Opening a new company is not that easy because it entails lots of processes and hard work. Aside from sourcing out the needed funds to finance your operation and hire credible employees to help you manage your company, you also need to formulate your own business strategies.

Business Plan

It is important to companies because it serves as a compass that helps executives and stakeholders in whatever actions and decisions they pursue. It serves as a benchmark that guides shareholders, executives and workers.

Some businessmen and entrepreneurs fail to discern the significance of the document. To know more about importance, read this article.

Importance:

For raising funds. If you want to obtain a loan from banks or financial institutions, it is one of the requirements of obtaining a hefty amount. They want to know how you can pay them, how profitable the company is and how you attract customers. Majority of them are hesitant to put their money into a company without seeing a convincing and effective business plan.

Benchmarking. It serves as a map that directs stakeholders and executives to a common direction. It guides them to the right path and provides measures when they go astray. It ensures that all employees, executives and shareholders are on the same path on what they intend to achieve. Through it, they can evaluate progress and make projections based on the present performance of the company.

Components that you need to consider:

It should include a concise information about the business enterprise, the industry where it intends to penetrate and business trends. You can need to conduct research and feasibility studies to get the need information you want.

Mission statement. You need to detail the companies objectives and the product and services it offer. You also need to enclose your target market.

Provide a detailed information about its stakeholders, owners, business advisors, managers and investors. Some firms even attach resumes of these persons.

You need to provide a brief information of the company’s operations. Describe the daily operations of the business, its suppliers, vendors, raw materials purchase, terms of payments with creditors and your customers.

You should also enclose your start-up cost and cash flow. Most often, these amounts are shown in a ledger type report or spreadsheets.

Provide a concise information about your product and services. Describe its attributes and what makes it unique from other products and services found in the market.

Rival companies/competitors. Give a brief description of your competitors, their weakness and strengths and ways of competing with them.

Marketing strategy and plan. Describe your tactics in attracting customers, boosting sales and establishing customer loyalty.

With all the ideas and suggestions mentioned beforehand, you can now create an effective business plan.

Business Plan: Its Importance and Its Components

I am an enthusiastic jewelry maker but marketing and business practices are not my forte. I love the design and artistic side of creating quality jewelry and love to chat with friends and associates about various methods and techniques. That’s what I personally enjoy, but I realized that it wasn’t enough if I actually wanted to sell my products and turn a profit.

Business Plan

That’s where my sister-in-law came in. She showed me how to evaluate jewelry business plans and software. As a fellow jewelry business friend, I was interested in what she had to say. Her business was turning over four times what mine was doing. We’d both started at around the same time, give or take a month or two, our jewelry was fairly similar and I had no less enthusiasm than she did. She showed me the jewelry business plan she was working from, but also demonstrated to me key points to look out for if I wanted to purchase a plan.

There is plenty of information to be had on the actual art of creating great jewelry, but jewelry business tips in a commercial sense are hard to come by. So my ears pricked up. This is what she told me to look for:

It sounds obvious, but make sure the jewelry business plan has an extensive general introduction on how to set up a jewelry business and what the market is looking for in terms of booth, shop and internet selling. You simply must know which market you should be trying to sell your own designs and creations into. As I’ve already alluded to, it’s fantastic to be creative and have wonderful ideas and skills, but if you want to make jewelry making more than just a hobby, you can’t ignore what people actually want to buy and what price they are prepared to pay for different merchandise.

Ensure the guide covers both selling online and also via stores, whether they be temporary (jewelry shows and fairs) or permanent.

The plan should fully understand and explain the relationships between costs, turnover and profit. If, like me, you are not a financial wizard, this should be clearly explained and relate directly to a jewelry business.

Look for personal examples. There is nothing to help you learn better than real life examples of going from making a loss to making a profit. A good plan should include mistakes made and lessons learned by the author. There is no substitute for personal experience, rather than theoretical pontificating.

Make sure the plan gives good advice on how to present your stall, booth or website. Presentation is crucial in the jewelry business.

Your plan should also cover all tax implications and how to keep records acceptable to the IRS. Also covered should be cash flow forecasting and how to negotiate with suppliers, show organizers and web-site designers. Useful tips on how to promote a web-site would also be advisable.

You should also learn about business licenses and insurance. They may not sound that interesting, but are, nonetheless, vital to sustaining a healthy business.

In effect, find a jewelry business plan that takes all the hassle out of the business side of things and leaves you free to do what you are most interested in: making great hand-crafted jewelry.

