The Essential Components to a Good Business Plan
Friday, February 28, 2014
Every business needs a plan, and this is never truer than at the very start of a business’s life. A plan will help document what the business does, its purpose, and how it will generate revenue.
Without that, as a business owner, you can find yourself a long way down the path of running your business without the basics established. Many a business owner wishes they could go back in time and start over, this time with a better business plan.
But without a TARDIS, it’s going to be hard to go back in time and undo problems that arise after your business has already begun. And, as far as we know, only the Doctor has access to a time-travelling police box.
So to make up for the rarity of time travelling machines, creating a business plan at the outset of your business is the only viable option.
Even if your business is established, redeveloping a strong business plan now is vital if you want to take it to the next level.
Getting your Business Plan Started
The templates and guides are available in Word format, so if it’s more your style to work from your laptop, try these. If you’re on the go or travelling, using a mobile app may be valuable. This way, you can capture your ideas and thoughts while out and about.
Writing an Executive Summary
The first section of a business plan is an introduction to your company that also acknowledges its customers. Here you will briefly summarize how your business will be successful.
Keep this section short but give it super strength.
Anyone in your business support network (Lawyer, Accountants, Advisors) need to be able to read this summary and quickly understand the company and the direction it is heading.
Developing a Company Description
Some companies misunderstand this part of putting together a business plan. Every company needs a solid description or pitch. It is fundamental to communicating what the company does in a very short, sharp way.
The company description or pitch should focus on explaining what the company does. This can be harder than you think – especially when trying to explain it to a new customer or, to people who do not work in your area of expertise.
The company description needs to be succinct and self-explanatory. If you get this right, it will become an essential part of your business. It should be able to be recited by all team members, it should be used in sales and marketing materials – it should capture the very essence of your business.
How do you do all of this? Watch this video and follow the steps. This is one of the best processes I’ve ever seen for developing a company pitch or description.
It’s called the Gaddie Pitch. It will show you how to create a pitch that explains your business, gets more leads and perfectly describes what your business does.
Doing some Market Analysis
The secret to success is to know your market – know who they are, what they want, what their pain points are, and how your business will ease that pain.
Do market research with your intended customers, search for evidence online that may support your ideas about how to reach this market.
By understanding your market and ensuring your offering matches its needs, you will validate the strategy of the company.
Include the results that matter in the business plan. This way, if someone is reading it they will understand how you reached the conclusions you have about the market. But also keep the detailed results in separate documentation. This will be handy when reviewing your business plan to see what has changed over time in your market.
Understanding Organisation & Management
You need to establish who the owners of the company are, and how everyone fits into its organisational structure. Include profiles of management team members and other essential personnel to explain their skills, experience and role within the company. This section is aimed at proving your team is aptly qualified to handle the tasks at hand.
Identifying the skills, experience and roles that are covered within the company will also help identify gaps that may need addressing in order to grow the company.
Defining your Products or Services
This section of your business plan lists not only the products or services you offer, but also states the benefits they bring to your customers.
Don’t forget to include relevant Intellectual Property (IP) here. Intellectual Property refers to the ideas and knowledge that you or your business has created. Basically, IP coversanything that is intangible – it’s not about products or things you can physically touch. Intangible business assets may include things like music, words, phrases, symbols, diagrams, discoveries, and inventions.
Marketing & Sales
Here, you’ll give a summary of your marketing strategy you plan to use to promote the business. A detailed market plan should be developed (link to previous Marketing Plan article).
Also include within this section sales projections based on the opportunities in the pipeline, their value and when they are expected to close. Segment the sales projections by their channel. That is, have sales projections based on the different channels the business uses to reach the market. A channel is how a company interacts with its market; this may include a store, a call centre, sales team, affiliate partners or online channel.
This will allow you to see which sales channel is working and which may need assistance or, a change in strategy. If your business has not yet launched, identify the channels you plan to use and how you plan to use them to drive business growth. This way, when you come to review your plan, you will have a baseline starting point to review the performance of each channel.
A regenerating business plan
Every time the Doctor regenerates, so does his TARDIS. Without his TARDIS, he would be lost and trapped in a time where he does not belong.
This isn’t too dissimilar from a business plan, either. A business plan should regenerate as the business evolves over time. With every change in the business, the business plan should be revised and adapted to suit the new market conditions.
Ensure that you take the time regularly to review and tweak your business plan, and think through what really matters to the direction of your business.
Armed with a solid business plan, it will be easier to be decisive about opportunities and obstacles that your business may face. The business plan will remind you, and the rest of your team, of the ‘big idea’ that made you start your business in the first place.
In other words, you’ll be in command of your future, kind of like the Doctor himself.
Only for you, no TARDIS is required.