Sitting down to write a formal Business Plan seems to many like a tedious task. Why spend time writing a plan when you well know in your head what your business is about and how you like to operate it? In fact, many business owners will only put their plan in writing when they know they need to have it to attract investors for a new business or when applying for a business loan from a bank.
We believe that every business should have a business plan. Business plans are decision-making tools that get desired results when actually implemented. Statistics have shown that businesses survive at a much higher rate with a well-thought out business plan. Business plans don’t guarantee success, but they certainly decrease the odds for failure.
Business planning helps:
Develop and improve the business
Understand the business better
Define business goals
Understand what customers want
Understand the competition better
Start-up Business Plan Components:
1) Executive Summary – Answers What, Where, Why, How, and Who started.
2) Objectives – Desired sales, gross profit percentage, and net profit.
3) Keys to Success – The main elements that make the business work (location, convenient parking, and low prices, e.g.).
4) Company Ownership – Legal structure and founder participation.
5) Start-up Plan – Total start-up expenses, assets, and cash.
6) Competitive Comparison – Competitions’ products, quality, strengths and weaknesses, and the company’s strategy to compete.
7) Sourcing – Product fulfillment responsibility, product value, and physical delivery.
8) Break-even Analysis - The required unit sales necessary to break-even (to cover fixed and variable costs so that the company can continue operating).
The financial projection should include monthly sales and expenses for the first 12 months and annual information for the following two years. The detail beyond the first year isn’t usually meaningful.
Standard Business Plan Components:
1) Executive Summary – Purpose of the plan, potential customers, and keys to success. This summary should actually be written last.
2) Mission Statement – The company’s basic purpose, including what market is served and what benefits are being offered.
3) Company History – Date of formation, location, experience of the owners, and initial debt or equity financing obtained.
4) Organization and Staffing – Officers and managers and any ownership interests.
5) The Management Team – Officers and their ages, education, work experience, and community involvement.
6) Local Economic Conditions – The surrounding community’s growth and economic development, employment, and opportunities for the products or services.
7) Competitors – The company’s competition and the plan to compete against them.
8) Marketing – Current marketing activities and required marketing to acquire potential customers.
9) Company Strengths – The company‘s location, quality of services, unique selling proposition.
10) Recommendations – Also include the effect on cash flow and taxable income.
11) Implementation Plan – Includes the action required, target date, and responsible party.
Implementing the strategies is what makes the plan come alive. Brilliant strategies are useless unless they’re implemented. The Business Plan is a about results. The contents of the plan should match your business purpose. If you’re developing your plan for internal use only, you may not need to include a section about the company. Business plans seeking investors should have detailed and convincing market data, but a plan for a small local business may not need as much market research. Banks and investors may only require a summary of the plan.
If you have any questions or would like additional consultation or assistance with designing a specific business plan for your company we are here to help. Please contact Allen & Company, PC at our Kennesaw office at (770) 428-6229.
Allen & Company, PC - a CPA firm serving Kennesaw, Marietta, Acworth, Woodstock and north Atlanta. Providing accounting, financial statement audit, taxation, and advisory services for individuals and businesses. Extensive experience working with franchised quick service restaurants and other franchised businesses.