Business Plans Made Easy In Four Simple Questions

Set an Effective Plan for your Business to Succeed

Anyone who’s ever been in business before or has a thorough knowledge of how to run a business is likely to tell you that the first step before starting any business is to write out a business plan. The wise will know that this is sound advice and much to the benefit of the entrepreneur or business owner, but what if you don’t know what a business plan is or how to write one? That leaves a lot of inexperienced entrepreneurs using the old “trial and error process” in starting out their first business.

However, there is very little room for failure in small business and many of those trying to build there own business are mainly driven by the principle of increasing their income. You simply cannot afford to loose your investment, but you’re also left confused – and sometimes even petrified – by terms like executive summary and break even analysis.

What’s the point? Just get out that checkbook, hire a qualified staff, and start selling! How hard can it be, right? Unfortunately this attitude can lead to very risky financial decisions that almost always end in bankruptcy or large debt.

Business Plans Don’t Have to Be Difficult

There really isn’t all that much to a business plan once you break it down. The average business plan is made up of a few key components; for example, the executive summary, financial projections, a break even analysis, profit/loss forecasts, market analysis, and a startup analysis; and takes up anywhere from 20 to 40 pages on average.

You’re Not Having a Drink with a Friend: You’re in Business

The major player in failing to plan is the constant feeling of humbleness from your business domain. When you’re sitting around with a friend having a drink and discussing an idea it’s easy to put a plan into play without ever writing it down. With your business it’s simply not that easy. You need to keep your plan on paper.

This makes things more serious. When you take the time to really analyze what you do and become consistent in following-up on that analysis you are in business. So don’t think of your business plan as a one-time startup effort. Once it’s on paper it will not be put away on a shelf or in a drawer collecting dust. You need to reread, rewrite, and rethink your plan throughout the entirety of your business.

Ask yourself the following four questions before even starting your business plan:

1) Do I know what the purpose of my business is?

2) Can I lucidly describe how my business will work to a total stranger?

3) Who is likely to be doing the same kind of business I’m doing?

4) Who is likely to be interested in my business and what I sell?

If you can answer these four simple questions then you already have enough information to start writing your business plan. These questions are basically identifying who you are (as a business), what you do (or what you plan to do), where your market is, and what chance you stand (if any) of competing in this market. This lays out the standard foundation for you to be able to evaluate weather or not the way you plan on conducting your business is going to be a good investment and time-well-spent or your worst financial and psychological nightmare.

Notice here that I used the phrase “the way you plan on conducting your business” and not “the business you plan on conducting”. Any business is feasible given the right circumstances so our objective here is to determine a means to feasibility and not necessarily the feasibility itself (which is likely to be endorsed by a more detailed feasibility report).

Let the Plan Take Its Course

Your business plan is not at all complicated and shouldn’t be viewed as a tedious process or avoided in any way. If you find something in your plan isn’t working then perhaps it’s time for a change. After all that is what the business plan is there for. If you didn’t write your plan down and keep track of changes, how would you know what works and what doesn’t?

Take the time to put your plan down on paper. There are plenty of free resources online and offline to help you put together your business plan. You can ask your local bank for a standard business plan template or get one on the Internet in minutes.

You won’t have to fill out the entire plan right away. Certain parts may take longer than others and it’s not a sequential process. Start with what you know first. Leave the executive summary (or description of your business) for later when you’re clearer about your business identity. Leave things out, or incomplete, if you’re unsure and fill them in later, or go back and make changes, when you have more information. It may not be pretty at first, but it is there to keep you focused. It also provides those people most interested in your business (such as you, your partners, shareholders, or investors) with concise and up-dated information about your business and the direction in which it’s heading.

Copyright © Sherif Ramadan & Business-Geek.com 2007

Creating A Franchise Business Plan

The major difference between a business plan for a traditional start-up and a business plan for a franchise is that the latter must join necessary items together from both sides-the franchisor and the franchisee. Creating a franchise business plan is necessary for you to anticipate and think through questions about the challenges you will face and the expectations you have for the business.

