The Best Business Plan for Your New Venture

A well-conceived business plan does much more than merely describe what will become your business. Your business plan must first and foremost portray you as a competent and trustworthy professional and furthermore sell your entrepreneurial concept.

Along with a description of the products or services you’ll offer, your plan will also describe a promising business model, the marketplace in which you’ll compete, reasonable estimates of start-up and monthly operating expenses and when the business can be expected to turn a profit. If outside funding is required, then the plan must convince lenders or investors that you are prepared and qualified to build a significantly profitable enterprise. A good business plan will do the following:

  • Describe the products and services
  • Identify target customers
  • Identify and evaluate major competitors
  • Describe the business environment
  • Present a profitable business model
  • Detail the marketing plan
  • Detail the operations plan
  • Detail the financial projections
  • Present the qualifications of the management team
  • Provide an exit strategy

Here are business plan options for three scenarios:

The Executive Summary

An expanded Executive Summary can serve as a useful business plan, in particular for those who will launch a venture that will have modest start-up costs and operating expenses. A detailed Executive Summary can provide a good road map from which to launch a business venture, yet it is not a business plan option for those who will approach lending institutions or investors.

The expanded Executive Summary will include a description of products and services that will be sold, identify primary client groups and competitors and give an overview of the business environment. The business model, marketing plan, operations plan and financial data will also be provided. To be useful, the Executive Summary business plan must fully integrate the above components and demonstrate how the business will become profitable.

The Operational Business Plan

An Operational Business Plan is produced by an existing organization with several years’ performance history, usually with a goal to either apply for expansion capital or prepare for the sale of the company. Operational Business Plans may also be used to upgrade and streamline how a business runs, functioning as a guide for the management team.

The Operational Business Plan delves into great detail about production, customers, competitors, the marketplace and business environment, sales distribution channels, management and staffing. Historical data are available and five years of financial statements are typically included, along with financial projections that forecast the company’s expected performance over the next three years.

The business plan to attract investors

When outside investment is sought, it goes without saying that the potential for strong profits must be demonstrated. The more money that is requested, the bigger the promised profits must be and the more quickly realized. A break-even analysis, which shows the timeline for when revenues and operating expenses will equalize and the business will be positioned to earn a profit, along with credible financial assumptions and revenue projections, are critical in this scenario.

If the business is an existing one, the financial projections must appear to be attainable, based on the five-year financial history given. Make sure that your business and personal credit scores are 700+, as lending institutions are highly selective and conservative in regards to awarding loans.

Venture capitalists and angel investors may be somewhat more forgiving of a less than perfect credit rating if your business concept and model are extraordinary. Beta test the products/services, business model and operations with a sampling of target customers to verify product demand and your ability to efficiently deliver the goods to the marketplace.

For VCs, the potential for big profits is king. They are in it for the pot of gold that comes when the company goes public and stock is offered. Angels are not totally dissimilar to VCs, but they are drawn to an entrepreneur’s vision and passion in addition to the pay-off.

Regardless of the type of business that you choose to launch and whether you will self-finance or seek funding from others, a well-written business plan will ensure that you think critically about your ability to build a business, either alone or with partners. Your business plan is the road map to entrepreneurial success.

Thanks for reading,

Kim

Do You Want To Improve The Performance Of Your Business?

A Checklist to Begin the Journey of Improved Business Performance

“Culture isn’t just one aspect of the game – it is the game. In the end, an organization is nothing more than the collective capacity of its people to create value.” Lou Gerstner, Who Says Elephants Can’t Dance?

Reviewing the management process of a large, nationally operating company recently highlighted once again the continual challenge of remaining objective about the business we lead. Our repeated observation is owners and managers of businesses may declare they want to implement new ways to enhance business performance, but rarely understand and accept that as leaders of the enterprise, their own personal change must accompany or precede business change.

Although senior management may name a set of values they assume will create the organizational culture, the real culture will be determined by how all workers perceive daily operations are actually practiced and rewarded. An old maxim states, ‘Perception is stronger than reality’. Our work teams will see, feel, sense and then practice the culture of our business long before they adopt any stated values or formally announced strategies and processes.

