10.09-10.10 Business Plan

What is a Business Plan?

1. It serves as a guidebook, outlining the goals and objectives of a company, and providing a roadmap for how to reach them.
2. It services to identify the operational/financial and marketing elements to be addressed. It provides a framework to be referenced so the company can assess its progress toward the goals.
3. It encapsulates the trajectory of a company, from its products or services to its revenue-generating capabilities, its management structure and financing, to its operational model.
4. It is a tool that serves the company’s energies in the right direction and sets the course for long-term success. It is the KEY to unlock a company’s success, allowing it to reach its objectives.

Who needs a Business Plan?

1. It is essential to any business, no matter how small or large.
2. It is a source of guidance, stability, and direction during the uncertain & unpredictable early stages of a company.
3. It can be a powerful tool in helping to make decisions, providing focus and clarity to the company’s goals, approach to growth on rapid developments, and other challenges of companies.

Why Business Plan Important?

1. Strategic Planning: writing out your plan is a crucial endeavor to crystallize your ideas and gain a better overview of your business. It is essential for Comprehending the breadth of your project, Pinpointing the financial demands, amount of energy/funds/resources indispensable for launching your venture.
2. Evaluating Ideas: with a business plan, you can understand which plan has the highest chance of success and dedicate your time and energy. It is like having a guide to point you in the right direction, you can confidently move forward and make the most of your time and energy.
3. Research: researching information is KEY when writing a biz plan, it enables you to make more strategic decisions and informed decisions. Knowing customers’ needs/desires/trends can help you create a plan that sets you apart from the competition. Researching your competitors will give you insight into their marketing strategies, product offerings, and pricing.
4. Recruiting: The business plan offers new hires an overview of the company and a glimpse into the future, giving potential employees insight into the culture of the company. It sparks a sense of hope and optimism and inspires confidence in the team’s ability to overcome obstacles.
5. Competitions: with the right research and preparation, a business plan competition could be the KEY to unlocking your business potential.

Types of Business Plans

Traditional Business Plan: it is the cornerstone of success, the blueprint for achieving financial freedom and growth. It provides the background details needed to demonstrate the company’s potential and gain the confidence of investors, outlining the scope and goals of the business and the steps to achieve them.

Lean Business Plan: It is a condensed/smaller version of a traditional plan, it is the equivalent of a summary, covering the most integral of the business model concisely. It provides guidance for the future and demands attention to the most essential elements without stuck in the details.

Nonprofit Business Plan: the plan outlines the financials and operations of the venture, but it also describes the positive effects it aims to have. Through the plan, nonprofits can demonstrate the real-world value they can offer and the difference they can make.

Benefits of a Perfect Business Plan

1. See the whole business: with a business plan, you are creating a well-rounded and comprehensive understanding of your business.
2. Strategic Focus: a perfect business plan allows startups and small biz to hone in on their unique identities, target markets, and products/services. It helps them to focus on their strengths, as well as on the needs and wants of their target audiences.
3. Set Priorities: a good business plan helps you prioritize by helping you identify what matters most. It also ensures that you don’t waste your time on any unnecessary tasks.
4. Manage Change: a good business plan is like having a GPS in your car, with a good planning process, you can make changes to your plan as planned to ensure that you reach your goal.
5. Develop Accountability: by conducting plan reviews and holding employees accountable for their tasks and accomplishments, it serves as a guidepost to identify discrepancies for improvement.
6. Manage Cash: A business plan like a financial roadmap, provides the framework for cash flow management, it helps you plan for the future by forecasting sales, expenses, and investments.
7. Strategic Alignment: a good plan is the foundation for success by creating clear goals and objectives, and identifying the right tactics to achieve them. It aids in making sure that all parties engaged in the company are on the same page and working toward the same goal.
8. Milestones: they act as a sort of compass, helping you stay on track and giving you the motivation to keep going. Milestones in a business plan are like a lighthouse for a ship, they provide a clear path to success and act as a powerful motivator to keep you focused on the goal.
9. Metrics: a good plan provides direct insight into the performance of your business and helps create realistic goals for your company. Putting performance indicators & numbers into the plan, and tracking them monthly, allows for more accurate tracking and measurement of data. The data can include sales/expenses/calls/web traffic/conversion rates/returns, etc. By tracking the key metrics, you can effectively monitor business progress and make better decisions to ensure success.
10. Realistic Regular Reminders to keep on track: it keeps you focused on the same long-term goals as opposed to being distracted by more short-term concerns that may arise. With reminders, you can continue to evaluate performance, track progress, and adapt accordingly. It ensures you are reaching your goals practically and realistically with a detailed plan that you can refer to as needed.

What should you do before you write your business plan?

