7 Essential Pieces to a Winning Business Plan
by Anne Ramstetter Wenzel
Writing a good business plan for your business requires time, commitment and a good business plan template. To successfully create an effective business plan and strategy document, you should commit to setting aside several hours of uninterrupted time each week for several weeks (hold the phone calls!). Be sure include the following seven sections in your business plan:
1) Executive summary
Write the Executive Summary last. Summarize the most important points of your plan (e.g., sales forecasts and growth strategies; why you need funding & what you will use the funds for; highlight the products or services you will sell, market growth and trends, key personnel). Keep it brief and simple: You can copy and paste many of the sentences and charts already included throughout your business plan.
2) Mission statement
Write a few sentences explaining why you are in business. Focus on the needs you satisfy for your customers, employees and you or your investors. Infuse your mission statement with enthusiasm.
3) Company history and description
What’s the legal form of your business, where is it located, what’s its history?
List current goods or services you provide.
Also list future goods or services you plan to introduce.
What is your competitive advantage? Explain why people or businesses would rather shop with you than other companies.
4) Market analysis
a. What markets are you serving? Define your demographics by types of people (e.g., mothers with small children, young professional men, high income families) or size of business (e.g., companies with fewer than 10 employees, Fortune 500 companies, independent professionals), and/or geography (e.g., local area, national, international, Internet).
b. What’s the size of your potential market? Use U.S. Bureau of the Census or trade association data to estimate your market size.
c. What are the trends driving demand? Identify the changing demographics (e.g., people living longer, smaller families, more businesses being formed), life or business styles (e.g., more people living alone, more businesses outsourcing non-core functions) or tastes (changing color preferences or favorite types of sports) affecting your market.
d. What are the industry distribution and buying patterns? E.g., coaching services can be delivered one-on-one, or via teleclasses and workshops. Products can be sold in retail outlets, home shopping events or the Internet. What are the most common methods of distribution in your industry? Do people buy based on price, trust, reputation of the company, or perceived quality?
e. Who are your competitors, direct or indirect? For example, children’s book publishers compete with video games companies for their customers’ time and dollars.
5) Marketing plan
a. Marketing mix. How will you generate leads? Networking, direct mail, a web site, publishing a newsletter, press releases ~ detail what marketing campaigns you will launch and when.
b. Marketing budget. Estimate marketing campaigns costs and write out a monthly or quarterly budget.
c. Pricing strategy. Are you going to be the low cost leader, the “best value” or the most expensive/highest quality on the market?
6) Management summary and personnel plan
Who will be the CEO, the VP of Marketing, the VP of Sales, the Director of Product Development, the VP of Finance and the business administrator? Who will produce the products or services, and sell to customers? Write out a job description for each critical function.
If you are working solo, schedule time to perform all management or production functions. You might choose a time each day, or a day each week to do bookkeeping, marketing, sales, product development, or you can break each day into segments. Or, you should identify employees, contractors or consultants who will perform these jobs for you. How much will you pay? What are the legally required and other benefits you will provide? Create a personnel budget, and schedule regular reviews to ensure that all functions are being performed as delegated.
7) Financial statements.
Include a Balance Sheet, Profit & Loss statements (historical and projections), a Breakeven Analysis and Cash Flow projections. Get financial templates from business planning or accounting books, web sites or software programs.
The software program Business Plan Pro, by Palo Alto Software, includes worksheets for all financial statements. A great book that contains business plan financial statement examples is The Business Planning Guide: Creating a Plan for Success in Your Own Business, by David H. Bangs, Jr. Another good source is Accounting for Dummies, by John A. Tracy, CPA.
The U.S. Small Business Administration also has good instructions for creating business plan financial statements. Go to www.sba.gov and click on “Business Plans” underneath “Starting Your Business.”
You'll find some sections of your business plan more challenging than others. Don’t hesitate to ask for business planning help from a local small business development counselor, accountant, market researcher or business coach. Focus on completing one business plan section at a time, and you’ll eventually complete the seven pieces needed for your “blueprint for success.”
Business Plan Outline
outline of a typical business plan is given that can serve as a guide. You can adapt it to your specific business. Breaking down the plan into several components helps make drafting it a more manageable task.
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Why you need a killer executive summary in your business plan
The purpose of the executive summary
is to entice the reader
to review, or request to review, the
entire business plan.
The executive summary is not a mini
version of the entire
business plan. Keep it brief. It should be viewed as a
marketing tool, a very important marketing tool.