Jewelry Business Plans

Now that you know what a business plan for real estate investors is you should next learn what it is used for. A real estate investment business plan can be used for several things. First it can be used to help you focus on one or two specific real estate investment activities. Secondly it can be used to help you repeat investment successes. Finally it can be used to navigate your investments around sink holes and problems.

Business Plan

Before you start writing your business plan you should create an outline and gather your information. To start with you will want to write an overview of your real estate investment goals and objectives. This will help you to keep your business plan focused on the areas of real estate investing that you are interested in. The next section will be a market analysis. This analysis should include information on your target properties, what current properties are selling for or renting for, etc. This section should also include information about local commercial listings agents and a local residential listings agent that you can use to find properties or to market the properties that you buy. Other resources that you will want to list in this section include the contact information for professionals that you can call for appraisal and inspection services. The remaining sections of your business plan should include a section on how you should respond to different problems, a section on sales projections and estimates, a section for your financial plan, a section on how you will manage your investments and a final section that will summarize your goals and objectives.

Developing a Real Estate Investing Business Plan

When attempting to secure funding company owners or designated members must conduct interviews and presentations with banks, venture capitalists, private investors, investment companies, the Small Business Administration, family and friends, etc.. Naturally, these investors and lenders want to know that they will receive a return on their investment. Therefore, the company or its designated member involved in the process is accountable for convincing funding sources that your particular business is worth their time, effort, and money. This is how a well written Business Plan comes into play because it is the avenue through which a company conveys how it will achieve the success necessary to not only pay dividends, but more importantly to sustain substantial profits. Your vision must come across to these professional investors as a worthwhile endeavor that will garner profits large enough for them to make back their investment, and then some. These entities are not interested in lending money and then receiving it back. Just like you, they want to make money and a detailed, precise, and well written plan is the most important selling point in captivating their focus and attention.

Business Plan

Likewise, a Business Plan is the means by which a company owner’s vision is transformed from thought to purposeful and well defined action. A well written plan takes into account the adversity a company will face in its future as well as possible steps that can be taken to overcome those very same dilemma’s. In addition, a plan is to exhibit every aspect of a particular industry and its trends in an effort to interpret for a company what the market for business is really like. Many business owners are surprised when the company encounters less than positive situations that were destined to happen, because consultation with an industry professional never took place. Part of a professional Business Plan Writer’s responsibility is to solicit the necessary industry consultation and research essential for the creation of a plan that will prevent the element of surprise that can happen without adequate investigation.

An overwhelming majority of start-ups require funding from sources outside of company owners themselves. Although there remains the few who are fortunate enough to have the resources to start and operate a company, a Business Plan is vital regardless of whether or not outside financing is needed. Your plan is your first key to success and you owe it to yourself, company management, and employees to solicit the help of a professional Business Plan Writer to produce a superb framework that will guide your business to the level of success originally envisioned. The Business Plan is the number one investment that you can make in your company and its future.

~A.L. Demings~

“Greatness begins with a flash and becomes full blown fireworks” ~A.L. Demings~

What Is a Business Plan?

Attracting Outside Funding

Business Plan

Most startups cannot launch without funding from investors and lenders beyond the founders of the company. For most funders, reading a business plan is an important preliminary (but not the only) step to choose who to fund. The business plan must attempt to convince funders to move on to direct talks with the founders, to go through their own process of due diligence, and to move on to negotiations over the financing deal. The business plan cannot convince funders to give money on its own, but it can easily kill the company’s chances of getting outside funding it finds to be lacking.

Thinking Through Strategy

A business plan also serves the purpose of letting entrepreneurs “make mistakes on paper” before making them in wasted dollars, cents, and time. Putting the plan on paper allows time to consider how the elements of a strategy complement the research done and the resources of the firm. It also allows advisors and other managers to give feedback on the plan of action.

Creating a Road Map

When kinks are worked out, the plan becomes an excellent tool to direct the company with. It should include the high level actions the firm must take, which can then be broken down into specific schedules and actions by the company’s manager or managers. As time goes on, managers can return to the plan and its financial projections to judge the progress of the company, how successful the planning was, and whether company is following the plan well.

What is the Purpose of a Business Plan?

