How To Prepare A Business Plan That Guarantees Big Profits

It is always said “If you Fail to Plan, you Plan to Fail”

Success in business comes as a result of planning. You have to have a detailed, written plan that shows what the ultimate goal is, the reason for the goal, and each milestone that must be passed in order to reach your goal.

A business plan is written definition of, and operational plan for achieving your goal. You need a complete but success tool in order to define your basic product, income objectives and specific operating procedures. YOU HAVE TO HAVE A BUSINESS PLAN to attract investors, obtain financing and hold onto the confidence of your creditors, particularly in times of cash flow shortages–in this instance, the amount of money you have on hand compared with the expenses that must be met.

Aside from an overall directional policy for the production, sales effort and profit goals of your product–your basic “travel guide” to business success–the most important purpose your business plan will serve, will be the basis or foundation of any financial proposals you submit. Many entrepreneurs are under the mistaken impression that a business plan is the same as a financial proposal, or that a financial proposal constitutes a business plan. This is just a misunderstanding of the uses of these two separate and different business success aids.

The business plan is a long range “map” to guide your business to the goal you’ve set for it. The plan details the what, why, where, how and when, of your business–the success planning of your company.

Your financial proposal is a request for money based upon your business plan–your business history and objectives.

Understand the differences. They are closely related, but they are not interchangeable.

Writing and putting together a “winning” business plan takes study, research and time, so don’t try to do it all in just one or two days.

The easiest way to start with a loose leaf notebook, plenty of paper, pencils, pencil sharpener, and several erasers. Once you get your mind “in gear” and begin thinking about your business plan, “10,000 thoughts and ideas per minute” will begin racing through your mind…So, it’s a good idea when you aren’t actually working on your business plan, to carry a pocket notebook and jot down those business ideas as they come to you–ideas for sales promotion, recruiting distributors, and any other thoughts on how to operate and/or build your business.

Later, when you’re actually working on your business plan, you can take out this “idea notebook” evaluate your ideas, rework them, refine them, and integrate them into the overall “big picture” of your business plan.

The best business plans for even the smallest businesses run 25 to 30 pages or more, so you’ll need to “title” each page and arrange the different aspects of your business plan into “chapters.” The format should pretty much run as follows:

Title Page Statement of Purpose Table of Contents Business Description Market Analysis Competition Business Location Management Current Financial Records Explanation of Plans For Growth Projected Profit & Loss/Operating Figures Explanation of Financing for Growth Documentation Summary of Business & Outlook for The Future Listing of Business & personal References

This is a logical organization of the information every business plan should cover. I’ll explain each of these chapters titles in greater detail, but first, let me elaborate upon the reasons for proper organization of your business plan.

Having a set of “questions to answer” about your business forces you to take an objective and critical look at your ideas. Putting it all down on paper allows you to change, erase and refine everything to function in the manner of a smoothly oiled machine. You’ll be able to spot weakness and strengthen them before they develop into major problems. Overall, you’ll be developing an operating manual for your business–a valuable tool which will keep your business on track, and guide you in the profitable management of your business.

Because it’s your idea, and your business, it’s very important that YOU do the planning. This is YOUR business plan, so YOU develop it, and put it all down on paper just the way YOU want it to read. Seek out the advice of other people; talk with, listen to, and observe, other people running similar businesses; enlist the advice of your accountant and attorney–but at the bottom line, don’t ever forget it has to be YOUR BUSINESS PLAN!

Remember too, that statistics show the greatest causes of business failure to be poor management and lack of planning–without a plan by which to operate, no one can manage; and without a direction in which to aim its efforts, no business can attain any real success.

On the very first page, which is the title page, put down the name of your business-ABC ACTION–with your business address underneath. Now, skip a couple of lines, and write it all in capital letters: PRINCIPAL OWNER–followed by your name if you’re the principal owner. On your finished report, you would want to center this information on the page, with the words “principal owner” off-set to the left about five spaces.

Examples: ABC ACTION 1234 SW 5th Ave. Anywhere, USA 00000

PRINCIPAL OWNER: Your Name

That’s all you’ll have on this page except the page number -1-

Following your title page is the page for your statement purpose. This should be a simple statement of your primary business function, such as: We are a service business engaged in the business of selling business success manuals and other information by mail.