1. Assess your goals, resources, and objectives and answer the following questions.
2. What is my Goal? It should be achievable and measurable, it gives you a target to aim for when creating your plan.
3. What resources do I have to achieve this goal? It means your available resources include start-up capital, equipment, skills, and experience.
4. What kind of financial factors should you consider? Amount of capital, profit on investment, solicit document to obtain investment or recruit workers.
5. Can you devote time and resources to complete your project?

Tutorial to Create a Perfect Business Plan

Executive Summary, Organization and Management, Funding Request, Company Description, Service or Product Line, Financial Projections, Market Analysis, Sales and Marketing, Appendix

Create Title Page and Contents: a business plan is a gateway to the success of a venture, and the key to making it stand out is a well-crafted PPT binder. It should be professional and organized, with a Clear Cover to Draw Attention. The cover should include the business name, names of principals, and contact info such as address, phone, email, web address, and date. The front should be easy to read, and a logo, and table of contents should follow the executive summary.

Draft an Executive Summary

It is like a summary of a business plan, condensing the key points into a short and powerful summary. It includes the idea behind the business, the cost and financing requested, the expected return on investment and time frame, the risk level, market position, management team, product and competitive strategies, a marketing plan, and an exit strategy.

1. Business Concept: overview of your business, outlining what it is, how it works, and why it is unique
2. Goals and Vision: a journey of purpose and direction that will guide your company toward long-term success. It should detail the ambition, intent, and purpose of your venture to realize your desired future
3. Product Description and Differentiation: a concise yet compelling overview of your product’s features, describing how they are distinct from competitor’s offerings and how they meet customer needs
4. Target Market: who you’re aiming to sell to, their needs and preferences, where to find them, provide the insight into how your business can satisfy its needs
5. Marketing Strategy: how to get leads, reach its target audience, optimize conversions, and ultimately build Brand Loyalty to grow the business
6. Current Financial Status: income, expenses, cash flow, assets and liabilities, pertinent financial info
7. Projected Financial Status: a snapshot of what you anticipate your business will look like financially in the future. Outline potential cash flow, revenue, expenses, and profits over the short and long terms. Give a realistic outlook on where your business should be in the next few years
8. The Asks: what does your business need, the expected outcomes, potential risks, resources, and timeline needed to achieve the desired result
9. The Team: provide a snapshot of the team’s qualifications and experience, covering who is driving the business forward. It details the key players, their roles and responsibilities, and why they are the perfect choice for the job.

Describe Your Company

The business description is an important part of your business plan

1. A holistic overview of industry, market & business, including current outlook and future potential. Use data and trusted sources to back up your analysis. Explain trends that may affect the industry, such as competitors, tech advancements, and changes in customer preferences that may affect your business
2. Starting with the structure of a business (retail/service/wholesale?) is key to a good description, explain distribution channels and you you plan to support sales. Cover your products/services, explaining how they differ from competitors and how they provide a competitive advantage
3. Fundraising, its is about Enticing investors with the promise of increased profits. It’s important to demonstrate the efficiency and effectiveness of your business, as well as the impact of any new investments. Show investors how the business is structured, who’s involved, and what makes it unique. Point out your advantages of location, service, or product, and how your business will benefit from the new investments (increasing efficiency or workflow)
4. Prove that you’ve done your research and have the support of industry professionals. Show your investors the Potential Success.

Market Analysis

Market size, market share, market segments, customer mix, competition influence, competitors, spending group

How big is your potential market? What is the reach of your product? How many people could benefit from it?

1. Understand your ideal customer profile: utilizing government data can provide an overview of the current number of individuals within the desired age range. It is important to examine the anticipated shifts in the size of the target age group in the future.
2. Research relevant industry trends and trajectories: taking time to analyze the data and understand the potential client’s buying habits will be essential to success.
3. Make informed guesses: think ahead and consider all the factors that could affect the outcome. The more quality information, the better you will get a more accurate estimation.
4. SWOT analysis: strengths (strong customer base, innovative products, experienced staff, any other factors that give the business an edge) and weaknesses (outdated technology, inefficient process, a lack of market knowledge) are the internal factors of a company. Opportunities (market or industry shifts that are used to create new products or services) and threats (external factors that affect the success of the business) are the external factors that should be considered.
5. Strength: Things your company does well, Quality that separates you from your competitors, Internal resources such as skilled/knowledgeable staff, Tangible assets such as IP, capital, proprietary technologies, etc.
6. Weakness: Things your company lacks, Things your competitor does better than you, Resource limitations, Unclear unique selling propositions
7. Opportunities: Understand markets for specific products, Few competitors in your area, Emerging need for your products and services, Press/Media coverage of your company
8. Threats: Emerging competitors, Changing regulatory environment, Negative press/media coverage, Changing customer attitudes toward your company

Competitive Analysis

Direct and indirect competitors, with a short and long-term outlook (Quality, Pricing, Place, Promotion, Positioning, Reputation, People, Partnership)

Differentiate Business in Three Ways:

1. Cost Leadership: it is the strategy of offering goods or services at a lower price than the majority of your competitors while STILL marking a profit.
2. Differentiation: it is vital in any industry, and sets companies apart from competition. It is all about being creative, finding ways to stand out, and making products/services better than competitors.
3. Segmentation: it is a strategy used by businesses to focus on a specific target market and gain traction with a smaller audience. Segmentation entails a deep understanding of the target market and their needs so that products/services can be tailored to meet exact requirements.

