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Cheat Sheet

Business Plans Kit For Dummies

From Business Plans Kit For Dummies, 4th Edition by Steven D. Peterson, Peter E. Jaret, Barbara Findlay Schenck

The best way — make that the only way — to achieve business success is to have a solid business plan. A business plan is critical to finding a successful course through turbulent times. If you have a really great idea for making money (or doing good with a nonprofit), an effective business plan will help you make the most of it. The following can guide you through some important aspects of putting together and assessing your business plan.

The Attributes of a Winning Business Idea

Lots of businesses start with a great idea. Writing a business plan can help you refine that great idea and put it to its first test. Ask yourself these questions to evaluate your idea as you assemble your business plan:

  • Is your business idea something you really want to spend time doing?

  • Do you have the resources, connections, skills, and expertise to turn your business idea into a success story?

  • Can you explain your business idea in 25 words or less?

  • Does your business idea address or solve a real customer need, problem, or desire?

  • Will you offer something new or different than the competition?

  • Does your business idea take advantage of a new opportunity? Is your business idea the right one at the right time?

  • Will your business idea make money — and how fast?

Consider a line-up of positive answers a green light — first to start your business planning and then to launch your business.

Key Components of a Business Plan

Writing a business plan is a big task, and no two business plans are alike. But most effective plans include the following major elements. As you write your business plan, come back to this list of key components to make sure your plan is complete and thorough.

  • Company overview: Your mission, vision, values, products, unique attributes, and the business opportunity you plan to seize

  • Business environment: An analysis of your industry, your marketplace, your customers, your competition, and how you stack up

  • Company description: The capabilities that give you a unique advantage over your competitors — including your management, technology, operations, distribution, service, finances, and marketing

  • Company strategy: Your roadmap to the future (including how you'll seize opportunities and avoid threats), your growth plans, your marketing plan, and even your exit strategy

  • Financial review: The state of your finances, including your income statement, balance sheet, cash flow statement, profit projection, and budget

  • Action plan: Steps you'll take to implement your business plan to meet your goals and objectives

5 Ways to Ensure an Effective Business Plan

No matter whether yours is a new or existing business, effective business planning is essential. Not only do you need to put time into the planning process, but you need to involve the right people as well. Effective business planning combines common sense and a few basic strategies:

  • Set aside enough time for business planning. The time you spend will save you far more time after your business is up and running.

  • In the planning process, involve everyone who will ultimately help make your plan happen. Good plans should guide and inspire.

  • Set clear goals and objectives. Make sure you have measurable outcomes and feet-to-the-fire timelines.

  • Gather all the information you need. An effective plan depends on a complete and accurate understanding of your market, your customers, your financial situation, and your business environment.

  • Write a plan that people will read. A business plan only works if those in your target audience — whether investors, prospective partners, board members, key staff, or others — actually read and understand it, so you need to create a plan that's concise, complete, and readable.

Evaluating Your Business Plan

Each time you review and revise your business plan, actively solicit suggestions and ideas throughout your company and target audience. Useful ideas can come from anyone anywhere. Start within your business, asking employees the following ten questions:

  • Is the company communicating its vision, mission, and strategic plan to employees? If not, how would you suggest we do a better job?

  • Are the business goals and objectives outlined in the plan clear and appropriate?

  • Do your own duties and responsibilities help support the company's goals and strategic direction?

  • Can you suggest specific changes in the way in which you perform your job that will help the company better meet its goals?

  • Can you suggest ways to improve the company's overall operations?

  • Do company procedures get in the way of your doing your best job? If so, how do you suggest changing them?

  • Are you aware of changes in the industry — including our customers and our competitors — that should be addressed in our business plan?

  • Can you suggest ways we can enhance the value we offer our customers?

  • Can you think of additional ways we can enhance the value we offer our customers?

  • If you were in charge of revising the business plan, what other changes would you make?

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