A business plan is one of a company’s most important documents. It lays out the company’s objectives and describes the strategy for meeting those objectives. More importantly, it shows how the business will obtain financing and how much money the company expects to make.
Don’t think for a minute that as a startup, or as an army of one, you can skip the business planning process. That’s a terrible idea. Why? Because so many major decisions and strategies are determined by the business plan.
Plenty of books are available to help you write a plan. Usually, libraries have sample business plans you can look at, often arranged by the type of business. If you’re just getting started, here is a good outline to help you formulate a solid business plan. The scope of the plan you end up with will be determined by the size of the company, your access to capital and production resources, and a host of other variables. The following items are the components of a good business plan.
1. An executive summary answers the who, what, when, where, how and why of the plan. Plan on writing this last even though it appears in the front of the plan. You’ll need to have all the details worked out before you can put this part together.
2. A competitive analysis will look at the environment in which you’re going to compete. You need a good understanding of the business environment in which you’ll be implementing your marketing plan.
3. The mission statement summarizes the company’s purpose, vision and goals – the foundation upon which all further planning is based.
4. Component plans for each functional area of the business. Obviously, these need to be tied into the objectives of the larger business plan. For example, you should have:
A marketing plan. How do you intend to take your product or service to market? What strategies will develop long-term relationships that build brand equity? I will write a separate blog on what needs to go into a marketing plan. For now, however, I just want you to see that the marketing plan is informed by the business plan. You cannot create a marketing plan in a vacuum.
A financing plan. Describes how the company will be capitalized, sources of funds, and how debt and cash flows will be managed. How much working capital is needed?
A production plan describes how products will be developed in the most cost-effective manner possible. Do you require an assembly line? What material handling equipment is needed?
A facilities plan will describe the property, plant and equipment needed. Does the business require a warehouse, manufacturing or light assembly plant? How about sales offices or a distribution center?
A human resources plan will estimate employment needs and the skills required now and in the future. How big is the available labor pool? What job training is available in the community? How computer literate is the workforce?
I recommend making every one of these component plans part of your business plan, no matter how small your startup company may be. Getting an organizational structure in place is important for future growth. Just because your facility consists of your basement today doesn’t mean you’ll be locked in there forever. The business plan outline here is a format used by many successful companies, and it can easily be adapted as your company grows.
If you need help with a business plan or marketing plan, we can help. Call us at 330-342-1255 or complete the form on the contact page and I will call you back.
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