Behavioural change will not come through talking, written communications, lecturing or demanding a particular process. Effective long term change to increase company value and stability requires carefully thought out modelling of the proposed practices and processes plus showing all team members what needs to be done and how to do it. Rose-coloured glasses will maintain business performance at mediocre levels, based on historical practices in the company.

Bill and Kristine Schneider of the Corporate Development Group (CDG) emphasise how company value and growth is likely to be highest when the cultural practices, leadership style and strategy adopted by a company are aligned.

The following is a detailed checklist allowing any business to begin the journey of improving business performance. It is not intended to be comprehensive but will highlight sufficient key issues for your business to review. Please use the checklist as a positive assessment of how you can kickstart new growth and understanding of your business strategy.

Company Leadership:

  1. Does your business have a clearly defined written strategy as a foundation for all decision-making?
  2. Does your leadership team pro-actively research, discuss and adopt what is required to enhance business certainty and clarity?
  3. Do you conduct frequent regular reviews of operational and strategic planning?
  4. Are you confident about what is required to take the business to the next level?
  5. Have all business owners and senior management team members formally indicated they will learn and adopt all required changes to enhance growth?
  6. Have all business owners and senior management team members formally indicated they will commence the journey of personal change required to enhance their own leadership?
  7. Have you listed 5-6 practices of yourself or other leaders/managers in the business clearly inhibiting growth and clarity for the future?
  8. Do you know how to lead all staff into a program of change and improvement?
  9. Can you succinctly explain the Vision and Mission of the business?
  10. Have you done any specific leadership and management training in the past 10 years?
  11. Do you read about and study businesses, leadership and management frequently?
  12. Do you have certainty and clarity about the business in all areas?
  13. If not, how do you deal with this? (This may include personal skills you struggle with, tasks you are required to do for which you do not feel equipped, team issues, business functions, how suggestions or recommendations are handled… or anything!)
  14. How would you describe your leadership and management style and practice? (be honest!)? How do you think others would describe it?

· Autocratic/Controlling

· Participative/Democratic

· Developer/Trainer

· Visionary/Big Picture

Staff Training:

  1. Many companies limit growth by neglecting staff training. The resultant focus on short term targets delays expansion or stops it completely.
  2. Do you have a specific program of in-depth staff training?
  3. Does formal staff training include learning methods additional to lecture style and written instructions?
  4. Has the business designed and implemented on-the-job training processes to model and demonstrate all systems and processes?
  5. Can staff have some autonomy and be free to make mistakes as they learn?
  6. Does every staff member have a personal training and development plan?
  7. Do all business owners and senior managers have a personal training and development plan?
  8. If each staff member was asked about on-the-job training would they say it is frequent, relevant and equips them well for their role?

Marketing and Customer Service

  1. Do you view marketing as unnecessary?
  2. Do you have a multi-strategy marketing plan?
  3. Is there a procedure and schedule in place to frequently review your marketing?
  4. Do you have a specific written description of your key target market groups?
  5. Can you identify your primary customers (ie customers who create 80% plus of your business)?
  6. If so, is the plan known by all key personnel?
  7. What perception do your primary customers have of your business? How do you know?
  8. What uniqueness are you giving clients to create competitive advantage?
  9. Can you list the performance drivers of the business? i.e the factors that determine success – they must happen or everything heads south.
  10. Are Innovation, Creativity and Research being specifically nurtured, developed, tested and measured?
  11. Do you have a system of testing and measuring all marketing and advertising strategies?
  12. Do you have a clear picture of how many leads are required to obtain 1 customer and what the process of lead generation costs?
  13. Are your staff trained in how to use an effective sales process?
  14. Does the business have a specific program for writing effective advertising copy for all marketing strategies?
  15. Would relevant staff say all marketing and sales processes are frequently reviewed and therefore work well?

