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Business Plan Best Practices

Whether starting a new business, expanding an existing business, or simply introducing a new product or service, it’s a good idea to start with a plan – a business plan. To some, developing a business plan may seem like an extremely time-consuming and unnecessary task. It doesn’t have to be. Business plans can range from the simple to the complex–but should include the same core elements. Here are “7 Critical Business Plan Elements”:

 1) A convincing business case or “reason for being.”

What is your business all about and why does it – or should it – exist? What benefits does it provide? To whom? Why, in 50 words or less does your business “have what it takes” to succeed?

2) A differentiating product or service description.

What, specifically, is the product or service you’re offering? Not just a pizza restaurant, but a pizza restaurant with a specific menu, using certain specific items, appealing to people in a certain specific way, etc. Include those unique points that differentiate your product or service from others.

3) A clearly defined target market.

What is the market for your product or service? Over what geographic area does your market extend? What type of businesses or individuals does your product appeal to. Again, be specific.

4) A thorough competitive analysis.

The degree of competition that you will face and the extent to which you can effectively respond to that competition are important factors in your success. Consider not just direct competition, but all substitute products and services that may represent threats to your sales. For example, if you’re developing a business plan for a health club, local stores that sell exercise equipment for the home represent competition.

Look at each competitor’s strengths and weaknesses and consider how your business is positioned against that competitor. As with other elements of your plan, be honest – and be specific.

5) A credible statement of goals and objectives.

Your goals serve several important purposes. They define the objectives that will drive all of your activities, they provide incentives for motivating staff, and they serve as milestones by which you can measure success or identify areas for remedial action. Your objectives support your goals. Your goals should be broad: e.g. “Increase sales in XYZ territory.” Your objectives should be specific and should support your goals: e.g. “Grow the ABC product line market share by 15% over the next six months in XYZ geographic areas.”

6) A comprehensive marketing plan.

How do you intend to market your product or service? Your marketing plan should describe how your target customer group will be motivated to purchase your product or service. It should detail your marketing goals, the marketing mix you will use (i.e. traditional media advertising, Internet and social media marketing, direct mail, etc.), the cost and the anticipated impacts.

7) A credible financial plan.

How much revenue do you expect your business to generate? Don’t just pick a number out of the air. You need to support your financial predictions with sound data and evidence. What is the financial feasibility of your business? The bottom line matters. What financial goals have been established and what evidence do you have that these goals can be achieved? Even if you’re not looking to others to provide financial support to help you get your business off the ground, being realistic about the financial potential of your business will benefit you. If you can’t come up with a positive bottom line, don’t fudge the numbers. In the long run, you’re the one that will suffer.

Your business plan should serve as a blueprint for your business, detailing what the business concept is, what is expected for the business in terms of goals and objectives and – most importantly – how (specifically!) you will achieve those goals and objectives. Leave nothing to chance. Take this very important first step to ensure the viability of your business. You’ll be glad you did.

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