The title of the page should be in all capital letters across the top of the page, centered on your final draft–skip a few lines and write the statement of purpose. This should be direct, clear and short–never more than (2) sentences in length.

Then you should skip a few lines, and from the left hand margin of the paper, write out a sub-heading in all capital letters, such as: EXPLANATION OF PURPOSE.

From, and within this sub-heading you can briefly explain your statement of purpose, such as: Our surveys have found most entrepreneurs to be “sadly” lacking in basic information that will enable them to achieve success. This market is estimated at more than a 100 million persons, with at least half of these people actively “searching” for sources that provide the kind of information they want, and need.

With our business, advertising and publishing experience, it is our goal to capture at least half of this market of information seekers, with our publication. MONEY MAKING MAGIC! Our market research indicates we can achieve this goal and realize a profit of $1,000,000 per year within the next 5 years…

The above example is generally the way you should write your “explanation of purpose,” and in subtle definition, why you need an explanation. Point to remember: Keep it short. Very few business purpose explanations justify more than a half page long.

Next comes your table of contents page. Don’t really worry about this until you’ve got the entire plan completed and ready for final typing. It’s a good idea though, to list the subject (chapter titles) as I have, and then check off each one as you complete that part of your plan.

By having a list of the points you want to cover, you’ll also be able to skip around and work on each phase of your business plan as an idea or the interest in organizing that particular phase, stimulates you. In other words, you won’t have to make your thinking or your planning conform to the chronological order of the “chapters” of your business plan–another reason for the loose leaf notebook.

In describing your business, it’s best to begin where your statement purpose leaves off. Describe your product, the production process, who has responsibility for what, and most importantly, what makes your product or service unique–what gives it an edge in your market. You can briefly summarize your business beginnings, present position and potential for future success, as well.

Next, describe the buyers you’re trying to reach–why they need and want or will buy your product–and the results of any tests or surveys you may have conducted. Once you’ve defined your market, go on to explain how you intend to reach that market–how you’ll these prospects to your product or service and induce them to buy. You might want to break this chapter down into sections such as..publicity and promotions, advertising plans, direct sales force, and dealer/distributor programs. Each section would then be an outline of your plans and policies.

Moving into the next chapter on competition, identify who your competitors are–their weakness and strong points–explain how you intend to capitalize on those weaknesses and match or better the strong points. Talk to as many of your “indirect” competitors as possible–those operating in different cities and states.

One of the easiest ways of gathering a lot of useful information about your competitors is by developing a series of survey questions and sending these questionnaires out to each of them. Later on, you might want to compile the answers to these questionnaires into some form of directory or report on this type of business.

It’s also advisable to contact the trade associations and publications serving your proposed type of business. For information on trade associations and specific trade publications, visit your public library, and after explaining what you want ask for the librarian’s help.

The chapter on management should be an elaboration on the people operating the business. Those people that actually run the business, their job, titles, duties, responsibilities and background resume’s. It’s important that you “paint” a strong picture of your top management people because the people coming to work for you or investing in your business, will be “investing in these people” as much as your product ideas. Individual tenacity, mature judgement under fire, and innovative problem-solving have “won over” more people than all the AAA Credit Ratings and astronomical sales figures put together.

People becoming involved with any new venture want to know that the person in charge–the guy running the business knows what he’s doing, will not lose his cool when problems arise, and has what it takes to make money for all of them> After showing the “muscle” of this person, go on to outline the other key positions within your business; who the persons are you’ve selected to handle those jobs and the sources as well as availability of any help you might need.

If you’ve been in business of any kind scale, the next chapter is a picture of your financial status–a review of your operating costs and income from the business to date. Generally, this is a listing of your profit & loss statements for the six months, plus copies of your business income tax records for each of the previous three years the business has been an entity.

The chapter on the explanation of your plans for the future growth of your business is just that–an explanation of how you plan to keep your business growing–a detailed guide of what you’re going to do, and how you’re going to increase your profits. These plans should show your goals for the coming year, two years, and three years. By breaking your objectives down into annual milestones, your plan will be accepted as more realistic and be more understandable as a part of your ultimate success.

