10 Steps to a Highly Effective Business Plan

The 10 Steps to a Highly Effective Business Plan

A business plan is a written description of your business’s future. In essence, it’s a document that describes what you plan to do and how you plan to do it. The following business plan outline is a guide to assist you in the preparation of your unique venture.

Step 1 - Executive Summary
The executive summary informs the reader of the product/service, marketing strategy, management and the purpose and uses of funding. A first time reader should be able to clearly understand the plan from its summary.  The executive summery should be written after the business plan is complete. It should be no more than 2 pages long.

•    What is your company objective? What is the competitive advantage?
•    What are your mission, values & vision
•    Who is your management? What are their strengths?
•    Who is your target market and how will you penetrate this market?
•    Why are you requesting funding?
•    How much money you have invested in your business?

Step 2 - Table of Contents
The Table of Contents should provide a quick reference to the reader of sections and subsections of the Business Plan.

Step 3 - Product and/or Service Description
In this section you will provide a brief description of your product/service and its advantages. The reader should visibly understand the product/service that you are offering and who can benefit from purchasing it. This is your chance to SELL the reader about your product/service.

Step 4 - Industry/ Market Analysis
The primary purpose of this section is to provide the reader with a general idea of the industry and the market place where your product/service will be competing. This step should be conducted first. It is not sufficient to indicate industry statistics. Advise us what these statistics mean for your product/service. Are there opportunities for growth; if so, what are they? You should put emphasis on the potential threats and opportunities that exist to allow you to market your product/service. You should indicate the trends and know your competitors. Conduct a SWOT analysis.

Industry Analysis checklist:
•    How is the industry segmented?
•    What are the current trends?
•    Who are the major players?
•    What problems is the industry experiencing?
•    What are the growth forecasts?

Market Analysis checklist:
•    What companies are currently servicing this market?
•    Who are the customers in this market?
•    What motivates them to buy?
•    What is your competitive advantage?

Step 5 - Marketing Strategy

In this section you will tell the reader how your product/service fits within the marketplace you have described above and what your competitive advantage is. You will discuss the 4 P’s; product/service, price, promotion (advertising) and place. You should ensure that your 4 P’s are in line with your brand positioning strategy. Your sales strategy should be included in this section. This is the heart of your business plan. Your customer acquisition strategy described in this section will convince the reader whether or not to invest in your business venture.

•    Who is your customer? What are the demographics of your customer?
•    Why would they buy from you? Do you have any evidence that they will purchase your product/service?
•    What differentiates your product/service from the competition?
•    What are the strengths or weaknesses of your product/service?
•    What is your pricing strategy?
•    How does your pricing strategy compare with the competition?
•    Does the customer accept your pricing strategy? How do you know this?
•    How will you distribute your products/service?
•    What distribution channels will you use? Why?
•    How will you gain access to these channels?
•    How will you advertise and/or promote your product/service?
•    Is this promotional strategy an effective way to communicate with your customer?
•    How will you sell your product/service?
•    Who will sell the product/service?
•    How will you hire, train, and compensate your sales force?
•    How will you support your sales force?

Step 6 - Operations
This is how you will run your business. It is the step-by-step process that delivers value to your customer. It is your road map for success. These are the steps that the business will use to deliver their product/service in the marketplace; it may include manufacturing, transportation, logistics, and after sales service. How you operate your business should be linked to your marketing strategy.

•    How will you produce and deliver your product/service?
•    How will you use your operations to compete?
•    What is the cost?
•    What is the quality?

Step 7 - Development Strategy
In this section you will indicate the necessary steps required to get your business up and running; that is, if you are a start-up business. If you are an existing business looking to expand, you will indicate what you need in order to grow.

•    What work remains to be completed in order for you to launch your company or product/service?
•    What are the risks to the successful implementation of your development plans?
•    Cost risks? Competitive risks?
•    How will the company mitigate these risks?

Step 8 - Management
An investor looking to invest in a venture always analyzes the management team. They will assess the experience, the accomplishments of the individuals within the team, and their synergy. A resume of each partner should be included or discussed in this section.

•    Who are the key managers? What are their responsibilities?
•    What unique skills do they bring to the venture?
•    Do the individuals making up the management team complement each other in terms of personality and experience?

Step 9 - Financials
The financials are the glue that makes the plan stick together. The financials, which are composed of three years of projected cash flow statements, three years of balance sheet statements and three years of projected income statements, must be as realistic as possible and based on solid assumptions. Entrepreneurs will typically need to make assumptions about three key areas when writing a business plan: Sales, variable costs and fixed costs. You should prepare an opening balance sheet to indicate the amount of money you have invested as a shareholder. The income statement and balance sheet should be quarterly. Be sure that your financial projections are in line with the other sections of the business plan. Don’t forget to include your start-up costs!

Financial Templates:
1) Cashflow
2) Balance Sheets
3) Income Statement

•    Avoid unrealistic sales.
•    Include effects of seasonality and business cycles in all projections.
•    Do not underestimate your cash flow needs.
•    Do I have sufficient working capital?
•    Provide backup information on how you arrived at your figures

Step 10 - Funding Request
It is important to provide a detailed breakdown of how the funds will be used and what the possible sources of funding will be.