Parts of the plan usually include:

Business Plan

an introduction – defining the purpose of the plan;
overview of company – defining what the company is and will be;
product description – describing the product the company will sell;
marketing and sales-outlining the venues which will be used to selling product such as TV advertising, personal selling, public relations, newspaper advertising, etc;
market comparison-describing the current market for the product;
stage of development-showing exactly where the company and products fit in the big picture;
market trends–how the market is changing, for instance in the world of fast food the trend today is towards multi-concepts at one location;
competition–showing who the company is competing against, their strengths and weaknesses, the way a general views his opponent during wartime;
management–bios or resumes of managers and key personnel, showing their qualifications and how they can symbiotically interact with each other for the good of the company; and financial information, especially current financial statements and
sales forecasting–predictions of future sales.

Your business plan is a living document in that it can be changed as the market and other conditions change, but gives a guide to adhere to. Creating the plan requires the entrepreneur and his key associates to look at each section, pool their knowledge and take and honest inventory of all of the factors involved.

They need to discover the strengths and the weaknesses of their business model, and where they are weak determine ways to either de-emphasize that aspect, or find key personnel who have skills in that area. While it may seem to some like a mundane chore, writing and creating a business plan is the first step to success.

Creating A Business Plan

Similarities Between Business Plans For New and Existing Businesses

Business Plan

Both types of business plans should cover the customers the company will target and the competitors it faces. Both should detail the marketing and operations plans for the business. Both should delve into the financial targets for the business, on both the revenue and cost sides. This information presents either funders or employees with a clear idea of what the business intends to do.

Differences Between Plans For Existing and New Businesses

Whenever a plan must be presented to external funders for consideration it must be a formal document, carefully formatted and proofread thoroughly. However, for existing businesses preparing a business plan for internal use only, the level of formality can be relaxed a bit. While the format and order of a business plan should serve an internal or external plan well, there is not a requirement for an internal plan to stick to this structure.

Furthermore, a business plan for an existing business should include actual financial statements along with pro forma statements. This allows for pro forma statements to be based both on plans for future activities as well as reasonable extrapolations from past performance. New businesses have no financial records to pull from and can only take educated guesses based on the market they are entering.

Strategic Business Plans For Existing Vs New Businesses

The main use of a business plan is to help the owner(s) with the three important points below, of which at least one is bound to happen during the life of the business, unless it fails.

Business Plan

1. Staying The Course and Keeping The Business Stable

A business plan is a valuable document that business owners and managers should use to ensure that the business stays competitive and continues to advance forward. Remember that in business, if you are not moving forward, you are most likely moving backward, even if you can’t tell yet. Large companies do that kind of planning daily (they have to, otherwise they loose control of so many moving parts), and small businesses should do it too.

A business plan is not a document that you create with made-up numbers to impress your funding source. It is a living document which, when prepared correctly, gives the business its direction and helps it stay the course.

The document should have a detailed marketing agenda that the owner (for a one-person business) and all supporting staff (when there are employees) should be completely familiar with. There should be scheduled sales targets which need to be compared with actual numbers. There must be a marketing budget to allow for sales growth. And such marketing budget should not be made up of random numbers. Rather, it should be based on industry research and best practice (i.e. expense ratios) of companies in the same line of business.

There should be a marketing calendar that anyone involved in selling the business’ products or services, should carry at all times. This calendar details the actual selling activities that need to be adhered to on daily or weekly basis. When it comes selling and marketing, the lifeblood of a business nothing is to be left to chance.

2. Growth Financing

If you decide to grow the business, either by buying another business or simply expanding from within, having a business plan and reaching your sales goals as planned, makes you stronger when you go for financing. The bank (or your investors) will see that you had a plan, executed it and reached specific milestones. They will trust that you will execute your new plan with the same zeal. Otherwise, they won’t trust you with their investors’ money.

Therefore, it is very important to start with a plan (a template of your vision) and to use that plan as your roadmap for daily, monthly and yearly targets. Nothing helps you stay on track better. It also makes it a lot easier to secure the funding you may need to expand your company.

3. Selling The Business

Unless the business fails, is dissolved (e.g. a professional practice with one member), or is passed on to heirs, at one point, it will have to be sold. A business plan simplifies the sale process greatly.

Selling a business is similar to looking for financing. One difference is that the funding source will operate the business. Another major point in this case is that the funding source is probably putting all her/his life saving in the seller’s business. Because of that, selling a business is even more difficult than getting a bank loan or institutional investment.

A business plan can show a track record in meeting and/or exceeding planned sales and profit targets. Also, a business plan’s financial section has a lot of the documents that a buyer will need to review to do a due diligence. Usually, handing over a finished business plan will supply a major part of what a buyer needs to do a transaction.

