Business Plan Tips and Resources

There is great debate as to whether entrepreneurs should have business plans. Although they are required for people seeking business loans, you should still have one even if are not seeking financial assistance at this time. Keep in mind that you may need a loan in the future, and the foundation of your plan will already be laid.

A written plan helps you define what you are offering, who you selling to; and how much you need to sell to make a profit. Some people get intimidated by the thought of preparing a business plan. While it does take time to write, you don’t have to complete it all at once. Remember, a business plan will never be final. You will continually revisit and revise your plan as your business continues to evolve and grow.

In the early stages of planning, your document should clearly define your product and service offerings; target markets; marketing strategy; and financial plan.

There are a few things to keep in mind as you write your business plan.

  • Your business plan can be as few as five pages as long as you address the above-mentioned essentials.
  • You can’t be everything to everybody, so market research is essential. Just because your product or service appeals to several groups of people doesn’t mean they want it or are willing to pay for it.
  • If you fail to plan, you plan to fail. Research is crucial. You need to study the market you want to serve and the industry you want to enter.
  • Revisit your plan as often as needed.
  • Your market research and financial plans are the most important aspects of your plan.
  • It doesn’t have to be overly formal. This is your plan. It can be as informal as you want as long as you understand what you mean.
  • Use images to help visualize your goals and plans.
  • Write any thoughts about your business that comes to mind. This is your place to see what works and what doesn’t.
  • You are in business to make money. If you want to be charitable, start a nonprofit. If you don’t like taking people’s money, make your activities your hobby.

Check out books and sample plans to get you going, but use them as resources only. Do not try to fit your business into someone else’s model – even if you have the same business. Their dream is not your dream; therefore, you will get frustrated trying to make it fit. All books on business plans are not good books. Go to a local bookstore or library to review a few and select two or three that work best for you.

The following sources can help you through the business plan writing process and make it less intimidating.

Organizations that support small business owners

  • Small Business Administration
  • Women’s Business Development Center
  • Business departments at colleges and universities
  • Other established business owners
  • Local chambers of commerce and business associations

Business Plan Resources

  • Small Business Administration
  • Entrepreneur
  • Women’s Business Development Center
  • City and state resources for small business owners
  • Bookstores and libraries

Market Research Resources
These books can be found in the reference section at the library. Most cannot be checked out. However, you may luck up and find them on an online bookstores at a fraction of the cost.

Print Directories

  • Directory of Associations / Directory of Tradeshows
  • Sourcebook of Zip Code Demographics
  • American Market Place
  • Small Business Sourcebook
  • Best Customers – Demographics of Consumer Demand
  • Survey of Current Businesses
  • Industry and Trade Outlook
  • State and Metropolitan Area Data Book

Online Resources

  • Reference USA
  • ABI/Inform
  • ProQuest
  • Census – Business Census

Above are just a few tools to get you started on your business plan writing journey. If at anytime you feel stuck, contact one of the organizations listed to speak with a counselor. If you need assistance with your marketing or financial plans, they can help you with those, too. Just be sure to have a plan.

Writing An Effective Business Plan

Numerous statistics have shown that having a business plan can be very helpful for those planning to start or grow their business. Putting together a business plan can be illuminating to those who have very limited understanding of business management skills and how the process works in practice. Whilst there are numerous text books and templates available on how to put together a business plan, I have found that this is not always helpful for the novice who still need a hand holding. Getting support from an expert can be helpful but the financial investment can be a stumbling block. One way to overcome the investment challenge is to source experts with flexible approach in supporting clients with their business planning. For instance, how about utilising a seminar or a workshop where you can get all the support you need on the day from a qualified expert working in a group. Many small businesses have used this approach to circumvent the barrier of consultancy fees. Another option is to undertake a distance learning course with some online support from an expert incorporated within the process, which will ensure you complete your business plan as a core outcome of the course.

