Part 1 of Your Business Plan: A Road Map to Success

Remember when you were a kid and your allowance was just never enough for all the hockey cards or bubble gum that you wanted? So like any normal kid, you came up with creative ways to make more money. Maybe you tried selling an old broken toy to your little brother, or perhaps you decided to take on a venture like the iconic lemonade stand. Perhaps, you would try poaching supplies from the kitchen, only to be run off by a parent. Or maybe, you had a more organized approach. Maybe some of you knew you would have to have a plan before the parents would let us get into something so involved. You would make a list of what was needed, what you would charge per serving and how you split up the money. It would have been your first business plan – albeit a little undeveloped.

No matter the size, age or purpose of a business – it needs a plan. Even if you started your business years ago with the intention of just running it out of your garage, you still need a plan. So what is a business plan, aside from a list of supplies and prices? It is a formal statement of goals for your business, the reasons they are attainable and a plan for reaching them. Some business plans are hundreds of pages long, others begin as notes on a scrap piece of paper. No matter how it begins, the end result will bring your business closer to success. Below is an outline of the main components to your business plan.

Executive Summary

The executive summary summarizes your business plan. The most important component of it is your mission statement. It will sum up the purpose of your business, what you will tell your clients to make them understand what it is you do. The executive summary will not contain any technical language, highlighting the most important components of the business and how you plan to make it succeed. Basically, if your reader does not wish to go over every detail of the entire plan at that particular time, they will be able to read the executive summary and still have a good grasp of your venture. If you are drawing up a plan for an existing business, include how many years in operation, the existing legal and financial structures. The document will make recommendations on how you plan to meet your goals, but the step by step details will be in the body of the business plan. If there are multiple sections in your business plan, the executive summary will summarize them. If you are seeking financial assistance, this where you would sum up your needs, the reasons you need the money and how you plan to pay it back. The document will end with a conclusion summarizing the overall executive summary. The executive summary should be located at the front of your business plan, but it is best to write it after you have written the rest of the plan first. When all the research is done and you have thought about every little detail of the past, present and future of your venture, the executive summary will be much easier to write.

Business Description

Here is where you describe your business in more detail. Some very small businesses do not include this section because the information is already adequately listed in the executive summary. For mid to large ventures, this section is very important as it gives the reader a much clearer idea of the day to day operations. If you are an existing business, list the details on your corporate structure, the size of your work force, key product lines, physical locations of assets (such as real estate and large equipment) and the annual sales figures. If you are a brand new business, your business description will be more simple. List employees you expect to hire, projected sales figures, the products you expect to push the most revenue, location of facilities (where you plan to do business), at what stage of development you are in and your corporate structure (if you have one). The management team is also outlined in this section, as well as their responsibilities.

For larger more comprehensive ventures, there will be sections on business environment analysis, industry background and competitor analysis. These are very important issues to cover, especially when asking for financial assistance. Any one defect in the above assessments could mean the failure of the venture, so be realistic in your research and conclusions. For smaller businesses, old or new, these sections may not need to be covered at all. If you feel they are relevant to your plan but do not require their own section, simply include them with the business description portion of the business plan.

The business description will probably be the first and easiest part of the business plan to write. It is a great way to begin, as it gets you thinking about all the details you may not have considered before. If we continued to use the lemonade stand as our example business for drawing up a business plan, then the business description would probably be very simple. We would describe whose house our table would be in front of, if a parent was supervising the operations and what we have already done in preparation to open. In part two of this series, we will look at the core of our business and how to document it.

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Refine Your Business Description Until It Is Crystal Clear

You have probably been with owners of other small businesses on a course or in a seminar where people could not describe their businesses. Clarity on the kind of goods and services offered by your business is essential to good focus and ultimately to a successful marketing effort. Sometimes business owners, or those wishing to start a business, are passionate about the general area they want to be in such as landscaping, day-care providers or copywriters but beyond that their business ideas are hazy at best.

You should start your business; in fact you should start your business proposal, by first defining the business you are in. It is only by doing that that you will be able to come up with a Unique Selling Proposition or Point of Difference that will make your business stand out and gain you a loyal and growing clientele.

There is a simple way for potential entrepreneurs to define their businesses. They should start at the end and work backwards. If they know where they want to go then they will know how to work on the route to get there. If you set goals then the rest of the process becomes easier.

To think creatively and in new ways there are abundant tools available such as brainstorming, mind mapping and freewriting. Above all, business people should think about their businesses from the customer’s perspective. Do I meet the expectations of my customer? And who is my customer? These are the type of questions that needs answering.

Brainstorming with fellow businessmen or on your own, or by yourself, focused on what you consider to be the goal of your business, is most useful. Mind mapping goes one step further than brainstorming. It enables you to you create and perceive ways in which the interests of your business and the customer can match each other.

Freewriting is an interesting process whereby you seize upon the essence of your business and write about it continuously for anything from ten minutes to half an hour. You will know when you have written sufficient.

There are no hard and fast rules about using these tools but one. Do not assess or change what you have written as you go. Simply allow the ideas to flow. Even if you are doubt that a particular idea will be helpful just write it down. Only when you have spent sufficient time engaged in the process should you look at what you have done. Then you can sift through it all and retain what works for you. You will be surprised at what emerges.