Conclusion

Most business owners do not have a business plan. A lot of very small businesses (1-5 people) believe that they are too small and don’t need to have a business plan. They simply take it one day at a time, until they are in trouble or in need of money. However, experience has taught us that a business plan is a must from the beginning and should be used by anyone starting a business, alone or otherwise. How else can one know where the business is going and how is progress to be measured?

Every Business Needs a Business Plan

For those who still have questions as to why a business plan is so important, the following are three great reasons why you need to have a business plan.

Business Plan

Reason #1 – Attention to Detail – One of the most important reasons for you to develop a business plan is so you can have something that will help you consider present and future details for your company. More than likely there are many different aspects of your business that you have failed to consider, and developing a business plan can help you find them so you can plan for them ahead of time. When you develop a plan, it gives you the options to be able to deal with any problems long before they occur since you are planning out the details now.

Reason #2 – Makes Funding Easier – Another great reason to get working on a business plan for your business is because it makes the funding process much easier. If you are planning on borrowing money from lenders or offering shares to investors, most will want to see where the company is going before they give you money. Having a plan already drawn up can show them where you plan on taking the company and you will be more likely to get the funding that you need. It is important that you develop a realistic plan with accurate figures as well in order to present a plan that looks credible.

Reason #3 – Management Help – Starting a business of your own is a huge undertaking, and it can be difficult to manage everything at times. Having a business plan can help you with the management end of your business, since you will have a drawn out plan of what you want to accomplish. Having your business plan will enable you to set and work towards both short and long term goals that will help your company become successful.

While you may be tempted to get started in your business without a business plan, more than likely your business is going to fail if you have no plan to act as a compass for your company. Having a business plan is crucial during all stages of having a business, and while it will take some work to draw up a business plan, the work will be worth it when your company becomes successful.

3 Reasons You Need a Business Plan

The planning process involves setting organizational goals that are then translated into departmental goals that are then translated into goals for the smallest logical part of the business, (e.g. each individual sales representative in the case of a sales department). The textbook definition of the smallest logical part of a business is a “Strategic Business Unit.” If you’re not concerned about impressing people, call it a Profit Center.

Business Plan

Profit centers are organized in a manner that makes sense to the particular business. Some businesses may organize profit centers by classes of customers. Other businesses may think in terms of individual product or jobs. Still others think in terms of lines of business. Do you have a different pricing structure for different classes of customers or for certain jobs? Do you require higher profit margins on certain products? Do certain products, customers or jobs just naturally “fit” together? Answer these questions and you will begin to think of your business, if you do not already, as a cluster of smaller enterprises. This cluster of smaller enterprises can be thought of as an investment portfolio with each profit center representing an individual stock. Which should be invested in? Which should be liquidated? An investor has an overall goal for his portfolio. To achieve that goal he may take on higher risk investment for potentially higher return or he may accept a lower yield for proportionally lower risk.

Could your business be more profitable if some of your products, services or customers were emphasized while others were phased out? Is each individual margin on each of your profit centers adequate to justify the risk? The answers to these questions form the basis of a business plan. A formal business plan can help you manage your business better. Through it you can communicate your goals to others within your organization. The plan provides each manager with a common reference point. Departmental goals that are in harmony with the goals detailed in the business plan should also be in harmony with other departments. As the business grows, it is much easier to delegate responsibility over a particular profit center when a performance target has been set. When performance is measurable, the owner can quickly identify and correct problems. The owner will also know which managers are achieving their goals and which need assistance.

Preparing a business plan is time-consuming but is not difficult. Consider forming a planning team. The leader of the team should be able to remain objective, settle disputes between different departments and be a cheerleader for the plan. Often the team may be intimidated if the owner is also the team leader. Many businesses choose to hire a consultant to act in this capacity to insure objectivity and to provide motivation.

Motivation and involvement are the keys. If the managers contribute to the planning process, they will be supportive of its implementation. Above all, the managers (and their staff) must feel it is “their” plan. Instilling a feeling of contribution or responsibility in the employees insures their support of the plan and contributes directly to the plan’s success. A plan without support ends up on a shelf gathering dust.

Typical Sections of a Formal Business Plan:

1. Company History

2. Business Summary

3. Products or Services

4. Competition

5. Marketing Plan

6. Production Plan

7. Personnel Plan

8. Management

9. Financial Analysis

Copyright 2011 All Rights Reserved Stanley I. Simkins www.Management-Advisory-Group.com

Business Plans – A Tool For Better Management