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A business
plan is a blueprint for success. It is a working document and
a planning tool. It is a survival guide that will successfully
take you to your desired destination. If you were going to drive
to Toronto, Canada, you would not leave home for that trip without
preparing the things you would need for your trip. The same is
true for your business. You should not start a business without
having a business plan, because it is the map or guide that will
help you reach your goals.
I have seen many organizations function day-after-day
and year-after-year without a business plan. However, what held
the organization together were one or more individuals within
the organization who had a very strong and vivid vision for the
company. That vision served as a mental business plan for the
company. I do not recommend this approach. First of all, it deprives
your employees of the opportunity to help you obtain your vision
or goals. Secondly, it does not provide a way to quantify your
success. A written business plan would accomplish both of these
objectives.
Studies show that the average entrepreneur should
spend about 20 percent of their time planning. Preparing your
business plan, and working on it should be part of that planning
process. One of the biggest mistakes that entrepreneurs make is
their failure to plan their business success. Another big mistake
is the failure to hire someone to do the routine task of the business,
so that you can spend your time leading the organization. Your
business plan should never be completed. The reason … once
you complete your business plan, it will be time to start planning
for the next year. Of course, it does not happen that quickly,
but with all of your day-to-day activities of running a business,
it will definitely feel that way.
You can start by creating a business plan for
one year. Develop your objectives, strategies for accomplishing
your objectives and tactics for accomplishing your strategies.
When this process is completed, start to look at the broader picture
and envision where you would like your business to be five years
from now. Next, work to fill in the missing years … year
2, year 3 and year 4. The time period beyond one year is defined
as "long-range" or long-term." Your long-range
goals are just as important as your short-range or annual goals.
The "long-range" objectives and strategies do not need
to be as detailed as your current or annual business plan.
Once this is completed, you should start to "work"
your plan. This is one of the reasons why the business plan is
never completed. As you began to work your plan, you add more
details on how you plan to accomplish your objectives and strategies
in the business plan. For example, if your main objective for
next year is to make $1 million, create strategies that will help
you obtain this goal. Technically, a $1 million goal means your
average monthly income for the next 12 months should be roughly
$83,333. Now, think about ways to obtain this goal, and ask yourself
this question, "How can I get more customers to come through
your door or to purchase my products or services?
Studies have shown that entrepreneurs, who put
their business plans in writing, succeed more often than people
who do not. Make it a point to put your business plan in writing.
Writing helps clarify your thoughts, and revise that which is
not clear. It forces you to think about every aspect of the business,
every component of the business plan. I take the position that
there is no right way to write or produce a business plan. However,
for those of you who need structure, I do recommend the following
outline. Use the outline to move you in the right direction.
Components of the Business
Plan
Executive Summary
- The executive summary is usually completed last, because you
have to complete all of the other sections of the business plan
before you summarize what each section states. The executive summary
should be brief, and consume no more than one or two pages.
Industry Analysis
- You will need to head to the library for information on your
industry analysis or do some serious Internet searching. Your
local librarian will be able to point you in the right direction.
You will need to find information on how your industry is doing
and on the industry leaders. You should also obtain information
on how much money the industry makes annually and how many businesses
are serving the industry. To generate the clearest and most informative
picture of the industry, this information should be obtained both
nationally and locally.
Competitive Analysis
- Here you will need to explain your direct competitors? How many
similar or identical businesses are located within a 1-mile radius,
3-mile radius and 5-mile radius? What is the sales volume in your
geographic service area? What is the geographic service area in
your city and state? What unique advantages do you have over the
competition?
Marketing and Sales
- How will you market your business? If you are a new business,
explain the components of your grand opening. What will you do
to publicize and advertise your business? What are the demographics
of your customers? How will you "service" your customers'
needs? Remember as a small business, one of your biggest advantages
is that you can get to know your customers more intimately than
the large corporations, particularly in the retail sector. What
sales volume do you anticipate, annually and long-term?
Management Team
- Point out the strengths of your management team. Add the resume
of all the management team members and highlight how their experience
compliments your business. Produce an organizational chart. This
is your opportunity to sell your skills, training and experience.
Business Operations
- Describe the operations of your business. What are your business
hours? What days of the week are you open and closed? What is
your merchandise return policy? What personnel policies do you
have established?
Financial Statements
- Produce pro forma income and expense statements for three years.
Produce pro forma balance sheets for three years. Produce a cash
flow statement for the first year of operation of your business
or the first year of your business plan. All of these documents
will, not only help you understand the finances of your business,
they will help you understand your financial outlook.
Long-Term Plan
- Long-term means beyond one year. Prepare objectives and strategies
for each of the next four years of operations. This will help
you create a vision of where your company could be five years
from now. If you do not plan your destination, you will not reach
it.
Contingency Plan
- Be smart and prepare a contingency plan. Having a contingency
plan helps you stay calm if you discover that the original plan
is not producing the results you desire. It is a secondary plan.
Producing this plan now, can save you a lot of headaches if the
economy changes or an unexpected event occurs.
Many textbooks have wonderful examples of business
plans. You can also go to your local bookstore to purchase a business
plan manual. Business plan software is also available. Conduct
a search to find a format that pleases you and start to do the
work necessary to complete your business plan. Once you get started,
you will be on the road to success.
Joyce M. Parker-Johnson
President
Abaca Marketing Consulting & Training
Richmond, VA 23220
Phone: (804) 353-7558
Fax: (804) 353-7336
E-Mail: jparker-johnson@globalweb.net
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