Business Plans
Business plans have several uses and can be a valuable tool to help you succeed in your business venture. These uses include; part of a loan request presented to a financial institution, part of a proposal to an interested investor or, most important, part of your overall plan to make your business successful. Although we prepare all types of business plans, the only type we will address here is the one used to grow your business. This type of business plan needs to have three elements; the summary, the marketing plan and financial projections. To work, all of these elements need to be interrelated and defined in enough detail to be measureable.
In the summary we describe the nature of the business, the industry your business is in and all aspects of how you operate your business. Attention to detail is important in this section because we will be comparing your business to industry statistics. Normally statistics for most industries is presented two ways; by sales dollar and by ranking inside the industry by quartile. The detail presented in the summary will allow you to make good decisions for the marketing plan, the financial projections and ultimately for “apples to apples” comparison in your industry.
The marketing plan section is where we describe how you are going to promote your business. The detail in this section will allow you to determine why your plan is working or not working. Remember, the results have to be measureable. For instance, if you are cold calling using the telephone to set appointments and you determine that you will make 25 phone calls a day from the phone book; that is not enough information to be able to properly measure the results. Instead, determine that you will make 25 phone calls per day from a list of 1000 individuals in the metro area with an average annual personal income of $X and set 3 appointments a day with a sales goal of 1 sale per day of $X each. This type of detail allows us to do two things: prepare finite financial statements and compare the results to the plan.
The financial projections are prepared using the information detailed in the first two sections. These projections are usually for a three year period with the first year presented by month and the next two years presented on an annual basis.
The most important part of the business plan is to use it on a regular basis. It is designed to match actual financial results against your projections and test your marketing plan. Then you can adjust your marketing plan, your business summary or your goals to constantly improve your financial results.
