Starting Your Planning
Having a business plan — which means writing a business plan — is the best way to turn a good idea into a thriving company.
The chapters in this part make you a business plan convert.
They present the case for why a plan is important, walk you through the process, and guide you as you take the first steps toward creating a company with a long and prosperous future.
If you want great tips on how to come up with a winning business idea, I provide steps for conducting a reality check to make sure your idea is worth pursuing, help kick off your business planning process, and offer a guided tour through the essential process of creating your company’s mission, vision, goals, and objectives.
* Understanding the contents, use, and value of a business plan
* Identifying the people who will read your plan
* Setting your business time frame and milestones
* Launching the business-planning process
Because you’re holding this book, the task of writing a business plan has probably made its way to the top of your to-do list. Now you want to know what’s involved in the process and which actions to take first when writing your business plan. Well, that’s exactly what this first chapter of Business Plans Kit For Dummies, 2nd Edition, is all about. It confirms your hunch that business planning is not only important, but also essential — when you start your business and at every growth stage along the way. Plus, it helps you think clearly about why you need a business plan, who your business plan is for, what key components you need to include, and what kind of time frame is reasonable.Writing a business plan is a big task, but this makes it manageable, and this chapter provides a quick and easy overview to get you oriented and on your way to business-planning success.
Committing to the Business-Planning
Process
With a thousand issues clamoring for the precious hours in your day, committing time to plan your company’s future isn’t easy. But operating without a plan is even harder — and even more time-consuming in the long run. You took the most important step when you made the decision to write a business plan. Now you need to convert that decision into action — starting by dedicating your time and effort to the process.
As you carve time out of your calendar, these two steps will keep you motivated:
Define your business situation and how a business plan can help you move your business from where it is to where you want it to be.
List the ways that a business plan can heighten your company’s odds of success.
The next two sections lead the way.
Defining your business-planning situation
To get your business where you want it to go, you need a map to follow,
which is what your business plan is all about. It starts with a description of your current situation; describes your future plans; defines your opportunities; and details the financial, operational, marketing, and organizational strategies you’ll follow to achieve success.
Take a minute to think of your company as a ship about to set sail on an ocean voyage. Your business plan defines your destination and the route that you’ll follow. It details the supplies and crew you have on board as well as what you still need to acquire. It forecasts the cost of the voyage. It describes the weather and sea conditions you’re likely to encounter along the way and anticipates the potential dangers that may lurk over the horizon. Finally, your business plan identifies other ships that may be attempting to beat you to your destination.
The same kind of planning is necessary back on dry land. To navigate a new course for your company, you need to start with an assessment of where your business is right now — in other words, what current business situation you want to address or overcome. You need to define where you want to arrive and what strategies you’ll follow to get there.
To define your current business situation. It lists some of the many situations that companies face as they embark on the planning process. Take a few minutes to check off the situations that apply to your circumstances.
Buying into the value of business planning
The time you invest in your business plan will pay off many times over.
Following are some of the most obvious benefits you’ll gain from business planning:
A clear statement of your business mission and vision
A set of values that can help you steer your business through times of trouble
A description of your business model, or how you plan to make money and stay in business
A blueprint you can use to focus your energy and keep your company on track
A clear-eyed analysis of your industry, including opportunities and threats
A portrait of your potential customers and their buying behaviors
A rundown of your major competitors and your strategies for facing them
An honest assessment of your company’s strengths and weaknesses
A road map and timetable for achieving your goals and objectives
A description of the products and services you offer
An explanation of your marketing strategies
An analysis of your revenues, costs, and projected profits
An action plan that anticipates potential detours or hurdles you may encounter
Benchmarks you can use to track your performance and make midcourse corrections
A “handbook” for new employees describing who you are and what your company is all about
A “résumé” you can use to introduce your business to suppliers, vendors, lenders, and others
Identifying Target Audiences and Key Messages
Your business plan is the blueprint for how you plan to build a successful enterprise. It’s a comprehensive document that covers a lot of territory and addresses all sorts of issues. To help focus your efforts, consider which groups of people will have the greatest impact on your success. Those groups will be the primary audiences for your business plan.
For example, if you need capital investment, investors will be your primary audience. If you need to build strategic alliances, you want to address potential business partners. After you know who you want to reach with your business plan, you can focus on what those readers will want to know and what message you want them to receive. This section helps you to define your audience and your message before you begin to assemble your plan.
