How to Write and Manage an Effective Business Plan
Posted by Guest Author on July 9, 2012 in Business Management [ 0 Comments ]
If you are looking to start a business, or even have a business question about growth or challenge, one of the first questions any counselor, mentor or advisor will ask you is, “Do you have a business plan?” It’s not because they enjoy a good read, or are stalling for time. They want to see your business roadmap to help you along your path to success.
Your business plan is your roadmap that, after every step of execution, will take you one step closer to validating and enhancing your vision. That being said, your business plan should not be a one-and-done document, written once and never looked at again. Nor should it be so rigid that it can’t adapt to changes in the market, a new audience, or change in costs.
In order to write an effective business plan, you need to have a solid understanding (and be able to write and talk about) the different components:
7 Components of Business Plans
1. Executive Summary
This is basically a super-compressed version of your complete business plans. It provides you with a quick overview of each section of your plan, helping the reader to understand your objectives as it relates to finances, partnerships, product, etc. It is important to keep this section clear, concise and to the point – people can read the rest of the plan for the details.
2. Company Background
This is a description of your business, how it came to be, where it is today, and where it will go. Explain how you came up with the idea and your vision to be successful. Share about yourself and your own background. You should also include the facts about ownerships, current business position, and history. Describe Management, Organization and Ownership Including management/principals, board, organizational structure and professional consultants.
3. Products & Services
Describe your products and/or services in detail. Include competitive analysis/comparison, research and development, suppliers and inventory, and delivery.
4. Industry, Competition and Market
Be specific about the industry you are in, who your competitors are, and what your niche is. Define why you believe your products and/or services are in this niche. Include the industry definition market size, market growth and customer profile.
5. Marketing Plan
Perhaps one of the most challenging parts of business operations is marketing and selling is tough. This part of your business plan helps you to understand, plan and connect with your target market. This is what will help you implement your marketing and email marketing strategy. Determine specific goals and the time frame in which you want to achieve them. Decide what tools can best help you meet your goals and how they will be used. These can include the Internet, newsletters, direct mail, special events, trade shows, advertising, and more.
6. Goals and Strategies
Specify long-term business goals, milestones and strategies you will apply to achieve your goals. Include metrics and measurement tactics, the keys to success and any potential limiting factors that may keep you from reaching your goals.
7. Financial Assumptions and Projections
This section is the first section that most investors, banks and financial institutions review after reading the executive summary. Include items such as projected income, operating expenses, taxes, assets, liabilities, equity, payment terms, debts, line of credit, balance sheet, profit and loss, cash plan and more. Know your industry’s average financial performance statistics, you can use the North American Industry Classification System (NAICS) code for your business to see how your projections measure up against the rest of the industry.
This may seem daunting, but taking the time to write and update your business plan is key to understanding the financial health of your business and any potential growth opportunities. The value of the business plan comes from the active engagement when forced to think about planning. It allows you to work “on” your business and not “in” your business.
Don’t worry – you don’t have to do this from scratch. Take a look at SCORE’s free business plan templates to help you get started – regardless of what stage your business is at. Once you have a working draft, contact a business expert for FREE at www.score.org/mentors to review it together, and ask them any questions you may have. Get started today!
Photo Credit: businessplanexperts.net
Bridget Weston Pollack is the director of Marketing & Communications at the SCORE Association. In this role, Bridget is responsible for all branding, marketing, PR, and communication efforts. She focuses on implementing marketing plans and strategies for the organization to facilitate the growth of SCORE’s mentoring and trainings services. Prior experience includes Marketing Manager at Mid-Atlantic Control Systems, a small business in the commercial low voltage industry and Marketing Coordinator at Temple University Health Systems.