Writing A Business Plan: Where Do I Start?
This isn’t magic! And the hardest part may be simply getting started.
Or, as the old saying goes, “How do you eat an elephant? One bite at a time!”
Sit down and start drafting now. Some areas will require thought. Some will involve hunting through files and gathering financial documents. Some will involve research. For some you’ll need to involve others in your business and that may be one of the real advantages of the whole process. Your team is thinking and planning together, building understanding and consensus.
The end result is not only an effective document that accurately pictures your business as it is. The result is also a roadmap for taking your business where you want it to be. So make this writing a group project, utilizing the best ideas and abilities of each of your people.
Cover Sheet –
Yes, it’s the cover (well, you’ll probably have a piece of clear plastic over it) and it should have:
Company name, address and phone
Logo or company emblem
Your name and title (Some plans also include company officers.)
Confidentiality statement (Simply a sentence stating that the plan is confidential, is the property of the company, and may not be duplicated without your consent)
Table of Contents – Do this last, although it will eventually be placed immediately after the Cover page. It will list the heading for each section and tell the page on which it begins.
Executive Summary – Another section ultimately found up front but one of the last sections you write. Though no section of the Plan is fluff, this is the most concentrated of the text. If the reader reads nothing else, these pages should concisely summarize your business. This section should:
Summarize the entire Plan
Be brief (5 pages or less)
Describe what your company does, where, why, how
State the Company Mission
Indicate the competitive advantages
Sets forth how much money is needed
Description of Products or Services – Essential description of your business. This section expands more fully the description of the business found in the Executive Summary. As you write it, take both the customer’s perspective and yours in describing your products or services.
What do you make or sell?
What is required in materials, manufacture, packaging?
Is anything unique?
Intellectual property (patents, copyrights, trade secrets)?
Who are my customers?
Legal requirements, licensing etc.?
Organizational Structure – This section describes the people in your company, its management and personnel needs as the business runs day to day. This section should include:
- an organizational chart showing reporting relationships of the owners and key employees;
the business responsibilities of each position, including skills required;
employees needed – education, training, abilities
hiring and recruiting practices
Identify the individuals now holding key positions. What are their strengths?
What is missing? Which positions remain to be filled?
Describe the combined leadership abilities and other strengths of the Team as a whole
Outside professionals needed – attorneys, accountants, etc.
Who now holds these positions? Additional needs?
Competition– A discussion of your competitors is probably the last thing you want to focus on in YOUR Business Plan, but this analysis may be especially important for you in positioning your product.
List their identities, and describe the main strengths and weakness of each.
Their marketing focus
Their market share
How your business differs
Marketing Plan– Even great businesses fail if the marketing plan is not effective. Small businesses are tempted to cut marketing and advertising expenditures – a potentially fatal mistake – but the first step is a Plan.
Define the market for YOUR business. Who is your targeted customer? Describe him/her. Where does he go to buy your product now? What does he want in it? What does he read or watch now?
Access market research to determine marketing techniques. You don’t have to conduct your own studies. Trade associations and business periodicals are doing that all the time for you. But now is the time to do some detective work to find out what others can tell you about your potential customers’ needs and desires, and the effectiveness of old and new forms of promotion and marketing for your target market.
Determine your pricing strategy. Not as simple as it sounds, this decision will be based partly on your costs, partly on your competitors’ practices, partly on your niche of the market, and finally on your customers’ willingness to pay.
Describe your sales force. Educational background? Training? Characteristics? Compensation? Recruitment?
- Establish a marketing budget.
If you are a franchisee, your franchisor may do this for you by mandating a certain percentage of your gross receipts as a contribution to a national or regional advertising fund.
Other systems do not require such contributions, but advise their franchisees to spend a certain amount in marketing.
If neither applies to you, some business writers advise spending about 5% of your annual revenues on these activities.
Don’t forget to plan to use the free promotional media as well – Newsletters, press releases, etc.
Some of the readers of your Business Plan will read the Executive Summary and then skip straight to these pages of numbers. They may seem dry, but to those involved with your financial needs, they tell a significant part of your story. For these documents, you will probably need the involvement of your accountant.
The set of financials required in this section of your Business Plan may include:
Cash Flow Projections
Profit and Loss Statement
Cash Flow Statement
Appendix- This is the section in which you can add related documents, site plans, market research, resumes, etc. The section does not have to be used at all, but if it is, list the included items under the “Appendix” heading in the Table of Contents.
CONCLUSION- Have you started a draft plan of your own yet? There will never be a better time!