I guess some of you may never have thought about this. Remember there is always a solution to every perceived problem. In my company, we offer flexible support to all who are in need of putting together their business plan. We do group coaching, seminars, consultancy and distance learning course. You can even download free business plan template from our website or purchase one of the best books you can ever find in business planning titled ‘My Business Is My Business’ Learn How To Earn A Fortune – endorsed by the Co-Writer of Chicken Soup For The Soul and International Bestselling author Mark Victor Hansen.

Typically, business plans are needed for:

1. Business startup – when you are planning to start a business

2. Business development and growth- when you are planning to penetrate new and existing market with new products or existing products

3. Raising business finance- when you are planning to raise finance for a new or existing business

Here is a summary of how to prepare a financial plan linked directly to a business plan:

To calculate sales income /turnover forecast:

A. Make an assumption on the total number of goods and services the business expects to sell each month over the next 12 months. Remember to be realistic as new businesses very rarely start off with a high sales volume. In the case of a new business, you will need to set sales volume very low at the initial stage of the business to reflect the time spent advertising and promoting the services or products in an effort to generate leads and sales.

B. Make an assumption on the selling prices of goods and services. Again, ensure that the selling prices reflect what the market will be willing and able to pay. This is most likely going to be a reflection of market competition (the number of suppliers against the demand for the goods and services) as well as the purchasing power of the market (i.e. how much money consumers have to spend on goods and services).

C. Multiply the selling prices of goods and services, by the expected sales volume estimated to determine the monetary value of each month’s sales. Remember that where a business provides multiple types of goods and services, the value of sales must be determined for each of them.

D. In the case of voluntary sector organisations that rely on grants, donations and fundraising income, you will need to make an assumption on the type of grants expected and the value of grants in monetary terms based on your market knowledge. In the same vein, you will need to make an assumption on the number of fundraising events the business expects to undertake and the amount expected to be generated from each event. The assumption for donations can either be informed from historical trends or best estimates based on the strategy that will be used to generate them. Whatever approach is used, it is important that the assumptions are realistic to minimise the risk of overstating income. Remember that factors such as: government policy (taxation rate, regulation, public sector spending priority), the health of the economy (unemployment, interest rates, inflation rate etc), and the business’ relationship with its sponsors /wider community will ultimately influence many aspects of the income generated- so keep a watch on these factors.

To calculate expenditure forecast:

E. Make an assumption on the type of resources required to produce the sales income specified in “C” above. Resources in this case may include: staff (type), building (size, location etc), office furniture and equipment (computers, fax, telephone, heating, insurance etc) etc. It is for you to determine clearly what types of resources are required.

F. Make an assumption on the level of resources required as stated in “E” above to deliver the plan based on the assumptions on sales volume. For instance, you need to state what type of staff you need and how many, what type of computers or machines you need and how many etc.

G. Make an assumption for the prices of the resources (stated in “F” above) required to deliver the sales volume. Remember that the prices of the resources must be realistic and evidence based. An unrealistic price level will undermine the quality of the financial plan in that it will not be feasible (i.e. not achievable). Also remember that the prices of some resources tend to increase in line with the general inflation, whereas others increase at a rate below or above the general inflation index. You are therefore advised to desist from making generalised inflation assumptions (i.e. price assumptions).

H. Quantify the resources required to produce the goods and services by multiplying the prices of the resources by the volume of the resources as set out in “F” and “G” above. At this stage you have determined the value of the different types of expenditure you expect to incur to deliver the business plan. However, it is worth noting that the expenditure will differ in nature and so it is important that steps are taken to carefully categorise expenditure into “Revenue and Capital Expenditure” to ensure correct accounting treatment when producing the “Income and Expenditure Forecast (Profit and Loss Statement), “Balance Sheet Forecast” and “Cash Flow Forecast”. This will become clearer when we look at a worked example. For now, let us briefly define “Revenue and Capital Expenditure”. Capital Expenditures are expenditures that result in the acquisition of tangible items such as buildings, computers or furniture. At the initial purchase of capital items, almost the entire purchased price is shown in the balance sheet with only a proportion of the expense shown in the profit and loss statement to reflect the reduction in value of the items or the value of the capital item consumed during the financial year. Revenue Expenditures are expenditures that do not result in the acquisition of tangible items. They are usually consumed in the financial year they are purchased and will be shown in full as expenditure in the profit and loss statement or income and expenditure statement. If you need to know more about this, please read our booklet titled “Introduction to Financial Statement”. This booklet is packed with lots of practical examples and explanations specially written for non- finance experts.

