ASSURE SUCCESS INSTEAD OF FAILURE
Some of the Most Common Reasons for Business Failures are:
- Failure to understand capital requirements
- Mistaken estimate of market demand
- Lack of management ability
- Poor marketing strategy and implementation
- Reliance on a single individual
- Reliance on single customer or vendor
- Expedient rather than reasoned decision making
- Inadequate business planning
In order to reduce exposure to these business weaknesses, management should draft a written business plan. Besides strengthening the business, a business plan can also be used to attract capital, obtain loans, obtaining bonding, or to increase the business value in the event of a business sale.
Unfortunately, most business owners have never worked with a business plan and therefore have trouble visualizing what a business plan should embody. There are no hard and fast rules on what a business plan should have, and it can be easy to get caught up in the "art" of what should be included. If you would like to start on your business plan without spending time on the overall structure, you may want to use the following outline;
This is the most important section of the business plan. Keep in mind many readers will not read past the plan summary, so it has to capture the reader's interest. It should have an overview of company history, operations, growth, and financial highlights. Management's goals and objectives should be spelled out.
This section should contain brief resumes of the management team, and possibly an organization chart. Just trying to make an organization chart will uncover areas of vague or nonexistent lines of communication.
This segment should describe capacity, hours of operation, special equipment, and details of any expansion plans.
This section should have an analysis of the work force, employment contracts, employee manual, profit sharing, and employee related insurance.
A business plan should have a section that summarizes the company accounting system, including distribution and timing of the various reports.
The plan should include a description of the products or services, any proprietary technology or skills, a product cost analysis, new product development strategy, customer profile, and copies of promotional materials.
This section of the plan should analyze the impact of the economy, and government regulation, and the completion.
This segment should summarize the sales organization, and product distribution system.
Historical Financial Statements
The last three years financial statements should be presented.
Forecasted Financial Statements
The sophisticated reader will focus on this section. It should forecast the income statement, balance sheet, and cash flow for at least three years. Significant forecast assumptions and accounting policies must be disclosed.
The business plan described above is only a framework. Use your imagination to improve on it for your company. You should get in the habit of preparing or updating your written plan every year.