Writing the Business Plan (Part 1)
*The following information was taken from East Bay SCORE’s manual, “How to Start and Manage Your Small Business”. All references lead to the full copy of the guide which is free to download.
The usual components of a business plan are:
1. Table of Contents
2. Executive Summary
This might be the most important part of your plan. It must grab the readers’ attention, and hold it so he/she will review the balance of the plan. The Executive Summary can be as short as one type written page, giving a good sense of what you intend to accomplish. It will identify the principals and key team members, as well as some of your strategies. To help in the preparation of the Executive Summary, (and it shouldn’t be finalized until the rest of the plan is) you should complete the following exercises:
Prepare a Mission Statement for your enterprise.
This will be a clear and concise representation of the enterprises purpose for existence. One or at the most two sentences are sufficient. It should be a building block for an overall corporate strategy and a guide in decision making. An example of a mission statement for a small sign company: “We will sell signing to small businesses and individuals; we will produce quality signs at a price lower than larger firms, and complete these signs in 24 hours or less, from a storefront location in a high traffic area”. The mission statement of Wal-Mart is “to give ordinary people the chance to buy the same things as rich people.” A small airline goes as follows: “AirCo will offer young businessmen cost-effective transportation services within our geographical area, focusing on courteous and on time service.”
Do a SWOT analysis around your business idea early in the planning process:
This will help you think through your strategies for attaining the profitability you want. It is good to address problems and seek solutions before they actually occur. Some, but not all of the analysis may go into the Executive Summary, but the thought process will reinforce strategies you express throughout the plan.
Your Executive Summary will be a work in progress. You will find yourself revising it many times, or until it tells the story of your business in a way that will compel the reader to delve further into the business plan. You want to share the enthusiasm that you and your team have for the business.
3. General Company Description
4. Products and Services
Describe here in more detail, and in a structured format, what you are offering and how you will provide it. Sourcing encompasses all issues relating to how you will attain the product or service you intend to sell. However be mindful that what any customer seeks from a vendor such as reliability, availability, on time service, rapid response times, high levels of quality and predictable costs can also apply to a service you are offering.
When outsourcing products, remember how important the relationship with your vendors can be. They can hurt you if quality or delivery times deteriorate, prices increase, or if they aren’t concerned with providing you competitive advantages. You should be able to look to your suppliers for new product ideas, for marketing help and perhaps advertising allowances, and maybe even help, if cash gets tight, by virtue of extending terms.
In your plan list sources for your primary products, and append copies of price quotations, if available. You need to seek a protected market to avoid that the same product does not appear within your marketing area through another channel. In the event some outside force affects your vendor, or your own relationship breaks down, what are your plans for a secondary source? You don’t want to promote and advertise a product that you can’t get. Try to reach an agreement on future price increases where timing can be important.
Go out of your way to establish a trusting and cordial relationship with all of your vendors. It will pay off for you in many ways.
5. Marketing Plan
This will normally be the largest section in you plan. Marketing is all business activity involved in the movement of product or services to the customer, and includes advertising, packaging, promotion, selling and pricing. You should include factual information about the following:
Discuss the competition in some detail. If there is a compelling reason why you will not be adversely affected by competition (market exclusive, for example) discuss it here. Research the competition through the yellow pages, websites, Chambers of Commerce, Catalogues, Trade Shows, surveys, suppliers, and visit their locations.
Your competitive edge
Your marketing and sales strategy
This is part 1 of a 2 part series and was extracted from East Bay SCORE’s "How to Start and Manage Your Small Business." The full reference manual can be downloaded by clicking here.
*This blog is intended to provide information to support startups and existing small businesses. A sincere effort is made to ensure accuracy, but no warranty, express or implied, is provided in that regard and East Bay SCORE and the author will not be liable for any errors or omissions in this blog.