I’ve seen it all too many times – a business plan for a small business startup that once the business gets going, their business plan simply sits on a shelf gathering dust. It’s sad to see this waste of time and energy. It really shouldn’t be that way. Worse yet, most business plans are put together for financing and nothing else.

A business’ start up business plan should be a valuable document in managing the small business. In fact, it should be a living thriving document critical to the success to the business. If your plan is not up to the task, then fix it or create a new one that is. Here are some critical elements to a good business plan that allows it to be a management tool rather than just a bother.

1. The business plan should be a realistic predictor of the future of the business. This is particularly true for a business start up.

2. The plan should be based on solid conservative assumptions backed by research not one of these “If 20% of the market buys X products or services from us, then….” The better the research, the better the plan and often the better the business will perform.

3. The plan should be a living document, easily changed to reflect new discoveries in the market, competitors, costs, etc. By updating your business plan with newly discovered information will give you a new picture of what your businesses’ results will look like. That way, a) It will be a better base to make decisions from and b) It will allow you to do “what ifs” on various business scenarios.

4. It should be very detailed so minor changes in your business will roll through to both the bottom line in your P&L as well as your Balance Sheet.

5. It should have a cash flow component, as the lack of cash is the biggest reason why most businesses fail. As a matter of fact, many businesses that fail were making money. But no matter how much money a business is making, without the cash to pay bills and buy materials, etc, a business is doomed.

So if you are thinking of or are in the process of starting a new business, make a business plan a critical, living and breathing part of your business start up process and beyond. Your pocketbook will thank you for many years to come.

Are you at a point with your business where you just don’t know what to do next?
Do you have a business plan?
How about a growth business plan?

Have you looked at a lot of different ways to grow your business and nothing seems to work?

The right growth business plan could be your answer. If a growth business plan is done the right way it may open up some opportunities you have never thought about before. A growth business plan can be developed many different ways but I would like to discuss a growth business plan that you may have never thought about.

Here is the way I would encourage you to set up a growth business plan:

• Do some dreaming about what you would like your lifestyle to be
• By dreaming decide on an average income you would like to have over the next few years
• Decide how many years out you would like your plan to cover
• Decide how much profit you would like for your business to generate above the income you want for yourself.
• Set up a profit and loss statement of your existing business or your proposed business
• With the right business knowledge and a profit and loss statement you can actually use that data to see what your business would need to do for you to give you that income and profit
• Even better you can determine what size market you would need and even determine whether your market would support your business presently and in the future.

To me a small business is one of the best things you can have if you enjoy operating a business; however, it does require a lot more than just enjoying ownership and running a business. Especially if you are starting a small business and even if you have had a business for many years, you should know what you want for your future. Never guess about your business. You see, without a plan, you are just guessing. We business people work hard and we always continue to hope for the best but when we guess, we’re taking a lot of risks. You’ve probably heard the old saying from an unknown author that says, “If you fail to plan, then plan to fail.”

As a matter of fact, did you know that the Small Business Administration says that 50% of small business owners will fail sometime during their first 5 years? There are lots of reasons but one big one is that owners don’t have a plan. Another is they have picked a product or service that doesn’t have a big enough market to sustain their business and sometime during their future they will run out of customers.

Now as I said, there are many other reasons too.

After graduating from college, I started out in manufacturing as an engineer in a pretty large company and now, 45 years later, retiring as a of Director of Manufacturing, I have discovered an awful lot about business. Not only did I learn and teach a lot about business, I worked with small business owners as well. I’ve learned that it comes down to this. Too many owners work hard in their business but less on their business.

Do you work on your business as much as you work in your business? Do you ever dream about having a good lifestyle but just haven’t quite figured out what to do about it. Have you ever thought about seeing what your business would need to do to give you those dreams? Developing a growth business plan could be the answer.

So, why should you make a growth business plan? Well in simple terms you need to know where you’re going and how and when you’re going to get there.

