Business Plans

Business Plans
What Is A Business Plan?
A business plan (“Business Plan”) is a written summary of what you hope to accomplish by being in business (i.e. your goals), how you intend to organize your resources to meet your goals. It is a road map of where you want to go in your business, the various routes you will take, the various stages along the way and most importantly, where you will be when you have arrived at your destination.
Why Have A Business Plan?
Starting a business without a business plan is like starting out on a road journey without any idea of your destination and without a road map of how to get there. You will be lost from the moment you start and will never reach your destination.
Many entrepreneurs think of a Business Plan that is prepared for the benefit of others such as Bankers and potential investors, when in fact the most important beneficiary of a written business plan is the entrepreneur and their management team.
How Do I Prepare A Business Plan?
The Business Plan must be owned by the entrepreneur. It must incorporate the entrepreneur’s vision of the business as it exists today and the plans for the future. However, the assistance of a business consultant experienced in preparing business plans is invaluable. The consultant will help the entrepreneur organize their thoughts, synthesize their thought process and challenge their ideas

A Business Plan contains the following key elements:
1. Business Description:
The purpose of this part is to provide the reader with an overview of the business. The reader should understand exactly what business you are in, what its legal entity is and how your business intends to differentiate itself from its competitors.
A. Mission Statement
A good mission statement sets out your business’s goals and purpose. The mission statement should answer the question, “what solution do I provide, and what must I do to make sure that the solution that I provide is consistently delivered.”
B. Summary of the Business
This section answers the basic question “what business am I in?”
C. Legal Description
Is your business a sole proprietorship, partnership or a corporation?
D. Competitive Edge
Clearly identify how you intend to differentiate your company from its competitors:
- Who are your competitors and what is currently their competitive edge?
- What are your competitor’s weaknesses
- What will distinguish your products or services from those of your competitors?
- Service, quality or price—which of the three do you intend to emphasize?
2. Management
Provide biographies of the key members of your management team including education, prior positions and noteworthy achievements. Remember that you are selling your management team to the reader; include what makes them special. This very exercise will help you better think through whether the players fit well together and will make a successful team.
3. Marketing Plan
This section provides the reader with an overview of the industry in which your business competes, a description of your business’s potential customers and an explanation of how you intend to sell, distribute or promote your product or service.
A. The Industry as a Whole
Provide an overview of the industry including:
- How competitive the industry is
- What the growth opportunities are
- Who the industry leaders are
- What the niches are in addition to yours
B. Potential Customers
Describe who your potential customers are and what motivates them to buy including:
- Do they rely on recommendations from others
- What are their usage rate tendencies
- When do they make their purchases
- Do they buy online, on credit or on impulse
What types of businesses will buy your product or services?
Who will be the decision make and how can you reach them?
What problems of the decision-maker will you solve with your products or services?
C. The Benefits of your Product or Service
Consumers are interested in hearing the benefits of your product or service not in hearing about its features. Businesses want to know how your product or service will benefit the growth of their business.
D. Geography
Define the geographic area in which your business will operate, locally, provincially, nationally, or internationally.
E. Distribution
Explain how you intend to get your products or services to the market. Describe your role in the industry.
Are you a manufacturer? Service provider? Wholesaler? or Retailer?
F. Advertising
Describe how you can best reach out to your potential customers—newspaper, radio, TV, magazines, direct mail, phone, social media, and internet.
G. Public Relations
Public relations is the art of keeping your name in front of the public other than through paid advertising. The best-known form of public relations is publicity. Publicity is usually free; the trick is to get the attention of the writer or reporter who can help you the most.
H. Pricing
Explain your short-term and long-term pricing policy. Include information on your costs and profit expectations together with a thorough analysis of your competitor’s pricing and your perceived price point within the industry.
I. Sales Terms and Credit Policies
A sale is never complete until you put the cash safely in your jeans. You need to set out the terms of the sale (COD, net 30) and the conditions governing the granting of credit and the acceptance of payment before you make the first sale.
4. Operations
The scope of your operations covers a wide range of functions from dealing with employees to purchasing from vendors to maintaining your company’s accounting records.
A. Employees
If you plan to have employees:
- How will you assemble your team of employees?
- Where will you find the employees?
- What benefits will you offer?
- What incentives will you offer?
- Will you have an employee manual?
- Will you offer a retirement plan?
- Will there be opportunities for employee ownership?
- How will you train your employees?
B. Compensation
It is important that you have a clear a logical compensation plan before you hire the first employee. If you do not, you will be setting the stage for discord within your employee ranks and disruption of your business.
C. Vendors and Outside Resources
- What vendors and outside resources do you intend to use?
- How will you persuade them to do business with you, the new kid on the block with no history, no experience and likely a weak balance sheet?
D. Accounting and/or Bookkeeping
Who will take care of the accounting and/or bookkeeping?
- Will you hire an experienced bookkeeper, controller, or CFO?
- Will you use a computer accounting system and if so which one?
- Will you outsource your bookkeeping or accounting function and if so who will you use?
5. Risks
You need to understand the potential risks in your business. The better you understand them the better you will be able to anticipate them and the better you will be able to minimize the risks and stay in business.
6. Financial Management
Your great ideas and your hard work will turn into your worst nightmare if you are not aware of and in control of the financial aspects of your business. Before you launch your business do the research necessary to come up with financial projections that accurately and realistically describe the future of your business. A good accountant will help you produce these financial projections but this is your business and you need to fully understand all the financial aspects of the business. Once you have prepared financial projections don’t simply put them in the drawer. Compare your actual results to your projections on a monthly or at least quarterly basis and make sure that you fully understand the reasons or differences between the projected and the actual. By doing so, you will be able to identify and correct small problems before they become big problems that could threaten the very existence of your business.
YOU HAVE SPENT A LOT OF TIME AND EFFORT PUTTING TOGETHER YOUR BUSINESS PLAN!!! NOW IS NOT THE TIME TO PUT IT IN YOUR DRAWER. KEEP IT IN SIGHT AT ALL TIMES. There will always be a variance between the projected and the actual financial results–the trick is to understand the reasons for the variance and to take corrective action on a timely basis. You will then be in the driver’s seat!!!