How To Write A GREAT Business Plan

What Makes A Business Plan GREAT?

Why Planning is Important

Planning is important…
Suppose you lived in Cape Town and wanted to drive to deep in one of  rural areas in North West, would you use a map? Of course, you would. Starting or running a business without proper planning is like taking a 2000-mile trip, without a map. Planning will help shape your destination and provide the best road to get you there

Why Planning is Important

Planning gives you a blueprint to follow. It is a communications tool for investors, suppliers, employees and others interested in your business. If you don’t plan for the success of your business, you will likely fail. It is that simple.

Before you begin writing your business plan, consider four core questions:
1. What service or product does your business provide, and what needs to do it fill?
2. Who are the potential customers for your product or service, and why will they purchase it from you?
3. How will you reach your potential customers? And,
4. Where will you get the financial resources to start your business.

The Big Picture

A good business plan is a compelling storyboard about your business.
It explains:
Who you are; why you’re in business; what you do; how you do it; where you operate; how you will
generate profits; who your customers are; and, why your business is important.

Table of Contents

The first section of your business plan is the table of contents. It lists key sections within the plan.
Importantly, it assists the reader in finding specific topics and areas of interest in your plan. It also brings
organization and structure to the document.

Business Description & Vision

The Business Description & Vision component of the plan is pretty basic. It describes the business. In this
section, you should include a crisp mission statement; a focused statement about the company’s vision;
specific business goals and objectives for a prescribed time-period; and, background information about
the company. You should also identify the key principals or owners of the business.
The mission and vision statements set the tone for your business and are very important. They are
further described in the next two slides. However, before we move on to the mission statement, a
couple of quick notes.
First, your business goals and objectives should be specific and attainable. Remember, goals that are not
specific will probably not be achieved. Specificity regarding the details of your goals and objectives is
very important.
Second, the history of the company should be just that. It should describe when and why the business
was started and who the founders are. It should also explain how the company has evolved.
Now, let’s take a look at the mission statement.

Business Description & Vision

The company’s vision statement is about the future. It is a statement that outlines what a company
wants to be.
Simply put, a company’s vision statement should be a memorable and engaging expression of hope and
inspiration. It should guide the mission and business plan of the company. A business without a vision is
a company that is focused on the past.

Definition of the Market

The third step in this section of your plan is to identify your target market and profile your customers.
You can do this by answering several questions:
•Who are your current or prospective customers?
•What do they buy and why?
•And, what market segments or groups are more likely to buy your products?
A market segment or targeted group of customers is a grouping of people sharing one or more
characteristics that cause them to have similar product needs.
Market segmentation or target marketing is the process of dividing a market into distinct segments that
behave the same way or have similar needs. Because each segment is somewhat similar in their needs
and attitudes, they will likely respond similarly to a specific marketing strategy. This is an important
point and we will discuss marketing to targeted groups later on in this course. However, it is critical that
you understand the value of defining your market.
When identifying characteristics of your target market you should also determine the size of your
potential market. You can determine the size of your market by examining the number of potential
customers in a particular area; reviewing the geographic area they live in; analyzing prior annualized
sales and considering market growth.
If you don’t know who your customers are, you can’t develop a strategy to reach them. And, if you can’t
reach them, you will likely not be effective in selling your products and services.

Marketing and Sales Strategy

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Earlier in this course we talked about “defining the market.” In this component of the business plan,
Marketing and Sales Strategy, we will discuss reaching customers. Marketing is defined as the activities
associated with researching prospective customers and selling products and services.
In simple terms, marketing activities and strategies result in making products available that satisfy
customers while making profits for the companies that offer those products.
It all begins with research. To create an effective marketing strategy, you need to find answers to a
number of questions. Questions like:
Who are my customers and potential customers? — What kind of people are they? —
Where do they live? — Can and will they buy? — Am I offering the kinds of goods or services they want at
the best place, at the best time, and in the right amounts? —
Are my prices consistent with what buyers view as the product’s value? — How does my business
compare with my competitors?
Marketing research is not a perfect science. It deals with people and their constantly changing feelings
and behaviors, which are influenced by countless subjective factors. To conduct marketing research you
must gather facts and opinions in an orderly, objective way to find out what people want to buy, not just
what you want to sell them.

