Developing The Business Plan - Part 4 of 8

Using your situational analysis and your strategy, Tim Berry discusses how to go about actually writing your business plan and introduces the standard outline points. Duration: 7:49

In Series: Business Planning Webinar

  1. Creating a Successful Business Plan - Part 1 of 8
  2. The Three Parts of Your Business Plan - Part 2 of 8
  3. Crafting Your Business Strategy - Part 3 of 8
  4. Developing The Business Plan - Part 4 of 8
  5. Doing the Numbers in Your Business Plan - Part 5 of 8
  6. The Art of Business Forecasting - Part 6 of 8
  7. The Core Value of Business Planning - Part 7 of 8
  8. Business Planning Resources - Part 8 of 8

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Transcript

The third phase is to develop the plan using the situation analysis and the strategy we've already developed. For your business plan text, stay simple. Use your own words; tell your story; explain what you're going to do. These sample paragraphs aren't really important. It's not worth reading the detail. The idea is just explain your business. You know it well. Your reader will be looking for simple facts, easy to find, easy to read. The text of the business plan should be relatively easy to do.

There's no real reason to write from beginning to end when you're doing a business plan. You're using a personal computer. You can jump around. For example, you might start with the company description because that's easier for you to write and get going. Then you might then jump to the market analysis. Both of those are situation analysis type things, so they're easier to write at this point. Then you might go down to the financial plan later because you feel you want to do the numbers first. The key is jump around to fill in what's easiest and don't get caught or constrained by having to write one thing before the other.

You don't write your plan in the same order that somebody would read it. You will want to adjust the contents of your plan to fit its business purpose. We see an example here of the plan accompanying an application for commercial credit or bank loan. That plan should include the use of funds, the repayment plan, proposed balance sheet, ownership details, and personal financial statements for each of the owners of the business. On the other hand, a plan for an investment should have a financial plan that includes an investor offering, exit strategy, use of funds, equity plans showing how the ownership is to be distributed among founders and investors, and evaluation.

And investment plans usually have more emphasis on competitive edge because this is so deeply related to how the investors are going to make money, and also market growth is much more important in an investment plan than in some others. In all cases, remember, this is your plan and it tells your story. A business plan outline doesn't have to conform to anybody's magic recipe. It has to serve your business needs. Let's look at some standard outline points, beginning not with the first but the second.

The company description will normally include history, ownership, your start-up plan if you're a start-up company, start-up costs if you're a start-up company. Otherwise, it would have past performance and then location and facilities. Your description of what you sell whether it's product or services is going to include benefits and features and sourcing and in some cases, technology. Your fourth chapter will explain your market, including the target market, market growth, segmentations, market trends, market forecast.

Then comes, normally, strategy and implementation, which is where you lay out your marketing strategy; your sales strategy; sales forecast; milestones, which are very important. Those are dates, deadlines, budgets, who's responsible, and activities that will be part of the business plan. Your management team chapter explains your organization strategy, your key team members, what gaps you might have in the business, which presumably you're trying to fill, and your personnel plan with projected numbers for personnel costs for the time of your plan.

The financial plan will have funding strategy, profit and loss, cash flow, and balance sheet at a minimum. And finally, notice that I explained this one last although it appears first in the plan because you often write it last. Your executive summary will outline mission, vision, objectives, and keys to success. Some people ask between mission and vision. Mission is what your business is doing for its customers, for its employees, and for its owners. Vision on the other hand is what your company will be doing, where it will be, and what it will look like three to five years from now, where you want to go.

Objectives should be specific, concrete, and measurable in all cases so that you can track later whether or not you've succeeded in fulfilling those objects. And keys to success we've mentioned in our situation analysis discussion. Focus on the main points that determine success for your business. Remember always, the business plan is your plan for your business, so you tailor that plan to what you need. For example, you may be doing a business plan for internal use, your annual plan, operational plan. Then you don't need to include a company description if nobody outside the company is going to read the plan.

Same thing with management team. Fit your situation. You may not have to include backgrounds of the key management team members if the plan is for internal use only. Always, this outline is to be modified and tailored so that this plan is exactly what your business requires. One very important point for making a business plan useful too often overlooked is that the plan should be specific. You want to actually list activities with start dates and end dates. Who's responsible? What's the budget? What should the outcomes be of these activities and how are they going to be measured? That's critical for a useful business plan.

Another very important point is the objectives in your plan should be measurable. The most obvious is dollars in sales, dollars in profits, percentage change, and gross margin sales or profits. But beyond that, whatever you're doing, whatever is in your plan should be measured somehow, and the measurement should be specified. Calls, presentations, complaints, transaction, contacts, messages, volume. There are many ways to measure the non-dollar-specific portions of the plan. Without measurement, you won't be able to track and manage implementation, which is what the plan is really about.

The core of a good plan is the milestones, a collection of activities with start date and end date and budget, person responsible, department responsible. These milestones make a plan real. It's not just blue sky strategy. It's exactly what's going to happen when. And of course, the milestones give you a way to manage and implement that plan, give your course corrections, review the plan results, and turn that plan into a management tool.


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