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Anatomy of a Business Plan Part 1
The only way to take control of your life, raise your standard of living and move beyond merely surviving is to create your own unique product or service that you offer to increasing numbers of people in exchange for the things of value that you desire. This simple formula applies to countries as well as people. A self-sufficient economy has its own products or services of value to export to the world. Similarly, a self-sufficient individual has something of value to exchange in the global marketplace. That thing of value is based on your natural talent, skill, or interest—in other words, your passion!
For the past few weeks I’ve been working on writing a business plan for a special project. So, today, I thought I’d share with you some tips and ideas for writing business plans.
People typically pay hundreds and thousands of dollars to professionally write a business plan. It’s my contention, however, that 90 percent of your business plan can and should be written by you. Your business, especially if it is one based on your passion, is after all, the vehicle you will use to take you to the realization of your dreams-whether they be for just some extra income, or a whole new lifestyle. And who knows better than you what that vehicle should look like?
So today begins a recurring feature of the Saipanpreneur Project column I call "The Anatomy of a Business Plan" designed to introduce you to, educate you about, and empower you with the knowledge to create a business plan for your own unique passion-centered business.
Why you need a business plan
As the name implies, a business plan is a plan for your business. If your business idea is one that requires some capital (money) to launch or grow, then any investor or bank will request to see your business plan.
The purpose of any good business plan, therefore, is to communicate the the capabilities and talents of the principals (that’s you and other owner/partners), and the soundness of the strategies you will implement in order to 1. Grow the business, 2. Achieve profitability, 3. Repay any loans, and 4. Reward any investors.
However, there’s a more important reason for you to write a business plan. Even if you are not seeking investors or a loan, (and for those of you who know my philosophy, know that I maintain that you don’t need MONEY to start a business, and that what you need instead is VALUE), the process of thinking through and composing your business plan helps you to declare your intention to yourself and the universe, focus on and commit to a specific outcome, verbalize and write down your goals, harness your innate creativity, activate the power of your subconscious mind, mobilize your Higher Self, and change your vibrational state, and the frequency of your thoughts to one of hope and the possibility of a desired future, thereby bringing to you, by the Law of Attraction, the people, events and circumstances which will work in concert on seen and unseen levels of reality to manifest your dream.
For that reason, even if you are already in business and making money, writing a business plan can help you. In addition, since market conditions are constantly changing, writing a plan (especially the marketing and financials sections) can help you get a firmer handle on what you are and can and should be doing to grow your business, where your money is actually going every month, and how to monitor and reduce expenses and operating costs.
Additionally, a good business informs sales personnel, suppliers, and others about your operations and goals and, in-effect serves as an operations manual for your employees.
A business plan is not a one-time-only endeavor. As it serves as guide, as well as gauge, many entrepreneurs tweak their business plans on monthly, even weekly basis.
While every business plan format can be different, they all must include certain necessary information that banks and investors require, and that you need to master your business. So, to help you be as thorough as possible, we'll be using what I call the "Business Plan Standard Template" to create your plan.
So, as a first step, I encourage you to get out a notepad, open up a computer document, and start taking notes and answering the questions in each section. By the time this series is over, you’ll have everything you need, and more, to write a winning business plan, and put it in motion. You may also discover some unique ideas you hadn’t considered before!
There are 14 sections to this template. Each section has 10 or so subsections which help to give a full overview of each area of focus. This week, we’ll provide an overview of each major section. Then, in subsequent weeks, we’ll dissect each one in more detail
The 14 Sections are
I. Executive Summary
II. Company Description
III. Industry Analysis
IV. Target Market
VI. Strategic Position
VII. Marketing Plan and Sales Strategy
IX. Technology Plan
X. Management and Organization
XI. Community Involvement
XII. Development, Milestones and Exit Plan
I. Executive Summary
The Executive Summary is arguably the most important part of the business plan. It draws the reader's attention to its key points without necessitating a complete reading of the plan. In fact, many people who receive your plan will only read the summary.
The Executive Summary addresses the following points:
Briefly describe the nature of your business and why you are sure of its success. What is the basic concept of your business? State your industry sector (e.g. retail, manufacturing, wholesaling), your market and your competitive advantage. How does your product or service stand out from that of your competitors? What is the legal structure of your business? (e.g. sole proprietorship, partnership or corporation) Is your business already operating or is it in start-up phase? If it is operating, provide a brief summary of its evolution to date, including achievements, patents, prototypes, contracts and market research confirming its feasibility. Who are the key players running the company? Briefly summarize your management team's experience and references. How much money are you requesting (if applicable) and for what purpose? How much has the founder invested in the business to date? How has he or she used this money? In brief, what are the expected financial results? State gross revenue and net profits for the first year of operation. Do you intend to draw a salary from your business in the first year? If so, how much? Otherwise, how will you support yourself?
Write the answers to these questions in third person, as if you are sitting in a loan officer's office explaining your business. Here is an excerpt from the Executive Summary of a plan from a company called “Fantastic Florals. (courtesy of Bplans.com)
Fantastic Florals, Inc. (FFI) imports exclusively handmade flowers by artisans from Indonesia. The firm’s main office is in Anytown, Oregon, and has a customs house broker in Seattle, Washington to deal with related matters.
FFI quality products are unique and exclusive, and its target consumers are women with upper-middle to upper-end incomes. FFI’s competitive edge is that the products are 100% handmade, unlike competitor’s products. By this fact, the firm hopes to attract people that value the artistry of producing silk flowers. Since FFI products are mostly silk flowers and silk hair accessories, it considers itself to be in the retail gift market, although some consumers purchase the product for themselves. [end of excerpt]
You should wait until you've completed the entire plan before writing the Executive summary. In this way, you'll have a better understanding of the big picture and focus on the basics.
Next time we'll explore the “Company Description” Section.
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Until next time, remember, success is a journey, not a destination!-Walt
(Walt F.J. Goodridge is author of 12 books including Turn Your Passion Into Profit. Walt offers coaching and workshops to help people pursue and profit from their passions. Originally from the island of Jamaica, Walt has grown several successful businesses in the US, and now makes his home here in Saipan. To learn more about the Saipanpreneur Project and Walt's philosophy and formula visit www.saipanpreneur.com and www.passionprofit.com)
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