Business Plans: The Backbone of Successful Ventures

Business plans are the backbone of a successful venture because they help entrepreneurs like you, visionary and strategic, map out a path to sustainable growth. Business plans provide clarity and vision, financial planning and viability, strategic growth and adaptability, investor and stakeholder confidence, and operational efficiency.

Let’s get started by understanding each of the parts of your plan.

 Executive Summary

 The Executive Summary should be written last after the remainder of the plan has been finished. The executive summary is an overview of the business that includes the problem your business intends to solve, why your business stands apart from others, the results you desire, and your perfect patient, client, or customer. Your executive summary needs to be optimistic and exciting. It is your bragging right!

 If the business requires funding or investors, include how much is needed, how it will be used, and how it will make the business more profitable. This section must capture the bank or investor's interest quickly.

Organize your executive summary as follows:

1.      Opportunity: What problem will the business solve?

2.      Solution: How will the service uniquely solve the problem identified?

3.      Market focus: What market and ideal customers will the business target?

4.      Competitive advantage: How does the business intend to succeed against its competitors?

5.      Ownership: Who are the major stakeholders in the company?

6.      Expected returns: What are the key milestones for revenue, profits, growth, and customers?

 Company Overview

 Your company overview is a summary of your business, including unique deliverables, your mission, where your idea started, market positioning, business structure, and financial goals. After reviewing your company overview, the bank, investor, and you should have a bird’s eye view understanding of what your business is setting out to do and how it is organized.

 Keep your company overview short and succinct. This is the snapshot of the business. The type of business will determine which of the following sections will be required for the business plan. Only include what is needed to properly represent the business and remove anything else. Organize your company summary as follows:

1.      Company summary: This is the introductory section of your business, the ‘elevator pitch’ of what your company is setting out to do. Include goals and objectives.

2.      Mission statement: This is the action you need to take in order to accomplish your business’s vision and what your business will do for customers, clients, patients, employees, owners, and other stakeholders.

3.      Company history: This is the back story, your personal story, of why your business exists. Give a history of your business from its start, that morning when you woke up with a magnificent idea, and bring the world up-to-date on where your company is now in terms of sales, profits, key services, and customers.

4.      Markets and services: This is your target market and the needs that your business will address. Include descriptions of offered services and targeted markets, and customer types. This section is a general overview. More details will be provided later. 

5.      Operational structure: This describes the operational details of your business. State the employees needed to make your business run.

6.      Financial goals: This is the start-up capital needed, projected revenue and profits, forecast, and budget of the business.

Business Description

Your business description frames your business opportunity and answers what problem your business is trying to solve. Provide an example to describe how your business solves the problem. If your business addresses something the market has yet to identify as a problem (for instance, a new computer program or a new textile line), then also describe how your solution solves stress, saves money, or brings joy to your customer, client, or patient.

After a brief overview, describe what your solution to a problem is in detail, how it solves that problem, and what benefits customers, clients, or patients will receive.

The business description describes in detail how your services will be rendered and the pricing structure (e.g., fixed rate versus an hourly fee). Describe how your business will differentiate from your competitors. Who is your target market, and how can your customer, client, or patient benefit from your unique offering?

Depending on the type of business, the following sections may or may not be necessary. Organize relevant sections and remove everything else.

1.      Opportunity: Describe the current market for your business. What is the market, who are your participants, and where does this market exist? What current available services are, and how will your business stand apart? Also include possible additional services your business plans to offer in the future.

2.      Product overview: Describe your product or service in as much detail as possible. Do not hesitate to include pictures in this part.

3.      Key participants: Identify partners needed for your business, such as suppliers, distributors, referral partners, or any others. If there is a possibility that supplies may experience a break, include potential alternate solutions to avoid interruption to you and your customers, clients, or patients. 

4.      Pricing: Describe pricing, gross margin projects, and upgrade paths. Describe why your business’s pricing will be attractive to your target market. Know your competitor’s pricing and explain how your business’s service is different to justify your pricing structure.

Remember that there is a difference between working hours and billable hours. Not all hours are billable. If your business has employees with different job duties (e.g., in a law practice, there are associates, paralegals, lawyers, partners, etc.), indicate the various billing rates. Make sure to communicate rates clearly to clients, patients, and customers. If there are potential additional costs that will be passed on to clients, patients, or customers, state them up front.

Market Analysis 

Your market analysis shows your understanding of how well your business knows and understands your market and how it will support your business’s objectives. Set out an overview of the industry in which your business participates. Through defining your target market, your plan identifies geographic location, demographics, buyer characteristics, market needs, and how and by whom market needs are currently being met. Include a SWOT analysis as well. SWOT is an acronym for Strengths, Weaknesses, Opportunities, and Threats. This really helps assess your business’s position against the competition.

Depending on your business, include what is needed and remove everything else.

1.      Industry type: Begin with a bird’s-eye view description of the market opportunity. For instance, if your business is a clothing line, your industry type would be the retail industry. In this particular market, the global revenues are projected to exceed $500 billion, but the local revenues will be a much smaller market. Identify your market in your business’s local geography. Identify industry regulations and evaluate trends in market growth and stability.

