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 A solid business plan is a guide for investors to see what owners intend doing with their business. It also helps owners to see where they are, where they have been and where they are headed, and to focus plans, goals, and strategies for the business, including staff, which they may not do otherwise.
Michael Lloyd, a certified E-Myth consultant, says in his article On Crafting a Business Plan: “Having a sound business plan is definitely a core part of starting or owning a business. If you want to attract investors and persuade lenders, you'll want to thoughtfully build your business plan.” Lloyd identifies the tools to clearly communicate your business aims through strategic objectives:
- What your business will be when you are done, including both the basic and unique characteristics (products, size, market) of the business; and
- Your company story, the essence of your business from customer experience to employee actions.
“Remember,” adds Lloyd, “your business plan doesn’t have to be a dull and dry document. It should reflect your passion, vision, and commitment to building a stunning business that investors and lenders can be proud of.”
Getting Started
The following format is recommended to create your plan:
- The purpose for the plan: to obtain finance, to expand etc.
- Executive summary: a one to two-page summary of your plan and business—write this last.
- Business evaluation: structure, profile, aims and objectives, resource evaluation, financial status, service providers.
- Product evaluation: market sectors, pricing structures, packaging.
- The market: including market profile, competitor analysis, customer profile, distribution, pricing, advertising and promotion, expansion strategies.
- Operations plan: current production capability and structure, terms on purchasing, supplier evaluation, production process, and expansion plan.
- Legal: registration of intellectual property, corporate structure.
- Personnel/management: names, responsibilities, position.
- Financial planning: sales forecast, budget, projected financial requirements, and capital requirements.
- Action plan: detailing the who, what, when, where and how it will happen.
- Key performance indicators: measurements for the performance of the business.
- Appendices: supporting information.
Revising Results
Business plans are usually designed to guide businesses through the start-up phase and many businesses forget them once they are established. But the work does not stop once your business plan has been written. Quicken’s small business site (www.quicken.com) recommends a monthly or at least quarterly review of your planned versus actual results.
According to Quicken, your plan can help your business improve by allowing you to set priorities properly; gauge plan versus results and make corrections as necessary; manage the figures, including profit and loss, cashflow and balance sheet; and communicate your plan to others, both inside and outside the business.
Regular reviewing of your plan means you will be continually plotting the course you wish your business to take to improve growth and your bottom line. You may need to review your plan if you take on extra employees, introduce new products or services, change technologies, or if your target market changes.
Quicken recommends assessing the following when reviewing your plan:
- What went wrong and how can we fix it?
- What went right and how do we take advantage of it?
- What changes have taken place in our internal structure, the marketplace or the competitive landscape, that we need to update in the plan?
Each time you review your plan, set new budgets and targets, you will be in a better place to understand your business and the growth you can expect from it.
While there are DIY business planning kits and books available on the subject, you may need assistance from a business consultant to ensure you are heading in the right direction. And remember, a business plan will be unique to your business and must be tailored to your business’ purpose.
Source: DSB Magazine Oct/Nov 2004
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