include on your cover the name of your business or department, the business address and phone number, and the principal players or owners.
Business plan introduction
Take the opportunity, right up front, to really WOW your readers. Use the first page to mold their first impression and present your compelling sales pitch. In clear and concise terms, explain what makes your firm unique with a high probability for success. The introduction section is also a good place to include your mission statement or "vision". Though the thought of putting your vision in writing may appear daunting, the exercise itself will help clarify your purpose and goals, as well as help you hone your sales pitch. In a world where too many firms claim to do everything for everyone ("We are your ebusiness solution!"), a mission statement clarifies what you can do for clients and how you stand out from the rest. Spend some time on this section. Put yourself into your best creative mindset, yet be well-rested and energized -- this is a business you're planning, after all. Then, just start writing. Think about what you have to bring to the market and why, and back it up with solid examples, at least during your prep work phase. Don't stress if your first crack at the intro and mission statement appear canned. Prepping this section will help bubble to the surface your values and level of commitment to varying business and personal goals. If your plans are to start and run your own business, accept and embrace how closely this effort will be tied to your personal life.
Description of the Business
Now we're getting into the meat of the business plan. This section will more fully detail your product and service offering. You can use this section to delve into processes, operations, and procedures critical to the firm's viability. Also, think through how you will find and work with major suppliers, partners and primary customers. Here you can also outline how your limited resources will be allocated to areas such as business development, production, customer service and product delivery—setting the tone now will help guide priorities through the life of the organization. Specifically, you will define the human resources involved in the business, as well as the roles of each (include outsourcing services to accountants, lawyers, consultants, etc).
Environment and Competitive Landscape
This is a critical yet invigorating part of the plan, as you explore the landscape and peer into the scope of your potential. Open your mind and brainstorm environmental influences (economic factors, government regulations, changing demographics, seasonal fluctuations, and more) that do or may come to affect your customers, suppliers, competitors, and stakeholders... and thus affect your business. You will also need to put on your market research hat and investigate the players already in your market, possible entrants to your market, and disruptive substitutions that could possibly sweep in and put your products and services in lesser demand. When possible, assign your major competitors market share numbers that you can track (along with your own growing share) on a regular basis. Now, consider the pool of potential customers that you can reasonably reach with your marketing and geographic reach. Who are they? How much money do they typically spend on your products or services? How loyal will they be to existing vendors? This list or market description indicates your prospect pool and will give you a good idea of revenue opportunities.
Now it's time to change your shoes and put on those of your customers. Look at your business from their point of view. The fundamentals of marketing are often defined as the catchy Four Ps. In developing a business, you must think through the features, quality, branding, and packaging of your Product or service offering, as well as the Prices you will charge, including discounts and credit terms. Have at least an overview of your pricing strategy, one that is competitive and flexible, yet maximizes your margins. You must also make decisions regarding the Place -- that is how the product or service is made available to and convenient for customers -- and Promotion. Promotion covers the sales plan and promotion, advertising, marketing, and public relations. Some marketers add a fifth P and include People, to emphasize the enormous business impact of customers, employees, and competitors. To aid in the overall Promotion of your business, a SWOT analysis of your organization, major competitors, and potential pool of customers will help you to put together a plan for targeting the most or at least the most profitable customers in your market. A SWOT analysis entails digging deep into your major Strengths and Weaknesses, and your environment's key Opportunities and Threats.
The financial plan may seem the most daunting. Numbers may not be your area of expertise, or perhaps you're planning on living off this business and that's simply a lot of pressure. In any case, you will feel better about the business and you'll deserve a hearty pat on the back when this section is complete. In this section, you'll want to quantify your expenses as best you can (both start-up and on-going expenses, as well as salaries, including your own). If this is not your area of expertise, invest in some books for guidance or even professional help to put together a break-even analysis, proforma income/Profit & Loss (P&L) statement, proforma cash flow statements, and a balance sheet. The number of stakeholders in your business may determine the level of detail needed for this section, however even if you are the only investor, I urge you to have a plan in place to make sound business decisions and assuage any anxieties.
Ah, the end. Put in your appendix any and all relevant documents, if only as a holding place for your future reference. Such items may include debt agreements or applications, business-related tax returns, additional legal documents and contracts (insurance, business license, lease, capital expenditures purchase agreements, titles, paperwork of incorporation, franchise, partnership contracts, supplier agreements, etc), and personal financial statements of principals.
Where to go for help?
Talk with mentors within your industry, as well as those you respect in different fields. Pore over the latest books in the Business section of your local bookstore or university store. Take a business course online, or check out classes at your local business center or community college. And socialize. Yes, I'm recommending that you invite a diverse group of your most intelligent, creative friends to help you brainstorm elements of your business plan.
Congratulations! Simply by reading this, you have taken a huge step toward getting your business plan in place. Now, commit to setting aside time at least every six months to thoroughly review your business plan. Use this plan to stay focused and organized, so you can enjoy your work and be content in knowing your business is in the best possible shape for success.
Reprinted with permission from Jill Toole and from Kim Buchheit.
© Jill Toole, M.B.A.