Business Plan – What do we want to achieve?
This should be a short simple synopsis of your overall plan and strategy, showing your why, your very reason for being and how you will make a profit. This is your own first hurdle, as it should make sense to you and then have some other people, not family, look over it, to ensure it makes sense to them. Pay an experienced accountant, mentor or coach to look over it for and with you. Any time you spend in the planning will likely pay off in the execution, many times over.
Business Plan Contents
Start with a Contents page or Menu to show where everything is going to appear and in which order. Readers can pick the pertinent pages for them. Add a synopsis or overview.
What is the point of the business plan?
Use it as a roadmap and refer to it regularly yourself, tweak it or add to it and make sure that everyone involved reads and understands and inputs to it. Sometime you may have to make a U turn or pivot somewhat. It may also be used to seek funding from banks or investors. Some people will tell you that ‘actions speak louder than word’s or ‘get some momentum and work out the kinks on the way’. Action is a great start, but a plan will save travel time and reduce kinks. This is not paralysis by analysis, this is a basic necessity to put together before you start.
Goals & Objectives of the business plan
Without any fluff outline your goals and objectives – keep it short.
People or Executive Summary
Promoters – who are they and what is their experience. What qualifies them to run this enterprise? What will be their roles?
Write a bit about the team required, the titles or positions and then the people or type of people who wil fill them. What is their experience, qualification, success to date and why are they the right fit. Include details of your accountants or financial advisor, legal reps and any other professionals involved.
Answer the basic questions:
What are you offering
Why is it marketable at a profit
Who are your competitors
What problem do you solve
What IP is involved and how do you protect it
How will you manufacture and who will do it for you
What licence or protection do you have
Are raw materials needed and readily available
Do you have LTAs in place Long Term Agreement on price, production, delivery, quality etc
Is there a plant or factory, offices or land required. At what cost and how will it be funded
Likewise plant and machinery, if required, is it available and at what cost.
Market, Marketing Plan, USPs, Competition, Metrics
What size is the market ? How much do you want. How will you tell the world and compete in your chosen marketplace. How do you get to market physically. Which channels. How does each part the pipeline all profit from being involved and still leave you with a profit. Will customers be one off buyers or will they generate recurring income. What is the LTV Life Time Value of a customer. Based on your margin, how much would you pay to get a new customer 33% 50%, as a percentage of the initial transaction value or of the perceived LTV.
“Proper business planning demands that you focus on the self-interest of the customer at all times.” Brian Tracy
Which strategies will you employ to tell that story and spread the word. Consider doing a SWOT analysis, strengths, weaknesses, opportunities and threats, to show that you are well prepared for any eventuality, maybe a recession or a 4 week delay in delivery. Are there possible threats and how will you handle them.
Projections and Funding
Show expected turnover, margins, costs, break evens and any capital expenditure. Cashflow projected for at least 12 months, funding, investment and borrowings, (existing and required). Will there be shareholder or non shareholder investments, government grants, loans, credit from suppliers – cover all forms of possible funding being considered. One source may become dependent on another.
Bear in mind, that banks will only want to fund you, if you do not appear to need funding. This way they avoid risk as much as possible. Also, if you are an existing business the bank will want to see your history, three years sets of accounts showing a profit or improvement, the directors personal financial state of affairs and any debts, plus the state of your tax affairs. By the time you put this plan together, you may have worked out how to trade without any borrowings. Perhaps you can presell some product or service for deposits or use a Kickstarter or Indigogo or take in an investor for a set period and at an agreed return. If your product is good and is saleable, you should be able to presell at a discount to generate the income you require to get started.
Business Plan conclusions
The act of writing the Business Plan will make you think and look at the project like an outsider. It will help crystallise your idea, highlight problems and resolutions to these problems. So many people say, “Just follow your passion” – well that is sweet, but it does not pay any bills. Passion is great, possibly even essential to success, but there is no point in offering something that is not wanted or needed. Steve Jobs said that customers do not know what they want, but he produced something that was useful, beautiful and then told the market how good it was. He was a true visionary. Have you got the next square wheel or the next Apple. Writing the plan and talking it through with people will save you a lot of grief in the long run. Henry Ford said that if he had taken advice from his advisors he would have offered better horses, because that was what the market wanted. But when Ford started production, you can bet he had a plan, a very precise plan that included a lot of men and machinery in an assembly line with all the required parts for mass production.
“A clear vision, backed by definite plans, gives you a tremendous feeling of confidence and personal power.”
― Brian Tracy, The Gift of Self-Confidence
Need some help with Goal setting?
Google often uses “Objectives and Key Results” (OKRs) to try to set ambitious goals for their teams and then to track their progress – see here for their own guide.
Likewise there is a good 8 Minute video here on Youtube where Brian Tracy explains how to set ‘SMART’ goals. Specific, Measurable, Attainable, Realistic/Relevant and Time based.
By increasing, year on year, the number of customers, the value of the average sale and the frequency of purchase, all by just 10%, you will get a 33.33% increase overall – 10%.
As well as setting business goals, set some for Finance, Family, Health and Networth to prepare for the future. When yo decide what you want in each area of your life, you can set these goals. Then set deadlines or timelines. Expect obstacles, identify them and prepare for them. Determine who you will need to help you and get them on board. Work out which skills are required and learn them or hire competent people. Using checklists for each of th eareas, work your way through th echallenges, day by day, week by week, month by month and year by year. Prioritise the tasks and start off with the big ones that will make the others easier, as you visualise your end game daily. Without this sort of roadmap, you will drift aimlessly, so write up the plan and then stay the course.