7 Simple Steps to a Better Business Plan

Here are 7 easy tips to help you get started right now on your business plan.

It’s possible that even though you may have all this information on doing a business plan, you may not be any further ahead. We understand. The first time you do something is the hardest…

Like Mr. Miyagi in the Karate Kid movies taught his protégé: Wax on; Wax off… over and over again. The more often you do something the more “expert” you become at it.

Follow these seven “simple” steps and then you can get a business plan together pretty quickly:

Step 1: Start with the end in mind – you need to visualize and be able to describe what you want at the end of the day.

Step 2: Write it down. Do not worry about competing with Shakespeare – he wasn’t so good at the business side of things, but do take the time to jot done your ideas and expectations, starting with Step 1.

Step 3: What is your USP? What is your unique selling proposition? Are you going to be the “best” in the world, the city, the block? Do you need to be the best? Watch out for superlatives when describing your business and focus on customer benefits and value.

Step 4: How will you make money? Are you going to be selling a widget? How much for the widget? What goes into the making or acquiring of the widget? You do not need to be an accountant to explain this, but do take the time to follow the advice in step 2 – write it down!

Step 5: Who (whom my fifth grade grammar teacher would have corrected) will be buying whatever it is you are selling? How do you know them? How will you reach them? How will you grow them? By answering these questions (in writing) you will have the basis of a marketing plan.

Step 6: Putting together an operational budget and cash flow. It might sound complicated but work your budget by extending out Step 4. Do your cash flow by including your sales from your marketing plan.

Step 7: Do you have your exit plan ready? Again, working as a guerrilla means having the end in mind. Having that end forces us to have a firm understanding of our current situation. Answering some queries in a “partnership” questionnaire may help.

“Wait, I do these seven steps and I will have a business plan?” No, but you will have the necessary components to now begin to build your plan – whether using a kit or a third party service!

Keep smiling!

Three Tips To A Better Business Plan

A Business Plan Has To Be More Then Information

I was reviewing a business plan yesterday for a client who had spent hours working on it. He had a deadline he had set for completion and was very frustrated as it seemed that there was so much still to do. He had taken a sample plan that he found on line, for a similar company and made modifications thinking that this could be the perfect plan to go forward with.

What he had failed to understand was what the plan itself was actually for. I explained to him a business plan should serve one to two purposes an internal one and, in his case, an external one. Because he was looking for funding, he needed to have a plan that he could show possible investors along with a tool to help him guide his business.

Where he had gone wrong was that he thought by copying someone else’s work he had developed a plan. As I explained to him, the external purpose of the plan is to prove to investors you accurately understand your business. Which means:

1) Do you know who and what your direct and indirect competition is?
2) Do you know how much money it’ll cost you to operate a business like the one you want to establish?
3) Do you understand the needs, demands and wants of the market today and into the future?
4) Do you know what your value proposition is and how to articulate it in a way that can make you unique?
5) What is your marketing strategy and how will you employ it to obtain clients and create a differentiation from the competition?
6) How long is your sales cycle, and what will it cost to get your sale?
And So On!

Your Numbers Must Make Sense

This is one of the things that will turn an investor off faster then anything else. The first page an investor will go to in your business plan is your numbers. They’ll bypass all the glossy pictures and your executive summary, they aren’t going to check out your resume and your background, they’re going to see if the figures make sense.

So make sure the fundamentals are covered. Make sure you have a spread sheet where all your numbers foot, silly as this seems, I see this problem all the time. Also, if you quote numbers anywhere in your plan, an investor needs to have the ability to find those numbers inside your spreadsheet easily, and they better match. So if you say that you anticipate 10% growth in the first year and your chart displays 12% growth, your plan will likely be rejected before you get any farther. Regardless of how great the copy is.

Your numbers also have to be reasonable for your industry. Try and find as many companies out there, doing something similar to what you do. Observe how their growth has progressed. That should provide you with an idea of what you can expect. Don’t be too aggressive, unrealistic targets either way are not good, but growth that’s too rapid can harm a business as bad, if not worse, then sluggish growth.