Writing a Business Plan

One of the first steps in creating a new company is writing a business plan. The business plan serves a wide variety of functions, including, though by no means limited to, the following:

It defines and focuses your objective using appropriate information and analysis.

It is used as a selling tool, offering pertinent information to lenders, investors and banks.

Study of your business plan may reveal gaps and weaknesses in your initial concept.

A well-written business plan may be used to solicit opinions and advice from experienced experts in the field, offering sound guidance and a head-start to those new to the market.

Dos and Don’ts of Writing a Business Plan

There are certain common errors made in business plans that are very easy to make, and you should take special care to avoid.

Do Not Indulge in Over-optimism – You probably would not be going into business if you were not optimistic about your future in it, but a business plan is a hard bitten and realistic document. Do not be pessimistic, but be very conservative and realistic regarding things like capital requirements, timelines, sales, and profits. Most new businesspeople underestimate the amount of capital that will be required to start the new business.

Do Have a Back-up Plan – Do not ignore the potential adversities that a new business may encounter. Spell out strategies for tackling them within the plan.

Do Not Rely on Gimmicks – Do not rely exclusively upon the individuality of your business idea or even of a proprietary invention that no one else has. All business success is based on a plan with a solid economic format, not the great inventions. The things that make your business stand apart may well help your success, but they will be worthless without the sound financial plan.

Do Use Appropriate Language – You are communicating business ideas to potential investors and lenders who may have no idea about the minutia of the business that you are launching. Stay clear of specialized, industry vocabulary and lingo in your descriptions.

Do Answer All Questions – Make every attempt to answer all the questions that a potential investor, lender, or business associate might have about every aspect of your business plan. Do not leave gaping holes.

Building the Plan

There are numerous variations on how to write business plans, and, like all good quality business communications, they must be tailored to the individual company involved. The following elements, however, are fundamental to all basic business plans:

Start with a Vision Statement. This is a brief outline of your goal in founding your business. This is the big-picture place, so if you are going to get dreamy-eyed and romantic anywhere in your business plan, this is the only place where you might get away with it. Your vision statement may be as brief as a single sentence, but is more likely going to be a short paragraph.

Next, introduce yourself, focusing on your prior experience as is applicable to the new business. If there are partners in the business, the same information goes for each of them. Prepare rsums for yourself and each partner. Be factual and avoid self-aggrandizement. This portion of your business plan will be meticulously reviewed by those with whom you are forging relationships, including lenders, investors, and vendors. If you have personnel shortcomings that you plan to hire or contract to fill, include that here too. For example, if you do not have business budgeting experience, indicate that you intend to contract an experienced financial professional to maintain your books and offer guidance where necessary.

The third section is your business profile. Here is where you present the details of how you will do business. Spell out the details about facility rental, materials acquisition, and staffing requirements. Detail the volume of trade that you need to reach the break-even point, and project when you foresee reaching that point.

The fourth section is your economic assessment. Explain the niche in the economy that your business will fill, and why it will succeed. Bring in studies provided by regulatory agencies if appropriate and possible. Show demographics and traffic flow if appropriate. Show your potential lenders why your business is the place to put their money.

Finally, provide a cash flow assessment, projecting a one-year plan. Again, be realistic, but not pessimistic. Do provide for potential economic difficulties and how you will address them.