Financial Management

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The financial management component of the plan should include financial statements and forecasts for
the business. This important section will explain your revenue projections, how much money you have
and need, and when and how the business expects to make a profit. It will also reveal what your
marketing and operational processes and plans will cost.
The financial structure of your business is its foundation. A foundation that is generally described in
three financial statements: the balance statement, income statement and cash flow statement. Many
people are intimidated by financial statements, but you shouldn’t be.
The financial performance of any business is measured by the interrelationships among six essential
elements. These elements compose the financial statements noted above and are: revenue, expenses,
profits (or losses), assets, liabilities and net worth. A business will prosper or fail based on the owner’s
effectiveness in planning and controlling these components.
The accounting statements that illustrate and measure these financial statements are the balance sheet
and income statement. The cash flow statement is a monthly spread and simplistic variation of the
income statement.

Snapshot of a Business Plan

A typical business plan includes the following components:
Table of Contents
Executive Summary
Business Description & Vision
Definition of the Market
Description of Products and Services
Organization & Management
Marketing and Sales Strategy
Financial Management
Appendices
Each of these components is explained in detail within this section of the course. Review these
components carefully. Together, they represent your business plan. Also, available to assist you in a
later section of this course, is a business plan template. The template follows the outline in this course
and includes automated financial statements.

Executive Summary

Some would argue that the Executive Summary is the most important section of the business plan.
Although it is typically the first section reviewed by a reader, it should be written last – after the details
of your plan have been flushed out. The Executive Summary should provide an enthusiastic snapshot of
your company, explaining who you are, what you do and why. It should be less than 2 pages in length
and easy to read. After reviewing this section, the reader should have a good basic understanding about
your company, but most importantly, want to learn more about your business.

Business Description & Vision

The mission statement is a brief statement about who the company is and what it stands for. Some
companies use the mission statement as a marketing slogan. However, the real intent of a mission
statement should be to succinctly describe the purpose of the business. For example: Google’s mission
statement is: “Organize the world’s information and make it universally accessible and useful.”
Starbuck’s mission statement is: “Establish Starbucks as the premier purveyor of the finest coffee in the
world, while maintaining our uncompromising principles while
we grow.”
Don’t just write down a mission statement….. Think about it, get input from others and carefully develop
a statement that is an expression of your business.

Description of Products

This component of the business plan is the easiest to complete. However, don’t let the simplicity fool
you.
In this section you will identify and describe all of the products and services your business sells or
provides. You should also explain how the items you sell are priced. In addition, and perhaps most
importantly, this section should explain how your products and services are competitive.
The real value this section brings to the plan is providing the reader with a crystal clear understanding of
why you are in business, what you sell and how you compete. Keep this section focused, easy to follow
and emphasize your competitiveness. It is easy to list your products. But, it is far more worthwhile to
explain how you are competitive.
Finally, if you have pictures or brochures describing your products, reference them in this section and
include them in the appendix of the business plan.

Organization & Management

The organization and management section of the plan is pretty straight forward. The first part of this
section should describe how the company is organized.
Specifically, it should explain the legal form of ownership. That is…, are you organized as a
proprietorship, partnership or corporation and why. It should also describe the leadership of your
company and include an organization chart, if you have one.
In this section, you should also explain how things get done in the company. You should describe the
processes that support what your company does. For instance, how are your sales generated or
products developed or services provided?
In addition, this section should describe what licenses and/or permits your company operates with or
needs. It is also an opportunity to highlight special operating achievements and/or certifications your
company has. For instance your business may have specific security clearances or be quality certified as
an ISO 9000 firm.
Brag about things that make you special or qualified in special areas.
Lastly, this section of the plan should include a brief bio description on each key manager within the
company.

Marketing and Sales Strategy

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A successful marketing strategy will typically mix the 4Ps – price, promotion, products and place – to
reflect the wants and desires of consumers in the target market. Remember, trying to convince people
to buy something they don’t want is extremely expensive and seldom successful. A good marketing
strategy will be based on solid research, formal and informal, to determine what customers want and
what they will pay for.
The 4Ps of marketing are price, promotion, products and place.
•The product aspects of marketing deal with the specifications of the actual goods or services, and how
it relates to the end-user’s needs and wants.
•Pricing refers to the process of setting a price for a product, including discounts.
•Promotion includes advertising, sales promotion, and publicity, and refers to the various methods of
promoting the product, brand, or company.
•Place refers to how the product gets to the customer. Specifically, it refers to the channel by which a
product or services is sold or distributed.
These four elements are often referred to as the marketing mix

Appendices

The last component of your plan is the appendix. This section should help define your business and
highlight your accomplishments by including brochures, resumes, pictures and other important
information. Use this section to add color and depth to your plan.

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