Your Business Plan Needs To Show You Understand What’s Coming & Its Impact

It’s not sufficient to be able to show your snapshot in time. Your plan also needs to illustrate where you see your market heading over the following five or more years. It will tell an investor that you actually have an understanding of current and future trends of the business. It will also provide them insight into how you see the strategy for your company going forward. They may challenge your strategy and assumptions, but that’s better then outright rejection because they feel that you don’t have a clue about where your industry is going.

Remember, your investors are in this with you for a long haul. What you do to build your business over the next twelve months will be a significant indicator of your survival skills. What you do over the following five years will make the difference between a so-so investment and a terrific one. So this is your one chance to prove you’ve got what it takes.

Two more quick points to remember when submitting a plan.

You don’t get the chance to explain anything when your plan is in an investors hands, if the plan doesn’t do a good and concise job of explaining things, then you are cooked.

With every paragraph you write, you will need to ask yourself “So what”. In other words, you write something about your market, how important is it to growth and profitability. If an investor can say “so what, how is that going to make me money?” to anything you have written, don’t put it in there, unless you have answered the question.

Finally, your business plan also must be a guidance tool that you can utilize to run your company. It is a gut wrenching process to get it completed. But after you have completed it, don’t put it on the shelf, use it as a road map towards your success.

Building a Better Business Plan to Franchise Your Business

In building a solid franchise strategy, I first recommend “packaging” the business, maybe first in your mind, then of course on paper, with technology, processes and documentation, but first, decide what is this model that the franchisee will be replicating? Many times an entrepreneur handles more aspects in the corporate business than what a franchisee will be tasked to do upon opening which can be a good thing – keeping things simple in franchising has never been proven to be a bad thing. Franchisees like, appreciate and typically thrive in simple, structured environments with fewer variables left open. Maybe you decide to shorten the menu… possibly decrease the amount of services offered or it could be that the franchisee won’t be operating a production facility, only the retail portion of your business. Regardless, the franchise business plan should define this model clearly and accurately in order to understand the product being sold as the franchise program takes shape.

The next stages of franchise strategic planning should revolve around research. This research should be strategic in nature and focus on the franchise market, not the consumer market. We aren’t interested in the product or service provided to your customer as much as we are the franchise comparison to similar franchise brands. Who offers a similar franchise model based in your industry? What success stories have their been in your industry throughout the franchise market? In most cases, there are examples of good, bad and ugly ways to approach the franchise market, we typically suggest replicating the good and avoiding the other two options. By coordinating FDD’s from competing brands, interviewing people in the industry, even visiting some competing franchise brand locations if possible, you will be able to formulate your strategic mission and understand the best path to success. Every franchise has a value proposition, it is important that you understand what your brand brings to the market and how you will effectively attract, sign and retain franchisees for your system.

As your franchise concept takes shape, you now should begin to lay the framework for the financials, fees and other relevant numbers to the expansion plan. Franchise fees should be determined by reviewing the costs associated with training, support, sales and marketing related to franchise management. A validated franchise fee should be able to be explained to a buyer and easily understood. You will fail if the impression is given that you picked numbers because you thought they sounded good, you approached the market with confidence and an understanding for what each franchisee gets out of the relationship and why the numbers add up to a strong value proposition. Royalties, the primary profit center for most franchise systems are absolutely critical to the success or failure of any franchise system, understand what the ongoing percentages mean to both the franchisee and franchisor in your model and confirm that the fee structure lends itself to a profitable and meaningful relationship between both entities. Advertising requirements should encompass national, regional, local and cooperative strategies and each need to be managed delicately in order to provide franchisees with a meaningful benchmark to spend on building the brand in their market. Because franchising is a business of scale, the magnitude of every decision you make related to your business, your model and your brand is increased significantly, one wrong move up front replicated many times through franchisees could be disastrous for your brand and business.

Then it’s time to begin to understand markets. The franchise business plan should delineate which markets make the most sense for your company. Understand your consumer demographics. Know your territory analytics and have a good plan in place for how to position your franchised units. Territory disputes lead the list in categories for disgruntled franchise relations. Spend the time and make the investment necessary to fully grasp how and where to place your franchisees in order to avoid cannibalization and under utilization of markets.

A Franchise business plan should lead the way for a franchise expansion model. The vision, mission, competitive landscape and clear directives related to how to accomplish your growth goals should be explained, documented and most importantly validated as to why they are attainable and how you have come to these conclusions.