Failing to plan is planning to fail", and whether you are starting a new company, launching a new product, or beginning your new fiscal year. A well thought-out business plan or playbook will help ensure success.
Most people who spend time searching the Internet can quickly find a guide on how to write a business plan. However, just following a template doesn’t guarantee that the business plan produced will be successful or even good. A successful business plan needs quite a bit more to actually be useful and even more to be functional and successful. As the elements come together, if done correctly, the most important component of success will come from the soul of the business owner and leadership versus the company itself.
Your business plan needs to have minimally the following seven specific elements to make it "stand out" and be credible.
1. Have a Purpose
What is your business plan being written for? A road map on how to operate? An investor or loan pitch? Both? The purpose of your plan has to be clear and definitive. If you don’t know why you’re writing a business plan, the effort will be a waste of time. Knowing also means having a target audience you expect the plan to be ready by. With both defined, it will help dictate what information is included and how.
2. Include Your Motivation
Every business needs a mission that drives it, not just selling to make money. Your motivation defined in the business plan is that mission, so document the motivation, the problems solved, and the associated goals. Your motivation needs to be a reason that will convince people that your business will succeed, through the good times and the very challenging times.
3. Provide a Company Profile or Executive Summary
Your business plan needs a section that gives a reader a clear view of what your company is, does and provides in a few concise paragraphs. This should be the same information that one would find if they looked on the business’ website. It’s designed to be quick and digestible mentally because it needs to stick in a reader’s mind quickly, especially as more information is provided later in the plan. If the reader remembers nothing else, he or she will have the profile entrenched in their memory. And that matters when your plan is being considered and opinions are being developed.
4. Research
If you are going to develop a viable business plan, a plan your operating team will embrace, or have investors put their money into it, your information has to be top notch. And that includes knowing every topic involved, not just your internal operations. Research and critical analysis are key to developing and communicating a business plan properly. The information used has to be relevant, valuable, and objective. However, you’re not writing a novel, so the presentation of the information needs to be concise. Avoid brain dumps or data dumps - they can be confusing and overwhelming for most.
5. Include Relevant Sales and Marketing Plans
A simple mistake made by most startups or small businesses is they think they can write a business plan without knowing the real size of an addressable market and how something is going to be sold. A strategic sales and marketing plan is essential; it shows how your product or service is going to be delivered, communicated and sold to customers. It covers where, when and how much, all the key pieces that later on feed into the financial statement projections in the business plan. No surprise, a detailed sales and marketing plan has to be nailed down before planning out the rest of the business.
6. Create a Financial Plan that Translates Goals into Specific Targets
One of the biggest challenges in creating a business plan for a new Company is developing financial projections. If you have an existing business, planning out and working on your company's financial projections each year could be one of the most important things you do for your business.
Financial projections indicate where your business is going and growing. They help identify what's required for the business to succeed. The purpose of formulating financial projection is to predict what the business is capable of in terms of revenues and profits, with the help of the assumptions made on potential costs, market size, prices, marketing conditions and so on. Financial projections will help determine how much investment is needed for the business to achieve stated goals.
"If you don't know your numbers, you don't know your business." -Marcus Lemonis
It's critical your financial projections logically tie to your research data and your marketing plan. If you are unsure about creating financial projection, I highly recommend you hire a consultant who is experienced in making financial projections. If not, your credibility will be quickly diluted.
7. Be Willing to Modify the Plan for Your Audience
Another common mistake that is often made is writing only one business plan. A business plan that provides internal direction for your team is going to be very different than a business plan given to a lender or potential investors. Smart startups have multiple versions, just like candidates have multiple resumes for different prospective employers. Match the plan and message to the audience you are addressing.
Need some direction in getting your business plan to stand out? Email me at tmassie@sandler.com.
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