Getting Down to Business: Overview of the Business Planning Process

Overview of the Business Planning Process

Working Hard and Working Smart

"You've already got a plan for how you expect your business to turn out," writes Seth Godin of the business planning process in If You're Clueless About Starting Your Own Business and Want To Know More, "even if it's only a vague set of dreams in your head. That's great. Every business may not start with a plan, but it's safe to say that all of them start with a dream. Every small business expert worth his spreadsheet will tell you, however, that dreams are not enough–you need a written business plan."

Years ago, when Mom and Pop operated a family-owned business from the ground floor of the building in which they lived, success in business was probable just by working hard. Today, it's a different world. It's no longer enough to work hard–successful business owners also have to know how to work smart! Rather than hanging out a shingle to announce the opening day of business, new business owners plan for a successful start-up by researching and developing what is known as the "tool of the trade:" a business plan.

Well-researched business plans act as a blueprint for how to launch a specific business. Lining the shelves of bookstores and libraries are guides that suggest as many approaches to developing a business plan as there are business ideas. They come in a variety of formats, some written as industry-specific guides and others more general in nature. Whatever the format, the content typically covers the same central topics: cover sheet, executive summary, organizational plan, marketing plan, a financial plan and finally, additional items that support the content. "They may not solve every problem,"concedes Seth Godin, "but they'll give you a place to start and a focus as you build your business from the ground up."

Business Planning 101

Cover Sheet: Always the first page of the plan, the cover sheet includes the name, address, and phone number of the business and all owners or officers.

Executive Summary: Typically written after the main components of the business plan are complete, the Executive Summary reviews the content of the business plan. If loan funds are necessary, the Executive Summary states the loan request and specifies how the loan proceeds will be used.

Organizational Plan: Complete with a business description, information about the legal structure, management, and personnel. The Organizational Plan also identifies the business owner's background, technical preparedness and general qualifications to successfully operate the business.

Marketing Plan: Three simple questions form the basis for the marketing plan: How many (customers in each target market)?; How much (will they spend for your product or service)?; How often (will they purchase your product or service)?. The marketing plan is a detailed strategy for a twelve to twenty-four month period that proves market need and establishes a plan for capturing and keeping customers.

Financial Plan: The Financial Plan translates customer information into a financial format and includes a detailed loan request, sales projections, and a break-even analysis–at a minimum.

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