Business Insights

Why do we need a Business Plan? As everybody knows, without a plan you don’t know where to go. But this does not mean that, in order to be successful, every business has to prepare a 70 pages written plan, with charts, spreadsheet and the like. The answer of this question is that planning is important, but not necessarily the plan. In other words it is the process. Planning is important because it helps us, business owners, to focus, prioritize, manage and finally track our performance.

So, business planning doesn’t have to be complex and cumbersome: we can make it simple and practical. And again, as business planning is a process, it is not a something set in stone that keeps us locked up, in fact it’s one of the best way to manage change.

What’s the essence of the business plan? First of all, it’s your business identity: what is unique about your business, products, or services, and how are you different from the competition? Then, it’s your target market: who are your customers and what do they need? Here, you need to focus. Start with a niche of that target market because it might be difficult to service the whole market. Next, it’s the benefits that you give to your ideal customer. Not the features of your products or services, but the real value for your clients. And finally, it’s the strategy: how do you use your specific competence and uniqueness in order to give bliss to, or fulfill, the needs of your defined target customer. This last point is also called the business model, which means how your business makes money, while fulfilling your clients needs.

Alex Osterwald, in his blog on Business Model, writes that a business model should contain nine elements:

• The value proposition of what is offered to the market;
• The target customer segments addressed by the value proposition;
• The communication and distribution channels to reach customers and offer the value proposition;
• The relationship established with the customers;
• The core capabilities needed to make the business model possible;
• The different activities to implement the business model;
• The partners and their motivations of coming together to make a business model happen;
• The revenue streams generated by the business model
• The cost structure resulting of the business model

I think this is a good description.

What are the specific actions we need to implement to achieve what we have determined until now? What’s going to happen and when? Who’s going to do it? How much will it cost? How many sales will this produce? This is the real plan, nothing more. And it has to have metrics and numbers, otherwise we cannot establish if we are on track or not.
One last point. Often I’m being asked for a sample or a template of a typical business plan. Well, a typical business plan does not exist, because each business is different and each business plan is different. And, as we said, the plan is a process which happens in the mind of the business owner. So templates do not exist.

But generally a standard business plan should include the following outlines:

• The Executive Summary, which contains the mission and the vision
• The Company Summary, which describes the structure, ownership, location, etc.
• The Products or Services
• The Market Analysis which is formed by the target market, the industry and the competition analysis
• The Strategy and Implementation, which include the competitive edge, the marketing and sales strategy, the sales forecast and the milestones
• The Management Summary with the personnel plan
• The Financial Plan: Assumptions, Break-even Analysis, Projected Profit & Loss, Projected Cash Flow, Projected Balance Sheet, Business Ratios.

This language is perhaps a bit thick, but in fact developing the above points is not so difficult, especially if you have a coach who can lead you through the process. At Synergic we give a FREE initial consultation for developing your business plan.

And remember, you may not need to put everything into writing. But going through the process is fundamental.