Tips for Creating a Business Plan
by Michael Griffiths | July 09, 2013
It is essential that you create a comprehensive, well-thought of business plan. Management of your operations and promotion of your business all depend on developing a good plan. Think of it as a road map for your business, helping you determine what steps to take in order to get to your destination - which is, ultimately, success and personal fulfillment.
Writing your business plan will make you think objectively about your business, and you may even come up with new business strategies in the process. The plan will also serve as a record that you can revisit over time to remain on target or reassess your direction.
Below are some of the best tips for the creation of your business plan.
Create a Vision
Before you get lost in the details, outline a clear vision and a coherent set of values for your company. Develop a mission statement, and use it to define short-term goals and priorities. Once you have a clear, big-picture road map for your business, you can plan your journey with more confidence.
The Market Analysis
Simply citing a study about total market size isn't very compelling to investors today. Instead, talk about your competitors in detail in your business plan: identify direct, indirect, and even potential competitors and describe their offerings, their percentage of the market, their funding, and their pricing, distribution, and promotion strategies. Most important, the plan should be crystal clear about how your own offering is different and why it gives customers a better value.
Don't Ignore Your Customers
We all know the saying, "The customer is always right." This is most true when it comes to how they choose to spend their money. Too many entrepreneurs assume they know exactly what their customers need without bothering to ask. Take the time to learn about your customers, and build your business plan around their needs and desires.
Understand the Competition
An integral component to understanding any business environment is understanding the competition, both its nature and the bases for competition within the industry. Is it a particularly competitive environment, or one that lacks competition? How are the incumbents competing--is there a price leader evident? Finally, including a thorough understanding of the bases on which you intend to compete is vital; can you compete effectively with the existing players?
The numbers will be subject to particular scrutiny. Costs should be documented in full and sales predictions should be both conservative and realistic. While costs are more certain and predictable, a crucial factor in the success or failure of the business will be the level of sales. As potential investors leaf through your business plan, the biggest questions in their minds will be, How soon does this company get to breakeven? When will it be profitable? Are the numbers real? Gross margins and cash flow is equally important, as well as detailed monthly projections that demonstrate a well-thought-out way to get to cash-flow break-even level.
Savvy entrepreneurs should also include the slowing economy in their assumptions - sales cycles, as well as pricing. Investors don't like to see prices at or above industry norms, and warn against trying to compete on price, even though that route is tempting for a start-up. A business that is forced to compete on price is a commodity business, and commodity businesses usually don't do well in a downturn, and don't do well as venture investments.
A good business plan will include all these, although not all business plans are required to be as detailed.
Get a Second (and Third) Opinion
The most experienced entrepreneur knows that they can still benefit from a different point of view. Even if you're the only person involved in your business, find someone who can study your plan objectively and point out possible weaknesses, such as issues you might have missed, as well as highlight areas of strength.
Expect the Unexpected
Every business plan needs some wiggle room to allow for unexpected changes. Part of this involves creating budgets and marketing plans with some built-in flexibility. But adapting to change also means you might have to modify or even abandon business practices that worked well in the past. Be flexible, and be prepared!
Be Clear About the Rewards
Building a business involves hard work and struggle. But it should also include a clear set of rewards, both for you and your employees. When you set goals in your business plan, include some concrete motivation that goes beyond the satisfaction of a job well done. People work harder when they know what they're working for.
Arguably the most important component of the plan is the Executive Summary. This is a summary of the entire plan and is usually contained at the start of the plan. It also tends to act as a key qualifier for time-pressed investors--if they like it, they will read on, if not they will go no further. It should be completed at the very end of the business planning process and should have a "wow factor" that entices them to read further. In tandem with this, the writer should also prepare a short "elevator pitch," a five-minute overview of the key benefits of the new product/service.
Implement the Plan
Finally, a plan should always be viewed as a living document and contain specifics regarding dates, deadlines and specific responsibilities. It should be constantly reviewed and updated, as well as being used in regular "plan versus actual" discussions. Business relies heavily on people taking actions and being accountable for them. A winning business plan will help to ensure that the business is fully focused on what is required to achieve the company's goals.
About Michael Griffiths
Connecting Women In Business helps women business owners generate more leads, clients and increase profits with more networking, business insights, tips and tricks on marketing, growth, business and accountability strategies. We invite you to get your free social media tactics ebook when you visit http://www.connectingwomeninbusiness.com.au
About Chia-Li Chien
Chia-Li Chien, CFP®, CRPC, PMP; Chia-Li “like JOLLY,” Succession Strategist of Value Growth Institute, dedicated to helping private business owners increase their company equity value. She is the award-winning author of the books Show Me The Money and Work toward Reward and a faculty of the American Management Association. Her blog and newsletter was named a Top Small Business Resource by the New York Times You’re the Boss blog. Contact her at email@example.com or (704) 268-9378 .