In t­his article, well look at how to put together a business plan that can help you lay the foundation for your business, improve your chances of being successful, and generate enthusiasm and excitement about the business whether its being written for those funding it, or for yourself. Well answer your questions about what has to be covered in the plan, how to do research, how to make realistic projections, how to set milestones, and hopefully answer the hundreds of other questions that will pop into your head as you begin the planning process.

That planning process, by the way, is part of what makes putting together a business plan so important. The act of thinking about everything that must go into the plan will force you to think through the logistics of your business venture, and perhaps even come up with some ideas you hadnt considered before! You may even end up using many of the "selling words" you come up with for your business plan in your marketing efforts.

How doyou write a business plan?

A Few Guidelines

Where to Start

The plan you write will set the scene for your business. Youll set concrete goals that include deadlines, think through your HR organizational scheme and assign responsibilities, as well as describe the business and make your financial projections. One thing to keep in mind before you begin, however, is to set realistic goals. Dont set yourself up for failure before you even leave the gate! Also, make sure your plan is results-oriented. In other words, your plan should influence opinions (even if only your own) about your business and its future. So with that in mind, lets get started.

Pre-Plan Planning

Because all businesses are different, and business plans are written for different reasons, the first thing to think about is whom you are writing for. If you are planning on using the plan to get funding then remember that as you write, being sure to get the businesss most important message across immediately. Also, if youre approaching lenders rather than equity investors your projected profits wont be nearly as important. (They often associate high projections with high risk!) Know your objectives and strategies before you tackle the business plan. Remember, your objectives should be specific, concrete, and measurable; and your strategies should clearly explain how youre going to meet your objectives. Finally, keep it clear and concise, and ideally no more than 15-30 pages with attachments. Just remember KISS (keep it short andsimple). Once complete, the business plan is something you should refer to often and update and change frequently to meet the changing environment of your business.

Plan Elements

Your plan should include information that falls into these categories:

1. Your Product/The Business
2. The Market
3. Financials
4. Your Management Team

If youre reviewing many of the business resources available, youll quickly notice that every business plan outline will be slightly different. Just make sure you cover these basic categories, include an executive summary, and then add other sections that seem necessary for both the audience of your plan and your own personal use.

As we cover the steps in writing a business plan, well also write a plan a for a fictitious PDA software company. Watch for links to the fictitious plan at the end of each section. Now, lets go over the Executive Summary.

How doyou set and achieve business goals?

The Executive Summary

Usually, the first section of a business plan is the Executive Summary. This summary is often the most important part of your plan if you are seeking funding (and sometimes even if you arent) because it provides a quick overview of everything else in the plan. Often this summary is the only chance your plan gets when its in a stack with hundreds of other plans vying for the same investors attention.

Although it comes first in the business plan, the executive summary is usually written last, after you have ironed out all of the details of your plan. So, once you have the meat of your plan written, come back to this section and write your executive summary.

The executive summary should briefly cover:

• Statement of purpose The objectives of the plan... (i.e., to raise money, act as a policy guide, etc.)

• Company background

• The companys product or service

• Strategy overview Why the product or service is unique

• The market potential Research findings

• Financial projections for at least 3 years into the future

• The qualifications of the management team

• Finance requirements How you plan on spending raised capital

Make sure you state in the summary why your business will succeed. You can also include your mission statement in your introductory/executive summary.

How toFinish Your Business Plan In 1 Day ! 

The Business Profile

Legal Structure

Briefly explain the legal structure of your company. Is it a proprietorship, a partnership, a corporation or any of the other variations of these models?

Business/Concept Summary

Give your reader the "Big Picture" in this section. Explain the business opportunity youve seen in the current market. Give an overview of the industry and explain why your business is unique, as well as why it will succeed. Describe your product or service in a non-technical way, focusing on what you are doing that will make your product stand out in the marketplace. For example, you may have noticed your competitions products do not meet the needs of certain markets, so your strategy is to create a product that does meet those needs in order to reach those untapped markets and gain a stronger competitive advantage. Make sure you make this type of strategy pop out in this section.

Describe both the present industry scene, as well as future projections. If you find that you cant describe your business clearly and simply, then you probably have not thought it through. If this is the case, stop where you are and take the time to mull through all aspects of your business idea from start to finish until youve boiled it down to its essence.

Current Situation

Explain where you are with your business right now. For startups this should be a short explanation that simply states whether you have a product, or simply an idea, and the stage you are at in its development. For existing businesses, this means explaining your background, current sales levels, and standing in the market.

