What is Your Business Plan?
Updated: Jun 17, 2021
How to Create your Business Plan
The executive summary describes the focus of your business. Identify your mission statement, company location, financial structure, corporate structure, and goods or services offerings. Detail your business's unique and competitive advantages and the processes used to deliver this to the consumer.
A mission statement is an action-oriented roadmap that discusses your company's purpose. It clarifies what you would like to achieve, your target market, the details of how the organization will meet these objectives, and why you started your business. This lets the public know the product/service you will be providing, who you will be providing this for, and how you will be marketing this.
Detail your local service area. Make sure you are clear on the specific cities and counties you want to serve. If you want to sell nationally, or internationally, plan a robust map and calendar so that you can roll out additional service areas in a coordinated manner.
Financial structure refers to the investment you will make in your company and the way in which you will use both cash (capital) and debt. This mix directly affects both the risk and the value of your company and is important for future financing options. Your goal should be to finance your company at the lowest possible rate, which will reduce any debt obligations you have in the long term. The best way to do this is to finance your investment initially with cash.
The corporate structure you choose will influence all of the operations of your business, from day-to-day operations to taxes and then to how much of your personal assets are at risk. One of your main goals in deciding on a corporate structure should be to minimize your personal risk. For example, if you choose to establish your business as a sole proprietorship, you must be aware that you are personally liable for any tax issues that your business may face. We recommend structuring your business as a Limited Liability Company (LLC) to minimize this risk.
Products and Services
Identify the exact products and/or services your business provides. Should you have a combination of the two? This will depend on how well they interact with each other. For product sales, identify your product lines, methods of sale, and after purchase services.
For a service business, define the processes that create revenue for your business. Should you have multiple services, detail how they relate to each other, and describe the assets needed to operate each of them. Outline your pricing structure and whether your business will charge hourly, by project, or on a fixed price basis.
Make sure you know your ideal customer. Identify the groups of customers that create the most value for your business and their purchase habits. If your business typically services other businesses, an ideal business profile will contain traits, including company size, location, revenue, industry, and goods or services. From business to business, ideal traits to focus on will vary.
Businesses selling to consumers have to look at demographic, geographic, and psychographic data. Demographics are variables, such as age, education, income, and family structure. Geography refers to the location of your typical and ideal customers. Psychographics distinguish characteristics, such as political affiliation, environmental stance, and any other lifestyle attributes.
Research and understand your competition in the market. Identify what brands fulfill different needs for different consumer segments in your industry. Looking at other businesses can illuminate what customers are not currently being served.
Marketing and Sales
Describe your plan for customer acquisition. List all of the marketing channels, platforms, and communications your business will use. If you have plans to expand your advertising over time, identify these practices and how they will target your ideal customer.
The key to good financial analysis is to record accurate figures for revenue and business expenses. Make sure to state where financing is coming from, either personally or through business loans and/or equity financing.
To view a detailed financial analysis, view our case study and guide. This is also a great place to identify where capital is being invested and what future projects the company may be interested in developing.
The management summary details how your business is going to run on a day-to-day basis. It should detail personnel, processes and procedures. Identify how each of these key items creates value for your business and your customers. New business owners should ensure that they clearly identify the daily and overall responsibilities of each of their personnel. This will maintain a clear and ongoing vision for the entire company.
CPN & Associates LLC is a Business Consulting Firm offering strategic business reviews, analytical financial reviews, operational management, and many other small business services.