Last month we discussed the steps one needed to take in setting up a business from scratch. This month we delve into a specific part of that plan which forms the basis of the path ahead, Your Business Plan!!
The business plan is a detailed written description of your business's future, it tells what you plan to do and how you plan to do it. If you scribble down a paragraph on the back of matchbox describing your business idea and process, you've written a plan, or at least, inkling’s of a plan.
Business plans are strategic. You start here, today, with certain resources and abilities, and you want to be there, a place set in the future (usually three to five years ahead) at which time your business will have a different set of resources and abilities as well as greater profits and more assets. Your plan shows how you will get from here to there.
The greatest mistake that many businesses make, is that they don’t review the plan regularly to see how they’re performing to the plan, and they don’t make changes within the business to support the plan, or change the plan after due discussions and consensus that the plan needs to be amended.
Another big mistake businesses make is that once they reach that place in time where the plan matures and realizes its full potential, they don’t set a new plan, ultimately leaving them exposed. A Saying coined, says, “If you don’t know where you’re are going, how will you know when you get there”, and another astonishingly accurate saying says, “A goal without a plan, is just a wish”
This now leaves us with the points that need to be included in a Business Plan. Consideration must be given to the fact that in part many businesses are different, but the planning process is very similar. Each point below is an important part of a Business plan and each description vaguely describes what should be in that part of the plan. Its each person’s responsibility to extensively research and justify and populate that part of the plan with as much relative information as possible, as that will form the basis of decisions, other plans and goals that will be set to achieve in the future.
1. Executive Summary:
The executive summary is an overview of the key points contained in your business plan and is often considered the most important section. It is usually the first section that a potential investor or lender will read, and may be the only section to be read if it is not prepared properly
2. Business Strategy:
This section should give readers a very brief overview of your business — where you've been, where you are now, and where you're going in the future. It should also include elements from of your current position, your competitive advantage and a growth plan.
3. Marketing Strategy:
Describe the activities you will use to promote and sell your product or service. You should touch on each of the "four Ps" of the marketing mix: Product, Price, Place, Promotion. Your marketing strategy should also include information about your budget, Ideal Customers and lots of Market Research.
4. Operational Plan:
Your business plan should outline your current operational requirements as well as your projected requirements for the next 3 to 5 years. Your inventory management and accounting systems should have the ability to produce up-to-date reports. Include things like: Day to Day Operations, Facility Requirements, Information Systems, IT needs, Manuals, Accounting policies etc.
5. Strengths, Weaknesses, Opportunities, Threats (SWOT):
Completing a SWOT analysis is vital part of business planning. A properly prepared SWOT analysis shows investors that you have realistically and objectively considered these elements, identified risks, and put mitigations in place to avert the risks.
Most Banks and B lenders understand that businesses will encounter challenges at some point, and want to know how you will deal with these challenges. Remember that overestimating strengths and opportunities or ignoring potential problems will undermine your credibility. This is another area of planning that requires constant review.
6. HR Plan:
This section addresses how you plan to manage your employees and human resources processes. You should also discuss your short-term and long-term plans for employee recruitment, training, and retention. If appropriate, discuss any advisors, mentors, consultants that offer you support.
Never underestimate the importance of this people in your plan. Investors want to know that you and your employees have the necessary balance of skills, drive and experience to enable your business to succeed. It is also advisable to outline any recruitment or training plans, including timelines and costs. More often these days investors also want to know that you are establishing an ethical business that
looks after people, promotes their growth and wellbeing.
7. Social Responsibility Strategy:
Implementing good environmental and social practices is good business — it can give you a competitive advantage and help foster goodwill toward your business. In this section you should discuss ways in which your business honours ethical values and respects people, your community, and the environment. This section speaks directly to modern business principles that include a harsh look at the “Triple Bottom Line”, where investors and lenders not only consider the profitability of a business but also
their value in terms of social and environmental commitments.
8. E - Business Strategy:
Effectively using information technology is an important part of managing a business. In this section, you should outline how you plan to use internet technologies to reach customers, manage your business, and reduce costs. You should include information about: Online activities, Website development, IT requirements, consulting relationships, 3PL and 4PL integrations etc. with existing ERP systems.
9. Financial Plan, Forecasting & Other information:
This section of your business plan essentially turns your plans into numbers. As part of any business plan, you will need to provide financial projections for your business. Your forecasts should run for the next 3 to 5 years. However, the first 12 months' forecasts should have the most detail, including assumptions both in terms of costs and revenues, so investors can clearly see the thinking behind your numbers.
When putting plans to paper, remember the importance of thinking objectively. Analyzing a venture from three points of view — optimistic, pessimistic, and realistic, as these will give you a realisitc idea of what to expect as you move forward, and what you may encounter along the way.
Financial forecasts should include: Cash Flow Statements, P&L (profit & Loss) forecasts, and Income (Sales) forecasts.
Forecasts should cover a range of scenarios, and should include contingency plans you've developed to mitigate any risks. You can also review benchmarks and averages for your type of business and discuss your business' position.
10. Business Exit Strategy:
When the time comes, how will you exit your business? Good planning will give you the opportunity to consider all of your options, including strategies that may take time to implement. For example, if you plan on passing your business on to your children, you'll need sufficient time to train them and integrate them into your business, or a succession plan on who you will train and mentor in the business to take over the reigns when you exit.
Once you considered your options and set objectives, it's time to add an exit strategy to your business plan. Although you may not be exiting your business for some time, a solid strategy will be a roadmap to your future goals.
11. Additional Tips:
Once you are done creating your business plan, you need to review it thoroughly to check the grammar and spelling. Limit the amount of techno jargon that could only lead to confuse someone who doesn’t understand your business. Ask others to review it for you as a fresh pair of eyes sees things you would not and ask for constructive criticism. If need be, ask for advice from lawyers, Accountants, tax experts, business consultants etc. that all the required skills to help you professionally.
The most important thing to remember when creating a business plan, is that it represents your business, so you want that representation to be as professional and accurate as possible.
The above article of enabling Writing a Business Plan” is a summary in the process of business development which will be elaborated on in future articles. Next month’s article will cover the topic of “Developing a Business Plan”
For more information or a consultation with ICL Rezolve on how to help you start, develop or grow an existing business please book an appointment online at www.iclrezolve.ca or +1 (833) 739-6583