Success in business is no accident.
Ok, so everyone knows someone who launched a business on a whim; has flown it by the seat of his pants; and – far from going down in flames – has been wildly successful. Yes, it happens. But it’s not the norm.
Your business startup should be much more thoughtful and planned.
Any consultant worth her salt will tell you that a detailed, written plan is essential to your success – not just at startup but throughout the life of your company.
Usually containing projections three to five years out, a good business plan starts you off on solid footing, makes you more attractive to potential lenders, helps you make sound managerial decisions, and better positions your company for growth.
The thing that’s most important to know about a business plan is that it’s NOT a guide to entering a particular line of business or a particular market. Instead, it’s a guide that shows how you’re going to be competitive in that business or market, how you’re going to succeed.
Right about now you may find yourself irresistibly drawn to one of those fill-in-the-blank, one-size-fits-all, business plan templates you can find online, hoping take the work out of the process. They are precisely what you don’t want.
If dread is beginning to eat at you like a school of piranhas, relax. You don’t have to pen some epic volume (think: War and Peace with projected sales, revenue, cash flow, expenses, and profits). Size doesn’t matter so much. It’s the thought you put in it that counts.
So, where do you start? Business plans should always be tailored to the specific circumstances of any business venture. We’ll break down the elements next week, but here are some basics that most every business plan contains.
The Summary (or Executive Summary) – This is your business is a nutshell, a concise overview of the key elements of your business plan, placing special emphasis on your strengths and how you will make the company succeed.
The Company Profile or Description – Provides basic background about the company, its organizational structure, what you do and what makes you stand out from your competitors.
The Product or Service – A detailed description of product or service lines, including the importance of each to the company.
Project Financing – If you’re seeking financing, this section describes the project, its purpose, its cost, and the amount, form, and use of financing.
Ownership and Management – Details the principal management and non-management owners, areas of expertise, and outlines key management responsibilities and employees.
Marketing Strategy and Market Analysis – Describes the industry and industry outlook, identifies principal markets, major customers and competitors.
Technology – Is your product in the idea stage? In development? Ready to market? This section lays out the technical details and includes important patents, copyrights, and licenses.
Production and Operating Plan – Spells out how you will produce and deliver products or services. Includes descriptions plant, equipment, and labor supply.
Financial and Administrative – Lays out detailed financial projections, provides essential financial documents, and identifies key advisers, including auditor, legal counsel and bankers.
As you think about these essentials, remember this: Your planning is meaningless if you don’t put it into action. Review your plan regularly, at least once a quarter. Revise it as business conditions change.
Consultants at our Small Business Assistance Office can help you understand more about business plans. And our network of Small Business Development Centers has experts located in nine main regional offices and several satellite centers statewide. Use this online tutorial on business plans developed by the Small Business Administration.
For a comprehensive look at business plans, see our Guide to Starting a Business in Minnesota. Available for download in PDF, formatted for e-readers, or available in print (all free of charge), the book covers the major issues, questions and concerns about business startups.
Nothing we cover in this blog should be taken as legal advice. It’s not. And it’s no substitute for the professional guidance of a lawyer or accountant.
Jason Gray, owner of Real Meal Deli, explains the importance of having and using a business plan. Gray operates Real Meal Deli in three locations, two in Minneapolis and one in St. Paul.