I listed in my last post the sections of my business plan, but I also have a more general checklist of sections I use with clients, large and small.
Tips
· Be clear who your audience for the plan is: is it just yourself? Will it also be for employees? Investors?
· Concentrate on getting a first pass at the plan completed, it’s easy to spend too much time collecting data instead of getting it done. You can refine later.
· Be prepared to find creating a plan is much more difficult than writing some ideas down, it brings flaws and conflicts to the surface. Spend the time to uncover the source of the conflicts, and resolve or reconcile them.
· Have 2 or 3 people you trust review the plan. If possible these reviewers should have expertise in the business area(s).
· Keep the plan as simple and short as possible while answering all key questions.
· The greatest value of the plan is in the process of its creation, not the final product.
· Make sure it works: following your dreams may mean operating a couple of business areas to ensure that the bills are paid, when you might prefer to stick to one that doesn’t provide enough income. Some people start businesses while still employed to maintain cash-flow.
Plan Sections
1. Executive Summary. (The Two-Pager) If the plan is intended for soliciting investment, a two-page Executive Summary can outline the Market opportunity, the business model, and the rewards.
2. Introduction. Explain who wrote the plan and why. Who is the target audience?
3. Objectives. List your objectives. For the sole or joint entrepreneur, this may include more than financial goals: sense of accomplishment, satisfaction from reaching goals, interaction with people. Summarize the product and market in one or two sentences. Describe your vision (what will the business be like in 3 years) and the action you will take to realize that vision. (Together those two components are the mission.). What are the values you want to instill in the venture?
4. Opportunity. Identify the opportunity or opportunities you’ve identified that will help you reach your objectives. Answer some key questions: how is this unique? What is the competitive advantage?
5. Business Area(s). Describe in a paragraph each the service or product area(s) you envision. Keep it short and clear. Summarize the business model for each: how do you make profit?
6. Assets. For the entrepreneur, assets can include education, training, experience, attributes, and personal network. There may be intellectual property (IP) or other technological know-how that is important, or physical assets: equipment, office furniture, etc.For larger ventures, this section may be replaced by an Intellectual Property/Proprietary Information section and personnel descriptions in the Key Personnel section.
7. Strategy. Summarize briefly your high-level vision of how you will realize your objectives: will it just be yourself and your team? Are there important strategic partners? Where will the majority of your time be spent? Will the venture be self-funding, or need investment? For a larger business, the Strategic Plan may be a separate document.
8. Market. Outline in more detail your target market: demographic, geographic, industry, and the market maturity. Specify what you think the market size is and will be. How has the market changed? How do you anticipate it changing?
9. Operational plan. Describe your existing and planned infrastructure requirements. Include office, communications, web, and any other physical facilities.Include a schedule for operational improvements, including capital expenditures.Describe your staffing/outsourcing plan, including subcontractors.
10. Research Plan. If technological research is a key factor in the venture, describe the research areas, how the research will be conducted and the desired outcomes.
11. Marketing & Sales Plan. How will you reach your market? Word of mouth? Viral marketing? The Web? Advertising? Direct sales through cold calls? Existing business relationships? What market research do you plan to do?
12. Key Personnel and Service Providers. Describe the qualifications of founders and key personnel. Identify key external suppliers: raw materials, legal, accounting, etc.
13. Risk Management. List risks and the mitigation plan for each should the risk occur. Include sales, financial, environmental, liability and intellectual property risks.
14. Financial Plan. Project your cash flow out over two-three years. If you have financial planning expertise or resources, you may want to have a separate Profit and Loss (P&L) statement and Balance Sheet (Assets and Liabilities). For small businesses with a short latency or no difference between the financial transaction and showing these entries on the books, the cash flow can serve as your P&L.Often it’s useful to do two projections, or even three (“Sensitivity Analysis”): Optimistic, Pessimistic and Most Likely. State the assumptions that each projection is based on. Some folks even create a fourth from these, combining these three with different weightings. A suggested weighting:
Expected = 0.3*Pessimistic + 0.6*Most Likely + 0.1*Optimistic
You may discover you need financing: in this case the Business Plan is how you will communicate the opportunity to investors. Show clearly the return on investment and realistic timeline.
15. Appendices. Here you can provide details for later reference. Appendices can include education, training, industry and product experience, international experience, client/employer list, work experience summary (=accomplishments), community service, more detailed financial information, support resources or anything else that isn’t critical to the body of the plan, but you want as handy reference.
