Business Plans Tips
Read these 23 Business Plans Tips tips to make your life smarter, better, faster and wiser. Each tip is approved by our Editors and created by expert writers so great we call them Gurus. LifeTips is the place to go when you need to know about Entrepreneur tips and hundreds of other topics.
Common Weaknesses Uncovered During Business Planning
While you're writing your business and marketing plan, you are bound to find weaknesses in your company. Be prepared for this and don't try to hide them. Find a way to neutralize them or transform them into a strength. Keep an eye out for these common weaknesses:
* Inadequate staff training - do you or your staff have the knowledge and skill required to fulfill your business model and plan?
* Haphazard promotional plan - are your marketing campaigns coordinated and in sync? Misaligned and mismanaged promotional plans can hurt sales.
* Budgeting short falls - are you overspending your budget? Are your marketing plans costing you more than your budget can spare? Promoting your business is good ... but only within reason.
Don't Get Caught Without a Business Plan
If you fail to plan, you are essentially planning to fail. And yet, so many entrepreneurs fail to create a business and marketing plan for their businesses. A business plan can help you see the bigger picture and get organized, as well as:
Help you commit. You may have an idea of your company's goals in your head, but if you put them down on paper, it goes a long way toward making them happen.
Makes you a team player. By sharing your business plan with your employees, you make them feel like part of the company's operations. You give them an understanding of what the business' goals and objectives are, and they can help achieve them.
Help you make smart decisions. If everything is according to your business plan, you won't be taken by surprise by needs you didn't foresee. Planning well can help you make decisions about commercial property lease or purchase or equipment procurement.
Attract investors. Investors won't even consider funding a business without a plan. Even if you don't need financing today, one day you may.
Create an action plan. While you may know what your goals are, you may not know how to make them happen. A business plan should include action items that stimulate you to reach your goals.
Fleshing Out Your Operations and Management Plan
When it comes to seeking funding, the Operations and Management section of your business plan becomes very important. Spend some time to get it right. Investors will scrutinize how your organization is set up and how experienced your management is at running a business, so be sure to give as much relevant information as possible.
Operations:
Whether you're a one-person show or run a business with hundreds of employees, you likely have duties broken out into the following categories:
* Marketing and sales (include customer service)
* Production
* Research and development
* Administration
You may not have a department for each or you may overlap a few to make up for having a small staff. However your business is organized, define the tasks of each department as well as goals for each for the next month/quarter/year.
Management:
You may want to give a brief bio of each member of the management team, outlining each leader's experience in your industry and his or her tasks specifically. This helps investors understand what kind of leadership your business has, which can help them gain confidence that you will repay any loan you apply for, or will be able to generate a return on their investment in your business. Essentially, investors want to know your business is not only viable but also organized. This section of your business plan is your chance to prove that you run a tight ship!
Developing Your Design and Development Plan
Because your product or process may change frequently to keep up with competitors and rising supply costs, the Design and Development Plan portion of your business plan should be kept up to date and reflect your current development goals. Just like your marketing plan, your development plan should have a goal. Quantify it and provide as much detail as possible. Maybe you want to find a cheaper way to manufacture your helium balloons. Or increase production of your handmade soaps.
Process: Once you have your goal defined, start your plan with the process. Explain how your product (or service) is produced. Keep in mind, the plan is going to be read by investors, not scientists, so while details are important, write the process at the eighth grade level to make it easy (and interesting) to understand.
Development: This is where you can discuss plans for research and development. How will you continually keep your product relevant and affordable to produce? How often do you assess the product and decide whether or not to make changes? Investors want to see improvement, not stagnation. If your product hasn’t changed in 20 years, and your margin has been shrinking, you can be assured investors will pass on your plan in favor of one that stays innovative and on the cutting edge.
Marketing vs. Business Plan: Do I Need Both?
You hear people talk about marketing plans and you hear people talk about business plans. What’s the difference? Why would you need both? A business plan is a detailed presentation or report that discusses:
- Company Goals
- Products/Services
- Operations/Management
- Product Development
- Financial Position
- Income Statements, Cash Flow, Expenses
A marketing plan, which may be included in part within a business plan, focuses more on the marketing and promotion of the products or services a company offers.