Outline the Management and Organization

It is vital for readers to comprehend the structure, and informed perspective on the inner workings of your organization. Organization plan: organizational structure, employment, plan, job plan, task catalog, workplace catalog, etc.

List your Products and Services

They are the lifeblood of your company. It is important to provide a section of your business plan that outlines critical details about each item. Details are important.

Perform Customer Segmentation

It involves understanding and dividing customers into different groups or segments based on some shared characteristics. By doing so, companies may hone in on their ideal audience and develop more targeted campaigns. Segmentation includes:

1. Geographic: creating different groups of customers based on geographic boundaries
2. Demographic: dividing the market through different variables such as age/gender/income, etc.
3. Psychographic: grouping the target audience based on behavior, lifestyle, attitudes, and interests
4. Behavioral: focuses on specific reactions and the way customers go through their purchasing process

Define a Marketing Plan

It outlines the current decisions you have made and a future strategy for achieving success in your market. Your marketing plan should focus on How your ideas align with your customer’s needs, wants, and desires.

An effective marketing plan should include 4 key components: PRODUCT, PRICE, PLACE, AND PROMOTION.

1. Product: what you’re selling and how it is differentiated in the market
2. Price: how much does your product cost and why did you choose that pricing structure
3. Place: where you will sell your products
4. Promotion: outlines how you’ll get your product in front of your intended customers

Provide a Logistics and Operations Plan

They are the nuts and bolts of making ideas come to fruition. From allocating resources to scheduling activities, logistics, and operations plan outlines all necessary steps to bring a project or plan to life. The logistics and operations plan involves Suppliers, Production, Inventory, Shipping & fulfillment.

1. Suppliers: tracking down the right suppliers is Critical to the success of any business
2. Production: it is a key factor here, decide if you manufacture by yourself, wholesale them, drop-ship them, or a combination of them. It is important to plan ahead and estimate how long to get it.
3. Facilities: will you need a physical location or operate solely online?
4. Equipment: office furniture, computers, tools, technologies, etc.
5. Shipping and fulfillment: to ensure efficient delivery of products or services, consider choosing in-house shipment or 3rd party shipment.
6. Inventory: it is a key component of a successful plan. How much do you need? Should you have it stored in-hour or somewhere else? What is the best way to handle shipment and inventory?

Make a Financial Plan

It helps you understand your current financial state, set achievable goals, and devise a strategy to achieve them.

1. It is like a roadmap, you can identify where you are, where you’re headed, and what you need to do to get there.
2. You need to prepare an income statement, balance sheet, and cash flow statement to get a clear picture of the financial situation.
3. With a clear picture, you can set realistic financial goals both short-term and long-term, and break them down into actionable steps.
4. Create a strategy to achieve the goals, monitor the progress, and adjust the strategy regularly.

How to write a financial analysis for a business plan?

Review Business goals and Strategic plans, Prepare Profit and Loss Statements, Prepare Balance sheets, Create Financial Projections, Prepare Cash Flow Statements, and Create Sales Forecasts.

Three financial cornerstones: Income statement, Cash-flow statement, and Balance sheets

