I just finished a series of blog posts on the primary causes of small business failures. One of the best ways to avoid this fate is to have a living Business Plan. We will get to the living part over time, but we need to look at the right way to build a Business Plan. This blog mini-series will help owners organize their thoughts coherently to be able to produce an effective plan.
Most people think that creating a business plan is a linear process. You fill out some forms and some spreadsheets and it is done. You then put that document in a drawer and leave it until you clean out the drawer. A true Business Plan is a living document that requires iteration, even at the beginning.
There are two overall portions of a Business Plan. They are the narrative and the financials. These portions need to support one another. This means that if you have a financial projection to grow revenue, then you need a narrative on how you are going to achieve that growth. It needs to be obvious on how these connections are made and how any changes will work.
Most Business Plans are three (3) to five (5) year documents. You will have a supporting Annual Plan for the current year and that needs to line up and be the next step in executing the Business Plan. The reason that the Business Plan is extended is that you want to be able to produce the Business that you want. If the time frame is too limited then there will not be enough time to change the direction of the business.
I will talk about the narrative first in a series of posts, but this will break down into several major sections: Mission/Vision/Values, Market, Customers, Products/Services, Sales and Marketing, Operations, and Administration. Depending on the business, some of these sections will be significantly larger than others. But each area needs to be touched upon and has a definite purpose.
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