What is a business plan? It is your guide to how your business will reach its goals. Whether the business plan is written for your startup or whether you have been in business for 20 years and are creating a 5-year plan for new growth. The plan documents the path you should expect to follow.
For Traditional business plans, there are 9 key elements.
Executive Summary – This first section gives readers a brief summary encompassing the basic goals of your business and how you go about achieving them.
Company Description – In this part of the plan, the product or service your company provides and how you proceed to do this needs to be laid out clearly. This section should also describe the competitive advantages your business brings to the marketplace.
Market Analysis – An analysis of your particular market needs to be described in detail. Do you have competitors, and if so, how much market share do they have? What are your strategies for penetrating the market?
Organization & Management – This section should describe how your company will be structured, who is the leader, what is his or her role, and identifying other team members and the roles they fill. For each team member, you should also include details about their background and how their experience gives your business a competitive advantage. An organizational chart should also be included. Also required is a description of the legal status of the business, what type of entity is/has been formed, and who are the owners and company officers.
Service or Product Line – Descriptions of the products and services you will offer need to be detailed here. Describe the value proposition for your customers. If you are doing R&D, explain the anticipated outcomes and how they can impact the market and your value proposition.
Marketing and Sales –This section needs to lay out your sales strategy. How are you going to market your business and find your customers?
Funding Request – Any request for funding is detailed here. The writer must be specific in describing the terms he or she are requesting. Is the company looking for a loan, an equity investor, or a combination of both?
Financial Projections – This section needs to spell out the expected financial performance of the company. When do you expect to make your first sale? When will the company break even? What is the expected return for an investor? When will the lender’s loan be repaid? This is the section where an experienced CFO, one who is keenly knowledgeable in formulating plans, can be a key contributor. His or her experience can best translate the entrepreneur’s vision for the company and the product or service to the Income Statement and Balance Sheet that is required for this section.
Appendix – The appendix contains attachments pertaining to all the above information.
Now that you know what a business plan is, one might expect that a business plan is needed only for startups. Yes, a business plan is very important for startups, especially if they need to raise funds. However, business plans are for any company, as all businesses need to document both their short- and long-term strategies. Creating a detailed plan should be a regular project that is completed every 2-5 years, but reviewed every year for progress against the plan.
A properly completed business plan is a very long detailed document. If you need to present it to an investor, bank, or other interested parties, you should also create a summary or a PowerPoint presentation that can be more easily reviewed than the business plan. This will help you sell your company to the bank or an investor.
Why is a business plan important? It forces the business leader to document his or her vision and to think through important details for the company. There are many great ideas, but when you work through the financial projections and your pricing, you can evaluate the commercial viability of your product or service. There are a lot of great ideas and products that are not commercially viable; i.e. the dotcom bubble of the early 2000s.
In my view, one of the most important aspects of the plan is the goal setting that is required to complete the plan. If your plan is written well, the goals established in the plan will lead you down a path for building a successful business.
CFO Shield is in the business of helping small business to understand the market place, create a customized strategic plan, execute that plan, and achieve the goals of stability and prosperity you are seeking. We leverage our offerings and enable small businesses to share in the same economies of scale that larger companies enjoy. We are in the business of helping you create and maintain a successful business.