How to Write a Business Plan Part III

Feel free to share...

Facebook

Twitter

Google

Linkedin

Pinterest

Reddit

Email

Print

How to write a business plan

In Part I and Part II of this blog series on how to write a business plan, I have walked you through clarifying the business idea, marketing analysis, defining the business opportunity and customer profile, finding your niche and developing a sales plan and marketing budget.

Now, I want you to define how you are going to run your business, and develop a budget and sales projections.  This is where you go from dreamer to business owner folks! It’s about dollars and cents. If your business is not designed to make money, you have an expensive hobby.

The Operations Plan This section explains how you plan to operate the business.  Managing your enterprise is serious work.  As the boss, you need to orchestrate how the business will run while keeping costs down and maximizing profits. You need to have a clear process for delivery, handling customer complaints, determining how many employees you need, taking mark downs and so much more. If you are manufacturing a product, it is even more important to track all the raw materials, processes, finished goods, and shipped goods and how to work your way through the many emergencies, large and small. Your business plan should include as much detail as you can so anyone can see how you expect things to work.

Running your business can be as simple as going to a big box retailer and stocking up on more hot dogs, rolls, condiments, napkins, soda, etc. for that week’s business or as complicated as having shirts made by a foreign manufacturer, getting them through customs, price-tagged for sale, stocked in the store, scheduling help, and so much more. Other issues include location, business permits, inventory management, power and communications needs, insurance requirements, additional construction needs, and zoning requirements. Any of these areas can stop you from opening your doors and should be addressed as a detailed part of your plan. Personnel issues like pay, skills set needed, training, and total headcount should also be touched on, as they have a direct impact on your operations plan and your financial projections.

If you have the time, I strongly recommend creating a process flow worksheet that outlines every activity from receipt of raw materials to final customer sale.

Operations, as you can see, is all about the details some of which could keep you from opening your business. A page on your business operation will get you thinking about what it will take to get your business up and running

• What are going to be your top priorities?
• How will you measure the results of your processes?
• What is your plan for sources and uses of cash?
• How will you manage growth proactively?

Your Management Team  One of the essential ingredients for a successful small business is the experience the business owner brings to the table. Highlighting your expertise and background is critical to giving your business credibility, particularly in the early years. My first business was a multimedia production company, my background as a television producer was a key element to my clients trusting me with their marketing projects. Your knowledge of your industry and your relationships with potential strategic alliances and customers will be an important asset to your business. You will probably start out as a management team of one.  As your business grows, however, any new employees should bring with them skill sets that might include diverse business experiences, significant business contacts, demonstrated leadership and/or technical savvy.

Revenue Models/Cash Flow Projections  The financial plan lays out your operational budget and sales expectations for your business. Typically, the first thing any investor or bank will want to know is at how much money your business will generate and how soon will it be profitable (you might have a need to know as well). You will need to create a tight, well thought out, realistic financial plan that includes the amount of personal financial risk you are putting on the table.

If you are not comfortable with accounting, you should engage an accountant or a seasoned bookkeeper to help you pull together your initial financial projections.

It is also a good idea to work along side your accountant for a while once you start doing business. That’s the best way to get a grasp on the financial inner workings of your company. When it comes to developing sales projections, it is important to be conservative and realistic.  I like to focus sales projections around 30-day goals.

Know your numbers, and be able to defend them.  The worst thing you can do is develop financial projections that don’t make sense, particularly if you plan to pursue funding. The plan should also include a cash-flow projection and a break-even analysis. The process of developing your financial plan will help you understand how many sales must be generated to cover your expenses and eventually make you a few pennies.

Your financial plan is your best estimate of your company’s financial future. It is an estimate because you really have no idea how your company will perform financially until you operate the business for six-months to a year. Your plan should include a one-year operating budget and up to a three years of company sales projections.

The Executive Summary After the sales projections, it’s time to write your executive summary. You should think of these two-pages as your sales document for the entire business plan. The executive summary should contain enough information for the reader to get interested in reading the plan, writing a check in support of the business or coming to work for your business.  Here’s a recent post on how to write and executive summary. https://succeedasyourownboss.com/01/2011/how-to-write-an-executive-summary/

Once again, I strongly suggest that you purchase business plan software.  I recommend Business Plan Pro.

Then, sign up for a business plan course to finish your business plan.  They are offered at a local community colleges, Small Business Development Center, 1-800-8-ASK-SBA or use this link http://www.sba.gov/aboutsba/sbaprograms/sbdc/sbdclocator/SBDC_LOCATOR.html, or a local nonprofit serving small business, to finish your business plan.

A business plan is the small business owner’s hypothesis of what they think will happen in once they open for business.  The plan will change once the business is exposed to the marketplace, which means the plan must change regularly.  In fact, in the first few years of running a small business, the business owner should review and update their business plan every two-to-three months to make sure the business is on the right track.

No more excuses, now you have everything you need to finally get your business plan done. Please let m know if this post was helpful, I love to hear from you.

Melinda F. Emerson, known to many as SmallBizLady is one of America’s leading small business experts. As a seasoned entrepreneur, professional speaker, and small business coach, she develops audio, video and written content to fulfill her mission to end small business failure.  As CEO of MFE Consulting LLC, Melinda educates entrepreneurs and Fortune 500 companies on subjects including small business start-up, business development and social media marketing. She has been featured in the New York Times, Washington Post, Entrepreneur, Wall Street Journal and Black Enterprise Magazine. She hosts #SmallBizChat weekly on Twitter for emerging entrepreneurs and publishes a resource blog www.succeedasyourownboss.com  Melinda is also the author of the national bestseller Become Your Own Boss in 12 months; A Month-by-Month Guide to a Business That Works. (Adams Media 2010) 

Feel free to share...

Facebook

Twitter

Google

Linkedin

Pinterest

Reddit

Email

Print