Complete Business Plan Guide

Business-plan 2Though, business plan is one of the major things that will be needed when trying to open a business. It will help you as a business man to secure loan for you business in the future and many more advantages.

Below are the steps you follow to create awesome business plan responding to only the aspect that concerns your business.

SUMMARY OF BUSINESS

We strongly recommend that you write this section last! We also suggest it shouldn’t be more than two pages at most.

See this section as describing your business in five minutes. It should contain things like: what is your product or service, what are the structures of your business, who are the owners of your business, who are your customers, where are your customers and how will you take your product to them, what do you think of the future of your business –  remember is just a bit of everything necessary.

More so, it should be professional, complete, simple and concise.

If you are applying for a loan, state clearly how much you want, precisely how you are going to use it, and how the money will make your business more profitable, thereby ensuring repayment.

COMPANY DESCRIPTION

This section includes the following:

Mission Statement:

This explains your reason for being in business and your guiding principles. If you have a mission statement, this is a good place to put it in the plan. What is your business’ mission statement? I.e. how will you achieve your vision?

Vision Statement:

The vision statement briefly outlines your future plan for the business. It should state clearly what your overall goals for the business are.

Goals/Objectives:

What are your short & long term goals? What activities will you undertake to meet them?

Business Philosophy: What is important to you in business?

Form of Ownership: Sole proprietor, partnership, corporation, or limited liability corporation (LLC)?

Company History:

This is where you tell us your years in business, previous owners, successes, failures, lessons learned, reputation in community, sales and profit history, number of employees, and events that affected success. Discuss significant past problems and how you solved and survived them. Just provide answers to the ones that concerns you – like years in business, lessons learned, significant past problems and how you solved and survived them; you probably don’t have any employee yet – just ignore if it’s not pertaining to you for now.

Company Strengths and Core Competencies:

What factors will make the company succeed? What are your major competitive strengths? What strengths do you personally bring to the business? What can you do better than others? e.g professionalism, quality, excellent customers service and any more.

Present Company Challenges and Future Projected Challenges: for example: if you need more fund for your business growth. Here is where you will explain how much you need and how it’s going to help your business growth.

Long Term Goals: What are your plans for the future of the business? Do you have a plan to grow the business? If so, at what rate and how will you achieve it? Are you developing strategies for continued growth, increased production, diversification, or eventual sale of the business? What are your time frames for these?

COMPANY PRODUCTS AND SERVICES

What are your products and services? Describe in depth your products and services. (Technical specifications, drawings, photos, sales brochures, and other bulky items belong in the Appendices.)

What factors give you competitive advantages or disadvantages? For example, the level of quality or uniqueness features. Business location, what is the pricing, fee, or leasing structure of your products and services?

MARKET RESEARCH

There are basically two types of market research: Primary and Secondary.

Primary marketer search means gathering and collecting your own data. For example, you could do your own traffic count at a proposed location, use the yellow pages to identify competitors, and do surveys or focus group interviews to learn about consumer preferences. Professional market research can be very costly, but there are many books that show small business owners how to do effective research.

Secondary research means using published information such as industry profiles, trade journals, newspapers, magazines, census data, and demographic profiles. This type of information is available from public libraries, industry associations, chambers of commerce, vendors who sell to your industry, and government agencies.

Start with your local library. Most librarians are pleased to guide you through their business data collection. You will be amazed at what is there. There are more online sources than you could possibly use. Your chamber of commerce has good information on the local area.

The Why Questions?

Here you are going to answer the why questions on matters your customers, your competitors, your pricing, your promotion, and your advertisement. However, every small business can benefit from doing market research to make sure it is on track. Use the business planning process as your opportunity to uncover data and to question your marketing efforts.

The  How Questions?

Here you are going to answer the how questions on matters your customers, your promotion, and your advertisement. However, every small business can benefit from doing market research to make sure it is on track. Use the business planning process as your opportunity to uncover data and to question your marketing efforts.

COMPANY MARKETING PLAN

In your marketing plan, be as specific as possible; give statistics, numbers, and sources. The marketing plan will be the basis, later on, of the all-important sales projection.

