Developing A Business Plan

Your success in business depends largely on your plan. Your business plan is not just a worthless piece of paper; it's a road map you can use to help you get to where you're going, that you can refer to when you feel that you don't know where to go next, and that you can modify and use to project whenever you have a change in cash flow or situation. A good plan is also important if you will be seeking funding from investors. Many banks also require business plans for small business loans.

Your business plan is a living document, and should be referenced frequently. Parts of it may be used to create your website, and other parts contain vital tax information. All of it will keep you on track.

I recommend that you keep your business plan in a binder so you can add to it easily. Keep each of the sections detailed below separate, so you can modify your plan without having to re-do the whole thing. If you are going to present it to a bank or investors to request funding, bind it in spiral binding or some other binding that makes it easy for the readers to review it.

While your will be personalized for your business and industry, your business plan should consist of nine parts:

• Executive Summary
• Market Analysis
• Company Description
• Organization and Management
• Marketing and Sales Management
• Service or Product Line
• Funding Request
• Financials
• Appendices and additional documents (for instance, your legal documents, resumes or CVs of key staff, letters of reference, leases, etc.)

Executive Summary

Your executive summary is a brief summary of your business and your plan. It should summarize what your business is all about as succinctly as possible (“a convenient store in a busy business district,” “a web-based source of information about NASCAR”) and anything that makes it unique. You should include the date your business started (or your projected start date), who founded it, what these founders do, how many employees (if any), where your business is located (every location, including online addresses), and a description of any manufacturing facilities you may have. You should also describe all products and services you provide, and the names of investors and banks.

If you have been in business for a while, you should also summarize your company's growth over time, especially any outstanding growth periods or achievements. If you're just starting a business, summarize your own experience and background and the reason you chose to start your business, focusing on the problem you're trying to solve or need you're trying to fill as well as what you plan to address this problem or need. And whether you've been in business for a while or not, summarize your future plans.

The Executive Summary should be between 1-3 pages long.

Follow this summary with a concise table of contents.

This section should answer questions regarding:

• Who your targeted market is and what makes your business ideal for them
• How large your market is, how much they can afford to spend, and what the potential future growth in the market is
• How much market share you anticipate being able to gain and why
• Your profit margin and pricing strategy, including any discounting or sales
• Resources used to identify your target market
• Marketing and media plan to advertise to your target market
• How your target market purchases (e.g., is this purchase something a female buyer would make on her own, or is it a large corporate buy?)
• Potential trends affecting your target market
• Describe secondary markets and the trends that may affect them

This section should also discuss any target market testing you have performed.

Company Description

This section should describe the structure of your company. If you have employees, this section should include a high-level organizational chart to show how your top personnel work together, and a description of how your company goes about meeting the needs of your customers. For a complex business, include a chart showing how all the segments of your company work together as well.

Keep the focus on your market, even here. Discuss what market needs your business will be addressing and why it is more qualified to do this than other similar businesses.

Organization and Management

In this section, you'll need to define who the owners of your business are, what percentage of the company they own, and what the corporate structure is (e.g., C corporation or sole proprietorship?). In addition, if your business includes more than just you, include a detailed organizational chart showing the duties and relationships of your top-level staff (but not detailing sales staff) and refer to resumes or curricula vitae in the appendix of your key employees showing why they are ideal in the positions they hold in your organization. If your business includes only you, explain your qualifications and why you are qualified to start and run this business. Refer to your own resume which should be in the appendix.

Marketing and Sales Management

In this section, you need to detail what your marketing plan is, how you expect this plan to enable you to penetrate your market, and how it will be helping your business to grow. Talk also about your sales strategy. Training, compensation for sales staff, and sales activities should all be addressed here. If you are the only one in your business, discuss your plan for your own marketing and sales training here. Your qualifications in sales and marketing should be discussed here as well.

Service & Product Line

In this section, you should describe your product. Instead, describe its attraction to your target market, and why they will want to continue purchasing it. You should also talk about your product's life cycle, how well it competes in its current market, any trademarks, patents, or copyrights that are attached to it, and any further research and development you're going to undertake with it.

unding Request

If you're planning to use your business plan to secure funds, you should use this section to describe what funds you need to continue expanding your business, why you need the cash, and how you will be paying it back.

If you're using the business plan for your own purposes, you may delete this section.

Financials

Your financials should include documents and spreadsheets related to your past, present, and future cash flow. This section should make clear how your business has grown in the past, what kind of shape it is in today, and where you want to take it in the future. Be sure to include some clear graphs showing trends, especially for the future. For places where you need to make assumptions for future growth, denote each.

If you are just starting out, develop a budget for your business and put it here. Be sure to keep it updated.

Appendices

At the end of your business plan, you should include copies of all your important business papers: contracts, deeds, leases, building permits, press tear sheets, letters of reference, pictures of your products, credit histories, resumes and CVs of critical staff, market study summaries, and a list of all the most important business contacts you have, like your attorney and your accountant.

At the end of your business plan, anyone reading it should have a very clear idea of what you want to do and how you want to do it. It should be a complete and convincing sales tool that will help you make your case to anyone who might be able to fund your future growth, and a detailed complete road map for you to use as you navigate the growth of your company into the future.

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