Does your company have a business plan? Is it comprehensive? Does it have the key components needed to succeed? Does it plan for several scenarios?
Do you know how to create one?
Business plans are crucial to keeping operations flowing smoothly, outlining a path for growth, staying on a path of continuous improvement, and necessary for pitching to investors. Examples of entrepreneurs and business people operating with little to no business plans exist. But the hard truth is they aren’t thriving as greatly as they could. Price-Waterhouse-Coopers cites two-thirds of fast growth company CEOs as having a business plan.
Why? Simply the act of having to create a business plan forces those involved to critically think about business operations, strategies, tactics, and facts. Instead of putting these critical tasks off for a future date, it makes responsible parties form offensive and defensive plans before an opportunity or crisis presents itself. Armed with strategies and contingent plans, a business will be more prepared.
Depending on the audience (internal vs. external), the level of detail complexities can vary, but there are several key items that should always be included in the business plan. If the organization is seeking investors, an executive summary should come first. This is the “ask”; what does the organization want from the investor? The executive summary should be short and sweet (i.e. under a page). If the organization isn’t pitching to an outside party, this can obviously be left out. Next, describe the business. This includes a mission statement, organizational structure, legal structure, team members, product and/or service offerings (including differentiating factors), and target market(s). This should include detail, but be as succinct as possible. Next, describe how the organization will market its product and/or service offerings. This should include a look at market trends, both current and predicted, pricing and distribution strategies, and competitor analysis. If you are pitching to investors, a section on profitability should absolutely be included. This is a collection of factors of why the business will/is profitable. If the organization is in existence, include income statements, cash flow statements, and balance statements (serious and knowledgeable investors will ask for these). Including information on financials, expert profiles, cutting-edge technology, competitive advantages, provides a broad story for the investor. This section should include any information that can help support the previous “ask”. This should outline best and worst scenarios and the type and size of support you will need accordingly. It is also important to include risks and weaknesses, which can be addressed with strengths and opportunities. Lastly, include measurable goals and benchmarks. The most critical part of creating goals and benchmarks is to make them measurable; if they aren’t, there is no way to properly gauge improvement or decline. This section should outline how benchmarks will be measured, how they will be hit, what hitting the benchmarks will trigger, how goals will be met, what to do if they are/are not hit, etc. A concluding summary can also be included if the organization is pitching to investors.
This basic outline turns out to not be extremely basic or easy to compile, but with the information gathered and strategies formulated, the business stands the best chance at success once entering the market. It’s crucial to remember this is not a static process; the business plan should be revisited at least quarterly.