 Economics Data

Only provide answers to where it concerns you.

  • Facts about your industry
  • Total size of your market
  • Percentage share of the market you have. (This is important only if you are a major factor in the market.)
  • Current demand in target market
  • Growth history
  • Trends in target market — growth trends, trends in consumer preferences, and trends in product development
  • Growth potential and opportunity for a business of your size
  • What barriers to entry keep potential new competitors from flooding into your market?
  • High capital costs
  • High production costs
  • High marketing costs
  • Consumer acceptance
  • brand recognition
  • Training/skills
  • Unique technology/patents
  • Unions/
  • Shipping costs
  • Tariff barriers/quotas
  • How could the following affect your company?

Change in technology

Government regulations

Changing economy

Change in your industry

Company’s Products

In the above Products and Services section, you described your products and services as you see them. Now describe them from your customers’ point of view.

Features and Benefits of Your Company’s Products and Services

Biz-PlanThe first thing you do in this section is to list all your company’s major products or services. For each product or service, describe the most important features – that is, what does the product do? and what is special about it? Now, for each product or service, describe its benefits – that is, what does the product do for/to the customer?

It is important to know the differences between features and benefits, and think about them.

For example, if house is your product; to know the feature you ask what does how do. And you also ask what is special about your own house. What does a house do? A house gives shelter? And what is special about your own house? It lasts a longer time; those are its features.

Its benefits include pride of ownership, financial security and providing shelter for the family. You build features into your product so you can sell the benefits.

Unique Selling Point:

How will your products/services succeed in the market where others may have failed? What gives your products/services the edge?

Customers

Identify your customers, their characteristics, and their geographic locations; that is, demographics. Who are you selling to? Why would they buy your products/services over others?

The description will be completely different depending on whether you sell to other businesses or directly to consumers. If you sell a consumer product, but sell it through a channel of distributors, wholesalers, and retailers, you must carefully analyze both the end user and the intermediary businesses to which you sell.

You may have more than one customer group. Identify the most important groups.

Then, for each consumer group, construct a demographic profile:

  • Age
  • Gender
  • Location
  • Income level
  • Social class/occupation
  • Education
  • Other

For business customers, the demographic factors might be:

  • Industry (or portion of an industry)
  • Location
  • Size of firm
  • Quality/technology/price preferences
  • Other

Your Competitors

You do not need to pretend they do not exist’ else they will throw you of business sooner or later. The better thing to do is to analyze your competitors and find a better way to dealing with them.

What products and companies compete with you? List your major competitors, including their names and addresses. Do they compete with you across the board, just for certain products, certain customers, or in certain locations?

Use the following table to compare your company with your three most important competitors. In the first column are key competitive factors. Because these vary with each market, you may want to customize the list of factors.

In the cell labeled ʺMe,ʺ state honestly how you think you stack up in customersʹ minds.

Then decide whether you think this factor is strength or a weakness for you. If you find it hard to analyze yourself this way, enlist some disinterested party to assess you. This can be a real eye-opener. Now analyze each major competitor. In a few words, state how you think they stack up.

In the last column, estimate how important each competitive factor is to the customer. 1 => Very Important; 5 => Not Very Important.

Table 1: Competitive Analysis

 

FACTOR Me Strength Weakness Competitor A Competitor B Competitor C Importance to customers
Products
Price
Quality
Service
Reliability
Stability
Professionalism
Company

reputation

Location
Appearance
Sales

method

Credit

policies

Advertising

After you finish the competitive matrix, write a short paragraph stating your competitive advantages and disadvantages.

Niche

Now that you have systematically analyzed your industry, your product, your customers, and the competitors, you should have a clear picture of where your company fits into the world.

In one short paragraph, define your niche, your unique corner of the market.

S.W.O.T. Analysis

Here you are going to list each of your businesses strengths, weaknesses, opportunities or threats in the table below and then outline how you plan to address each of the weaknesses/threats.