Your audience
All the people who have an interest in your business venture — from investors and lenders to your employees, customers, and suppliers — represent different audiences for your business plan. Depending on the situation you face and what you want your company to achieve through its plan, certain audiences will be more important than others:
If your company seeks investment capital, your all-important target audience is likely to be filled with potential investors.
If your plan includes the introduction of stock options (possibly in lieu of high salaries), your current and prospective employees will be a primary target audience.
If you’re launching a business that needs clients, not cash, to get up and running — the sooner the better — potential customers will comprise your plan’s primary audience.
If you’re a self-employed freelancer, your plan may be for you and you alone to focus your efforts, chart your course, and anticipate problems before they arise.
Check off the groups that you think will be most important to your business success, given your current situation.
Your message
After you target the audiences for your plan, the next step is to focus on the key messages you want each group to receive. People with different stakes in your business will read your business plan with different interests and values. For example:
A person who owns shares in a company wants to read about growth plans.
A banker considering a loan request wants to see proof of strong revenue and profit prospects.
Employee groups want to see how they’ll benefit from the company’s growth and profits.
Regulators focus on operational and financial issues.
For advice on targeting and talking to your key audiences, including information on which parts of the business plan various audiences turn to first and how to address multiple audiences with a single plan.
1. Identify the three most important audiences you intend to address with your business plan.
2. Jot down key points you need to make to each target audience. Writing down your key points doesn’t require fancy prose; just get your ideas down on paper so you can refer to them when you begin writing your business plan.
The Anatomy of a Business Plan
Written business plans are as varied as the companies that compile them. Some plans run almost 100 pages, whereas others barely fill a few sheets. Some plans start with executive summaries, and others plunge right into detailed descriptions of products and services. Some companies print their business plans on paper, and some publish their plans exclusively on the web. Some plans include page after page of financial projections, and others
list only anticipated costs, expected revenues, and projected profits. Every business plan is written for a different reason and to obtain a different
outcome. Still, some plans are better than others. The following information helps you write a plan that will win high marks.
Business-plan contents from beginning to end
Business plans come in all shapes, sizes, formats — even colors — but they all share a similar framework. The following components, presented in the
order they generally appear, are common elements in most business plans:
Table of contents: This element is a guide to the key sections in your business plan and is especially useful if your plan exceeds ten pages.
Executive summary: This section is a summary of the key points in your business plan. You should incorporate it if your plan runs more than ten pages and you want to convey important information upfront. Because any readers dig no deeper than your executive summary, you want to keep it clear, captivating, and brief — in fact, try to keep it to two pages or less.
Company overview: This section describes your company and the nature of your business. It may include your company’s mission and vision statements as well as descriptions of your values, your products or services, ways your company is unique, and what business opportunities you plan to seize.
Business environment: This section includes an analysis of your industry and the forces at work in your market; an in-depth description of your direct and potential competitors; and a close look at your customers, including who they are, what they want, and how they buy products or services. Think of this section this way: It describes everything that effects your business that’s beyond your control.
Company description: In this section, include information about your anagement team, your organization, your new or proprietary technology, your products and services, your company operations, and your marketing potential. Focus on areas where you have real advantages over your competition.
Company strategy: Here’s where you detail your road map to the future. his section brings together the information about your business environment
and your company’s resources and then lays out a strategy for oing forward. Included in this section is your analysis of the opportunities, threats, and uncertainties that your business faces along with the ways you plan to avoid pitfalls and take advantage of opportunities.
Marketing plan: This section is where you describe how you plan to reach prospects, make sales, and develop a loyal clientele. Because customers and sales are essential to your company’s success, this section is a major component of your business plan.
Financial review: This section includes a detailed review of dollars and cents, including the state of your current finances and what you expect your financial picture to look like in the future. It typically contains financial tatements, including an income statement, your balance sheet, and a cash-flow statement.
Action plan: In this section, you detail the steps involved in implementing your business plan, including the sequence of actions and how they align with your goals and objectives.
Appendixes: This section includes detailed information that supports your business plan. It may include analyses, reports, surveys, legal documents, product specifications, and spreadsheets that deliver a ounded understanding of your business plan but which are of interest to only a small number of your readers.
Not all business plans include all the components we list. In fact, you won’t find a textbook example of a written business plan. For that reason, we don’t
provide any rigid business-plan model in this book. Instead, you find information in how to develop each of the major components, advice for how business plans tend to work for different kinds of businesses, and ways you can organize and present materials in your written plan.
