Hello again and welcome back. In this final part, I'll talk about creating a basic business plan. I'm not going to be too detailed today but will give an overview of what is typically included in a business plan to make it useful for your audience.
Once again, it is useful to keep the idea of a story you are telling to describe your business. You're just going to follow some guidelines in the same way the plot of a book follows certain guidelines. You'll have a beginning, a middle and an end. Your plan is not meant to be a sweeping saga but a well-drafted summary about your business.
Ideally, your business plan should include the following:
- Summary of your business environment
- Business/Company description
- Outline or Brief Summary of your business strategy (your storyline or plot outline)
- Summary of your finances and your financial projections
- Action Plan
The Summary
The summary section acts as an introduction to your business and the environment you will or currently operate in. It is assumed that you have done your research and thoroughly understand not only your business but the challenges and rewards to be expected.
The key things to include in the summary section are an overview of the industry, your competitors, your customers and issues that will affect your success. To make it even easier to understand, think of them as the 3 Cs. Conditions, Competition, and Customers.
Conditions refer to the forces that affect the industry you are in - things like government regulations, technology, pricing structures etc.
- By keeping your ear to the ground, you will find out what concerns the government or regulatory agencies have about your industry and what laws they will put in place to address it. How will this new regulation affect your business?
- In the same way, technology is constantly evolving - how will you be able to adapt in your business?
- What’s happening in your industry? Is it growing or is it stagnant with nothing innovative or exciting happening? What will you be bringing to excite your customers?
- All of these factors need to be researched and a summary of your findings and how you intend to address them should be in your summary section.
Competition is not only the other players in the industry but players that offer an alternative to your product or service that aren’t necessarily classified as part of your industry.
For example, if you are a car manufacturer, logically, your industry will comprise of car manufacturers. However, your competition is not only other car makers but bicycle makers, motorcycle makers and the government (that offers public transport).
So when you are thinking about your competition, think about the other choices your customers have to replace your goods or services. It won’t always be obvious, so talk to your customers about their wants and needs and pain points. It’s from these discussions that you will find out how your clients view your services and your industry.
In your summary, you should address where your competitors are, the strengths and weaknesses that they experience and how you will either leverage or address them. You will also want to include information on how your company will differentiate itself from the masses.
Customers are the foundation and backbone of your business. Without them, you’d be running a hobby. So you need to understand your customers’ needs.
- Why do they need your business?
- What solutions do your competitors currently offer and how can you do it better or differently?
- As with the competition, your customers aren’t only those you naturally think off. Along the way, you may find other users of your services that weren’t otherwise obvious.
Be careful here though because it is quite easy to fall down the rabbit hole of trying to be all things to everyone and this is where many entrepreneurs set themselves up for failure. The more variety of customers you try to serve, the more expense you incur and unless you are able to get financing to do this, you will come undone.
You also will need to start building a customer profile and this is one of the hardest things to do if you are a startup. However, it can be done.
Go to your competitors' social media sites and see who comments there. Where you can, click their profile pages and you can often get some of the information you are looking for - such as where they live, what their interests are, demographic information such as their age, education and marital status. This isn’t a bad thing especially if you don’t try to follow them like a stalker - you are simply trying to get an inkling of what the people who look at services like yours are about.
You can also carry out research - this can be done in a number of ways. You can do it yourself or see what has been done by others and is available for you to use. Often your local chamber of commerce or industry group will have some research information available. Your local library can also be a source of information on demographics and buying patterns. Once you’ve done this, you can now create a succinct snapshot of your client profile to be used in your summary.
Business Description
Here you describe your business, its goals and values. What it will be doing and how you will be doing it and who are the players to make it successful and innovative. Going back to the SMART objectives you created earlier, describe what your business will be doing and how it will carry out its goals and how your values will be played out in all of this. Describe the staff who will be involved in making the success happen in detail. What will be their function and roles?
Business Strategy
Here you get down to the nitty-gritty of how you intend to get customers and keep them coming back. So this would be a good place to put your marketing plan which might include your social media engagement, your sales team etc. Be as specific as you can. If you are writing your plan to raise funds, your potential investors or lenders need to see how you intend to succeed.
Financial Statement
This is where you put in planned and estimated financial information. The 3 categories of information needed are your income, your balance sheet, and your cash-flow. In most cases, the numbers you will be using will be projections but try to keep them as realistic as you possibly can. Don't give wild predictions because you will have to defend those numbers. Get help from a reputable accountant if you need help. Try to choose one who can explain things in simple ways you can understand and repeat to someone else.
Action Plan
In your action plan, you give a detailed outline of what you will do to make your business a success. While it may seem similar to your Business Strategy, it's not. Show what you intend to do. For example:
- Get an office place
- Identify required staff and hire them
- Identify and get suppliers. Name them and give an idea of monthly volume.
Whew, we’ve come to the end of our little discourse on the dreaded business plan. The questions are by no means exhaustive and I am currently working on a Business Plan checklist. I'd love for you to let me know in the comment section what you would like to see on the checklist. Good luck with writing your plan and let me know if you need any help.