So, do you need both? Yes ... use both types of plans as benchmarks throughout the year to ensure you’re on track to meeting your goals.
The Dark Side of Creating a Business & Marketing Plan
Did you know there is a dark side to creating a business and marketing plan? The thing about developing your plan is that you not only define your company's strengths, you uncover its weaknesses, as well. Be prepared to face them head on and either neutralize them or transform them into strengths.
Finding the Plan That's Right for Your Business
There are two main reasons to have a business plan: you need funding or you just want to make sure you stay on track for your business growth.
The thing is, no two business plans are the same. There are several types of plans, with each one fitting a different need. Which one do you choose?
Here is a short review to help you out:
The Mini-Plan:
Fairly short and to the point, a mini-plan doesn't take too much time and research to put together, and can be a good way to get out an idea or concept on paper to see if it's feasible. It's not the best option for serious finance inquiries, as bankers usually want a hefty document to look over.
The Plan in Action:
This is a work-in-process, and primarily serves to help you run your business. You'll use this plan frequently in operations, and will update it often. There's no need to include information on key executives or other information aimed at an audience outside of your business.
The Formal Plan:
This is the professional presentation you will give to bankers and potential investors. It contains all of the necessary elements, including financial statements and research.
You Need a Business Plan ... Even If You Aren't Seeking Funding
You know what your business does. You have plans for the future. Why bother with a business plan? A business and marketing plan is your roadmap to success ... without a map, how will you know where you are going? Writing out your plan and objective for your business goes a long way toward making it happen. While laying it out makes it official, don’t be afraid to go back and make changes to the plan as necessary. (For help in creating one, check out http://www.planyourbusinessvision.com.)
Ingredients of a Business Plan
A business plan can be formal (if you're presenting it to investors or a bank) or informal (if it's just for your reference), but whatever style you write it in, there are certain components you should include.
Executive Summary:
Required for formal business plans, optional for informal plans.
This is the Cliff's Notes of the business plan. It gives an overview of the entire plan, and if you're asking for investment or financing, it lays out exactly what you're asking for. Keep it to no more than a half page, and be sure to include:
* Business Concept
* Financial Details
* Financial Requirements
* Current Business Stats
* Major achievements
Business Description:
Required for both formal and informal business plans.
The next section is an overview of both the business and the industry, as well as the outlook for growth and opportunities you may be able to take advantage of.
Marketing Strategies:
Required for both formal and informal business plans.
Here you lay out who your target market is and how you will go about marketing to them.
Competitive Analysis:
Required for formal business plans, optional for informal plans.
List your top three to five competitors and assess their strengths and weaknesses.
Developmental Plan:
Required for formal business plans, optional for informal plans.
This section outlines your product's design and how you plan to develop it.
Operations and Management:
Required for formal business plans, optional for informal plans.
Outline the operations organization and define the roles of each of the key players in your business. Discuss opportunities to grow your staff.
Finances:
Required for formal business plans, optional for informal plans.
Here you include all income statements, cash flow and balance sheet so investors can see what your assets and liabilities are.
When to Update Your Business & Marketing Plan
Just as your business changes, your business and marketing plans should change too. Your business' objectives will likely change over time, as the industry landscape changes, your competitors get sharper, and your product line improves. Here are some key times in the life of your business when you need to assess your plans and make adjustments as necessary.
* New Financial Period: You should re-evaluate your plan at least once a year, but quarterly or monthly may be necessary during more turbulent financial times.
* New Business Structure: When your business changes structure, you will need to make sure your plan is in alignment with the new realities of your business.
* Change in Financial Need: Have you changed your financial goals in some way? Maybe your business needs to expand? Re-evaluate your plan to bring it in alignment with your new goals.
* Change in the Market: Markets are always in flux ... some more than others. Re-evaluate your plan to make sure it is still in sync with your market.
* Product/Service Growth: Have you decided to branch out with a new product or service line? Time to create a new marketing plan for this new line. Also, take a look at your other marketing plan to make sure nothing adversely overlaps.