The business plan is also needed if you require financing from any third-party source, since this is the first document they will ask for. The franchisor will already have a good deal of information to include in the narrative parts of the plan, as well as most of the financial information you will need in the Uniform Disclosure Offering Circular (UFOC) disclosure document.

The main sections of a franchise business plan should include:

1. Introduction: Here you will include a cover sheet listing the name and contact information for the business. You should also include a description of the business, including the product or service provided, the size and competitive nature of the market for the business, and a description of the steps you will use to take the business to market.

2. Management: A description of the key management roles, including names and background information. Resumes could be used to highlight prior experience relevant to success in your new business.

3. Marketing: You will include details of how you plan to attract customers to the business and any competitive advantages you predict the new business having. In addition, you need to provide detailed marketing and advertising strategies you will use.

4. Financials: Income statements, cash flow statements, and balance sheets are necessary to show future performance projections. Your statements should also include extensive notes concerning all tangible assumptions you have used to prepare the projections. It is important that these projections be prepared on a very conservative basis, since you cannot predict any unexpected delays or challenges that may happen on any new business startup.

5. Financing Needs: Even if your funding is coming from your own savings, detailed financing needs will better prepare you for whatever may happen as you get the business set up and operating. This section should contain an analysis of all startup costs, including enough working capitol to cover initial marketing plans and operating losses until the projected breakeven point for the business.

When you decide to purchase a franchise, the franchise business plan will serve as a guideline to running your business successfully. Further, completing a franchise business plan before jumping right in has several advantages. It will allow you to consider options and formalize your projected course of action in the new business. In addition, you may come up with questions you can refer to the franchise company to ensure you have a clear understanding of the franchise startup before making a final decision to go forward.

Why is a Business Plan So Important to Your Success?

A good business plan is the most important but often overlooked part of running, starting and expanding a successful business, and obtaining finance for a business. If a plan is written properly, running a business and obtaining finance is much easier, leaving less room for error and failure. While you cannot predict everything that can happen in a company’s future, a good plan helps you avoid certain pitfalls and overcome obstacles, while anticipating and creating opportunities.

There are different plan formats for various circumstances. A comprehensive plan will help you run your business venture or project more successfully. There are also specialized plans for various purposes, such as a funding plan for a bank, investor or venture capital firm.

The business planning process is very important. It is a building block system that is continuous, systematic and comprehensive. It involves the entire company, produces effective decision making, and executes those decisions effectively in a strategic plan. A good plan also measures the relationship between expectations and performance. It evaluates your company’s progress or lack thereof.

It is said, writing an effective business plan is more art than science. It is good to have a proven process and format, but you can’t just fill in the blanks on a master planning program or document. It is a matter of asking yourself the right questions within the proven process and format that brings about a successfully written business plan.

The comprehensive plan that I develop has eight sections: the executive summary, company overview, management and operations, marketing strategy and plan, strategic and sales plan, financials and appendix. I amend the eight section plan for specialized plans, like the funding plan.

The organization of the business plan is quite important. The eight section business plan is in a specific order from which each section builds on the previous section. There is fluid thought and reasoning employed to achieve a business plan which reaches its specified purpose. Although I wrote that the executive summary is the first section, it should be written last. All the other sections should be written in the order they are listed. A plan contains a very precise and concise format and is organized into numbered sections and sub-sections, which contain specific information in short, paragraph form.

A business plan is a dynamic document, as it changes on a daily, weekly and monthly basis. By being able to access it on your company computer network and online, various key people within the company can use and update it easily and effectively. For a Business Plan to be successful, it must be intertwined into the fabric of your business, have a detailed implementation schedule and be carefully tracked.

A well written and implemented business plan can do a lot of things, including: running, expanding or starting a successful business; be readily changed, adapted and updated to suit market conditions; be a fantastic sales tool; obtain funding; react quickly to market changes; give you the ability to make realistic forecasts and projections; seize market opportunities; establish and sustain your competitive advantage; and more.

Always consider hiring an experienced business consultant and planner to help develop, write and most importantly, implement your business plan.