 

S – STRENGHTS

–      Professionalism

–      High traffic location

W – WEAKNESSES

–      Poor Power Supply

–      High Cost of rent

O – OPPORTUNITIES

–      Build excellent customers service

–      Good Government Policy

T – THREATS

–      Cash Flow Problems

–      Poor Management

MARKETING STRATEGY

Now outline a marketing strategy that is consistent with your niche. How do you plan to enter the market? How do you intend to attract customers? How and why will this work?

 Promotion: How do you get the word out to customers?

 Advertising: What media do you use, why, and how often? Has your advertising been effective? How can you tell? You know your system works if you have repeated customers.

Do you use other methods, such as trade shows, catalogs, dealer incentives, word of mouth, and network of friends or professionals?

 Promotional Budget

How much will you spend on the items listed above? Should you consider spending less on some promotional activities and more on others?

 Pricing

What is your pricing strategy? For most small businesses, having the lowest prices is not a good strategy. Usually you will do better to have average prices and compete on quality and service. Does your pricing strategy fit with what was revealed in your competitive analysis?

Compare your prices with those of your competitors; are they higher, lower, the same? Why?

How important is price as a competitive factor? What are your payment and customer credit policies?

Location

You will describe your physical location in the Operational Plan section of your business plan. Herein the Marketing Plan section, analyze your location as it affects your customers.

If customers come to your place of business:

  • Is it convenient? Parking? Interior spaces? Not out of the way?
  • Is it consistent with your image?
  • Is it what customers want and expect?

Where are your competitors located? Is it better for you to be near them (like car dealers or

fast‐food restaurants) or distant (like convenience food stores)?

Distribution Channels

How do you sell your products or services?

  • Retail – These are people who sale to the final consumers
  • Direct (mail order, World WideWeb, catalog)
  • Wholesale – These are people who sale to retailers
  • Your own sales force – These are your internal sales force
  • Agents – They your external sales force
  • Independent reps – these are people who make commissions off the products they sale

Has your marketing strategy proven effective?

Do you need to make any changes or additions to current strategies?

Sales Forecast

Now that you have described your products, services, customers, markets, and marketing plans in detail, it is time to attach some numbers to your plan. Use a forecastspreadsheet to prepare a month-by-month projection. Base the forecast on your historical sales, the marketing strategies that you have just described, your market research, and industry data, if available.

You may want to do two forecasts: 1) a ʺbest guess,ʺ which is what you really expect,

and 2) a ʺworst caseʺ low estimate that you are confident you can reach no matter what happens.

Remember to keep notes on your research and your assumptions as you build this sales forecast and all subsequent spreadsheets in the plan. Relate the forecast to your sales history, explaining the major differences between past and projected sales. This is critical if you are going to present it to funding sources.

COMPANY OPERATIONAL PLAN

Explain the daily operation of the business, its location, equipment, people, processes, and surrounding environment.

 Production

How and where do you produce your products or services?

Explain your methods of:

  • Production techniques and costs
  • Quality control
  • Customer service
  • Inventory control
  • Product development

Location

Describe the locations of production, sales, storage areas, and buildings.

Do you lease or own your premises?

Describe access to your buildings (walk in, parking, freeway, airport, rail, road, and shipping).

What are your business hours?

If you are trying to get an expansion loan, include a drawing or layout of your proposed facility.

Legal Environment

Describe the following:

  • Licensing and bonding requirements
  • Permits
  • Health, workplace, or environmental regulations
  • Special regulations covering your industry or profession
  • Zoning or building code requirements
  • Insurance coverage
  • Trademarks, copyrights, or patents (pending, existing, or purchased)

Personnel

  • Number of employees
  • Type of labor (skilled, unskilled, and professional)
  • Where do you find new employees?
  • Quality of existing staff
  • Pay structure
  • Training methods and requirements
  • New hiring in the coming year?
  • Who does which tasks?
  • Are schedules and procedures in place?
  • Do you have written job descriptions for employees? If not, take time to write some. Written job descriptions really help internal communications with employees.
  • Do you use contract workers as well as employees?

Inventory

  • What kind of inventory do you keep: raw materials, supplies, finished goods?
  • Average value in stock; that is, what is your inventory investment?
  • Rate of turnover and how it compares with industry averages?
  • Seasonal buildups?
  • Lead time for ordering?