Some of the questions a growth business plan might ask you are:

– Are you comfortable that the market wants and is willing to buy your product or service?
– Is your product or service priced so it is competitive in your market?
– What’s different about your product or service? Why would a customer purchase it over someone else’s?
– Is your market big enough to support your business? What about 15 years into the future?
– If you wanted a better lifestyle, what would your business need to do to give you that lifestyle?
– How much sales would your business need to generate to give you that income?
– How much sales would your business need to generate to give you the income you want 15 years into the future?
– What will be the cost of your labor and material?
– What will your expenses run?
– How much will it cost to overcome the capacity constraints that will occur as your business grows to meet your income requirements?
– Will your profit give you the income you want in the future and at the same time maintain a healthy business for you as well?

If you develop a good Profit & Loss Statement for your existing business for the current year or for the first year of your proposed business, you can use this data to actually project how much sales you would need to yield the income you want and the profit margin you want. You can plan ahead as far as you want. Sound impossible? It’s actually pretty simple and can be pretty accurate plan.

A plan like this would show you how much sales your business would need to do, what your fixed and variable expenses would be, what your material cost, labor cost and profit would need to be to provide the income and profit margin you want. You can see pretty quickly if it’s possible for you to get your business to that level. I don’t know of any better way than to have your business give you the income and profit you want. What’s neat is you can determine what you want your income to be and your profit to be over the next few years and develop a plan that can show you exactly what your business would need to do to give you that income and profit.

And with just a little more data you can actually determine how many customers you would need for each year you plan for and how many leads you would need. From that you can actually determine what size market you would need and whether your market is big enough to supply those leads that could be converted into customers.

Learn more about how to develop a growth business plan. Visit http://www.StrategicBusinessSolutionsLLC.com

Please raise your hand if you’ve ever been frustrated about what to put in a business plan? What will convince an investor to give you money? We’ve all been there. And it seems like the answer keeps changing depending on who you talk to.

The problem, or rather the truth, is that there is no “one fit all” solution. So the bad news is: even a step by step guide to writing a business plan won’t really make your plan “good”. The good news is, you really don’t need a step by step guide to make your plan compelling enough to close investment.

There are many different formats and there really isn’t a “universal” length for a perfect business plan. Depending on your product or industry, it can range anywhere between 10-100, and sometimes more, pages.

The question you should ask yourself is: what stage is my company at? If you are already generating revenue and are looking for a second or third round of financing to expand, the business plan can get much more elaborate and detailed, especially on the financial analysis and projections side of things.

But if you are just starting a business, don’t have established revenue yet and are simply looking to attract investors to get started making money with your products or services, keep on reading.

Most important to understand in this case is that it all comes down to one simple thing:

telling a great story!

This does not mean you shouldn’t present accurate facts, be transparent, and most importantly tell the truth; but it means that you need to package all those facts into an interesting, exciting, and fascinating story so your readers (potential investors) keep on reading and don’t get bored by page 25. It’s a lot to ask someone to read an entire business plan, so the least you can do is make it fun and interesting.

I have had the pleasure to be on both sides of the table (both writing and reading business plans), and here are the 7 things that are often forgotten or done wrong:

1. Get To The Point Quickly

We all get excited at the prospect of starting a new business… so going on and on about one or more aspects that really cause you to be enthusiastic is great when you sit over a cup of coffee with your friends or colleagues.

But when it comes to reading something on a digital device or piece of paper, without your enthusiastic voice, endless chatter can get old very quickly.

Think of your potential readers as the most impatient individuals you will ever meet. How would you structure your sentences when talking or writing an e-mail to them? Now add just a hint of enthusiasm and relevant information to that, and you should be close to getting their attention.

2. Move Most Compelling Facts To The Top

In addition to keeping things “snappy”, prioritizing information and structuring the business plan around the importance of each element can help move the reader along.

