Business Planning 101
Want to jump straight to the workbook?
You are tired of waiting on the sidelines, watching others turn their dreams into reality. You are ready to take the plunge and become an entrepreneur. But where do you begin? How do you go about starting your own business? And that, my friends, is the big question.
Like most things, you need to start with a realistic plan to help you create the foundation of your new enterprise. This foundation becomes your road map and your guide to building your business one step at a time. This applies to any entrepreneurial endeavor from any industry. Starting your own business is not something you can do on the fly. Leave the “I can just wing it” attitude at the door because that already sets you up for failure. Like we always say at Cowe Communications, preparation is vital. It takes thought, effort, and time and those pieces cannot be skimmed over.
A well-written, thoroughly researched business plan identifies what your business is, who your target audience is, the needs you’re fulfilling, and your potential for growth. It’s also a way to attract future investors. Ready to take a deep dive into planning your business? Then let’s begin!
An effective business plan can be broken into these elements: executive outline and summary, company history, market analysis, strategic objectives, sales and marketing plan, company management summary, and an investor proposal.
- Executive Outline and Summary: This is an overview of the most important parts of your business plan: company description, products and services, mission statement, value proposition, market analysis and a summary of the 3-year financial projection. Keep in mind that this is an overview. Keep it short and sweet and engaging. Choose your words wisely. This is a chance to show your reader that you have a thought through every detail and scenario. State your goal clearly—that is, after all, what this entire business plan is about. Remember: Though the business plan is written in third person, be authentically you.
- Company History: This section gives the reader a detailed, intimate look into the profile of your company. It includes the date the business was founded, the history of the company, the legal structure and ownership, the mission statement, the vision statement, the management team (including job description, duties, and responsibilities), and any location of facilities that exist.
When writing this section, pay attention to details. Give as much information as possible without being too over descriptive. Also, remember there’s a difference between a mission statement and a vision statement. Sometimes, this gets confused as one and the same, but it is not. A mission statement expresses the company’s purpose, what you provide and to whom do you provide your goods and services. Make it short, powerful, and unique. A vision statement talks about the impact your business will have in the next five or ten years once your mission statement is accomplished. Make this inspiring and passionate!
- Overview of Services and Products: This is your opportunity to describe in depth (and great detail) your company’s offerings. Show the need for your services or product and illustrate how you are going to fill that need. Be specific and concentrate on your value proposition and how these products or services will ultimately benefit your customers. Provide relevant data and evidence that reinforces and supports your offerings. Include testimonials if and when possible.
- Market Analysis: Identify your audience. Show precisely who you will be serving with your products and services. Describe who they are, what they do, when they are most likely to buy, where they will buy, and how it benefits them (value proposition.) Show how large the potential market is, what their buying habits are, and what they would be willing to pay for your goods and services.
A competitive analysis is also a critical component. Be sure to describe your main competitors, their strengths, and weaknesses, and how you uniquely differ from them in the marketplace. Show emerging trends and establish yourself as either ahead of the curve or firmly placed in the right place and at the right time.
Add graphics to break up the blocks of text. These visual aids can make the analysis more exciting and impactful. Make sure the data you collect supports your mission, vision, and value proposition as well as aligns with your goals and objectives. Gather data from sources such as Google Trends, Bureau of Labor Statistics, U.S. Census Bureau, Trade associations, Industry publications, and city, state, and federal databases.
- Strategic Objectives: In this section, describe your business’ goals and how you plan to achieve them in the next three to five years. Detail initiatives and measures that will set you up for success. Strategic objects should include financial goals, customer goals, internal operational goals, learning and growth goals, and future goals. Show how you are going to achieve your goals through strategic actions.
Use this formula to define your objectives: action + description = result. Make your objectives SMART: Specific, Measurable, Actionable, Realistic, and Timebound.
- Sales and Marketing Plan: These are strategies for bringing awareness and engagement to your services. Based on your market analysis from the previous section, focus on the 5Ps: Product, Place, Price, Promotion, and People. Show how you are going to target, attract and delight your customers with your products and services.
- Company Management Summary: Detail the company stakeholders and people responsible for the management of the business. Include the bios and information for the founder, the team members, the board members, and the advisors. Show how everyone is connected to the strategic objectives and the part they play in achieving your goals.
Growth is important to a business plan. This holds true for the people described in this summary. Detailed opportunities for growth as well as the potential for new hires.
- Investor Proposal: If you are raising capital with an investor, then this section is necessary. Investors are usually not experts in your line of work, but they do expect you to be. Do not overly complicate this section trying to impress anyone with technical jargon or complicated scenarios. You are simply showing an investor what they are investing into, why their investment will help the business (and its customers) to be successful and when they will get a return on their investment.
- Five Year Financial Statements and Charts: Financial projections show cash flows, income, liabilities, and balance sheet. If there are loans to be repaid, here is where those numbers will be found, along with payroll, rent, insurance, marketing costs, and more. You will focus on three key financial statements: Income Statement (Profit & Loss Statement), Balance Sheet (Assets and Liabilities), Statement of Cash Flow (Inflows and Outflows of Cash). Other components of the financial statement include sales forecast, operating expense, payroll Expense (if applicable), amortization and depreciation, cost of goods sold (COGS), and break-even analysis.
In summary, the business plan is at the heart of your business’ success. This guide is meant to help you start your deep dive into the venture of your dreams and make that into a reality. Check out our companion worksheet here.
For any questions, our team at Cowe Communications can help steer you in the right direction. Visit our website for more information.