Suppliers

Note the following information about your suppliers:

  • Their names and addresses.
  • Type and amount of inventory furnished.
  • Credit and delivery policies.
  • History and reliability.
  • Do you expect shortages or short-term delivery problems?
  • Are supply costs steady or fluctuating? If fluctuating, how do you deal with changing costs?
  • Should you be searching out new sources of supply, or are you satisfied with present suppliers?

Credit Policies

Do you sell on credit? If so, do you really need to? Is it customary in your industry and expected by your clients?

Do you carefully monitor your payables (what you owe to vendors) to take advantage of discounts and to keep your credit rating good? You need to carefully manage both the credit you extend and the credit you receive.

Warranties & refunds:

If you manufacture certain goods, what are the warranty terms? What is your business refund/exchange policy?

Quality control:

Describe your quality control process. What checks or balances do you have in place to ensure the product or service you offer is produced to the same standard of quality? What steps do you take to meet product safety standards?

Managing Your Accounts Receivable

If you do extend credit, what are your policies about who gets credit and how much?

How do you check the creditworthiness of new applicants?

What terms will you offer your customers; that is, how much credit and when is payment due?

Do you offer prompt payment discounts? (It is best to do this only if it is usual and customary in your industry.)

Do you know what it costs you to extend credit? This includes both the cost of capital tied up in receivables and the cost of bad debts. Have you built the costs into your prices?

MANAGEMENT AND ORGANIZATION

Who manages the business on a day-to-day basis?

What experience does that person bring to the business? What special or distinctive competencies? Is there a plan for continuation of the business if this person his lost or his incapacitated? If you have more than 6 employees, prepare an organizational chart showing the management hierarchy and who is responsible for key functions. Include position descriptions for key employees.

 Risk management

Here you are going to list all your business potential risks (in order of likelihood) that could affect your business.

 

Risk Likelihood Impact Handling Strategy
[Description of the risk and

the potential impact to your

business.]

[Highly Unlikely,

Unlikely, Likely,

Highly Likely]

[High,

Medium,

Low]

[What actions will you take

to minimize/mitigate the

potential risk to your

business?]

[Description of the risk and

the potential impact to your

business.]

[Highly Unlikely,

Unlikely, Likely,

Highly Likely]

[High,

Medium,

Low]

[What actions will you take

to minimize/mitigate the

potential risk to your

business?]

[Description of the risk and

the potential impact to your

business.]

[Highly Unlikely,

Unlikely, Likely,

Highly Likely]

[High,

Medium,

Low]

[What actions will you take

to minimize/mitigate the

potential risk to your

business?]

[Description of the risk and

the potential impact to your

business.]

[Highly Unlikely,

Unlikely, Likely,

Highly Likely]

[High,

Medium,

Low]

[What actions will you take

to minimize/mitigate the

potential risk to your

business?]

Professional and Advisory Support

List the following:

  • Board of directors and management advisory board
  • Attorney
  • Accountant
  • Insurance agent
  • Banker
  • Consultants
  • Mentors and key advisers

Personal Financial Statement

Owners often have to draw on personal assets to finance the business. This statement will

Show you what is available. Bankers and investors usually want this information as well.

They will ask owners to cosign or personally guarantee any business loans.

Document your assumptions, notes, definitions, and any special financial situation.

Include details of notes, securities, contracts, etc. on the bottom of a personal financial

spreadsheet. Include one such spreadsheet for each principal.

Financial History and Analysis

A solid analysis of the past must precede any serious attempt to forecast the future. A Financial history and ratios spreadsheet will allow you to put a great deal of financial information from other statements on a single page for ease of comprehension and analysis. You may also enter industry average ratios for comparison.

Debt Schedule

This table gives in-depth information that the financial statements themselves do not usually provide. Include a debt schedule in the following format for each note payable on your most recent balance sheet.

 

To whom

payable

Original

amount

Original

date

Present

balance

Rate of

interest

Maturity

date

Monthly

payment

Security Current/past due

Please drop your questions in the comment box bellow. Meanwhile, you can also ask for the downloadable version.

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