We're continuing our business plan template discussion with the 7 elements most commonly found (with some variations) in the majority of plans.
Each of these pieces to the business plan is important on it's own and then contributes to the whole.
Let's take a look at how each section one works with the whole and what information you'll want to gather as you're doing your business planning.
For discussion purposes and the actually formatting of the plan, we're discussing these elements in this order.
When you're working on your business plan, you may find it easier to work on the sections is a different order than the way they are put together in their final form (per the pic above!) When I'm working on mine, I find it helps to work on my plan by thinking and writing about the sections in the order indicated on the Business Plan Steps diagram on the previous page.
The reason for following this particular process is because the sections build upon one another and you'll need information from the SWOT Analysis in your Marketing Plan, the Operations/Management portions will be required in your Financial Plan.
And finally the Executive Summary is a succinct "finish" to the whole plan and will eventually briefly introduce your company with a powerful, attention-grabbing start!
This section of a business plan template focuses specifically how your business will function. Have you considered how your business will operate? Have you identified processes/procedures to make you efficient in your business? If so, are these documented to make it easy to operate your business.
Here’s where we’re also going to identify whether we plan to produce our own product/service or are you going to sub-contract part of the business and manage the sales/customer service?
Again, don't be intimidated if you don't have experience in all these areas. I didn't either when I started my first business.
Our business plan template needs to address the general management and organization functions of the business.
Include position descriptions in your business plan for key employees in the organization.
The final section (but probably one of the most important!) of a
business plan template, will identify the
proposed income and expenses required to start your business. It will
also identify your break even -- the point there your income and expense
"equal" and you begin to make money after crossing this line
positively. See the Break Even diagram below.
This section of the business plan template is extremely important to YOU!
Make sure to look at this section with a critical eye. While you may love your business idea and the thought of being in business, ask yourself these questions:
This is also the portion of the plan that will be heavily critiqued by any investors, banks, or other financial institutions you are requesting funds from to start your business. They want to see that you’ve thought through the financials realistically, you've done your homework with regards to pricing/market share, and you've retained enough funds to cover contingencies you'll require.
If you don’t plan to seek outside funding, but plan to fund your business out of your pocket (e.g. savings, current job, investments, etc.), this section is often not completed. However, I’d suggest you proceed with the Pro Forma in the same manner as the person seeking external funding because this exercise is extremely beneficial in helping you steer your business and manage your cash flow as you build your business.
Include any money you plan to invest in the business and make projection for funds required to get the start-up company off on firm footing.
You'll also want to think about what share the profits you are willing to split with an investor or partner? They may only be willing to invest for a piece of the profits. So how much are you willing to share? New business owners don’t always county on sharing, but a portion of something is better than nothing.
Your Financial Plant should also include the Pro Forma. So you ask, “What is a Pro Forma?”
The Pro Form is where the “rubber meets the road”.
It is the financial projection of how the business will perform over a 12-60 month period. This is the portion of the business plan that projects cash flow requirements for the business.
Cash flow is crucial for a business and you will be referring back to this portion of your business plan template frequently to see how your business is performing and if you’re on track financially. It's even a good idea to track the projections vs. the actual performance of your business to determine if you're on track or if you need to made adjustments to your plan over time.
Remember, a good business plan template methodically walks you through your business idea, helps you to determine what the supply and demand for your product/services are, allow you to identify your strengths and minimize your weaknesses, identify your specific marketing strategies, and finally determine the best method of management/operations for your particular business.
This one document can be the difference between success and failure of your new business. The hardest part, is actually thinking through what is logical and makes sense. Don’t’ be tempted to just slap together a plan that makes you money overnight. Generally, this is unrealistic and will set you up for failure.
The planning process does take time and effort, but the time you spend on the planning will pay off in significant ways in the long run. Take it from my experiences!!
Note: The business plan is a roadmap – it is not an event!
It’s o.k. to plan and change course if things change. This should be a working document! Don’t get caught up in trying to make your plan so perfect you fail to finish it or make it useful to your business growth.
I’ve know many business people who refuse to plan because they don't know how to make it “perfect”. Perfection can be your downfall.
You'll want to make your best educated decision and go with it when planning.
There is a rule in success -- whatever you write down, the mind will find a way to make it happen! But don't make these puny, whimpy goals so you know they'll happen. Think about some "stretch" goals. Things that make you want to get up in the morning . . . :)
This will be a positive good road map for your business journey!Think and Grow Rich . . .