Running your own business is a highly rewarding, but often a risky endeavor. As with anything else, increasing your chances of success begins with preparation. And when it comes to transforming your dream into reality, the key to successfully jump starting your business is simple: Create a business plan that plans the work and then, work the plan.
Whether you’re just getting a new business off the ground, expanding the business you have, or purchasing a business, devote plenty of time to planning:
- Begin with a discovery process to confirm the viability of your venture.
- Do your homework.
- Uncover fundamental objectives, insights, opportunities, and risks.
- Research the market.
- Examine your offering, market conditions, trends, and the competition.
- Excavate potential problems.
- Outline your goals and objectives.
- Compile the business intelligence you need to create a solid foundation of actionable information to chart your present and future direction.
The next logical step is to develop a plan—a strategic business plan that functions as a living document to define your objectives, guide your business, and take you from Point A(where you are today) to Point Z (where you’d like to be). But remember—a strategic plan is about more than securing funding—it’s essential to jump starting your business. And once you’ve written your business plan, follow it up with an action plan that spells out your short and long-term objectives and how you’ll achieve them.
Just remember this—there is no underestimating the power of planning. As the former CEO of Octel and Lucent Technologies notes, “People usually plan their vacations more carefully than they plan their careers. I’m a compulsive planner, but there were times when I had no idea what I was doing.”
Even when you have no idea what you’re doing, developing, and implementing a plan improves your chances of achieving your goals. This article outlines the fundamental components of crafting a strategic plan to take your business to the next level.
What is a strategic plan?
Strategic planning is the process by which the key stakeholders (you and your partners) in an organization envision its future and develop the procedures and operations that will enable you to achieve that vision.
A strategic business plan serves two purposes. First it’s an internal document that defines your goals, strategies, and tactics. Second, it’s a tool for raising capital. However, you need a plan, whether you’re looking for capital or not. Without a plan you won’t know where you’re going and you have no way to benchmark or track your progress.
With a strategic plan you have a road map that enables you to look ahead, allocate resources, focus on key points, and prepare for problems and opportunities.
A well-articulated strategic business plan clearly outlines your vision, goals, priorities, strategies, products, services, and financing needs. It also provides relevant information about your company, your management team, and short- and long-term objectives. Highlighting both the positive and negative aspects of your business opportunity, your strategic plan should look ahead from three to five years.
How do I write a business plan?
As they say, there’s more than one way to skin a cat. Likewise, there’s more than one way to write a business plan. Formats, outlines, and lengths vary. But they all tend to share a generally accepted format and certain standard components.
Your plan must be clearly written, logically organized, and convincingly worded. It should target a specific audience. It should outline the details of financing, competition, strengths, weaknesses, and forecasted financial performance.
As a rule of thumb, when writing your plan, include the following components:
- Cover letter—writes a cover letter to introduce you and your business plan to your audience.
- Title page—include a title page that details the content of your plan, your name, address, phone number, names and positions of the executive team, date and contact information.
- Table of contents—add a table of contents to make it easy for readers to find information.
- Statement of purpose—includes a clearly stated explanation of your company’s goals and how you’ll achieve them. For example, your statement of purpose may be “to provide quality, reliable landscaping services for less in the Phoenix metropolitan area”. Describe your value proposition, whether it’s price, convenience, service or another attribute, how much capital you’ll need, and how you’ll repay it.
- Executive summary—this is the most important part of your business plan. Include a brief summary that highlights the major points of your plan. Provide background on your business, the market, your value proposition, key team members, projected ROI (Return on Investment), internal rate of return, and current and potential risks.
- Market information—describe your target market(s). Substantiate statements with facts and supporting detail. Include market research on initial and future markets, key market segments, past growth rates, anticipated trends, and changes.
- Company—describe your company, its type, history, legal structure, industry, market, principals, and revenue size and growth rate.
- Product/service description—describe your offering, relevant business benefits, stage of development, how your product/services will satisfy a real business need and enable you to compete.
- Management team—include detailed information on the core members of your team—the people who will run the company, as well as senior partners, attorneys, financial and business advisors. Include names, titles, experience, skills, responsibilities, and compensation.
- Potential risk factors—include an assessment of the risks facing the company. Describe the worst-case scenario and anything that could go wrong today and in the future. Offer strategies for overcoming risk.
- Execution/action plan—describe how you’ll translate your business plan into actionable results down to the finest detail. Describe how you will obtain licenses to do business, open an establishment, get products on the shelf, hire employees, and forge partnerships. Describe production schedules, delivery processes, and customer service policies in order to set operational benchmarks to measure progress.
- Financial information—Include a section that projects future revenues and profits three to five years out. Base this information on best-case, worst–case and most likely-case scenarios. Summarize financial data like cash flow, income statements, balance sheets, banking relationships, terms, and rates of loans, financing plans and working capital requirements.
- Legal preparation—includes corporate bylaws, patents, and trademarks, licenses to do business, employment agreements, and customer contracts. Anticipate the legal and documentary setup your business will require. Writing a business plan can seem like a daunting task. However, there are many resources available to help you prepare a sound plan. You can find books in your local bookstore, software programs and templates online and in local computer/software stores or you can work with a consulting firm, a nearby Small Business Development Center, or a local business school.
No time like the present to start to plan your work and work your plan. Happy planning…