* You've Achieved Your Goals: Congratulations! You've achieved what you set out to do. Time to set a new goal and create a plan to achieve it, too.
What's Your Objective?
Part of any good business or marketing plan is laying out your business’ objective. By writing it down, you are effectively dedicating your company to meeting that goal. Before you start your plan, brainstorm. Imagine your business in five years. Ask yourself these questions:
- What will my business look like?
- What will my revenues and profits be?
- How many employees will I have?
- What will my product/service offering look like?
- How many locations will my business operate in?
- How involved will I be as owner?
Quantify Your Goals
It’s important to avoid vague ideas like “my business will be successful.” You need hard numbers that you can measure against your actions. You need your goals to be "S.M.A.R.T." -- that is Specific, Measurable, Attainable, Realistic and Timed.
If this year your profit is $50,000, it will most likely be unreasonable to reach $1 million in profit in just a year. Set your standards high, but attainable. If you want to reach a certain number in sales, lay out how you will reach your metric. Will you add sales staff? Will you increase promotional campaigns? Lower prices of products? Your plan should give clear-cut, step by step actions to achieve your goals. If you don’t come close to your goal by the end of the period (year, five year mark), reassess your plan and make changes that are more realistic.
No Company is Too Small (or Big) for a Marketing Plan
As a small business, you may be bootstrapping your way with no financial backing. Every sale may go into your bank account to pay bills. But if you’re not investing at least some money back into your company, you will quickly find yourself lumped in with the 95% of all small business owners who find themselves in the small business graveyard within the first five years of operations.
So, how can you avoid this bummer statistic? Create a business and marketing plan.
Create a plan using strategies that will provide you with the best return on investment and that are affordable given your current budget. You can always grow from there.
Once you determine which methods are right for your business, lay out your budget. If you set aside just 10% of every sale, will that provide you enough capital to invest in at least one form of advertising a quarter? Could you afford to put aside 20%? You’d be surprised how quickly you can save enough money to have a decent marketing campaign if you only plan!
Schedule your plan on your calendar. Decide exactly when you want to do each strategy or technique and set deadlines for yourself. By doing this, you plan for your future, and can stay out of the small business graveyard!
Business Plans: Reasons To DIY
Whether you are seeking outside funding or not, you need a business plan. But the question is, should you write it yourself or hire a consultant to help you with it. Here are some reasons you should do it yourself.
* You know your business better than anyone else. This is your baby and you are the best person so to describe your vision for it's future.
* You are creating the plan for internal use only, not to seek outside funding. A business plan isn't rocket science, especially if you're writing it for your own purpose.
* You are just starting out and don't have the funds to hire a consultant. Using templates or software, you can do this by yourself ... at least enough to get your business started on the right track.
* You are good at following templates -- there are plenty available for DIY-ers. There are dozens of free and cheap marketing and business plan templates available online, and you can easily plug in your own information in to get a satisfactory plan.
Business Plan Mistakes #1: Getting Too Detailed
Whether you're writing your business plan for investors or for yourself, don't get too detailed on how your product or services works. The focus of your business plan is how your are going to make your product or service profitable, how it will attract the quantity of clients necessary for business growth. So spare the specifics on your product or service and talk about how you are going to monetize it.
Invest in Market Analysis
The market analysis section of your business plan is required if you intend on gaining investor interest. But it is also a very useful exercise if you are not. It is in this section that you take a look at your industry, your competition and evaluate how your business fits in ... and will survive.
In many cases, your audience probably doesn't know anything about your industry, so start by defining your market in terms of:
* Size
* Structure
* Growth prospects
* Trends
* Sales potential
But even if this section is just for your eyes, researching these things may show you that you don't know your market as well as you thought and could save you some heart ache later on.
Define Your Target Market:
You need to define a narrow segment of the market that will be best served by your products and services. This help you create better marketing messages and will help you make your business more attractive to the right buyers. Keep this in mind: Make your target market too broad and you have a shotgun effect with poor results on sales. Make it too narrow, and you leave no breathing room for future sales.
