number of new accounts, “y” levels of awareness, “z” levels of retail distribution, etc. These are very important benchmarks against which you would be able to judge the progress of the business as time goes on. Importantly, this is an exercise that should be ongoing, and not just something that is implemented only in the first year of preplanning the business.
How to Write a Business Plan - An effective business plan is generally written over an extended period (weeks or months) as each section will require research and analysis. Some SCORE clients come to us with the goal of seeking to develop an effective plan, and our goal is often to try and write one section every week or two based on the learning at that point in time. There are a few key steps that should be taken in the process that will facilitate writing the plan.
* Conduct your own research of the business category in which you will enter, with the objective of learning as much as possible about how the category operates, and importantly what it takes to be successful in the market. Before you write the plan, you should be able to identify the 3-5 keys to success in the business you will be entering. It is much more beneficial to develop your own plan, possibly with the help of others, rather than to pay someone else to write the plan for you. This is because when you write the plan you completely understand every element and will be much better equipped to run the business when it begins.
* Seek secondary sources that can add to your knowledge of the categories. For example, some business libraries will have examples of business plans written by others that you could use as an example of how you plan to approach the venture. One library in New York City (Science and Industry Business Library…SIBL) contains hundreds of business plans for different types of companies, and you might find one written about your type of business or something very close to it. Another excellent source for business plan examples is the website www.bplans.com. They also have hundreds of sample plans you can use to help develop your document.
* Identify a business plan format that appeals to you. There is no “right” business plan format. If you search Google for business plan formats you will get 20,800,000 results, none of which is the ideal, but most of which are probably adequate. In this chapter, we will identify the sections of a business plan that we believe to be most important. You can decide if this is right for you, or you go to other sources for an approach that makes you feel more comfortable. This book provides two options for business plans, both of which are extremely effective.
* Determine your personal goals. Specifically, what are you trying to achieve with your venture. Are you seeking to develop a large business with many employees that will generate approximately $XXX in personal income? Or is your goal to just create a successful one-person venture that can give you $YYY income each year? Perhaps your goal is to be a high-profile businessperson who is regularly quoted in the papers and on-line, and this is more important to you than the income you make from the business? There are infinite combinations of personal goals, but it is essential that you carefully think through yours, as they will impact significantly on the type of business plan you develop.
Length of a Business Plan – One of the most common questions we get from clients is how long the plan should be. We have seen plans that are three pages and others that are eighty pages. Generally, the length of the plan depends more on the complexity of the business and the depth of planning you have done, than any “formula” which suggests that it should be a certain number of pages long.
Two Types of Business Plans - There are hundreds, if not thousands of different formats for writing business plans. In my 40+ years of working with both large and small clients, I have found that one type of format works best for a small business and another works better for a medium or large organization. In this chapter, we will provide a format for both, as small organizations do grow larger over time. However, it should be noted that in the nine years I have been working with relatively small companies I have tended to recommend the “Small Company Business Plan” which is reviewed below. The plan for larger companies follows it in this chapter. There is no reason that an entrepreneur cannot mix and match sections if it works for them.
Small Company Business Plan - The intent of the Small Company Business Plan is to provide in one simple document the information that a company should develop to effectively plan its business and contain enough information so that the document could be used with investors if raising money for the organization is necessary. This plan contains only eight sections as follows:
SECTION ONE: Business Definition - This consists of a succinct description of what the business is, so that an uninvolved party would have no difficulty understanding what the organization is offering in terms of products or services.
SECTION TWO: Market Environment - This section is intended to provide a framework for the environment into which the business is entering. It is NOT intended to contain growth statistics about national or regional market size and growth as one might include in a business plan for a large company, but rather a discussion of the general market the company is entering. For example, if the entrepreneur is going to open a lady’s shoe store, the discussion should talk about the number of competitors in the area and the relative importance of them as potential threats to the desire to develop a local ladies shoe franchise. If the entrepreneur is opening a human relations consulting firm, the discussion would focus on the number of other similar types of organizations that exist within the regional market, and what is perceived to be the demand for this type of consulting service.
SECTION THREE: Target Market - This is a discussion of the primary target market for the product or service from the perspective of the buyers of the offering. For example, if the company is making a new type of toy, the target market is not the children who will play with the toy, but the retail outlets or wholesalers who will carry the toy. This does NOT suggest that the marketing will not be directed at the end users (i.e., children or parents) but the primary target is the buyers, because without the distribution you would never get to the children.
SECTION FOUR: Product/Service Positioning or “Reason Why” - This section should briefly indicate the unique point of difference of the product or service that will be offered, so that the target audience has a reason to buy. Said differently, it is what you would like your customers to think about your company when the name is raised. One commonly used example is BMW cars. They have long had the positioning as the Ultimate Driving Machine. TD Bank has positioned itself as the convenient bank, with more locations, better hours, etc.
SECTION FIVE: Marketing Plan - This consists of a one-year program that outlines in detail how you will come to market with your product or service, in terms of developing awareness of the item/service, generating trial/purchase, generating distribution, etc. It should also include a point of view on the type of customer service you plan to provide to build and maintain a good reputation for your company.
A key part of the marketing plan is the development of an appropriate name and logo for the company, and also a 5-7-word slogan/tagline that would be used in addition to the name to help describe the business (more about this elsewhere in the book).
SECTION SIX: SWOT Analysis - This is a section where the company would look at what the strengths, weaknesses, opportunities and threats are relative to the venture. It is an excellent exercise to help in the analysis process when starting a new business.
SECTION SEVEN: Operations Section - This is the section that describes how the business will be structured, and what tasks each of the people in the organization will be responsible to accomplish. For example, it will describe how the product/service will be created or manufactured, and what will be the process of “selling” it to the target market.
SECTION EIGHT: Financial Analysis - This is the principal
