Strategic Plan vs a Business Plan
Oftentimes business owners don’t think they need a strategic plan because they have a business...
Every existing and aspiring business owner will tell you that they have a business plan. However, over the span of my career, which is more than (gulp) two decades, the words “business plan” mean different things to different entrepreneurs. For some, a business plan is held as a vision or aspiration in an entrepreneur’s mind. For others, a business plan is defined as the tax returns that their accountant prepares every year. For others still, a business plan is a document that contains a bunch of information needed to get a bank loan or a cash injection from investors.
In reality, a business plan should include the entrepreneur’s vision, the past financials, and that bunch of information investors want to know about. When googling “business plan”, you will find a lot of opinions on what a business plan should include. You may even find some articles and blogs stating that a business plan is not needed. The statistics simply do not support this opinion.
A business plan is required for growth. Ultimately, there are eleven things that every business plan should include.1. Executive Summary
The executive summary is important for those seeking funding. A weak executive summary will stop a bank or investor from diving further into the business plan, which ultimately means a denial in funding. Therefore, the executive summary needs to be as concise as possible, detailing the key points of each section of the business plan. Many advisors will state that the executive summary should be written last. I encourage entrepreneurs to write it first and then set it aside. After completing the business plan, write the executive summary again, without looking at the original. When the final executive summary is complete, go back and review the original.
Trust me. You will see the value of the business plan when comparing the two summaries.
The business overview is the general description of the business. It should include the legal structure of the business, such as sole proprietorship, partnership, corporation, LLC, or S corporation. Also, it should include the history of how the business came to be, as well as the type of business. For example, what does the business sell or provide. Finally, the overview should include the location of the business and the channels of doing business, such as storefront, remote, and/or ecommerce.
Just like in building architecture, form follows function. How you do what you do should be informed first by the what you do and the why. There should be a strong explanation on how the business will function, including the physical setup, processes, and people responsible for specific tasks.
This should include a deep dive into the market. How is the industry doing? Is it growing? Where are there opportunities of growth? Who is buying? A lot of reading and market research goes into this section. If done well, there should be charts, graphs, and spreadsheets.
Think of this section as a menu. (Perhaps if you are opening or own a restaurant, you will include a menu in this section.) Describe the products manufactured or sold, or the services offered. Each product and service should have a brief description. Make sure to group or classify products and services to make sense of them.
This section needs to answer, “How will the products or services be sold?” Describe the pricing strategy and sales information. The following questions need to be answered in this section:
Market research should be conducted to analyze the strengths and weaknesses of direct and indirect competitors. Additionally, the following question needs to be addressed—“What is your business’s competitive edge?”
This section should contain bios of the entire management team–including pertinent background information like education, experience, and associations.
The financial plan should include the following:
The following documents are needed in this section:
Below is a list of some examples of supporting documents to be included in a business plan:
Remember a business plan is the roadmap to create your dream, but the implementation of the plan turns your dream into reality. By doing the work to complete the business plan, the odds are stacked in your favor towards success because the actions and decisions you make for your business will be guided by the research, data, financials, and strategy outlined in the business plan.
On this election day, as I write this blog, I am reminded of former U.S. President Dwight D. Eisenhower’s words of wisdom, “Plans are nothing; planning is everything.”
If you have questions on how to craft a business plan, MPWRSource offers a Business Planning Bootcamp which utilizes the CORE FOUR Business Planning Course to teach aspiring or existing business owners the information and skills in business planning. Reach out to the MPWRSource Squad for more info today!