Tuesday, June 18, 2013

10 Tips For Business Planning

By Richard Lindfield
By Microsoft Images
Obviously there are many more than 10 tips on how to write a business plan and I have included links to some of them. If you are an entrepreneur getting ready to write your first business plan, these first few tips will give you something to consider.

1. Why am I doing this? Understand why you are writing a business plan in the first place. A good business plan is a blue print for how your business should be run. If (God forbid) something happens to you that keeps you out of commission for 6 months or more, you should be able to hand over your business plan to someone who can temporarily run your business for you using the Business Plan as a guide. You might be writing it as a start up looking for funding, or an established business looking to expand. In each case you will write it slightly differently so decide up front why you are doing this. A decent Business Plan takes 100 hours or more to produce, so it is not a task to be taken on lightly.

2. Start small. Here is a fun exercise that I have posted about in numerous LinkedIn Groups and I find it very interesting to read the responses. Before you sit down to start writing your Business Plan sit down and describe your business in 10 words or less! Think in terms of what your business will do to improve the lives of your potential clients. What’s the benefit to them? Don’t even try to list any features of your products or services. Try it now, tell us what you do by leaving your 10 words in the comments below!

3. Stay small. Before you write a full business plan write a one page business plan to use as an outline for the full sized one. You already have your one sentence description of your business. Now be succinct in your description of the company, your products and services, marketing strategies, operational information, financial information, any funding requirements, and an appendix showing sources. Use one paragraph of 3 sentences or less for each topic and keep the entire document to 500 words or less.

4. Research, research, research. Now that you have a vague idea of what your business will look like, go and do a feasibility study that will confirm (or not) your assumptions. Do both primary and secondary research on the market and your niche in it. Research your competition. Research EVERYTHING! Use the internet, do surveys, talk to suppliers, identify your distribution methods, get quotes on capital acquisitions and create cash flow projections.

5. Identify your core values. We all have personal values that are important to us. It is crucial that the values of the company be consistent with your personal values or you will not be satisfied with the results you obtain. Incorporate your top 3 or 4 personal values into your company’s mission and vision statements. I use the Values Preference Indicator from Consulting Resource Group International to determine the values of the clients I work with who are developing their business plans.

6. Set goals. Set SMART Goals (Specific, Measureable, Attainable, Realistic, and Time sensitive) for 6 months out, 1 year out, 2 years out and 5 years out. If you don’t know where you are going you might wind up somewhere else. It is a good idea to brainstorm your goals with your advisory board. If you don’t have an advisory board, go recruit one. Try to include an industry mentor, your banker, key staff and trusted family members on your advisory board.

7. SWOT everything. SWOT stands for identifying the Strengths, Weaknesses, Opportunities, and Threats. SWOT your business idea. SWOT yourself as an industry expert and as a Manager and Owner. SWOT any business partners you might have. SWOT EVERY competitor. SWOT your suppliers. SWOT the business model you have decided to implement. This research will help avoid getting bitten on the butt by something at a future date.

8. Create a critical path for your business. When will you do what and at what cost for the next 12 months. Not all steps in your critical path will have a cost associated but will still be sign posts of the progress of your business towards the ultimate goal.

9. Don’t reinvent the wheel. Go online and search for free downloadable Business Plan Templates. A good place to start would be the financial institution you normally do business with. If they have a template on their web site, chances are that is the way they want to view information when they evaluate your business for a loan. DO NOT buy Business Planning Software. You are going to spend over 100 hours writing it so why would you want to add a software learning curve into the mix?

10. Do it last! Even though your Executive Summary is the first section of your business plan is the executive summary you should write it last. Why? It is written last because you don’t really know what to put into it until you have done all of the other sections so you can summarize them. You could start with the One Page Business Plan you learned about in tip # 3 and compare it to the reality of your fully researched plan and revise and expand it accordingly and use that as your executive summary.

Richard Lindfield is Director of Training for The Fraser Valley Training Group. Services include Business Plan Writing. You can connect with Richard on LinkedIn at http://ca.linkedin.com/pub/richard-lindfield/1a/757/38a.