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10 Steps to Success For an Effective Business Plan

No matter whether you are starting out on a new business venture, breathing new life into an existing business or simply seeking to improve your business performance, a carefully constructed and realistic business plan is essential.

We all have a tendency to map things out in our heads and together with some rough calculations on the back of an envelope, we quickly convince ourselves that it is all possible. In practice, we tend to gloss over the less attractive details. Consequently, many people dive straight in and start a business without the necessary planning, which often results in a false start costing the owners money and time. Business plans can vary considerably but the essential sections are shown below:

(1) Executive summary.

The executive summary provides a very succinct look at the business. It is similar to the elevator conversation where someone important to you asks what is this all about? Why are we looking at it? This is your opportunity to make a fast impression and engage the reader so that they fully understand where you are coming from.

(2) Industry analysis.

Probably the greatest risk for any business is a lack of knowledge about the industry and the market. It may sound like a great idea to start an alternative lifestyle and run an olive farm as described in our example. Probably many people do just that. They invest all their savings in to the business. They mortgage their home. Then they trust to good luck to make things work. In practice there is nothing to replace thorough research an analysis of the industry and the market.

(3) The business

The Business section of the Business Plan is a simple statement of the facts clearly laid out. It usually results in a one page factual summary showing the business relationships.

(4) Products / Services

Businesses can take many forms and may deliver either products / services or a combination of the two. For instance a company that sells floor tiles may also offer to lay the tiles as a service. This section should clearly describe the products and service offered by the business.

(5) Production

This section needs to be very dependent on the nature of your business and the sample we are using simply illustrates how this can be done. For example if we had a cake shop we would need to consider:

- The raw materials such as flour, eggs etc

- The tools that are required such as mixers, oven etc

- The instructions and process used

- The timing for each stage

For many businesses there will be no production as such, however you may be providing services and the section could be used to describe the methods used to deliver those services.

(6) Marketing

The marketing strategy should be a simple statement to set the scene for the rest of this section. It enables the reader to focus on the areas of interest rather than looking at the full range of marketing possibilities.

(7) Financial information

You need to be able to express the current financial status of the business in a way the readily understood by the reader. For an established business this would involve the use of a Balance Sheet which clearly itemizes the assets and liabilities as well as capital or owners equity.

(8) Management and staffing requirements

This is a simple statement of how the business will be managed. Will you manage the business yourself or will it be necessary to employ supervisors etc. Provide an overview of the anticipated staffing requirements and how they will be employed.

(9) Financial spreadsheet attachment

There is a clear need for financial spreadsheets to provide the basic figures about the business. These can be rudimentary calculations or detailed and complex worksheets but the basic intent is the same.

(10) Other attachments

This can include any other relevant material such as product brochures, plans and specifications. However, a recommended attachment is a bibliography listing the sources of your research information. This gives great credibility to the whole plan.