Like anything else in life, your business plan is something that must be planned to be a successful document that will support and enhance the presentation of your company's short and long term objectives, position, market, appeal, and profitability. If you are an expanding small business, an upstart or a new non-profit organization, then you may be seeking funding or investors. For you, your business plan must exhibit excellent and well planned presentation information.
The following are the basic components of any effective business plan:
1. Executive Summary
· Think sales pitch. This is where investors look to get a pulse for your business, its viability, profitability, and potential for a return on their investment.
· Think job interview. The executives you will allow to read this summary will be those in banking or merchant relationships from whom you seek favor. Be sure you write this summary so that the reader feels informed, respected, and confident in your abilities and experience.
· All inclusive by main points. Let the reader feel the shortness of your points.
· Remember "summary"; details are in the plan's additional sections.
2. Company Profile
· Company Mission Statement. A one sentence statement that precisely describes your company's purpose; a stated directive.
· Company Vision Statement. The paint in the picture of your company and its direction.
· Legal structure and month and year of company beginnings, also known as the business form; how you registered your company with the local or state authorities when you filed your paperwork.
· Historical context. If you are a new upstart, explain how your company developed and from what historical concept. If you are an established company, you will want to include 1-3 sentences about your founding days, 1-3 sentences about your most recent company accomplishments, all the way back to major accomplishments made 5 years ago.
3. Products and Services Description
· Include products descriptions in a separate section rather than in services descriptions.
· New products or services should be listed as "new" or "upcoming" to conveniently show steady growth.
4. Marketing Plan and Marketing Strategy
· Marketing Research should be included here as well. Your research should include primary research information that you or your staff has conducted to determine your own local market information and demographics for your local market.
· There should be a stated and outlined Marketing Strategy for getting your products or services direct exposure to the marketplace in which you hope to operate. How are you going to reach your market?
· A well written Marketing Plan must include your company's "Plan of Action" for the next 2-3 years at minimum. This portion of your plan should be spelled out in detail and should perhaps include financial or market research statistics.
5. Target Market or Customers
· Your Target Market and your customers will be close in demographics, needs, and perceptions. Be prepared to find out all you can about them. Statistics on their needs and personalities will be important in this section.
· What is it about your product or service that makes your customers exclusively attracted to your company? How does your company stand out in serving your community of clients? How does your product or service appeal to their needs?
· What portion of your Target Market will be tempted from your competition? Which segments of your Target Market will become loyal to your company and why?
· You must be able to succinctly state your competition's strengths and weaknesses in this section. Know what they offer that gives them an edge over your company, and if your company has the advantage knowledge it and state why.
· Your competition's range of rates must be stated either in extremes, averages, or both. How does your competition stack up to industry averages; how do you?
· Clearly outline what it is that you offer to the client that gives your company an advantageous edge over your competition. Whenever and wherever possible be ready to exploit the rates, statistics, advertising, client requests, or any other thing to underscore to the business plan reader the clear and distinct advantage your company has over your local competition.
7. Advertising and Promotions
· Outline for the reader what type of Advertising and Promotions your company will need to run to stay in the competitive arena in your local market.
· Offer examples of expense rates necessary to properly Advertise and Promote your products or services.
· State any current discounts or special deals that you expect to keep in place within the next 12 to 24 months.
8. Sales and Distribution
· How many sales staff do you currently employee? How many do you expect to have on staff in the next 24 months?
· What are your sales projections for the next 24 months? Where are you getting your calculations and how are you making your estimates? What is your company's projected sales growth [usually stated in percentages] over last year?
· How are your products and services distributed? Do you have a retail outlet? Are you distributing your products or services over the internet? Using regular mail? Through some industry standard? [Example: books with a network of book stores and distributors].
9. Operations and Operational Plan
· How does your company operate on a daily basis? Are you online, on the phone, or in a retail location? Do you depend primarily on advertising, on door to door direct sales, or on phone sales?
· What is your Operational Plan and how do you implement it on a daily basis?
· Define the variables in your Operational Plan and how you expect them to affect your company's success.
10. Client Account Management and Credit Policies
· Explain, in brief, how your company manages Client Accounts, particularly as it relates to money, billing, and collection policies.
