After laying the foundation of a house, or success planning in business planning, it is time to build the first floor, which is market planning. When crafting the market plan the following things needs to be considered: products/services, distribution, customers, industry, and competition. Don’t forget the four Ps of marketing: pricing, promotion, packaging, and position. All these need to be established in order to generate sales, a.k.a., revenue. 75% of a business plan is the market plan. Do you know why? You can have the best operations, product, cash flow, and people in the world, but if you do not have consumers, you do not have a business. If you have read our other blogs, you know what I always say, “Marketing is not about creating demand. It is about meeting demand.” Through developing the market plan, the needs of the market will appear. That may cause you to pivot your business model, which ultimately could save your business and make you money.
Once the first floor is built, you can move on to the second floor: cash flow and operations planning. A business owner needs to develop a cash flow projection. According to a U.S. Bank study, 82% of businesses that failed cited that cash flow problems factor into their failure. Cash flow isn’t about the money that is coming in and out. Cash flow is about the timing of when money is coming in and out. Look at a landscaping business. Their money doesn’t flow in until the summer, so they wind up struggling during the cold seasons. It is important to budget for the seasonality of a business and to prepare and analyze cash flow statements to make sure you are keeping on top of it. I highly recommend employing a good accountant.
In terms of operations, business owners need to research and identify applicable laws, regulations, and issues that apply to their businesses. This requires extensive research. Also, this is the time to consider legal form of your business, i.e., sole proprietorship, partnership, limited liability company, corporation, or s-corporation, as well as the assumed name you choose for your business. Insurance, taxes, tax-id numbers, employment relationships, insurances, recordkeeping, suppliers, and customer service should all be outlined in the operations segment.
Ultimately, the finalization of the business plan should determine the desirability, viability, and feasibility of your business. While working on the plan, you may have to change course or pivot, but making mistakes on paper are much less time consuming and costly than in real life.
Your business plan should answer the following questions:
- What are your products or services?
- Who are your customers/clients?
- How will prospective customers/clients find you? How will you find and sell to them?
- Where is your business located? What does the location look like?
- How many employees are working? Who are they? What are they doing?
- What is your role in the business?
- Do you like what you will be doing? Why?
- How do you see the business in two years? Have expanded? Hired employees? Moved? Added new product lines?
- After two years what do you want your role in the business to be? Will it be right for you?
- Why do want to do this business?
- What do you personally want to achieve?
- What do you want your business to achieve?
Once the business plan is complete, the next step is to implement the plan. The plan is the roadmap to create your dream, but the implementation of the plan turns your dream into reality. Remember that the business plan is not just a document that occupies space on your cloud or on your bookshelf. It is a living and breathing document that should be cited frequently and adjusted on occasion, much like a GPS may change your course when there has been a car accident causing a traffic jam.
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!