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Monthly Archives: July 2017

External and Internal Plans

External business plans

When a business plan is prepared for an external party, it should be focused on what the external party requires. Very often external business plans are prepared for people who are providing capital or finance to the business. However, this may not be the only reason. You may need to prepare a business plan for a community organisation or a council so that it outlines the impact of your business on the community. This will have a different focus to a plan that is prepared for a financier.

More specifically, external business plans are often prepared for parties that you would like to invest in your company. If you are preparing a plan for an investor of this category, you need to think clearly about what that investor wants to see in your plan. If it is at all possible, ask questions and understand exactly what the investor wants to see. Leaving this to chance is often a fatal mistake. Don’t try to guess the needs of your reader. Find out.

I would also warn you about putting too much detail in an external business plan. Keep it to the point and keep it focused. Don’t stray into reams of detail on the chance that your reader wants to know this. Further detail can be supplied at a later time. However, if your reader wants the detail, go ahead and write all the pages that you need.

In the opinion of some commentators, the executive summary carries about 95% of the importance to the reader. I think this is a bit overstated, but it is important that your executive summary outline very clearly the benefits to the reader. Your executive summary answers the question “Why should I read this plan?” So make sure you get the “What’s in it for me?” points into the executive summary.

Internal business plans

On balance, I think internal business plans are the most important. This is a document that dries your business forward. An internal business plan summarises what you and your team are actually going to do to improve your business and achieve your goals. No one need see what is written in this plan except those people who are directly involved in carrying out the plan. You may choose to show it to a wider readership, but that is your choice.

While the internal business plan will contain elements of what is in an external plan, the internal plan will be solely focused on trying to achieve the goals of the owners of the enterprise. What are the precise financial goals? How many locations will you operate from in five years time? When will the business be sold? How will production efficiency be improved by 15%? How many people will you employ at the end of next year? And so forth.

In my view, an internal business plan is only of use if specific tasks are assigned to specific people to be achieved by a specific time. Also, there must be constant follow-up of these goals. No progress is made until people know exactly what they have to do and by what time and they need to be accountable to the plan.

Plan For Profit

1. Introduction: The plan’s introduction is where your business explains the service and/or product you will offer. The introduction will make the business stand out, above any other potential threat to offering the same or similar service.

2. The Business: This section of the plan will describe the board members, key players, and a brief introduction or summary about the company history. There will be discussion on percentages of ownership, how many employees there are, and where the company is located. If this is a new business, this section will be brief; but if it a free sample business plan and outline of a company that has been in existence, this section may cover past successes and achievements.

3. The products and services: This section of the free sample business plan is a detailed description of what product and/or service is offered. Specifics in this part of the free sample business plan are the key. For example, instead of the free sample business plan reading “ABC offers clothing”, the plan would state, “AMC offers designer children’s clothing for children ages birth to 8 years old at highly discounted prices”.

4. Market: This section of the sample plan will analyze (both informally and formally) the targeted market, if it is a niche market, and what community need the company will fill. At this point in the plan, you should use statistics, percentages, and detailed figures to support your statements.

5. Financial & Budgetary Analysis: The financial & budgetary analysis section of the sample plan will be an outline of profits, income, and expenditures of an organization already in existence. As a business just starting out, the section will be projected costs and expenditures, as well as profit projections. This is a great way for a business person to assess and visualize the venture is worth it. In other words, if it will not cost more to get started/operate than the money it will bring in.

6. Company Highlights: The free sample business plan will also include a section for you to look at that will have miscellaneous highlights of the company. The free sample business plan will list such highlights as: a mission statement; value statement; keys for success; desired outcomes; etc. All will show and prove why and how the business will be profitable.

7. Table of Contents and Index: The table of contents will guide you through the plan to find exactly what you are looking for. This is both visually appealing for the plan, and will help those looking at your plan (potential investors, banks, partners, etc.) move through it easily.

Grow Business With Business Plan

• Do some dreaming about what you would like your lifestyle to be
• By dreaming decide on an average income you would like to have over the next few years
• Decide how many years out you would like your plan to cover
• Decide how much profit you would like for your business to generate above the income you want for yourself.
• Set up a profit and loss statement of your existing business or your proposed business
• With the right business knowledge and a profit and loss statement you can actually use that data to see what your business would need to do for you to give you that income and profit
• Even better you can determine what size market you would need and even determine whether your market would support your business presently and in the future.

