NFIB's Guide to Business Planning

Business Planning QUESTION: Does everyone need a plan for his or her business? ANSWER: Absolutely. If you fail to plan, you plan to fail! I have been in meetings with my client and his banker. As soon as the banker asks for a “Business Plan”, I can, quite literally, see my client's eyes roll back. In the car, going back to his office, the terror in his eyes is very real!
Why are small business operators so afraid to tackle the job of planning? You wouldn't build a house without a plan! What makes you think you can build a business without a plan? The problem, of course, is that small business operators typically don't understand how to write a plan. They plan in their head, but putting the plan on paper is a challenge. NFIB can help! How NOT to Create a Business Plan Templates... Software automation... Cheap service providers... They are everywhere today. Everyone seems obsessed with the idea that technology makes everything cheap and easy. Just buy a template, fill in some blanks.... presto! Plan! How hard can it be? The problem is that those cheap templated plans are not YOUR business plans. They don't guide and direct the growth of YOUR enterprise. They don't reflect YOUR challenges and action lists. You might have inserted your profit and loss figures and projections, and your name and address, but a useful plan should be totally customised to YOUR business, YOUR personality, and YOUR goals. It needs to describe your marketplace and your customer profile and your competitors. It needs to map out your strengths and weaknesses and the opportunities and risks as you see them. It need not be a huge and onerous task, but a little time invested in producing a quality plan will pay dividends. It will dramatically increase your chances of business success. That's why your bank manager wants to see a plan! A good template can help. There is software available to make parts of the planning process simpler. But a quality plan requires an investment of YOUR time and effort, and possibly some cash invested to secure help from one or more capable service providers to help you. Getting Ready to Write Your Plan Physically putting a plan together requires you to translate your thoughts about how you are going to run your business (and how it will perform) into a format that is dictated, in large part, by the industry you are in and the expectations of your audience. While most plans share a similar structure and contain similar information, the content of your plan will be distinguished by those characteristics that are unique to your operation. Just as each person’s resume differs because it reflects the particular life experiences of that individual, each plan will differ. But the format makes it instantly recognizable. The Big Picture A business plan has a number of major elements or sections. Each of these serves a particular purpose in the overall direction of your firm and plan. The list below identifies and briefly describes each of the documents or document categories that will make up your plan. They are presented in the order in which they typically appear. Don’t feel constrained to follow this exact format if another way makes more sense due to the nature of your firm. For example, the financial portion of a plan for an organization with a 20-year track record is much more important (and comprehensive) than the financial portion of a startup’s plan. The relative mix of product and services to be offered can also affect the content of a plan. Issues relating to inventory, production, storage, etc., become less significant as the product/service mix moves toward a purely service model. For example, a organization that relies on the services of professional employees would provide substantial details about attracting, acquiring and retaining these key employees. In any event, it pays to at least mention all the major issues listed below, even the ones that are relatively less significant to your particular idea. Someone who is reading your plan will be more confident about your assessment of the situation if you identify such issues and resolve them, however brief a section might be. For example, if you plan to work alone and perform all services personally, you might note that you anticipate no need to hire employees or engage independent contractors if you succeed at the levels projected in the plan. However, if you plan to show growth beyond your personal capacity, then take the time to explain how you plan to cope with the growth and recruiting the talent you will need. Remember, be careful not to raise any questions in the minds of your audience that are not resolved somewhere within the plan document. Sections of a Typical Plan There is no requirement that these items need to be created or worked on in the order shown. In fact, you will likely find yourself having to switch focus to consider the impact that one part of the plan has on another. Conventional wisdom has it that the executive summary, which is preceded only by the cover sheet and table of contents, should be prepared after the rest of the plan is complete. A general outline for a plan is: Executive Summary: usually written last. Summarizes the plan and provides the reader with an overview. Business Description: describe the company, trade name, vision, mission, ethics, goals and legal structure. Products and Services: outputs, sales mix, costs and profits, expansion of services and product lines and product/service life cycle. Industry Analysis: trends, demand outlook, barriers to entry and growth, impact of innovation and technology, impact of economy, government and financial health of the industry. Market Analysis: trends, size, competition analysis, projected market share and decisions on products and services. Marketing Strategy: location, distribution channels, sales, pricing, tools: networking, circles of influence, internet, brochures, sales systems and database. Management, Operations & Organization: organizational structure, responsibilities and support (professional services). Implementation Plan: staff, staffing issues, systems, communication, bookkeeping, equipment, software, office, furniture, fixtures, land and buildings, research & development. Financial Plan: start up costs, cash flow sensitivity analysis, cash flow and expenses, etc. Contingency Plan: identify risks (liability, contract termination, etc.) and plan to reduce or eliminate identified risks or threats. Your plans for dealing with accidents, emergencies, and disasters. The SWOT Business operators - especially those starting out - typically get excited about their strengths and the opportunities they see for their business. When it comes to weaknesses and threats, however, they suddenly lose sight of reality and claim there are none! Believe it or not, your ability to identify weaknesses and threats is one of the most important keys to business success! Be realistic. Be thorough. Be honest!
Questions for Entrepreneurs who Genuinely want to Succeed...
Do you have a good quality business plan, and a schedule to update it regularly? Do you have a soundly developed brand and brand building strategy? Have you built a Messaging Framework for your business? Have you implemented a good quality, easy to use CRM (Customer Relationship Management) System? How good is your filing and date management system?