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Your Step-By-Step Guide To Creating (And updating) Your Business Plan

Business Plans aren’t just for companies seeking venture capital! They are really an opportunity for you to lay out your company's vision and goals, while also getting real about the risks and competition your company faces. It's an invaluable tool and will help your team better understand your company's unique position in the market.


While it is a detailed document that can take substantial time to fill out, it will help your business grow 30% faster than it would otherwise. In fact, 71% of fast-growing companies have plans. They create budgets, set sales goals, and document their marketing and sales strategies.


If you struggle to fill this out, I can work with you and your team to get it completed. Depending on how much time you can allot to its creation, it can be completed in as little as 4 weeks, or we can make it a quarter goal. I want to see your business grow 30% faster than it otherwise would!


A business plan is an essential roadmap for business success. This living document generally projects 3-5 years ahead and outlines the route a company intends to take to grow revenues.


Let's get started...


Part 1

Company Description


This section of your business plan provides a high-level review of the different elements of your business. This is akin to an extended elevator pitch and can help readers and potential investors quickly understand the goal of your business and its unique proposition.


What to Include in Your Company Description

  • Describe the nature of your business and list the marketplace needs that you are trying to satisfy.

  • Explain how your products and services meet these needs.

  • List the specific consumers, organizations or businesses that your company serves or will serve.

  • Explain the competitive advantages that you believe will make your business a success such as your location, expert personnel, efficient operations, or ability to bring value to your customers.



Part 2

Market Analysis


The market analysis section of your business plan should illustrate your industry and market knowledge as well as any of your research findings and conclusions.


What to Include in Your Market Analysis:


Industry Description and Outlook – Describe your industry, including its current size and historic growth rate as well as other trends and characteristics (e.g., life cycle stage, projected growth rate). Next, list the major customer groups within your industry.


Information about your Target Market – Narrow your target market to a manageable size. Many businesses make the mistake of trying to appeal to too many target markets. Research and include the following information about your market:


Distinguishing characteristics – What are the critical needs of your potential customers? Are those needs being met?  What are the demographics of the group and where are they located? Are there any seasonal or cyclical purchasing trends that may impact your business?


Size of the primary target market – In addition to the size of your market, what data can you include about the annual purchases your market makes in your industry? What is the forecasted market growth for this group?


How much market share can you gain? – What is the market share percentage and number of customers you expect to obtain in a defined geographic area? Explain the logic behind your calculation.


Pricing and gross margin targets – Define your pricing structure, gross margin levels, and any discount that you plan to use.


When you include information about any of the market tests or research studies you have completed, be sure to focus only on the results of these tests. Any other details should be included in the appendix.


Competitive Analysis – Your competitive analysis should identify your competition by product line or service and market segment.


Assess the following characteristics of the competitive landscape:

  • Market share

  • Strengths and weaknesses

  • How important is your target market to your competitors?

  • Are there any barriers that may hinder you as you enter the market?

  • What is your window of opportunity to enter the market?

  • Are there any indirect or secondary competitors who may impact your success?

  • What barriers to market are there (e.g., changing technology, high investment cost, lack of quality personnel)?


Regulatory Restrictions –  Include any customer or governmental regulatory requirements affecting your business, and how you’ll comply. Also, cite any operational or cost impact the compliance process will have on your business.



Part 3

Organization & Management


Organizational Structure


This section should include: your company's organizational structure, details about the ownership of your company, profiles of your management team, and the qualifications of your board of directors (if you have one). These may seem like unnecessary questions to answer in a one- or two-person organization, but they can help us establish where your business is strong and where it still needs support.


A simple but effective way to lay out the structure of your company is to create an organizational chart with a narrative description. This will help you figure out exactly who is doing what.


It will give you peace of mind knowing that there is someone in charge of every function of your company.


Nothing will fall through the cracks, and nothing will be done three or four times over. To a potential investor or employee, that is very important.



Answer the following questions:


  1. Who does what in your business?

  2. What is their background and why are you bringing them into the business as board members or employees?

  3. What are they responsible for? This section should include who's on the board (if you have an advisory board) and how you intend to keep them there.

  4. What kind of salary and benefits package do you have for your people?

  5. What incentives are you offering? How about promotions?



Ownership Information


This section should also include the legal structure of your business along with the subsequent ownership information it relates to.

Have you incorporated your business? If so, is it a C or S corporation?


Have you formed a partnership with someone? If so, is it a general or limited partnership? Or maybe you are a sole proprietor?