Financials, Performance and Business Control:

  1. Is business growth decided and planned? (the alternative is merely hoping it will happen)
  2. Do you have a Gross Revenue & Net Profit target for each Market/Industry segment as relevant to your business?
  3. Do you have other targets for various indicators relevant to your business?
  4. Do you have a written comprehensive strategy with detailed action plans and teams to move toward strategy achievement?
  5. Have you identified key issues and risks hindering achievement of growth plans?
  6. Do you have a risk management plan to protect the business against all reasonably foreseeable scenarios?
  7. Do you have a plan to ensure all systems and processes to keep up with proposed growth are reviewed, installed, updated or changed?
  8. Is there a plan to adequately fund all proposed areas of growth for the business?

Combined, the answers to these questions will give you a general, overall picture of the strengths and weakness of your business. This will give you clarity as you move towards improved business performance.

Three Big Reasons Why Most Businesses Fail – And It’s Not The Lack Of Funding!

Many years ago, I tried to start a storefront business. Actually, I tried to start a bunch of businesses through out the years. But this particular business was it! I thought of a clever name, had a coworker design a logo, and then I bought inventory. I’m officially in business, so I thought! I was excited and ready to start my business. I even started looking at offices to run my business.

I had everything: Enthusiasm, confidence, desire and most of all, a great idea that was a sure sure path to success and riches. This time.

I started an E-bay drop ship business. I was selling sports paraphernalia. Everything was going great. I was buying products dirt cheap from a warehouse and selling them on e-bay at a pretty nice profit. However, I did not have a plan. All I know is that I wanted to make a lot of money – fast.

I did not account for the cost of shipping. I did not account for shipping costs for different areas of the country and for the size of the boxes in which I mailed the products. This ultimately ended by drop ship business along with other unexpected costs,

But those weren’t the main reasons I went of business. The three main reason my business and most other businesses shut down is – lack of vision, plans and goals.

Vision

Vision is a clear picture of where you want your business to go. For example, your vision could be that you want your business to grow from one store to four stores in 10 years if you’re running an offline business. If you’re running an online business, your vision is to make enough money to be able to start an online marketing academy to help other struggling marketers.

Vision helps you and your business have something to strive toward. Your vision is a map to guide you on your business journey. When you have a vision, you have a clearer a since why you do what you do and anything that does not help you reach your vision, you should not pursue.

Goal

Goals are specific milestones that helps you get closer to your vision. Goals are specific, attainable and they have a deadline attached to them. I should have one more ingredient for a goal. It should have action!

Your goals should also be measurable, challenging but realistic. Setting a goal that says I want to make 1 millions dollars in three months is a goal but unrealistic. A better goal is I want to make 1 million dollars in my business in one year by using online and offline marketing strategies such as giving out business cards, running solo ads and posting articles on my website and e-zines.

It is important to write your goals down. keep them in front of you at all times. This will keep you focused and will help you not lose sight of your goal(s). As time goes by, you may have to reevaluate your goals depending on how situations change. It’s OK to set new goals. Businesses do it all the time. But you must keep your goals.

Because starting a business requires so much commitment, time and focus, it’s good to celebrate after achieving a goal. Celebrating renews your spirit and gives you the energy to keep going,

In the bible, even God celebrated his achievements. He created the sky and he said that was good, He created the water and the fowl of the air he said that was good. And on the six day he created man and he said that was good. On the seventh day, he rested.

We should have the same philosophy when building our businesses.

Plans

Plans are a foundation for helping you achieve your goals. As the old saying goes, people don’t plan to fail, they fail to plan. Although failure is not necessarily a bad thing, you should strive to fail as fast as possible so you can move on to success. What this means is that you’re going to make mistakes. Make the small mistakes early so you can learn from them. And use what you learned from those past mistakes to succeed.

Just like you need a blue print to build your house, you need a blue print for your business. The blue print for your business. The blue print for your business is your business plan. Here is what you need to include in your business plan:

  • Who is your target market?
  • What will we sell (Be specific)?
  • What makes us different from the competition?

You don’t have to write a two page business plans to include taxes, credit, inventory, receivables, etc. like your traditional offline business but you need a short term and long term plan, plan of action to achieve your goals and your marketing strategies.

I would like your input to what it takes to start and sustain a business. Provide feedback on my Facebook and twitter page. Also, leave comments on my blog page. Look forward to hearing from you!