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How to Write a Business Plan
Posted By Ron On November 4, 2010 @ 6:55 AM In Budgets,Tips & Techniques | Comments Disabled
Lots of pundits these days are discounting the importance of a business plan, but most businesses that succeed plan their success rather than leave it to chance. Think of a business plan as your business’ “future resume ,” but never think of it as a static document. Your business plan can and should change as your company matures. If you’re considering starting any type of business, I highly recommend using these steps and processes to map out where you want your new business to go.
 I’ve written several business plans. My largest one was in graduate school where my strategic management professor required us to write a business plan to compete against WalMart. It was 144 pages long! Other business plans I’ve written were for real businesses – a small restaurant, a lumberyard, an Internet business, and a sandwich shop. Writing a business plan isn’t difficult, but it does require some time and forethought.
The first steps is to be realistic. You probably won’t be making $12 million in net profit one year in. Nor will you be selling franchises across the globe within 5 or even 10 years. Slow down, take a breath and get real. Your next step is to get started and understand what a business plan is and how it can help your business succeed.
A business plan is a report that documents your plans for starting and running your business. It can be 15–50 pages or more. Some of the key points it covers include:
The most common reason entrepreneurs write business plans is to secure financing for their business. But there are other important reasons to write a business plan if you’re considering starting a business. A business plan:
Entrepreneurs often resist writing business plans because they think either it’s too time consuming or it ties their hands unnecessarily. They may even believe it will become dated and obsolete rather quickly. On the contrary, a business plan can be written in a weekend – I’ve written one in less than one weekend – and it CAN be altered at any time the market demands. In fact, it should be updated often to reflect the business’s ever changing needs and goals. A typical business plan should include a table of contents and then 10 sections, as follows.
The first section, the executive summary, is a brief synopsis of everything the plan covers. It is the most important part of the plan, so it should be written last, after you’ve written the other sections of the plan. To write the executive summary, read through your plan and devise one brief paragraph summarizing each section. The executive summary should be less than three pages.
Your industry refers to all the companies that do what your company does, selling the same types of products or services. To give the reader of your business plan a solid understanding of the opportunities in your industry, your industry overview should include the following:
Depending on how large and popular your industry, the industry overview can be anywhere from one to five pages.
The market overview is appropriate if you run a local business; the industry overview will suffice for companies doing business nationally or internationally. Your market overview should cover the same information as the industry overview but apply to your local area only. It should include:
Because the focus is more targeted, this section should typically be about two or three pages long.
The business description is a snapshot of your company. It tells the reader what you do, who is involved in the business, why you decided to start it, and how you expect it to grow in the next few years. It should include the following:
In most cases, your business description will be only one or two pages long.
Now that you’ve told the reader briefly about your company, describe in detail the product or service your company offers. This is the who, what, when, why, where, and how of your business. Your product or service description should include:
Depending on the complexity of your offering, this section could be as little as two pages or as many as nine.
The personnel section should specify the employees you expect to hire (if any) and describe the individuals on the management team who will execute the company’s plan. The section should include:
Since your team can be an important factor in your company’s success, this section should be at least two pages in length and could run as many as five or six.
Marketing is everything you do to alert customers of what you’re selling and persuade them to buy from you. Customers make or break a business, so marketing is one of the most important aspects of any company. Evaluate your options and decide which marketing methods to use, including:
This is one of the most substantial sections and could be as long as 10 pages.
Business operations are the internal processes used to produce what you’re selling, be it consulting services, restaurant meals, or skateboards. This section should explain that process, perhaps in the form of a flowchart, a visual diagram showing how each step in the process impacts all the rest. The flowchart addresses:
Operations sections for businesses involving manufacturing or production will be about four or five pages long. Operations sections for service-oriented businesses may be only two or three pages, depending on the processes the business uses to sell its products or services.
Financial statements are four documents you create to figure out how much money you expect to make in the following year. Once you create them, though, you’ll want to update them constantly so you know where you stand. The information you’ll want to cover in this section includes:
The financial section is another important one and will generally run at least five pages, or as many as ten, depending on how you format your financial statements and how many pages each of those takes.
Inevitably, you’ll end up with information that’s important but doesn’t need to go in the front of the plan and doesn’t fit anywhere else. You can include this information at the end, in the appendix. The appendix may contain:
If all you include in this section is resumes, you may end up with two or three pages. But if you also have contracts or articles, the appendix can balloon to 12 to 15 pages.
A business plan isn’t just any multipage document – it’s a guide to how you should run your business. Think of your business plan as your guidebook or workbook that you should read through on a regular basis (meaning weekly or monthly). Doing that will keep you on track and possibly keep you from making an emotional decision in the heat of the moment. By following the strategies you identify within the pages of your plan, your business should grow and prosper.
In addition to reading your business plan regularly, you can also use it to:
By taking the time to thoroughly think through all aspects of your business venture with a plan, you can avoid a lot of the pitfalls your competitors didn’t or couldn’t. Starting a business isn’t something you should take lightly. Make certain you give your new venture the attention it needs and deserves by planning. Remember: proper planning produces peak performance.
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