Most successful business owners routinely use a business plan to stay on track, seek financing, re-energize their companies, or arrange strategic alliances.
The purpose of the business plan is to make a commitment on paper to a plan of attack, which will determine the direction the business is moving. It should also determine the exact strategy and tactics, the risks and rewards. Here’s where you should begin:
The basics
A business plan should be set up with a cover page and a table of contents. Each section should be tabbed and neatly labeled.
Executive summary
This is the whole business concept in a nutshell —- a complete summary of the rest of the plan. Starting with when and how the business began and ending with projections, this section briefly describes the product/service, what separates the business from the competition, what makes the business successful and what it needs to do to become even more successful.
This should be two pages at most. If it is not well written to compel the reader to continue, it will not get read and ultimately will end up in the round file.
Mission statement
The mission statement is the rudder of the business. It briefly states what the business is about — what its mission is — and is often used in marketing materials.
Background and business concept
Also know as “the company,” this section picks up where the executive summary left off. Basic information about the company, its past, present and future, should be provided here.
The market
What customer groups are targeted? Who is the competition? What is the market? Why would it be interested in that service or product?
Your product or service
What is it? What makes it special or attractive? What does it cost? Are there warranties? How will the product or service be produced and/or distributed? How will the business be promoted? How will the business attract new customers? Is there an in-house sales force? Will the company sell through manufacturers’ representatives, telemarketers, direct mail or the Internet?
Management team and objectives
Who’s running the business and what goals are they required to meet? Is the management team deep or thin? What is its previous experience?
Financial considerations
Financial statements should be done on a cash basis. What are the business’s expenses and revenue sources? The more detail the better. This section should include the exit strategy.
The summary
Summarize the rest of the plan and key issues.
Appendices
Assets and liabilities must be included in this section. Personal financial statements and biographies of the principals also should be included here. Louis P. Stanasolovich, named one of the best financial advisers in America the last four years by Worth magazine, is founder and president of Legend Financial Advisors Inc., a fee-only financial advisory firm located in the North Hills. Legend provides asset management and comprehensive financial planning services to individuals and businesses. Reach him at (412) 635-9210 or via his firm’s Web site at www.legend-financial.com.