Objectives

List the objectives of your company. For instance, do you want to become one of the top ten companies in your industry within the next four years? Do you want to have a staff of ten within the next two years? Do you want to gross $XX by year five. Do you want a positive return on investment by the end of the second year? Keep them specific and measurable.

The Market

The Market: Analysis & Segmentation

Market Analysis

In the first section of the Market Analysis, define your market using concrete numbers and percentages. In other words, how many potential users are there for your product or service? If you are offering a regional service and have found that there are 80,000 potential customers in your geographic area, then this is where you put that information. Explain the growth and other changes you see in the market and how the competition is flailing, failing or flourishing as a result. Include some market history if it applies to your product and market. You may not be able to go back three years because the market didnt exist! Refer to the statistics and data youve discovered through your market research and be sure to quote the source and date. You can also include information about outside influences on the market (i.e., government regulations, union activities, etc.), seasonality of the market, and the typical industry life cycle.

Segmentation

Your market may be segmented by price, quality, region, customer age, income, buying behavior, industry or anything else. Determine what those segments are and describe the ones you are going to target. By focusing on specific segments youll have a better chance of success. Remember its hard to be all things to all people. Keep in mind that your product will probably also cross into several market segments. Remember to address each segment in your marketing planning.

The Market: Target & Competition

Target Audience

Determining the right target audience is probably the most important part of your marketing efforts, because it doesnt matter what youre saying if youre not saying it to the right people! In this section of your business plan, go into as much detail as possible about who your market is. At a minimum, you should describe your typical customer. What is the age group, gender, family size, income, and geographic location. For business-to-business markets make sure you include the industry type (or SIC), company size, job titles/departments, annual revenue, and geographic areas. Include as much additional demographic and psychographic information as you can dig up, such as what their spending patterns are, whether they are brand conscious when it comes to your product type, what influences their buying behavior, what promotional efforts do they respond to most often, etc, etc.

Embarking on a journey into your target audiences brain, also known as psychographics is often key to your marketing efforts and will be demonstrated in more detail in our Marketing Plan Workshop.

Just as with all of the other sections of your business plan, there is no absolute for organizing your plan. Organize the market analysis section in the way that seems most logical and will best illustrate your products market.

The Competition

Give a complete and thorough overview of the competitive market. Who are the heavy hitters? What are their strengths and weaknesses? Identify the differences between your product offerings and theirs. What is their pricing structure? Sometimes your suppliers are good sources of information about your competition. Visit your competitors locations, Web sites, exhibit booths, etc. Information is often the key to a strong competitive advantage.

Small Business Marketing Ideas-How to Grow Fast at Low Cost

Strategies: Marketing

When it comes to identifying your marketing strategies, think about how you are going make your product stand out from the pack. If you have a product that no one else offers, your job is not so difficult. If you dont then you have a little more work ahead of you. Find (or create) your competitive edge. What is your Unique Selling Advantage? If your product does what the others do but you can offer it cheaper then youre on to something. If your product is packed with features that the others dont offer then youre also on to something. Whatever it is, find the differences in your product or service and capitalize on them.

One method for brainstorming is to put yourself in your customers shoes! Walk the walk and talk the talk. Ask yourself why you buy one product over another. What media do you really pay attention to? All these thought processes will help you nail down the best strategies for getting your products into your potential customers hands.

In this section, present an overview of your strategies and then move into how you are going to position your product, how you will price it, and how you plan to promote and distribute it.

How you position your product is how you want your target market to perceive it in the marketplace. Is it the premier product for business executives, or is it a less expensive alternative to the "big guys" product? Do you want your product to be seen as an investment or an expense? Put into words the ideas you came up with while "walking the walk" above. According to David Ogilvy, founder of an extremely successful advertising agency, positioning is the most important aspect of your marketing efforts. You have to find your niche.

Also explain how you price your product in this section. Start with how your main competitors price their products. Is your product better (be objective!), or just comparable to theirs? Have you done any research into what people would pay for your product? Get as much competitive pricing information as possible and combine that information with a feature comparison. If your product is obviously better (be objective!) then you can probably price it at or above your established competitors prices. If it isnt then you probably should lower your price in order to get a share of the market. Pricing increases can come later once you have a good hold on a piece of the market.

Once youve established your products position and pricing, move into the exciting world of promotion andadvertising. This should cover every avenue youll travel in getting the word out about your business and your products or services, from free promotion via press releases, to trade shows, to million dollar TV ad campaigns. Your promotions should always have specific goals. For example, are you trying to build brand awareness, make immediate sales, promote a special event, or simply generate interest and leads?

