Do you have or know how to make a business plan?
A well-developed business plan is critical for any start-up business. To develop a thorough business plan, research your customers and competition; avoid mistakes that lead to business failure; and know how to implement a business plan and make it work. Your business plan should include a basic financial statement, all major pieces of a business plan, and information from your business-planning checklist.
Basic financial statements for your business plan.
Here are the four most important financial statements you need to understand to plan and run your business:
- Your bottom line: subtracting costs from revenue to come up with net profit. A balance
- sheet is a financial snapshot that shows what you own, what you owe, and what your company is worth. A cash
- flow statement is a cash monitor that follows the flow of cash in and out of your company.
- Budget: A financial forecast that shows where you intend to make and spend money.
How to write a business plan: customers, competitors, and you.
Look at the following three sets of questions and insights; they give you a shortcut to what’s most important to know about you and your business plan.
Consider the following three customer questions:
- Who is my real customer—who is the buyer?
- Why do they buy it?
- How do they buy it?
Think about the following three competitors’ questions:
- Who are my real competitors—others my customers consider before buying from me (or not)?
- What is different about these real competitors when compared to me?
- What are these competitors trying to do to me?
Keep the following three ways to win in mind:
- Constantly innovate.
- Offer something distinctive.
- Focus on your key customer segment and build an iron-clad relationship with it.
What makes a business plan work?
The following is a list of the key components that you need to master to make your business plan work:
- Plans: company mission, vision, goals, and objectives that all work together in alignment.
- Organization: A logical structure for your company.
- Procedures: efficient and effective ways of doing things
- Leadership is an ability to influence and encourage others around you.
- Skills: The abilities and knowledge that your employees require to succeed.
- Culture: Beliefs and attitudes that lead to always doing the right thing.
The major pieces of a business plan
When you’re putting together a business plan, divide the plan into these basic sections—which every quality business plan should have:
- Executive summary This section is a very brief overview of what your business plan is all about; it should entice the reader to see more.
- This is a description of what your organization wants to do—the business in which it will compete, your vision and mission, the main products and services it will offer, and the principal actors who will be involved.
- This section describes the market(s) you intend to enter, the current trends driving the market(s), and the competition you will face.
- description Here you present your strengths and weaknesses using a SWOT analysis chart.
- Company strategy: In this section, you tell the reader just how you’re going to succeed in accomplishing your goals and objectives.
- Here you provide financial statements, including a profit-and-loss statement (P&L), a balance sheet, and a cash-flow statement; these should be historical as well as projections for future periods.
- Finally, you present a time-phased action plan for going forward to achieve the goals and objectives of your business plan—specific steps you will take to make the plan work.
A checklist of business planning essentials
You have a number of essential tasks to complete before you write your business plan. At the heart of business planning is having a clear picture of your goals and how to reach them. Here are some other important things to think about:
- Get everyone involved in setting goals and objectives—and give them incentives.
- Learn all you can about your customers.
- Understand who your competitors are.
- Identify your strengths and weaknesses relative to opportunities and threats.
- Determine which capabilities you absolutely need to succeed.
- Know the things that add value to your organization.
- Do your financial homework.
- Identify the worst possible thing that could happen to your organization and what you will do if it occurs (your Plan B).
Reasons why new and established businesses fail:
You are not going to fail with your business plan if you look closely at each of the following reasons and avoid the mistakes (the first set for start-ups, the second for established firms).
A start-up business may fail for the following reasons:
- It runs out of money and has no backup funding source. fails
- to establish clear goals and objectives misunderstands
- what customers want.
- Underestimates the competition
- has difficulty managing people. It has
- ineffective procedures and systems. doesn
- ’t have critical business skills.
- The founder/owner refuses to let go and exerts excessive control; founders are unable to pivot quickly when the initial business plan fails.
An established business may fail for the following reasons:
- Unable to change—leaders get fat, dumb, and happy (FDH syndrome).
- Top leadership lives in the past and can’t attract fresh new talent. can
- It can’t transform rapidly because of too many fixed costs that are no longer useful.
- Management engages in too much short-term thinking and acting. Ignore
- threats from disruptive new industry entrants. It doesn’t
- do serious long-term strategic planning, only annual budgeting.
- It doesn’t do succession planning.