The format that I have found to be effective is:

1- Brief Executive Summary

2- Company Description

3- Market Analysis

4- Product and/or Services

5- Marketing Strategy

6- Sales Strategy

7- Company Goals & Objectives

8- Management and Operations

9- Competitive Analysis

10- Financial Projections

Some entrepreneurs include a request for funding at the end, and some create a separate document (mostly with their attorneys) called “Private Placement Memorandum” (PPM). The advantage of not including a funding request in the business plan, is that you can stay flexible in terms of who you are sharing this business plan with and how much money you end up asking for. It’s easier to change the short PPM rather than going back into the business plan every time you talk to a different investor.

The main thought behind the structure I suggested above is that every section sets the stage and builds up to the section right after. Again, there are many different formats, and you can really change this format up to whatever suits the story you are telling. You might for example have a big name on your team that has significant weight in your industry, so moving the “management” section up (maybe even to the top) can make sense in some cases. It’s all about getting the reader excited, and the prospect of working with a celebrity might just get that job done for you.

3. Create Transitions

This is a mistake I see happening time and time again. Creating transitions between the different sections of the business plan is a really simple trick that makes the overall experience more pleasant, while “tricking” the reader into continuing to read.

Many business plan authors think it’s enough to just “compile” all the information relevant to their business in form of one continuous document – no matter how.

The problem, however, becomes that sometimes jumping thoughts can be jarring and confusing.

Go back to thinking about your business plan as a story you would tell around a campfire. You wouldn’t reveal the big twist right in your first sentence, would you? And the way that you would go from one character and plot-point to the next, is how you should think of every segment in your business plan.

Don’t shy away from creating cliff-hangers at the end of some sections. For example, if your market analysis concludes that one specific age group and gender has an urgent need that no product in the market is currently satisfying, you can end this section with a question like: So how does [your company or product] address this urgent need and turn it into profit? And then go right into your products and services presentation.

4. Don’t Be Too Flashy

In my experience, there is a huge difference between sounding professionally enthusiastic and self-promotional. Using too many flashy buzz-words and too much promotional language throughout the business plan can get irritating to read and mostly comes across as insincere. It also raises the question if the authors of the plan are hiding the fact that they might not have figured “it” out yet.

Trying to be flashy simply distracts from the real, hard facts and dilutes the value of your presentation. The old saying, “when in doubt, keep it simple”, truly applies here.

5. Use images And Graphic Examples

This speaks to the “making it fun to read” – part. No, no… making it fun doesn’t mean making it flashy. It simply means you should also not try to achieve the opposite of flashy – which I believe to be “boring”.

Images and graphic examples should be relevant to the information you are presenting. The goal is to give the reader’s eyes a break here and there to keep the flow going. Think of it like visual potato chips… but the good, organic kind that is fun to eat, while still staying relevant to your healthy diet. This can include images of your product(s), website screenshots, industry statistics, charts, etc.

6. Attachments

Sometimes there are amazing articles or entire studies on specific industry developments that support your case. Instead of copy-pasting and quoting the entire article, though, attach it to your business plan as a separate document labeled “Exhibit a)”, b), c), etc. (one for each document) and reference the exhibit with a short quote or summary inside the business plan. That way you are giving the reader the choice to check out the attachment or to continue going through your presentation.

The goal here is to avoid unnecessary “inflation”. More pages is not always better! Sometimes 10 pages that knock it out of the park are better than 100 pages that are overwhelming with too many industry stats and lengthy paragraphs that you didn’t even write yourself.

7. Try Putting Yourself Into The investor’s Shoes

It’s hard, but when reading through your finished business plan, try to distance yourself and read it from the perspective of an investor. Ask yourself very honestly and harshly: would I put money into this? Imagine putting everything on the line; your car, your house, your life’s savings.

You would be surprised how many times you will cringe and realize that it’s simply not good enough yet; that some of the language you don’t even buy into yourself; that you might have to do a lot more research and planning before taking it to an investor. In the end of the day, you are not just putting their money on the line, but also your own time and resources, which could be devastating.

Taking on this outside perspective can be a sobering experience and really help to create an excellent business plan. Check out http://www.investopedia.com – they give great insights into the world of risking money.

So what exactly do you put in each segment of the business plan? Stay tuned for my next article, which will focus on the content and what to include when writing your first and final draft.