Following this explanation, you’ll need to itemize the projected cost and income figures of your three year plan. I’ll take a lot of research, an undoubtedly a good deal of erasing, but it’s very important that you list these figures based upon thorough investigation. You may have to adjust some of your plans downward, but once you’ve got these two chapters on paper, your whole business plan will fall into line and begin to make sense. You’ll have a precise “map” of where you’re headed, how much it’s going to cost, when you can expect to start making money, and how much.

Now that you know where you’re going, how much it’s going to cost and how long it’s going to be before you begin to recoup your investment, you’re ready to talk about how and where you’re going to get the money to finance your journey. Unless you’re independently wealthy, you’ll want to use this chapter to list the possibilities and alternatives. Make a list of friends you can approach, and perhaps induce to put up some money as silent partners. Make a list of those people you might be able to sell as stockholders in your company–in many cases you can sell up to $300,000 worth of stock on a “private issue” basis without filing papers with the Securities and Exchange Commission. Check with a corporate or tax attorney in your area for more details. Make a list of relatives and friends that might help you with an outright loan to furnish money for the development of your business.

Then search out and make a list of venture capital organizations. Visit the Small Business Administration office in your area–pick up the loan application papers they have–read them, study them, and even fill them out on a preliminary basis–and finally, check the costs, determine which business publications would be best to advertise in, if you were to advertise for a partner or investor, and write an ad you’d want to use if you did decide to advertise for monetary help.

With listing of all the options available to your needs, all that’s left is the arranging of these options in the order you would want to use them when the time come to ask for money. When you’re researching these money sources, you’ll save time by noting the “contact” deal with when you want money, and whenever possible, by developing a working relationship with these people.

If your documentation section, you should have a credit report on yourself. Use the Yellow Pages or check at the credit department in your bank for the nearest credit reporting office. When you get your credit report, look it over and take whatever steps are necessary to eliminate any negative comments. Once these have been taken care of, ask for a revised copy of your report and include a copy of that in your business plan.

If you own any patents or copyrights, include copies of these. Any licenses to use someone else’s patent or copyright should also be included. If you own the distribution, wholesale or exclusive sales rights to a product, include copies of this documentation. You should also include copies of any leases, special agreements or other legal papers that might be pertinent to your business.

In conclusion, write out a brief, overall summary of your business- when the business was started, the purpose of the business, what makes your business different, how you’re going to gain a profitable share of the market, and your expected success during the coming 5 years..

The last page of your business plan is a “courtesy page” listing the names, addresses and phone numbers of personal and business references–persons who have known you closely for the past five years or longer–and companies or firms you’ve had business or credit dealings with during the past five years.

And, that’s it–your complete business plan. Before you send it out for formal typing, read it over once a day for a week or ten days. Take care of any changes or corrections, and then have it reviewed by an attorney and then, an accountant. It would also be a good idea to have it reviewed by a business consultant serving the business community to which your business will be related. After these reviews, and any last-minute changes you want to make, I’ll be ready for formal typing.

Type and print the entire plan on ordinary white bond paper. Make sure you proof-read it against the original. Check for any corrections and typographical errors–then one more time–read it through for clarity and the perfection you want of it.

Now you’re ready to have it printed and published for whatever use you have planned for it–distribution amongst your partners or stockholders as the business plan for putting together a winning financial proposal, or as a business operating manual.

Take it to a quality printer in your area, and have three copies printed. Don’t settle for photo-copying..Have it printed!

Photo-copying leaves a slight film on the paper, and will detract from the overall professionalism of your business plan, when presented to someone you’re trying to impress. So, after going to all this work to put together properly, go all the way and have it duplicated properly.

Next, stop by a stationery store, variety store or even a dime store, and pick up an ordinary, inexpensive bind-in theme cover for each copy of your business plan. Have the holes punched in the pages of your business report to fit these binders and then slip each copy into a binder of its own.

Now, you can relax, take a break and feel good about yourself..You have a complete and detailed business plan with which to operate a successful business of your own. A plan you can use as a basis for any financing proposal you may want to submit..And a precise road-map for the attainment of real success…

You just complete one of the important steps to fulfill of all your dreams of success.

