If you are serious about your business, you need to have a written business plan.
Not only is your plan an overview of your business; it is also the framework for the detailed actions you will need to undertake to build the business. The process of developing the plan should allow you to define the strengths and uncover the hurdles you will need to overcome to be successful.
Your business plan is also a living document; the strategic plan should be revisited at least annually and updated, as necessary. Every team member should understand the plan and how they fit into its execution.
1. The Executive Summary
This is a brief overview of the plan, generally no more than two pages. It should include paragraph summaries of each of the operational sections of the plan: history, market and competition, products and/or services, management experience, and the financial outlook. If you are seeking funding, include a brief explanation of the needed financing and how it will be used. Remember, you are writing this to who might not be acquainted with the facts of the business so be clear, but brief.
2. Mission Statement
An enthusiastic statement that defines the company’s purpose, what you offer, and your overall goal. and how others including clients, employees, and if appropriate, the community benefit. Generally, mission statements are brief, no more than a few sentences. For example: Microsoft’s original mission statement was: A computer on every desk and in every home. Cradle to Crayon’s mission is: Provides children from birth through age 12, living in homeless or low-income situations, with the essential items they need to thrive – at home, at school and at play.
3. Company Description and History
If the business is already established, tell the story of how the business started and how it progressed since that time. Include past, present, and future services and products which have been sold, and the reason why you possess a competitive edge on similar businesses. This section should include information on the business’ legal structure (incorporation, sole proprietorship etc.), the location, and staff size. For a new business, describe how you developed your idea for the business and how your background will help the business.
4. Market Analysis
This is the analysis of the market, including competition, target clients and demographics. Outline future market growth (both overall and for your company), and trends that may affect greater interest in your services and goods. Describe your competition, and where possible include a description of specific companies you compete with, and an analysis of their strengths and weaknesses.
Key here is to define what sets you apart from your competition.
5. Marketing Plan
What is your service or product? What are the benefits, and what problem(s) does it solve? What is your plan to communicate this to your customers; what are your marketing and sales channels. Define why people make purchasing decisions (price, quality, trust etc.) when it comes to your product and how your product will satisfy those needs. Explain again why someone would buy from you instead of your competition.
6. Management Summary and Personnel Plan
Describe the organizational structure from the company and job descriptions of every person. Define the essential positions and how they fit into the structure. If you are solo professional, determine what you can outsource to ensure that you are focused on the right priorities – spending time on ancillary activities may save money, but may also keep you from growing the company.
7. Financial Reports
This section covers the financial statements and projections. It should include the Balance Sheet, Profit and Loss, and Cash flow statements. Depending on the business this may also include sub-schedules for Capital Expenses and other major items. This section should include a summary schedule; projected detailed monthly financial statements for at least the first year, and annual projections to cover the next 3 years of the business.
If you are raising capital, the most important schedule is one detailing how the money will be spent. Investors need to see that their money will be used to build a business – not a lifestyle.
Randy Miller
As an Outsourced CFO, Randy brings over 35 years of experience to his work with privately held companies; building better organizations for growth; and maximizing value for a sale or re-capitalization. He specializes in strategic planning, organizational development, and accounting and finance management services for businesses. His passion is working with Owners/ CEOs/Presidents to maximize enterprise value by sharing his knowledge gained from working with start-ups, growth companies, and turnarounds for over thirty-five years. His role is to build the accounting and support functions to allow the owner to focus on the business, not the back office. Visit RMM Accounting.