The following important ownership information should be incorporated into your business plan:

  • Names of owners

  • Percentage ownership

  • Extent of involvement with the company

  • Forms of ownership (i.e., common stock, preferred stock, general partner, limited partner)

  • Outstanding equity equivalents (i.e., options, warrants, convertible debt)

  • Common stock (i.e., authorized or issued)

  • Management Profiles       


Experts agree that one of the strongest factors for success in any growth company is the ability and track record of its owner/management team. This is particularly important if you’re looking to get outside funding. So, take some time to pull together your employees' resumes.


The resumes need to include the following information:

  • Name

  • Position (include brief position description along with primary duties)

  • Primary responsibilities and authority

  • Education

  • Unique experience and skills

  • Prior employment

  • Special skills

  • Past track record

  • Industry recognition

  • Community involvement

  • Number of years with company

  • Compensation basis and levels (make sure these are reasonable -- not too high or too low)

  • Be sure you quantify achievements (e.g., "Managed a sales force of ten people," "Managed a department of fifteen people," "Increased revenue by 15 percent in the first six months," "Expanded the retail outlets at the rate of two each year," "Improved the customer service as rated by our customers from a 60 percent to a 90 percent rating")


Also, highlight how the people surrounding you complement your own skills. If you're just starting out, show how each person's unique experience will contribute to the success of your venture.



Board of Directors' Qualifications (Skip this section if you do NOT have a BOD)


The major benefit of an unpaid advisory board is that it can provide expertise that your company cannot otherwise afford. A list of well-known, successful business owners/managers can go a long way toward enhancing your company's credibility and perception of management expertise.


If you have a board of directors, be sure to gather the following information when developing the outline for your business plan:

  • Names

  • Positions on the board

  • Extent of involvement with the company

  • Background

  • Historical and future contribution to the company's success



Part 4

Service or Product Line


Describe your service(s) or product(s), emphasizing the benefits to potential and current customers. Focus on why your particular product will fill a need for your target customers.


What to Include in Your Service or Product Line Section:


1.  A Description of Your Product / Service


Include information about:

  • The specific benefits of your product or service – from your customers' perspective

  • Your product or service's ability to meet consumer needs

  • Advantages your product has over that of the competition

  • The current development stage your product is in (e.g., idea, prototype).


2. Details About Your Product’s Life Cycle


Be sure to include information about where your product or service is in its life cycle, as well as any factors that may influence its cycle in the future.


3.  Intellectual Property / Legal


If you have any existing, pending, or any anticipated copyright or patent filings, list them at this point in your business plan. Also, disclose whether any key aspects of a product may be classified as trade secrets.


Lastly, include any information pertaining to existing legal agreements, such as nondisclosure or non-compete agreements.


4. Research and Development (R&D) Activities


Outline any R&D activities that you are involved in or are planning to complete.


What results of future R&D activities do you expect?


Be sure to analyze the R&D efforts of not only your own business, but also of others in your industry.



Part 5

Marketing & Sales


The next part of your business plan should focus on your marketing and sales management strategy for your business.


Marketing is the process of creating customers. This is an important piece of your business plan as customers are the lifeblood of your business.


In this section, the first thing you want to do is define your marketing strategy. There is no single way to approach a marketing strategy; your strategy should be part of an ongoing business-evaluation process and will be unique to your company. However, there are common steps you can follow which will help you think through the direction and tactics you would like to use to drive sales and sustain customer loyalty.


An overall marketing strategy should include four different strategies:

  1. A market penetration strategy.

  2. A growth strategy.

    • This strategy for building your business might include:

  • An internal strategy such as how to increase your human resources

  • An acquisition strategy such as buying another business

  • A franchise strategy for branching out

  • A horizontal strategy where you would provide the same type of products/services to different users

  • A vertical strategy where you would continue providing the same products/services but would offer them at different levels of the distribution chain.

3.  Channels of distribution strategy.

Choices for distribution channels include:

  • An online funnel (from free product to paid service)

  • An internal sales force - Sales Calls

  • Original equipment manufacturers (OEMs)

  • Distributors

  • Retailers.

4.  Communication strategy.

How are you going to reach your customers? Usually a combination of the following tactics works the best:

  • Online

    • Social Media

    • Email

    • Webinars

    • Affiliates

    • Guest Blogs

  • Advertising

    • Printed Materials

  • Personal Selling

  • Public Relations


After you have developed a comprehensive marketing strategy, you can then define your sales strategy. This covers how you plan to actually sell your product.


Your overall sales strategy should include two primary elements:


1. Your sales activities. When you are defining your sales strategy, it is important that you break it down into activities. For instance, you need to:

  • Identify your prospects.

  • Locate where/how they can best be reached.

  • Identify how you will engage with them.

  • Once engaged, how will you enroll them?

  • How frequently will you be enrolling?

    • How many prospects will you enroll during each enrollment period?