· What are your company's payment and refund policies? Be sure to have these policies posted in the public arena somewhere close to your client's purchase opportunity. If the client checks out online, make sure you have a Policy Page on your website that clearly informs the customer of these policies. If you are retail only, then make sure your policy is posted near the checkout counter. Either way, you will want to reiterate that policy and tell where it is posted in your operations within the context of this section of your business plan.
11. Accounting and Management - Cash Flow statements & Management structure
· How does your company handle its accounting? Do you have a staff accountant? Do you use a monthly service? Do you handle it yourself and then have it quarterly or annually reconciled by a professional CPA? Bankers, investors and foundations are all typical sources that will be interested in this segment of your business plan. Make sure you answer their business accounting questions here so you don't get quietly eliminated without further inquiry or discussion.
· Include current Cash Flow statements, at least from the last year. If you have been in business longer, include 2-3 years of quarterly or annual Cash Flow statements. Two or three pages are the maximum size for this section.
· How does your management team handle finances? Do they receive monthly P&Ls (Profit and Loss) that they can reconcile and examine for financial leaks or improvements?
12. Financial Planning and Projected Balance Sheet
· Take the time and invest the money in a professionally prepared Financial Plan for your company. If you are a sole proprietor, then you will include an abbreviated version of your personal Financial Plan. All other business structures cannot use any portion of their personal financial plan; rather draft a separate Financial Plan for your business and include it here.
· From your best calculations, create a set of Projected Balance Sheets for the next 2 years. This helps bankers and other investors determine what your expected return-on-investment will be and how they can estimate the value of your company.
· This section can include any number of supporting documents, and should include as many of the following as is reasonably useful for the financial aspect of your business plan. Keep in mind here, if it doesn't help to sell the value and ROI (Return on Investment) of your company, then it doesn't belong here.
· Some examples of excellent supporting documents include: preprinted advertising brochures your company distributes [sales pitch], industry or market studies, especially those published by governmental offices, and others.
There may be an occasion to leave out one or more of these segments, but if you do, then be prepared to insert a blank page with a title and a two sentence explanation as to why it is unnecessary to fully develop the missing portion.
- The use of being verbs. This includes any structured sentence containing both words "to be" anywhere in the sentence. "Being" verbs are also those which end in "ing." This is not a hard and fast rule, but it should be followed as closely as possible since sentences structured with being verbs usually contain a "passive voice." A well written plan is one in which you have edited out the passive voice as much as is reasonably possible. Readers and funders respond better to content written in an active voice.
- Remember your writing helps to sell your company when sentences are written in alternating lengths. Massively long sentences are not needed to give you or your company a sharp look or a smart read. The variance in sentence length helps to keep the reader's attention and prevents a reader from tiring.
- Avoid using these words in your content:
- which – Replace with "that."
- would – Sounds like a habit to the reader's mind. Choose the more active "will".
- ongoing – Meaningless drivel in the context of a business plan. If something in your plan is indeed "ongoing", then place it under the appropriate subheading, give it a "plan" subtitle, and describe it as a "current" event. Example: A current sales program that your company plans to implement for several years [making it an "ongoing" event], should be listed under the Sales and Advertising category and subtitled either as "Current Sales Events" or "Sales Planning" or a with a similar subheading.
- nice – This is an empty, non-descript word that generally accomplishes nothing in a business plan.
- due to – Weak language; does not belong in a business plan. Too explanatory for funding favor.
- in terms of, kind of, sort of, fixing to* – All of these are weak, empty, or regional slang* and they are not persuasive in your content.
TONE AND PRESENTATION
Your business plan's tone and presentation are of the utmost importance to your company's public appearance when viewed by any business associate, banker, investor, or related person. We will cover more detail on the final presentation in Lesson 8. For now, remember these things about the tone and presentation of your plan:
- Keep the tone strictly business related.
- Never include personal, friendly, "cool," or slang language in your business plan; it distracts the reader from the facts.
- Your presentation should be clear, easy to read, impeccable in grammar, spelling, and punctuation.
- Keep your presentation visually uncluttered.
- Never use excessively large font in the print or visual version of your business plan unless you know ahead of time that your reader is visually impaired. Most presentations are formatted in 10-11-12 point fonts; 14 point font should be your high end.