More Details About Business Plans

Last week we discussed the importance of using your business plan to guide the growth and processes of your company, rather than developing it for funding sources and never referring to it. We also outlined the basics of a business plan.

This week we will add more details about certain parts of your business plans. To prevent this post from being too long, we will highlight other parts over the next few weeks (the dates we will discuss the others sections appear in the outline below). Once again, we refer you to the excellent resources of the Small Business Administration (SBA), Small Business Development Centers (SBDC), Service Corps of Retired Executives (SCORE), and paid consultants. Each of them provide excellent resources at no- to small-cost.

Your business plan should contain the following information:

Executive summary (Usually 1 page. It is the last section you prepare)

1. Business summary describes (in one paragraph) the overview of the business idea, financial goals, and operational goals 
2. Keys to success explains why your business will succeed over your competition. It includes advantages of the service or product, marketing hooks, expertise of the principals. Usually this section will be among the hardest to write. Typically you use bulleted statements to highlight each key. 
3. Key objectives describes the financial goals for the first five years of the business. It overviews the major milestones to accomplish those goals. Use a graph for the financial goals and bullets for the milestones. 
4. Legal entity states how your business is, or will be, legally organized according to the laws of your state. You may choose to register as a sole proprietorship, partnership, Limited Liability Corporation (LLC), Limited Professional Corporation (LPC), S-Corporation, C-Corporation, 501 (c) 3, or other more arcane legal entity. Each entity provides different levels of protection, regulation, and organization. Always consult an attorney for any entity stronger than a sole proprietorship (even then it’s recommended). Listing the entity in the Executive Summary requires one line.
5. Quarterly and annual sales and profit projections indicate how much profits, revenues, and overhead you think your company should generate
6. Key principals and investors lists names and brief biographies for you, your key investors, and management team. This section will usually occupy a second page by itself. Biographies should be short. They should outline each person’s expertise, experience and major role in the company. Photos of each person allow others to recognize key players.

Market analysis (Look for…)

1. Can Your Business Idea Succeed next week, July 22
2. Who & What is Your Competition on July 29

Operational plan (Look for…)

1. Planning Your Operation on August 12

Marketing plan (Look for…)

1. Drafting your marketing plan on August 19
2. The 7 Pillars of Successful Marketing on August 26
3. Steps to Successful Sales Calls on September 2

Finance plan (Look for…) 

1. Establishing QuickBooks Accounting on September 9
2. Using Virtual Bookkeepers on September 16
3. Retaining an Accountant on September 23
4. Finding Funding for Your Business on September 30
5. Angel Partners & CVs on October 7

Exit strategy

1. What is the plan for current principals and investors to exit the business? Provides enough detail to satisfy everyone and reduce future discomfort. Drafting this section allows you and all the principals to confirm common understanding about how long each person (including investors) intends to stay involved in the business. It also describes what cash or profits triggers them leaving.
2. How does a principal sell his/her portion? Explains if current partners have right of first refusal, acquisition by other principals, or selling to outside investors. It also describes the role new investors or partners would play in the management of the company should they buy out one of the principals.
3. Milestones that trigger the exit include number in the client base, revenues, profits, market penetration, or significant dates. This section needs agreement of all principals. It provides more detail than the first section of the Exit Strategy.
4. How will the firm be dissolved describes what will happen to the assets, clients, brands, name, patents, copyrights, trademarks, and any other elements of the business. Your options include selling to (or merging with) another firm, selling to one of the partners, transferring ownership to family members, or dissolving everything and walling away. You may wish to include consulting a business broker in this section.

Creating—and following—a business plan prevents costly mistakes (Not that you still won’t make costly mistakes, that’s part of being a business owner. A business plan reduces the number you make with real money). Drafting, refining, and modifying your business plan requires hard work. Find a coach to help through SCORE or your local SBDC to assist you to write your plan. Join organizations, like a small Chamber of Commerce (sometimes large Chambers only focus on the global or large companies), whose members are small-business owners.

We hope this helps you build a business plan that will outline, guide, and deliver the growth of your business.