  • From there, you need to determine:

    • The average dollar size per enrollee?

    • The average dollar size per enrollment period?


2.  A sales force strategy. If you are going to have a sales force, do you:

  • Plan to use internal or independent representatives?

  • How many salespeople will you recruit for your sales force?

  • What type of recruitment strategies will you use?

  • How will you train your sales force?

  • What about compensation for your sales force?



Part 6

Funding Request / Looking For Investors





If you are seeking funding for your business venture, use this section to help you outline your requirements.


Your funding request should include the following information:

  • Your current funding requirement

  • Any future funding requirements over the next five years

  • How you intend to use the funds you receive:

    • Is the funding request for capital expenditures?

    • Working capital?

    • Debt retirement?

    • Acquisitions?

    • Whatever it is, be sure to list it in this section.

  • Any strategic financial situational plans for the future, such as: a buyout, being acquired, debt repayment plan, or selling your business.  These areas are extremely important to a future creditor, since they will directly impact your ability to repay your loan(s).


When you are outlining your funding requirements, include the amount you want now and the amount you want in the future.


Also include the time period that each request will cover, the type of funding you would like to have (e.g., equity, debt), and the terms that you would like to have applied.


Part 6

Financial Projections


You should develop the Financial Projections section after you've analyzed the market and set clear objectives. That's when you can allocate resources efficiently. The following is a list of the critical financial statements to include in your business plan packet.


Historical Financial Data


If you own an established business, you will be requested to supply historical data related to your company's performance. Most creditors request data for the last three to five years, depending on the length of time you have been in business.


The historical financial data to include are your company's:

  • Income statements

  • Balance sheets

  • Cash flow statements for each year you have been in business (usually for up to three to five years).

  • Often, creditors are also interested in any collateral that you may have that could be used to ensure your loan, regardless of the stage of your business.


Prospective Financial Data:


All businesses, whether startup or growing, will be required to supply prospective financial data.


Most of the time, creditors will want to see what you expect your company to be able to do within the next five years. Each year's documents should include forecasted income statements, balance sheets, cash flow statements, and capital expenditure budgets.


For the first year, you should supply monthly or quarterly projections. After that, you can stretch it to quarterly and/or yearly projections for years two through five.


Make sure that your projections match your funding requests; creditors will be on the lookout for inconsistencies. It's much better if you catch mistakes before they do. If you have made assumptions in your projections, be sure to summarize what you have assumed. This way, the reader will not be left guessing.


Finally, include a short analysis of your financial information. Include a ratio and trend analysis for all of your financial statements (both historical and prospective). Since pictures speak louder than words, you may want to add graphs of your trend analysis (especially if they are positive).


If you do plan on sending this business plan to potential investors, you may want to include an Appendix to your plan. This can include items such as your credit history, resumes, letters of reference, and any additional information that a lender may request.



Part 7

(soon to be Part 1)

Your Executive Summary




The executive summary is often considered the most important section of a business plan. This section briefly tells your reader where your company is, where you want to take it, and why your business idea will be successful. If you are seeking financing, the executive summary is also your first opportunity to grab a potential investor’s interest.


The executive summary should highlight the strengths of your overall plan and therefore be the last section you write. However, it usually appears first in your business plan document.


What to Include in Your Executive Summary:


Below are several key points that your executive summary should include based on the stage of your business.


If You Are an Established Business, be sure to include the following information:

  • The Mission Statement – This explains what your business is all about. It should be between several sentences and a paragraph.

  • Company Information – Include a short statement that covers when your business was formed, the names of the founders and their roles, your number of employees, and your business location(s).

  • Growth Highlights – Include examples of company growth, such as financial or market highlights (for example, “XYZ Firm increased profit margins and market share year-over-year since its foundation). Graphs and charts can be helpful in this section.

  • Your Products/Services -- Briefly describe the products or services you provide.

  • Financial Information – If you are seeking financing, include any information about your current bank and investors.

  • Summarize future plans – Explain where you would like to take your business.


With the exception of the mission statement, all of the information in the executive summary should be covered in a concise fashion and kept to one page. The executive summary is the first part of your business plan that potentially could be shared with many people (depending on your needs and goals), so each word counts.

What if You Are a Startup or New Business??


If you are just starting a business, you won't have as much information as an established company. Instead, focus on your experience and background as well as the decisions that led you to start this particular enterprise.


Demonstrate that you have done thorough market analysis. Include information about a need or gap in your target market, and how your particular solutions can fill it. Convince the reader that you can succeed in your target market, then address your future plans.


Remember, your Executive Summary will be the last thing you write. So the first section of the business plan that you will tackle is the Company Description section.



Congratulations, you've completed your business plan! Here's to growing 30% faster!





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