Business Plan

About

Years ago, a business plan was in many ways like a roadmap for a business. It was narrowly definitive, had a specific direction and milestones, and, unless there were major events that took place in the industry or the company, was largely adopted and executed without major alterations.

Writing Tips: Business Plan

Know your audience.

A diverse group of people is usually necessary to provide funding, make initial decisions, and offer direction should the plan be adopted and the business started.
Potential readers of your business plan include:
- Banking managers or other financial backers
- Attorneys
- Certified Public Accountants (CPAs) or other accounting professionals
- Sales and Marketing professionals
- Experts in the particular field of business
- Consultants
Accommodate your diverse audience with language that facilitates their understanding.
Keep a balanced focus to address concerns of a diverse audience of professionals.
- If the plan is too focused on the accounting, you may not appeal to the marketing or legal professionals.
- If most of your emphasis is on marketing, you may alienate the accounting professionals.

Know relevant market factors.

Many different markets may affect the business. This is a global economy. There may be a dependence on overseas products. Overseas labor may be a worthwhile consideration. Where will the product be shipped? Consider these factors, research them carefully, and include objective information on as many of them that may apply. Overlooking any one of them may be the difference between a profitable or unprofitable business.

One key market to analyze is the competitive market. Who else is doing what you are proposing, and how far ahead in market share are they from you? Does your product or service in some way offer enough differentiators–ways that you are better than the other like businesses–to allow you to realistically compete? Will retail establishments stock your items if they feel they are the same as what they currently carry? How would your services be better? From the minute you open the door to your business, you are in defensive mode. Competitors abound, and they are looking for the same customers (and revenues) that you are.

You will also likely be affected by the:

Employment market: Will there be enough employees with the skills you require in the area in which the business will be located?
Supply market: Will there be enough of the materials or products you need to give your business what it needs?
Financial market: Is this a good time to start a business? How much will the money you may be borrowing cost you?
Consumer market: Are consumers spending on what it is you are selling? Do they feel they need it, are they getting it somewhere else, and it is a purchase they are likely to make at the time you plan to launch your business?

Elements in a Business Plan

Today, a business plan is more like an open travel itinerary. However, there is an effective framework for a business plan that can be adapted for most situations:

Cover letter

Explains that a business plan is to follow or attached.
Explains why the recipient is receiving it.

Executive summary

Introduces the plan.
Includes a mission statement that describes the business and the reasons it will succeed.
Asks for support.

Lists the page numbers and topics in the plan.

Business description

Details what the business will look or looks like.
Includes the need for the business, its legal status, how much space it will occupy, where it will be located, and details on the specific goods and/or services the business will offer.
If the business already exists, describe the founding, growth, sales, and profits.

Product or service description

Explains what you are providing.
Explains what it is, how it will benefit customers, and what makes it different from the competitor’s product or service.
Tells how it will be profitable.

Market analyses

Discusses market trends and how your business fits in.
Comment on your projected growth, your competitors, your customers, and how you will increase your market share.

Management and operations

Explains how you will run your business.
Describes how you will physically bring the product or service to market.
Convinces the readers that you have thought through issues related to personnel, manufacturing, marketing, distribution, security.

Risks and competitor analyses

Identifies potential risks.
Names and describes competing products and services.

Financial projections

Your projections are the meat of the business plan. Investors want to know that there is the potential for return on their investment (ROI).

Outlines your start-up budget.
Provides information about your current finances.

Appendices

Include all supporting documentation for the business and its parts.
Provides:
- Complete resumes or curriculum vitae of the management team.
- Relevant media coverage.
- Market research.
- Consultants’ studies.
- Key correspondence from those with a stake in the business.

See a Model: Business Plan

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Revision Checklist: Business Plan

Focus/Purpose

Have you maintained a balanced focus to address concerns of a diverse audience of professionals?

Development/Elaboration

Allow the plan to fairly reflect the many aspects of business.

Does your executive summary outline your proposed business and plan?

Identify the type of business.
Include the name of the business (if applicable).
Summarize why the business will be successful.
Be confident and brief.