1. Income Statement: it is the backbone of a business plan and uses financial models to combine sales, expenses, and costs. It is a simple tool to determine if a business is making a profit or a loss.
2. Cash Flow Statement: it is crucial to understand how a business will meet its obligations when it needs money and how it will obtain money.
3. Balance Sheet: a snapshot that shows all the equity, assets, and liabilities of the business at a particular point in time.
4. Cash: money that is readily available for the company to use
5. Cash Sales: income from monetary transactions made directly with cash
6. Receivables: the revenues earned from customers who promise to pay at a later stage
7. Other Income: the money comes from liquidating assets, collecting interest from loans, or getting returns from investments
8. Total Income: the full picture of financial gain, it is the culmination of all cash earnings, sales transactions, what is owed to you, and other income sources
9. Material/Merchandise: they are essential for any business to succeed
10. Direct Labor: the labor force that is needed to make a product or provide a service.
11. Overhead: the umbrella term for the cost of running a business
12. Sales/Marketing: salaries, commissions, and additional costs are all part of this
13. R&D: a team of skilled minds to identify opportunities, understand the changes, and advancements in the industry, create products that push the boundaries, and explore new trends
14. General and Admin Expenses: a variety of labor costs go into G&A, such as salaries, office rental, insurance, taxes, and more. Which ensures a company’s continued operations, growth, and ability to generate a profit
15. Taxes: a major factor in a cash-flow statement, it includes income taxes, goods, and services taxes, and all taxes must be accounted for accurately
16. Capital: outline a company’s inflow and outflow of cash and provide a detailed account of the capital required to purchase equipment
17. Loan Payments: a way to keep long-term debt in check and ensure that financial liabilities are met
18. Total Expenses: a clear picture of the financial health of an organization, with each expense item representing a piece of the puzzle
19. Cash Flow: subtracting total expenses from total income to give the all-important cash flow number
20. Cumulative Cash Flow: subtract the previous period’s cash flow from the current period’s

Supporting Documents 

A fundamental piece of a business plan, it includes vital contracts, letters of reference, the business’s lease, and legal documents, providing an additional layer of detail that increases the credibility of the plan. This document can demonstrate the business’s ambition and capability, as well as any commitments and obligations, to the reader or investor.

Common Mistakes

When writing a business plan: Making a long-winded business plan, Underestimating User Acquisition, Striving to create a ‘perfect plan’, Failing to research the target market, Forgetting cash flow, Thinking a business can’t be started with a formal plan, Misunderstanding the plan’s purpose, Underestimating the competition, Leaving little room to pivot

What to do after writing a business plan?

1. Get Help: when to ask for help can be a tricky decision, and understanding what help you need can be daunting
2. Make sure it connects to your purpose: You know you have a purpose in your business. Why did you decide to start? What are your passions, and goals? When you identify this purpose and use it as your guide throughout your business journey, it can make all the difference
3. Begin to Test and Measure: it is an essential step in turning your concept into a successful business. By testing and measuring, you will understand how the different elements of your plan affect one another and how they work together to help achieve your business goals
4. Use to 80/20 Rule: it is an invaluable tool for any business looking to maximize its profit. By simply observing an unbalanced distribution of work and reward, you can make smart decisions when it comes to allocating resources. The rule is also a great way to identify areas for improvement to maximize your success and save time.
5. Learning Something New: for entrepreneurs, taking the leap into owning their own business can be daunting. They may have the necessary skills to start, but the overlooked knowledge and understanding of the other aspects of operations can be overwhelming.

Tips for Writing a Business Plan

1. Don’t be long-winded: lengthy plans are harder to follow and can be bogged down in unnecessary details, easily be forgotten and ignored
2. Show why you care: it is not just about the services/products you provide, but about how much you truly believe in them. Demonstrate why you care by letting your enthusiasm and passion for the business shine through
3. Providing Supporting Documents: these include the CVs of your team, customer personas, product demonstrations, and messaging samples
4. Reference Data: the data gives you a roadmap and a solid foundation and provides you with the evidence you need to back up your assumptions and conclusions, helps you demonstrate competence, and shows your plan is based on sound research
5. Research x 3: you need to analyze the products that your competitors offer, their prices, and their services. Research what works and what doesn’t in your specific industry, and learn from the success and failure of the business. Use this to your advantage when developing your plan.
6. Demonstrate your points of difference: standing out from the crowd is critical for success, it is important to clearly show how your solution is different. It involves highlighting why your product or service is better than competitor and how it effectively solve a problem for your target customers. Incorporate the distinction into your plan, emphasize why you are unique, how your approach is superior, and how you can solve the customer’s problem better than anyone else.
7. Be objective in your research: provide relevant, fact-based data when reporting, and make sure to share the conclusions you’ve drawn from the research
8. Know the Purpose of your plan: before researching and writing, you must be crystal clear about why you are doing this. Attract investors? Get your teams on the same page? Provide direction for your business? Clarity at the onset will save you time and energy in the long run
9. Identify your Audience: knowing your target is just as important as having a clearly defined goal
10. Avoid Jargon: it should be avoided wherever possible so that all your potential stakeholders can understand and comprehend the message
11. Don’t be afraid to change: it is important to think of your company’s growth as an ongoing exercise. Your plan should grow and develop as your business, it should be reviewed, refined, and improved as time goes on. It is necessary for success.
12. Use it: it should be actively taken into account when making decisions, as it’s been made based on careful consideration of your business goals.

A business plan is like a map pointing the way to success. It is the cornerstone of all your successes and the foundation upon which you’ll build your business. A well-thought-out plan is the key to achieving your goals and bringing your vision to fruition.