Serious business planning is vital to those who are serious about business success.
All entrepreneurs face this fact when they don’t know how much money they need to start or grow their businesses.
So they write a business plan.
Have you ever scribbled a business idea and short to-do list on a napkin? That’s a very basic business plan, outlining what a business will do to meet goals.
Sherman Oaks Accounting & Bookkeeping powered by One Source Services, Inc. have taught many entrepreneurs how to use business plans to steer their businesses, address market changes, seize new opportunities, reinforce strategies, manage goals and responsibilities, track results, and plan crucial resources.
A modern business plan is shorter and easier to write than ever before.
It doesn’t even have to be printed; a business plan is a work-in-progress and a printout would only be a snapshot from the moment it was printed.
An effective business plan is never finished! Therefore, it should include a review schedule that ensures results are reviewed and metrics revised regularly.
There are three common business plan types:
One-Page Business Plans informally summarize the business with concise language that fits on one page. It’s an efficient way to introduce a business to potential investors, sort of an extended version of the napkin scribble.
Internal Business Plans are also informal but more detailed than a One-Page. Intended for internal use, they focus on strategy, metrics, milestones, budgets, and forecasts without formalities like company histories or management details.
External Business Plans are intended for external use and are formal, often used to obtain investor funding or loans. They are very well presented with attention to language and format, including specifics about projected capital and funds usage to keep prospective investors informed.
It’s worth repeating that effective business plans must include a review schedule!
Formal business plans also include:
Executive Summary: a compelling, concise section that neatly hits vital plan points including what problem your business solves and how, target markets, a management team summary, and key financial highlights.
Company Overview: summarizes things like your company’s legal structure, history, ownership, mission statement, and location.
Products and Services: goes deeper into the problem your product or service solves, the competitive landscape, your competitive edge, special technologies, intellectual property, and other key aspects of your products and services.
Target Market: examines the people you’ll be selling to. It’s crucial to understand your target market in order to build successful marketing campaigns and sales operations.
Marketing & Sales Plan: discusses how you’re going to reach your target market through market position, pricing, promotions, sales operations, and processes.
Milestones and Metrics: summarizes implementation, tasks with due dates, and who’s responsible for them. It also lays-out measurements such as the sales lead numbers, website page views, and other metrics to measure progress.
Management Team: includes biographies of key personnel and why they were chosen. Important to investors, this can be left out of most business plans.
Financial Plan: A crucial component, entrepreneurs must pay attention to how much money is coming in and being spent. Meaningful financial data provides strategic information for better decision-making on issues like hiring and big purchases, and helps determine how much capital to ask banks or investors for. It should include a sales forecast, profit & loss statement, cash flow statement, balance sheet, and personnel plan.
Our CEO, Anna, says, “Any amount of planning will give your business a significant advantage over those who run by the seat-of-their-pants.”
Writing a business plan is one big step forward, but you must revisit and revise often to leverage for success!
Business owners who learn something new about their business every day turn their business plan into a growth machine that adapts to new information.
Did we mention the importance of a regular business plan review and revision schedule? It’s vital that business owners often compare actual numbers to plans, revisit goals, set new ones, and review overall strategy.
It isn’t as complicated as it may seem.
Sherman Oaks Accounting & Bookkeeping powered by One Source Services, Inc. can help with quality data input and meaningful financial statements, allowing you to adjust your business plan based on your actual business results!