Business plan models, or outlines, are similar across the spectrum of business plan writing. This means that the requested information relating to the different sections of a business plan are similar but may differ in presentation and/or layout.
CA Boner Business Plans created, and uses, the business plan model as illustrated here. The triangle with the seven circles represents the business plan sections (the circles) that are in constant “motion” as the business starts and continues through the various business cycles. The triangle provides an anchor to the business planning process allowing for creation of strategic and tactical plans to accomplish the desired results.
It is important to understand that when there is a change in one of the circles (sections) it also creates change in the other circles.
Nothing in a healthy business environment stays at a constant, therefore giving rise to "Your Business IN MOTION". Constant change requires the business plan to be a "working" document assisting the business to remain focused on its original intent while assessing opportunities and challenges.
A brief summary of the seven sections of the business planning model used by CA Boner Business Plans is provided below.
VALUES, VISION, MISSION
Values, Vision, and Mission give direction and focus for defining what you want your business to be and what you want to accomplish.
It is important to first determine the Values (a set of beliefs or standards) which are to be exemplified throughout your organization and drive employee behavior to accurately represent your business. These values, as internal drivers of the business, are a foundation for your Vision, which is an internal statement that provides focus to employees as they guide the workings of your business.
The Mission statement relates your long-term strategy and the focus is to the external workings of your business, i.e. the customers. It is imperative that all three (values, vision, mission) are in alignment with each other to achieve desired results.
Of great importance is the alignment of your business values, vision, and mission to your personal values, vision, and mission. This is essential because there comes a time in your business career, whether as owner or employee, when you ask yourself, “Why am I doing this?” The answer is typically found at the personal level and is used to guide you through changes you make to find the alignment between your personal life and business life.
It is imperative to spend the amount of time needed in determining your values, vision, and mission as this area is one of the keys to the successful performance of your business.
BUSINESS STRUCTURE
The structure of your business is important in order to address legal, regulatory, and accounting considerations. A simple business structure in the beginning may become a difficult issue as you grow, especially when crossing county and state lines.
It is highly recommended to seek legal advice when determining your business structure. Also prudent is to look to accounting expertise to assist with accounting and tax related issues.
Following is a list of items (not inclusive) to consider when structuring your business:
- Name of Business and is the name available
- Licenses and Permits
- Resale licenses and Sales tax
- Tax ID and EIN (Employer Identification Number)
- Form of Business (sole proprietor, partnership, corporation, LLC, LLP)
- Financial Accounting
- Tax Accounting
Seeking professional assistance may appear to be time consuming and costly up front, but it will be a time and cost savings as your business grows.
MARKETING
It is important to understand your business and what product/service you provide in order to correctly analyze your industry and its trends.
You will want to know the following about your industry:
- Size
- Growth rate
- Maturity
- Sensitivity to economic cycles
- Regulatory requirements
- Seasonality
- Supply/distribution channels
- Financial characteristics
Essential to business success is knowing your customer.
Therefore, market analysis considerations need to be given to the following:
- Defining your target market
- Competition
- Strategic position (including risk assessment)
- Sales strategy
- Your market plan
OPERATIONS
Explaining how your business runs is extremely important for internal planning.
In the business plan, it is important to note:
- what is essential to the type and success of your business
- what is your distinct advantage
- whether you are able to overcome any of the frequent problems in your type of business
This would include addressing topics such as:
- Facilities
- Location
- Improvements
- Production
- Inventory control and management
- Supply and distribution
- Customer service
- Processes
- Research and development
- Financial control
- Information technology
- Disaster recovery
- Other major operational issues of your business
MANAGEMENT
People are at the heart of every business and are also a key factor in making you successful. That is why it is imperative that the business values, vision, and mission are well understood and practiced within the organization.
Focus is on the people who run the business and the management style and structure.
Key management personnel to include are:
- Key managers
- Board of Directors
- Advisory Committee
- Consultants/Specialists
- Key personnel to be added
Also include your management compensation and incentives.
FINANCE
Financial statements provide you with information to make decisions, therefore it is important that you understand them. The numbers simply represent decisions you have made in your business.
Remember: every decision will eventually end up somewhere in your financial statements.
The three most important financial statements to include in your business plan are the following:
- Balance Sheet: shows your assets, liabilities, equity, and how much the business is worth overall at a point in time. This includes forward projections (pro-forma) for 3 years.
- Income Statement: shows your income, expenses, and whether your company made a profit. This includes forward projections (pro-forma) for 3 years. This is also referred to as the Profit and Loss Statement (P&L Statement).
- Cash Flow Projection: shows your cash in and cash out and projects whether your business has the cash to pay its bills. This includes forward projections (pro-forma) for 3 years.
Additional financial information to include:
- Start-up costs
- Sources and uses of funds
- Break-even analysis
- Budgeting projections
- Assumptions for all projections
EXIT STRATEGY
It may seem counter-intuitive to think of how you will be “getting out of business” if you are just starting. And if you are an existing business, you may not have given much thought as to how you plan to exit.
But we all know we will exit our business at some point. This section of the business plan is extremely important in determining where you want to “end up”, as that choice drives many of the decisions you make during the life of your business.
Different exit strategies include:
- Succession plan
- Sale
- Merger
- Buy-out
- Franchise
- Acquisition
- Going-public
- Closing your business.
Regardless of which exit strategy is chosen, it needs to be incorporated into your business plan.
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