2.      Market segmentation: Describe the main market segments and those your business is targeting now. A market segment is a group of people (or other businesses) within the industry, identifying smaller segments, such as vegan handbags or vegan shoe lines. The market can also be segmented by criteria such as quality, price, range of products, geography, demographics, and others. Ask if the segment is growing, shrinking, or will it be flat for the next few years. What percentage of the market will be reachable? What share of the market is anticipated within the next 2-3 years? Use graphics (e.g., line graphs or pie charts) to show growth, percentages of markets, or groups.

3.      Competition: All businesses compete specifically or directly with competitors. Research those who provide services to solve the same problem your business seeks to address. What are your business’s advantages over your competitors? How will your business stand out from your competitors? A matrix of features comparing businesses is useful. How is your business different and better for your target market?

4.      SWOT analysis: A SWOT analysis should always be included by assessing your business’s strengths and weaknesses (internal) and opportunities and threats (external). This is a good exercise to go through on an annual or bi-annual basis. After completing the analysis, ask how your business’s strengths can help maximize opportunities and minimize threats; how your weaknesses can slow your business’s ability to capitalize on the opportunities; and how your business’s weaknesses could expose it to threats.

Strengths = Advantage, Capabilities, Assets, people, Experience, Financial Reserves, Value Proposition

Weaknesses = Disadvantages, Gap in Capabilities, Cash Flow, Suppliers, Experience, Areas to Improve, Causes of Loss

Opportunities = Areas to Improve, New Segments, Industry Trends, New Products, New Innovations, Key Partnerships

Threats = Economy Movement, Obstacles Faced, Competitor Actions, Political Impacts, Environmental Effects, Loss of Key Staff, Market Demand

Operating Plan

Your operating plan is how your business currently and will continue to develop and maintain a loyal customer base, including management responsibilities with dates and budgets, and making sure results can be tracked. Consider future growth and what is needed to realize growth. Elements include how your business will bring services to markets and how you will support customers, clients, or patients. It is the logistics and technology of your business. Depending on the type of business, include what is needed and remove everything else. Keep this part as short as possible.

1.      Order fulfillment: Describe your business’s procedures for delivering and keeping track of services or products to your customers, clients, or patients. 

2.      Payment: Describe payment terms, methods accepted, pricing plans, and any impact on cash flow.

3.      Technology: Describe the key technologies used in your business, including data security and backup plan.

4.      Key customers: Identify customers who are important to the success of your business due to a partnership, volume, pathway to a new market, or who may bring in more than 10% of your business’s revenues.

5.      Key employees and organization: Describe unique skills or experiences that are required of the current team and recruiting or training processes. List key employees who are necessary for success. Use an organizational chart.

6.      Facilities: Describe your business’s building. If you are a home-based business, know the legalities and tax filings.

Marketing and Sales Plan

Your marketing and sales plan is one of the most important functions for your business. Here, you will give details of the intended marketing for your business. Describe messages, channels used for generating leads and promoting your business, and sales strategy. Depending on the type of business, include what is needed and remove everything else.

1.      Key messages: Include key messages that will excite your target market. Use graphics and images.

2.      Marketing activities: Describe marketing options for product recognition, qualified leads, store traffic, or appointments. Consider advertising (newspaper, magazine, television, radio), direct mail, telephone solicitation, seminars or business conferences, joint advertising with other companies, word of mouth, fixed signage, digital marketing, social media, email marketing, or SEO.

3.      Sales strategy: Describe your sales approach, such as full-time commissioned salespeople, contract sales, or another approach.

Financial Plan

Your financial plan is where all your business planning comes together. You have identified your target market, target customers, and pricing. Knowing these, along with assumptions, you can estimate your business’s sales. Also, you will identify what costs and expenses are expected. This is important on an ongoing basis to see when your business becomes profitable. It is also important to know what funding is needed before income is generated.

Include estimated start-up costs, projected profit and loss, and a summary of the assumptions being made. Assumptions should include initial and ongoing revenue. For projected start-up costs, consider absolutely every cost your business needs to open the door. This will vary greatly from business to business. For example, a home-based business may need a computer and internet connection, whereas a retail store needs a location, a buildout, supplies, furnishings, and inventory. Research in detail what costs it will take for you to open your doors. You will need to make assumptions about how many months of recurring items, in addition to one-time expenses, to estimate when cash will begin to flow into your business. Use a spreadsheet. 

Projected profit and loss are extremely important to research. Over time, your business should grow in profits, which means increased costs as well. Research your industry in your geographical area to estimate your projections. It is advisable to be conservative in your assumptions.

Summary of assumptions. Describe how you arrived at the startup costs you will need. Where did you gain knowledge about your profit and loss figures? What resources did you use to determine your data?

Conclusion

In conclusion, business plans are the backbone of a successful venture because they provide structure, clarity, and direction. They help entrepreneurs articulate their mission, define objectives, and map out a path to sustainable growth. A business plan ensures you’ve thought through strategies, investment needs, market changes, your team, and so much more. The upfront work is tedious, and details are necessary to ensure you create and maintain the business of your dreams!