In addition to these fundamentals, you may also include a discussion of your marketing plan and plans for future expansion. There are numerous government websites with valuable information pertaining to small businesses – make use of that information in your business plan. There may be sites that pertain to your specific business, and the Small Business Administration has a volume of valuable information pertaining to all start-up businesses. Additionally, depending upon the nature of your company, you may include additional sections as they pertain to the individual situation. Additional sections may include Products, Services, Distribution, Suppliers, Customers, or any variety of specialized sections that apply to your situation.

In short, keep the writing in your business plan clear and appropriate to your audience. Keep the tone positive but not unrealistically optimistic. Do not be overly verbose, but provide a wealth of information in a concise format.

How To Plan Your Business The Right Way

Would you ever think of taking a trip to a foreign location without some type of tourist guide or map? Could you imagine doing this and then the feeling of suddenly realizing that you have no idea where you are or what to do? I would imagine that would be a terrifying experience. Fortunately people take trips like this all of the time and these types of experiences are averted through proper planning. Operating a business without a business plan is like taking a trip without a map. You do not want to dedicate precious time to building a business only to suddenly realize that you have no idea where you are or what to do.

We often see entrepreneurs who are working so much on the day-to-day tasks of building the business that they do not take the time to properly plan. Usually the business owner did not take the time to properly plan for the future. This is one of the biggest mistakes a business owner can make. In this article I will outline 5 reasons an entrepreneur needs a business plan to keep their business on the right track.

Provide a Roadmap

A business plan provides a guideline to help you achieve your goals. Mapping out a plan helps you in determining which strategic path you will use to reach your desired destination. The research and brainstorming conducted during the writing of the plan will assist you in figuring out where the business should go while providing a complete set of instructions to help you get there. The primary goal of a business plan is to provide a roadmap that ensures your business is heading in the right direction and stays on course.

As a Motivational Tool

Business plans are very important for internal motivation and the motivation of stakeholders. While writing your plan the first step you should take is to identify the correct business plan template needed. Secondly, you must determine your vision, or where you want to see your business in the next 1-3-5-10 years. Creating this vision becomes a motivational tool because it allows you to see the possibilities you can create for your business if you follow the plan.

Identify Strategic Integration

A comprehensive business plan assists the entrepreneur in making a cohesive strategy that brings into account all the elements of the strategic business plan, and identifies how they associate with each other. Looking at the business in this way promotes the elimination of components of the plan that do not correlate with the greater vision. The plan helps you to identify how you can build your company over time. For example if you have an existing business you might try to expand the business through your existing clients. Your strategies might evolve around deepening your client relationships through customer relationship management. A system for reaching out to clients could help move the company forward.

Increase Creativity

Strategic business plans can help to increase the creativity associated with the business. Without creativity, your company is only one of the many competing for market share in your field, area, or industry. By using a creative approach you can design a business that sets itself apart in the marketplace with a distinctive look and brand. All too often, we see bland, boring marketing messages and products presented in uninspired ways. To succeed you must stand out in the crowd by getting creative and differentiating your business by identifying your competitive edge. A well-crafted business plan can help you do just that.

Define Desired Outcomes

In simple terms a business plan helps the entrepreneur get the job done. The business plan defines the desired outcomes and outlines the steps necessary to reach them. By performing the actions dictated in the business plan, the entrepreneur is able to stay on track. It is easy to get lost in the day-to-day details of the operation as pointed out before. By reviewing the plan periodically, the business owner is reminded to schedule time to do the strategic tasks outlined in the business plan. In short, taking focused and strategic action leads the entrepreneur to success.

It is very important that an entrepreneur sets a direction before moving forward. This can only be done through proper business planning. Below is an honest review of a company that can help you do just that. It may be the key to your success.

Make sure you set yourself up to be successful and do not find yourself in a strange land without a map. Develop a strategic business plan that will outline the growing success of your organization over time, and watch as your business succeeds beyond your wildest dreams.