Does your business description provide legal, technical, and material details about the planned business?

Include the proposed business’s legal status (type of incorporation, where it was incorporated, and stock and equity status).
Tell how much space it will occupy and where.
Include which goods and/or services the business will offer.
Give specifics about the physical area of the business (where the business will be housed, and how that site will be purchased, built, or leased).

Do you include market research and analyses that situate the business in a real context?

Identify which markets (international, domestic) may affect the business.
Identify which factors within those markets may affect the business.
Note how the related markets may factor into the success of the business.

Do you identify who is on the management team and what roles they may play?

Include full names for every member of the management team.
Identify board members.
Provide an overview of each member’s position and responsibilities, and title, if applicable.
Summarize the team members’ relevant qualifications. Include complete bios in the appendices, not in the body of your plan.
Mention any availability issues regarding the management team

Do you detail the planned marketing strategy for the business?

Describe how marketing will benefit the business.
Include information about the target audience and the media (newspapers, radio, TV, the Internet) that will be used.
Identify the strengths of the marketing strategy.
Mention when the campaign is scheduled to begin.

Note: This may not be a calendar date (since there may be delays in the launch of the business), but a period of time attached to the plan. For example, rather than stating, “The advertising launch will begin in September of 2008,” state, “The advertising launch will occur three months after construction of the plant is completed and four weeks before the first shipment to stores.”

Indicate the marketing budget: how much are you going to spend on marketing?
Include information on any outside marketing firms you will use and their submitted proposals, if any.

Do you explain in the management and operations section how the company will be run?

Identify and explain issues related to personnel, such as budget, organization, and size.
Explain how you will secure adequate human resources.
Describe how distribution will be executed.
Address areas that may not even apply to your particular business to show that they were not simply overlooked.

Note: If there is nothing to be shipped, write, “Shipping: Not applicable due to he electronic delivery capabilities of the software. Should the company expand into other products requiring shipping, appropriate due diligence will be conducted at that time.”

Do you provide a competitor analysis that identifies potential challenges and addresses risks?

Identify existing and future competitors (if known).
State the level of threat you feel they may pose.

Note: Be realistic. For each competitor, mention the areas in which they pose a risk (these could be geographic areas, specific product or service lines, or with certain target customers or clients).

Define the risks you may face.

Are your financial projections honest and conservative?

Be conservative.

Note: Inflated (or naive) numbers will show through. You want to give readers of the plan confidence in you.

Organization

Do you structure and format your plan professionally?

Use headings to identify the sections in your plan.
Divide information into paragraphs by topic.

Style

Have you written in a tone that is honest, clear, and direct?

Use terminology that is specific to your field, but make sure that your plan can be understood by an interested non-specialist.
Use technical terminology only when you need it to properly describe your product or service.
Back up terminology with explanation and illustration in common language that your readers will be able to understand.

Do you use strong, active language and a formal voice?

Avoid mediating words like maybe and possibly. Be confident and direct.
Avoid jargon and slang. Try to make your writing universally readable.
Make descriptive, active statements.
Avoid using the passive voice.

Note: The passive voice hides responsibility for actions by focusing on the object, rather than the doer, of the action. Plus, it is wordier than its active voice equivalent. Thus, it’s important in business plans to avoid it as much as possible.

A marker of the passive voice is a form of “be” as a helping verb.
Example: Customer satisfaction will be conscientiously tracked.

To change a passive phrase to an active one, add a subject and rearrange your wording.
Example: Market research and customer support teams will track customer satisfaction.

Have you proofread your plan before printing?

Check your spelling and punctuation.
Verify all dates and figures.

Format

Is the formatting of your plan professional?

Use bold headings to divide information into logical, easy-to-read sections.
Use bulleted lists or charts to present timelines or schedules.

Have you chosen appropriate publishing for your document?

Select dignified fonts and font sizes.
Include page numbers on the bottom center or top corner of the page.
Consider printing business plans on company stationery and using attractive binding methods.