Business Planning is Very Important for Business

BYTRADEBYTRADE subscriber Posts: 63 Bronze Level Member
edited September 2012 in Business Planning
A good Business Plan is the most important (and often overlooked) part of running or starting a business, expanding a business or obtaining finance for a business. If a Business Plan is written properly, starting, expanding or running a business, and / or obtaining finance, is much easier, leaving less room for error and failure. While you cannot predict everything that can happen in a business' future, a good Business Plan helps you avoid certain pitfalls, overcome obstacles, while anticipating and creating opportunities.Types of Business PlansThere are different Business Plan Formats for various circumstances. You should always start with a Comprehensive Business Plan to run your particular business venture or project. Once you have completed your Comprehensive Business Plan, you can take certain aspects of that Plan to form other Business Plans for various situations, like a Funding Business Plan for a Bank or Venture Capital Firm.At ABC Business Consulting, we offer 4 Levels of Business Plans to meet most needs and requirements.The Business Plan Process is Critically ImportantFormats are important for Business Planning but most important is the Process. The Process is a building block system that is continuous, systematic and comprehensive. It involves the entire Company, produces effective decision making and executes those decisions in a Strategic Plan. A good Business Plan also measures the relationship between Expectations and Performance- it evaluates your Company's progress or lack thereof. A Business Plan's goal is to create the future for your company- being proactive versus reactive in relationship to your market niche.For a proven Business Planning Process developed over the course of twenty years of business planning, please see the ABC Business Plan Workbook and Guide.Developing a Business Plan is Both Art and ScienceIt is said, writing a good Business Plan is more art than science. It is good to have a proven process and format, but you can't just fill in the blanks on a master planning program or document. It is a matter of asking yourself the right questions within that proven process and format that brings about a successfully written Business Plan (see the Tips Section later on in this article for more details).A Comprehensive Business Plan has Eight Sections1. Executive Summary5. Marketing Plan2. Company Overview6. Strategic & Sales Plan3. Management & Operations7. Financials4. Products and Services8. AppendixTable of ContentsBefore discussing each section of the Business Plan, let's cover one of the most important parts of the Business Plan, the Table of Contents. The Table of Contents should be very detailed, so that the person reading and using the Business Plan can find and access the information needed very easily and quickly. You can write a great Business Plan with all the necessary information in it, but if you can't easily find or access that information, then the Business Plan ceases to be a useful tool.The Table of Contents should be organized by each section of the Business Plan and the specific page numbers of each section and sub-section. For instance, in Section One, The Executive Summary, you should be able to find the Management sub-section very easily. It is strongly recommended that a Business Plan be organized as an online document, with the sections and sub-sections hyperlinked to the page where that information resides. This way you can access information very quickly on a computer online versus having to flip through the paper document to find the information.OrganizationThe Organization of the Business Plan is quite important. The 8 Section Business Plan is in a specific order from which each section builds on the previous section. There is fluid thought and reasoning employed to achieve a Business Plan which reaches its specified purpose (i.e. to run a business, to buy a business, to expand a business, to enter a joint venture, to finance a business, to complete a particular project). Although we discuss the Executive Summary as the first section of a Business Plan, the Executive Summary should be written last. With the exception of the Executive Summary, all the other sections should be written in the order they are listed. Remember that a Business Plan is a Business Document; you are NOT writing prose. It should contain a very precise and concise format and be organized into numbered sections and sub-sections, which contain specific information in short, paragraph form. As an example: Executive Summary / Management Section:I. Executive SummaryA. Mission StatementB. Business Plan PurposeC. Management1) John Doe, CEO/ Founder : Mr. Doe has been in the tire distribution businessfor 20 years.a) Mr. Doe has capability to run this start-up due to his developed skills:(i) "skill a"(i) "skill b"Business Plans should be written in paper form, computer format and online format. Computer Format means the Table of Contents are hyperlinked so you can easily access certain information quickly and precisely in one click on your computer. By using the Executive Summary example above, the Table of Contents for the Management Section, CEO Skills, should appear as such:Table of Contents:I. Executive SummaryA. Mission Statement (hyperlinked) : page 1B. Business Plan Purpose (hyperlinked) : page 1C. Management (hyperlinked) : page 11. John Doe, CEO/Founder (hyperlinked) : Page 1Publishing The Business PlanYou should have your Business Plan published securely, online (via password access) so that certain key managers or employees can access and manage remotely. Also, you can use an online Business Plan to attract funding for your venture. You can have different versions accessible online for particular purposes. For example, you could have your Marketing Plan accessible remotely so your Sales Manager can update it or refer to it while in the field or on an important sales call. You could have a funding version of your Business Plan accessible online for angel investors or venture capitalists to view your opportunity.The Business Plan is a Dynamic, Living DocumentA Business Plan is a dynamic document, as it changes on a daily, weekly and monthly basis. By being able to access it on your company computer network and / or online, the CEO, Executives, Management and Key Employees can update it easily and effectively. For a Business Plan to be successful, it must be intertwined into the fabric of your business. Having the Business Plan organized with Hyperlinks with highly organized sections and uploaded on your company's computer network and accessible online, allows the Business Plan to become a "living" document which can effectively:1) Run a business2) Be readily changed, adapted and updated3) Be a sales tool4) Obtain funding5) React quickly to market changes6) Give you the ability to make realistic forecasts and projections7) Seize opportunities8) Keep your Competitive AdvantageConsider the Business Plan AudienceOrganization of your Business Plan is KEY to its effectiveness and utility. It is important to remember that too many Business Plans are written from the perspective of the Business Owner. When writing your plan, remember your audience extends beyond you, the Owner. Don't neglect your Managers, employees, customers, the marketing aspects and the potential investor elements. This is also why we suggest writing one Comprehensive Plan to run your business and develop other Specific Purpose Plans for different audiences, i.e. a Customer Plan, an Investor Plan, a Lender Plan, a Strategic Management Plan, a Marketing Plan, Supplier Plan and so forth.Business Plan Section One: Executive SummaryAs stated previously, the Executive Summary should be written last. Why? Because it organizes and summarizes the entire Business Plan. You cannot achieve this effectively until all other sections of the Business Plan are completed. You should develop two types / renditions of the Executive Summary for your Business Plan. A short version which is 2-3 pages and a longer version that is 5-7 pages long. The Executive Summary contains the Company Statement, Visions and Mission, the Purpose of the Business Plan and a short summary of each section of your Business Plan, along with a Financial / Profitability Section.The Executive Summary (short version) is part of your Business Plan, giving the reader a quick overview of the important facts contained in your Business Plan. The Executive Summary (short and long versions) can also operate as a stand-alone document to be used to generate interest in your business opportunity or venture, i.e. to be sent to a funding source to generate and gauge their initial interest. An Executive Summary can accompany a Deal Overview or Investment Summary to provide more details to a venture capitalist about your particular business opportunity.Brevity, yet completeness and inclusiveness, is key when writing your Executive Summary. It should be concise yet have adequate detail about your Business Plan. This can be difficult to achieve if you attempt to write it prior to completing all the sections of your Business Plan.
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