Pricing:
Naturally, your price must cover your costs and leave some room for profit margin. The lower you can get your costs, the higher your profit. Your price should reflect demand for your product and value provided, as well as changes in your market as a whole.
Distribution:
In this part of your plan, define where and how you will distribute your product. Do you have geographical restrictions? Technological limitations?
Promotion:
How will you promote your product? Lay out how you will use advertising, packaging, public relations, promotions and sales to increase exposure of your product.
Elements of a Marketing Plan
When developing a comprehensive marketing plan, there are certain common elements you should look at including.
* Purpose/Goal/Mission: What result to you want your marketing plan to achieve? Be specific. Do you have a sales goal? A prospecting goal? Get your numbers written down.
* Target Market: What is your niche? Again, be specific ... you may sell to people outside this target, buy your marketing message will be talking to a specific segment. Who are they?
* Products/Services: What product or service are you focusing on for this plan. It is better to have marketing plans focused on a single product line or you may get your messages confused.
* Market Analysis: What are the market trends related to your product or service? What is the competition doing? In comparison, what are your product's strengths and weaknesses?
* Strategy: What is your over all game plan for promoting your product or service?
* Tactics: What specific marketing method will support your strategy?
* Budget: How much money to you have to work your plan and how will your allocate the funds?
Business Plans: Reasons To Hire a Consultant
Whether you are seeking outside funding or not, you need a business plan. But the question is, should you write it yourself or hire a consultant to help you with it. Here are some reasons you should hire a consultant to help you out.
* You don't have the time necessary to pull together a good plan. You can delegate at least the first draft or two to a professional who can pull one together much more quickly and efficiently than you can.
* You are seeking outside funding. There are professionals who are trained and experienced in attracting and securing funding from banks and investors. If this is the reason you are writing your business plan, having the feedback from a professional business plan developer can make a big difference.
* You've written up an initial plan, but something isn't working. Because you are so close to your business, you may not be able to see its weak points. A consultant can help you identify and overcome the ones you find.
Fact Checking: An Important Part of Business Planning
Your business and marketing plan often will rely on data and research to make proper projections and decisions. So be very careful that the data you collect is reliable. Also, things change, so keep checking your the facts you based your business model on over time, just in case those facts have changed and you need to make adjustments.
Business Plan Mistakes #3: Target Market Too Narrow
As much as marketing to everyone is a mistake, so is marketing to such a small niche that your business becomes unsustainable. Your niche needs to have a large enough population to support your business model, while being narrow enough to focus your marketing message. It is a delicate balance you need to maintain in order to succeed.
Business Plan Mistakes #2: Target Market Too Broad
If you market to everyone, you market to no one. You need to market to a niche, a specific segment of "everyone." It doesn't matter if "everyone" needs your widget, "everyone" isn't going to want or buy it. For example, if you sell diamond studded pet leashes, is your target market really "anyone with a dog"? No.
Take Your Business Seriously ... Write a Business and Marketing Plan
Are you struggling to be profitable in your business? Maybe it's because you ... on some unconscious level ... are not taking your business seriously. Writing out a business and marketing plan can help you set that right ... and put you on track for a successful business. (For tips on how to write a business and marketing plan you can use, check out the free e-course at http://www.planyourbusinessvision.com.)
A Business Plan Helps You Make Wise Purchasing Decisions
When your business and marketing plan is written out, you can make smarter decisions about buying assets. You may have bought equipment and long-term assets on an as-needed basis before. But a business plan lets you make arrangements in advance so that you’re not taken by surprise. For example, if your lease is up on retail space in a year, include considering buying commercial property in your plan now. (For tips on creating a business and marketing plan, check out the free e-course at http://www.planyourbusinessvision.com.)
A Business Plan Gets Everyone on Board the Success Train
When you have a written business plan, you can share it with others on your team: employees, management, virtual assistants. This not only gets everyone on the same page ... it can also inspire them to contribute in ways you never thought of. By sharing your business plan with them, they have an understanding of where the business is going, and can gauge their place in it. (For help in creating a business plan, check out the free e-course at http://www.planyourbusinessvision.com.)
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| Carma Spence-Pothitt |