As mentioned, these techniques can be done on your own or with others. Obviously you may want to discuss your ideas with other business people and professionals. But at the end of the day it’s your business and you need to know what it is you are offering in the marketplace. It helps immeasurably when you are asked by a financial institution or a customer to write a proposal, and when you are developing sales material.

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Your Business Plan – Detailing Your Business Description

Do not assume that anyone who will be reading your Business Plan knows anything about your business. You will need to include a number of specific pieces of information that will help the reader to understand exactly how you have set up the business.

In order to do this, include the following in your description:

1. The legal name of the business and form that it takes under the law. For example, is it a sole proprietorship, partnership or corporation. Also talk about specific divisions or departments that you have set up within the business.

2. Business ownership – Are there shareholders and if so, what percentage of the company do they control and how active are they in the operation of the business. You might also want to include a paragraph or two here about the way that you involve other people in the business either through contracts or wages. Remember to include your role and the way that decision-making is done so that the business will flourish.

3. Location and facilities – Describe the address, size and costs of the places where your business operates. Don’t forget to include any storage facilities.

4. Historical information – Summarize the way that the company started and any significant milestones along the way. Talk about products and services that have been provided in the past as well as the staffing that was required to this point in order to operate the business. If you do not have a history but are just starting up a new business, include your plans and what you hope to offer the market once you are open for business. You can talk about successes that you have enjoyed as well as difficulties and how you managed to overcome them.

5. Business Summary – Use a couple of detailed sentences that will give a brief but clear overview of the business, clientele and reputation.

The description of your business should leave the reader with a clear understanding of exactly what you have set up and how you not only served others in the past but also how you plan to continue, expand or change your business in the future, It is therefore important that you use clear language and details that will paint a picture in the mind of the reader while also inspiring that person to want to know more about your business because of the interest that they have developed during the reading.

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What Is Your Business Description?

A good business description will make your work a lot easier as you travel the road to starting your business. When you write a formal plan with the hope of qualifying for a business loan or attracting investors you need to let them know that you know what you are doing. But aside from all of the paper work and jumping through the hoops others set up for you, I believe that the most important reason to write an in depth business description is to understand who your potential customers are.
Understanding your customers

Understanding Your Customers

Let’s look at an example. Let’s say you want to open a business hat sells fishing equipment. You stock all of the latest rods and reels and maybe a great assortment of fishing lures. A man and his 2 sons walks in and realizes that he needs a fishing license for the trout they will be going after. Do you sell licenses? If you do you will need to be involved with the State Government and follow their rules and regulations. Who do you contact to make that happen? They tell you that they are going to be gone all day and want to buy sandwiches and other food items but they don’t have time to make another stop because the fish won’t wait. Do you sell food? if so, do you have the necessary permits? Even a small kitchen will need an oven or cook top. That means proper electric and water hookups and fire safety, and, well you get the idea.
Your customers expectations

Your Customers Expectations

Your business description first and foremost must meet the expectations that your customers have when they walk through your doors.Get inside their heads. What do the want? If they are looking for something specific you can bet there is something else related to it that they want as well. Understand them, offer them what they want and then break it down what it will take to provide it.

It’s not rocket science but it does take some detailed thought. You can do it. Don’t forget to write it all down and keep things organized. actually, this can be the fun stuff because you will have a mental picture of what you business will become. Enjoy the ride.

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Business Insurance Policy and the Importance of the Business Description

One of the most important parts of your business insurance policy is also one of the most basic; the business description. The amount of detail included within the business description varies from Insurer to Insurer. For example Insurer A may just state that their policyholder’s business is “printers” whilst B might go into a lot more detail and show a business description of “lithographic and digital printers, printing of large format graphics, printing of greeting cards, property owners and business ancillary to the aforementioned”.

So if your business insurance policy is placed with Insurer A how do you know that they fully understand your business? If you are using an Insurance Broker, which I really hope you are, then you should ask your Broker to show you a copy of their market presentation. This document will include full details of exactly what it is you do, what you make, what your product does, who you sell it to, etc., etc., as well as other important informations such as your sums insured, limits of indemnity and claims experience.

If your Broker has arranged your policy through an Insurer’s online quote system, or if you have arranged it direct yourself, then it is more than likely that you will have a simple, straightforward business description such as “hotel”, “builder”, “HR consultant” or “carpet shop”. This is fine as long as you are happy that your business does not do anything out of the ordinary and that you can comply and agree with all of the policy terms and condition, and all of the assumptions detailed on the Statement of Fact or Proposal Form.

A classic example of where a straightforward business description can lead to problems is the world of Web Design. Most of the online policies available for the Web Designer or Developer have a business description of just “Web Design”. What the business description drop-down on the online quote engine does not tell you is that the majority of these policies will not cover you if you provide hosting service, or if you build e-commerce sites, or if you provide chat room or forum on your website. These details are contained within the Statement of Fact.

The moral of the story is simple, if you want to avoid any possible nasty surprises when you need to rely on your Business Insurance Policy and make a claim then please do make sure your Insurers do know and understand exactly what it is your business does.

I hope you have found this article useful and that you will double-check to ensure your business insurance company is fully aware of what it is you do.

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