Once you have goals set, build on the information youve already assembled about your target market and your marketing strategies, and once again, get into your prospects heads. What media do they use? What are their buying habits? Where would your advertising dollars be best spent? What are their interests? How can you use that information to sell your product or otherwise meet the goals youve just set?

For example, lets use a Brady Bunch illustration and say we are in the business of selling cars specifically cars with a high passenger capacity. If the Bradys fall into our Target Audience, we know that our audience watches little TV, reads the newspaper, tends to make decisions as a family (so getting the attention of the kids is key), and likes to travel by car on long trips out west. Therefore, our advertising and promotions would probably work best in print specifically newspaper and our sales literature and other tactics need to be designed with kids in mind.

Now, that example is definitely oversimplified, but you should get the idea of what you have to think about. Basically you have to decide, based on your audiences habits:

1. what your advertising message should be,
2. how you need to say it,
3. and where you need to say it.

In the promotions section of business plan, briefly explain the what, how and where listed above. The "where" part of those questions is called your advertising mix and is sometimes the easiest of the three to determine. This section doesnt always have to be that detailed. In other words, you dont have go into exactly what your advertising themes will be unless you feel they are key to your businesss success. Save those details for your marketing plan.

Next discuss how your product will be distributed. Will you go through retail chains, online sales, direct sales, etc? Describe the standard distribution channels for your industry, and explain the strengths and weaknesses of each method. Is one channel better from a financial standpoint, but not from a customer service standpoint? Will you have a network of distributors? There are several options for distribution channels including retail outlets (either your own or an existing chain), wholesale outlets, sales force, telemarketing, cybermarketing, or direct marketing on TV and cable shopping channels.

How toWrite a Strategic Marketing Plan 

Management Structure: Staff Positions and Management Section

The first thing many investors may look at in your plan is the management structure. If youre not looking for investors, this section will still help you plan your organizations structure and help you make sure you have the skill sets you need to succeed. Investors want to make sure you have the necessary resources to properly plan, organize, control and lead your business. They will look for weaknesses in your management teams experience, so before they can do that you should do it. Assuming you already have your technical staff in place, set up a management team that has good experience and track records in marketing, finance and operations. It can make the difference in whether your business plan works or doesnt work. In fact, 98% of small businesss that fail do so because of weaknesses in their management staff.

Minimum Staff Positions

The staff youll need to run your business will really depend a lot on the type and size of your business, and the scope of what you are offering. As a general guideline youll need:

Writing the Management Section

Start with a summary of your overall management philosophy. Identify your company founders and board of directors. Answer the obvious questions such as how many employees you will have over given periods of time, how many of those will be managers, what their experience and credentials need to be, etc.

For the key players you already have in place, provide summaries of their resumes highlighting pertinent experience and achievements, salary levels, and their areas of responsibility. For positions you are still trying to fill, summarize your minimum requirements for likely candidates along with the responsibilities of those positions. Or, contract those positions out to professionals who specialize in the area you need. You may find that contracting work out is the best solution initially anyway. Be sure you include the credentials and track records of your contracted help. Also, remember to include time tables for hiring additional staff.

Include a section on outside support, such as your CPA, your attorney, your banker, and your insurance broker. Also include any other outside resources such as your board of directors or management consultants.

Look at your management plan critically and search for weaknesses in your organization Spell those weaknesses out here, and identify your plans to address them. Even if you dont see the weaknesses, it is very likely that your potential investors will.

Financials: Revenue Model, Assumptions and Comments

Depending upon your business, you may also want to include a section describing your revenue model. This should describe the various revenue streams your business will be putting in place and how each will bring in money. If youve come up with a unique revenue stream then be sure to describe it clearly. (You may also want to make sure you have confidentiality forms signed.)

When writing your assumptions, you are essentially setting the scene for what is about to follow. Explain the techniques you came up with to arrive at the information in your financial statements. For instance, you may want to state that all sales and purchases are assumed to be cash based, certain inventory levels are maintained and paid for on specific terms, your sales commissions are based on x% of sales totals, etc. You can also include information about the general climate of your industry. This can be a bulleted list of short statements, or written in paragraph form.

For your own internal use, it is helpful to put together an assumptions spreadsheet that lists individual salaries (including costs of benefits), marketing expenses, other known budgeted business expenses, as well as revenue projections. This spreadsheet can help you identify when your expenses are going to peak due to marketing activity and planned hiring schedules.