Investors & stakeholders will be impressed.
Creating a business plan is hands down the most important part of any successful business. It acts as your barometer and can keep you on track, or tell you when your business is off course. If you don't have a plan, or if you haven't updated your plan yet this year, this is your opportunity.
If you are just starting a business, the plan acts as your roadmap and is a guiding document for everyone in the company. It will change over time as you review the realities of the market and uncover new ways to grow your business. Use the roadmap to guide you to the destination, but don't be afraid to choose an alternate route along the way.
Business plans can provide two key benefits for businesses of any size:
Planning: The business plan will guide your operations for the year. It should be a forward looking document that provides a 360-degree view of your operations. Forecast the needs for the year and make sure they align with your corporate goals.
Investment: If you’re a new business or one that is in a major growth phase, you're likely looking for more investment funds. Investors and venture capitalists normally expect to see a comprehensive business plan. The plan will help them decide if you have all your ducks lined up in a row, and whether their investment has a good potential return. The business plan will not get you an investor on its own, but it could be the deciding factor if the investor is leaning towards funding your project.
For the last number of years, I’ve been volunteering a few hours of my time to help the Red River College Business Administration program with their final class – Entrepreneurship. My role has been to grade a business plan and presentation the students create. Their task is to come up with a number of ideas for a business, perform market research and feasibility studies, then ultimately create and present a business plan for a panel of “investors” to successfully complete the Business Administration program.
Students are given the main topics to cover, and these should be part of every business plan:
- Executive Summary
- Company Profile
- Marketing Plan
- Operations Plan
Let's look a little more at each of these sections and what you should include as part of your own business plan.
1. Executive Summary
The Executive Summary is just what it sounds like – a summary of what your plan is all about. It includes information about what your business is, how you are going to build it, how you will get to market and what your overall objectives are.
In one summary, you should be able to sell your plan to an investor and prove its potential for success. It should immediately show your focused direction and what you aim to accomplish, along with how you'll do it. Be succinct and make sure you're speaking the language of the executive-level professionals you need to impress.
2. Company Profile
This identifies your business and the key players within it. Explain what goods or services you offer, how you’ll be structured and highlights about the industry you’re in. It is important to bring your business to life in this section. This helps assure investors or decision-makers relate to your business and know that what you’re building is viable.
Some key topics to cover in the Company Profile include:
- Type of business: partnership, corporation
- The service or goods you’ll offer
- Industry Overview: Include things like competition, trends in the industry and how your business will keep up with trends
- Staffing: How you’ll scale the personnel in the company
3. Marketing Plan
Are you familiar with the P’s of marketing? Well, this is where you really show them off. There are anywhere between 4 and 8 P's in marketing, depending on whether you offer goods or services.
The standard 4 Ps are:
- Product: What you’re actually selling
- Price: How much you sell the good or service for
- Promotion: How do you "go to market" with your product and present it to the public
- Place: Where you’ll take your goods/services to the market. This can include sales channels online, in retail stores, at trade shows and beyond.
Lock each of those down with good market research (more about that later) to ensure you’re hitting the mark.
See Related: Your Brand Is Upon Our Brain
For service oriented businesses there are a few more P's that come into play. These include:
- Process: How you deal with customers.
- People: Who you have on staff.
- Physical Evidence: Elements of your service that customers see or experience, especially to signal high-quality service.
Researching your market is an imperative part of the process in building your plans and growing your business. Delivering market requirements is key to a successful business—you have to satisfy customer desires. Your business strengths can differentiate you from the competition, so highlight those points.
Take the time to conduct research along the way to help shape your business focus. Ask your potential customers some questions about what they are looking for from your business, what they are are willing to pay for your product/service, how they want to make purchases (tech tools, credit cards, payment terms, etc) and key aspects to your business vertical.
4. Operations Plans
The operations plan details how your business is going to run on a day-to-day basis. Detail all of the nuts and bolts here, and include as much information as you can regarding how you’ll further build your business operations. Focus on these sections:
- Production and manufacturing plans
- Inventory planning
- Partnerships with vendors and suppliers
- Quality control plans
- Human resources needs
This is a good place to measure what it’s going to cost to do business. Topics like employee size and compensation, along with how much inventory and how you’ll manage it are important.
Don’t forget to include the types of business partner and vendor relationships that you'll be building, as these are going to be important aspects of the operations that can factor into the other sections of the plan. Expect a lot of questions from investors and stakeholders.
This won't be a surprise, but it's worth noting—financial figures are the bread and butter of your plan. Without them, you might as well just have an empty plate. Your business plan must include important basic financial documents like:
- Income statement
- Balance sheet
- Cash flow statement
You should start with a sales forecast with at least two years worth of revenue broken down on a monthly basis. You can also create an expense budget that includes start-up capital requirements and the ongoing operation of the business.
Of course, these forecasts are best estimates, but your expertise and experience will prove that they are educated and realistic forecasts.
If you do your research well, you can build a sales forecast that shows realistic revenue generation based on which sales channels you’ll use and markets you decide to enter.
Help is out there, whether it's from our Business Hub or via other resources online or offline. Start here.
- World Trade Centre Winnipeg
- Business Model Generation – Alexander Osterwalder and Yves Pigneur
- Book: The Lean Startup by Eric Ries
- Book/Blog: The 4-Hour Workweek by Tim Ferriss
Remember that the business plan is a living document. Build it with the best information you have on hand, but don’t get paralyzed by over-analysis. You can always launch a bit early, test your ideas and make adjustments. You do have to make money after all!
You can’t tell the future but you can certainly prepare for it with a solid business plan. Make sure you have a clear direction and can define that in your plan. Don't just make this a plan on paper (or screen), but live it every day in your business. Then measure your performance and realign your operations and goals to make sure you stay on track and achieve your objectives.
Do you have business plan questions we can answer? Ask in the comments. Stay tuned for more on building business strategy, and we'll be happy to include answers to your questions.