To me a small business is one of the best things you can have if you enjoy operating a business; however, it does require a lot more than just enjoying ownership and running a business. Especially if you are starting a small business and even if you have had a business for many years, you should know what you want for your future. Never guess about your business. You see, without a plan, you are just guessing. We business people work hard and we always continue to hope for the best but when we guess, we’re taking a lot of risks. You’ve probably heard the old saying from an unknown author that says, “If you fail to plan, then plan to fail.”

As a matter of fact, did you know that the Small Business Administration says that 50% of small business owners will fail sometime during their first 5 years? There are lots of reasons but one big one is that owners don’t have a plan. Another is they have picked a product or service that doesn’t have a big enough market to sustain their business and sometime during their future they will run out of customers.

Now as I said, there are many other reasons too.

After graduating from college, I started out in manufacturing as an engineer in a pretty large company and now, 45 years later, retiring as a of Director of Manufacturing, I have discovered an awful lot about business. Not only did I learn and teach a lot about business, I worked with small business owners as well. I’ve learned that it comes down to this. Too many owners work hard in their business but less on their business.

Do you work on your business as much as you work in your business? Do you ever dream about having a good lifestyle but just haven’t quite figured out what to do about it. Have you ever thought about seeing what your business would need to do to give you those dreams? Developing a growth business plan could be the answer.

So, why should you make a growth business plan? Well in simple terms you need to know where you’re going and how and when you’re going to get there.

Some of the questions a growth business plan might ask you are:

– Are you comfortable that the market wants and is willing to buy your product or service?
– Is your product or service priced so it is competitive in your market?
– What’s different about your product or service? Why would a customer purchase it over someone else’s?
– Is your market big enough to support your business? What about 15 years into the future?
– If you wanted a better lifestyle, what would your business need to do to give you that lifestyle?
– How much sales would your business need to generate to give you that income?
– How much sales would your business need to generate to give you the income you want 15 years into the future?
– What will be the cost of your labor and material?
– What will your expenses run?
– How much will it cost to overcome the capacity constraints that will occur as your business grows to meet your income requirements?
– Will your profit give you the income you want in the future and at the same time maintain a healthy business for you as well?

If you develop a good Profit & Loss Statement for your existing business for the current year or for the first year of your proposed business, you can use this data to actually project how much sales you would need to yield the income you want and the profit margin you want. You can plan ahead as far as you want. Sound impossible? It’s actually pretty simple and can be pretty accurate plan.

A plan like this would show you how much sales your business would need to do, what your fixed and variable expenses would be, what your material cost, labor cost and profit would need to be to provide the income and profit margin you want. You can see pretty quickly if it’s possible for you to get your business to that level. I don’t know of any better way than to have your business give you the income and profit you want. What’s neat is you can determine what you want your income to be and your profit to be over the next few years and develop a plan that can show you exactly what your business would need to do to give you that income and profit.

Creating simple Business Plan

Let’s start with the basics. A business plan is a tool with three basic purposes: communication, management, and planning. As a communication tool, it is used to attract investment capital, secure loans, convince workers to join and assist in attracting strategic business partners. A complete business plan shows whether or not a business has the potential to make a profit. It requires an honest look at almost every phase of business and allows you to show that you have worked out all the problems and decided on potential alternatives before actually launching your business.

As a management tool, the business plan helps you track, monitor, and evaluate your progress. The business plan is a living document that you will modify as you gain knowledge and experience. By using your business plan to establish timelines and milestones, you can track your progress and compare your projections to actual achievements.

As a planning tool, the business plan guides you through the various phases of your business. A thoughtful plan will help identify obstacles so that you can avoid them and establish alternatives. Many business owners share their business plans with their employees to cultivate a broader understanding of where the business is going.

All three of those purposes are important, but be sure to particularly remember the management and planning aspect. That ensures that you are actively involved with executing your business plan and tracking the goals you’ve set out to achieve.

In Focus: The Useful Business Plan
In order to be a truly usable tool, a business plan should be a work-in-progress. Even successful, growing businesses should maintain a current business plan. It doesn’t need to be fancy, complicated or difficult, it just needs to be clear and manageable.

Remember, your goals are to show your expertise in your business, to “sell” your business to prospective customers (such as investors and employees), and to design a management tool that works for you.

Every successful business plan should include something about each of the following areas:

1. Executive Summary

2. Market Analysis

3. Company Description

4. Organization and Management

5. Marketing and Sales Management

6. Products and Services

7. Financials

8. Appendix