No matter what type of business you run… No matter what stage of development your business has achieved… A written business plan is essential for continuous business success.
One of the greatest challenges for any small business owner is to carve out the time, on a regular basis, to understand the overall business environment and to determine its impact on business performance. A business plan can serve as the framework from which to gauge the business’ performance relative to internal goals and the outside environment. A business plan will help you visualize and articulate goals. It will help you communicate with lenders, customers and employees. It will help you track your success and enable you to make business decisions based on accurate information.
A well-written business plan documents all areas of the business, including these five main categories:
- purpose, and objectives
- description of the business
- marketing plan
- management plan
- financial management plan
Purpose and Objectives
This section will briefly describe the purpose of your business — what is your market opportunity and how will your business provide a solution. Outline your short-term goals and your long range vision.
Description of the Business
Describe in detail the type of company you are forming, product or service that you are offering, and the competitive advantage of your business.
Be sure to include specifics about the setting of the business. Since location is such a strong factor in the success of any business, this section should cover more than just the address. It should include such topics as: What kind of space will be needed? What are the desirable characteristics of the location? How accessible is it? What demographic factors have been considered?
Marketing Plan
The marketing plan describes, in detail, how you will market your business to potential customers. You cannot assume that your service or product will “sell itself.” Successful firms require a proactive approach to attract sales.
A good marketing plan will provide all of the information and guidance for your business to reach its customers, and should go beyond decisions on advertising. Most marketing plans address four topics: the customer, the market, the market share held by the business, and the general industry and economic climate. This section focuses on the general aspects of the customers, how the business will serve them, and where the business fits in its market.
Research your competition and gather as much information as you can about direct and indirect competition. Don’t forget to consider businesses that can provide substitute products or are located in other geographic areas, especially if the internet can be used to reach customers. Discuss how what you know about your customers and your competition impact your pricing strategy. With a well-defined pricing strategy based on a good understanding of the target customers, a business can effectively improve its competitive stance and profitability.
The last section of the marketing plan addresses advertising and public relations. How a business is advertised and promoted can determine its success. An overall strategy providing a consistent message to the customer across multiple promotional avenues will help establish the business in the community. This in turn will help drive sales.
Management Plan
The management plan sets the foundation for the success of the business. This category addresses particulars regarding the owners, managers, and key employees of the business. It describes necessary skills and assigns responsibilities. It evaluates the relative strengths and weaknesses in existing management and describes the steps needed to capitalize on the strengths and overcome the weaknesses. The plan also provides parameters for additional training and offers guidance for decisions related to the application of outside assistance or services.
Financial Management Plan
Sound financial management assures that a business will survive through tough times and grow during good times. In this category, the very nature of your business is described in financial terms. While it is not necessary that a business owner become an expert in the realm of finance and accounting, it is imperative that the owner become familiar with and understand the financial impact of all business decisions.
In general the financial management plan should include a complete set of financial statements: balance sheet, income statement, cash flow statement, etc. Historical statements (for existing firms) and proforma (future projections) statements are included in order to provide a clear understanding of where the firm has been and where it is going. It is not unusual for a comparison to industry standards to be included as part of this category’s appendix to determine how well the business is performing relative to similar firms.
Are we there yet?
Once the document is produced, the engaged owner has the perfect tool to use in setting the direction of the firm and measuring its performance.
If you require the assistance of our expereinced writers, who create a document that is not only functional but informative and engaging to financial professionals, or if you just want someone to review and edit your business plan without fear of risking your idea our consultants know what belongs in an effective business plan; then all you have to do is get in touch.