Best Websites For Writing a Business Plan

It seems that nearly everyone you meet has an idea for a new business. The topic usually arises while enjoying a few cocktails with friends or at the company water cooler. Many times the conversation is premised with “You know what they should make…” or “I’ve got a great idea for a business…”. It just goes to show that we all have a little bit of the entrepreneurial spirit within us (some more than others). In reality however few of these wannabe entrepreneurs ever really take action.

Although idea generation is an important beginning process for any entrepreneur, it is merely the first step along a usually long and arduous journey to forming a viable business. If it appears that a person truly believes in their initiative the first question that should be raised is “How far along are you on the business planning process?” Have they conducted market research? Have they forecasted 1st year sales revenues? Projected costs? Perhaps more appropriately, have they written a business plan? For the large majority the answer to the questions above is in the negative. For those of us really interested in pursuing an entrepreneurial life we know the importance of composing a business plan. Whether you are using the plan as a means of seeking funding or already have startup capital in place, a business plan is a great tool for plotting your business venture.

Below are just a few links that will be helpful for those of you who wish to jump into the rather time consuming process of writing a business plan. As you will see, it is not a lack of business plan information that is the issue. The difficulty lies in choosing the best source with the most relevant, helpful content. Many websites may include some information on writing a plan but ultimately are interested in selling software of consultation services. The sites below offer useful and more importantly free information.

SBA – the U.S. Small Business Administration is a great resource for entrepreneurs just beginning and more seasoned small business owners as well.

Inc.com – website for Inc. magazine, basic overview of writing a business plan including structure, common mistakes, and competitor research.

Bplans.com – comprehensive business plan resource including templates, outlines, and webinars

Highland Capital Partners – venture capital firm website but offers sound advice and information for entrepreneurs

How to Write a Business Plan That Works

Key components in and organisation’s success will depend on a great degree on how well you;

  • can gather and interpret information
  • adapt to change
  • manage staff and resources
  • promote your business
  • look after customers and more.

This is where forward planning can help you.

A colleague once told me that ‘even a bad plan is better than no plan at all’. A bad plan at least shows that you have given some thought to the direction you want to go in.

A good plan takes time and effort, especially the first time you do one and many business owners or operators think they don’t have the time, or don’t see the value in it. But believe me… it is worth the time and effort!

It is an opportunity for you to build solid foundations for your business, based on known facts and these allow you to:

  • be very accurate in your plans and future projections.
  • avoid unforeseen pitfalls and crisis situations
  • spend your money and/or other resources in the most effective way
  • stay ahead of the market
  • make the most of every opportunity
  • be pro active and choose your own course rather than be reactive and follow everyone else
  • stop wasting time, effort and resources on inefficient processes and more

Good business planning involves:

  • looking at what you’ve done in the past few years
  • looking at where you are now
  • drawing conclusions from the above two points
  • based on that information determining your objective for the coming year/s
  • setting key strategies to help achieve the objective

Analysis of Past Performance

In this section of a business plan you look at the past year (or two) to take a good look at what worked and what didn’t. Where you came from is every bit as important as where you are going. You need to look at:

  • What promotional activities did you run- for example did you have any discount deals, special offers etc?
  • What worked? What didn’t?
  • Why did the activities work so well, not so well – find the reasons
  • Advertising campaigns
  • (again) What worked? What didn’t?
  • Why did the campaigns work so well, not so well – find the reasons
  • What mediums did you use? (ie Newspapers, magazines, radio. List the actual companies you used as you may have used a number of different ones.)
  • How much did you spend on them?
  • Which ones generated enquiries and which ones didn’t?
  • Did you keep track of the enquiries, if so, what were the results?

Keeping statistics on where enquiries come from can help you to use your advertising budget in the most effective way. There’s no point in spending a lot of money on advertising on television, for example, if most of your enquiries come from newspaper ads or word of mouth. Asking customers where they heard about you and keeping a record is the best way of determining advertising effectiveness.

  • Were there any noticeable or unusual increases or decreases in your business? If so, why did they happen?
  • Were the increases/decreases at any particular time of the year, or did they affect any particular product or service. If so why? Do a detailed analysis of product and service sales. How many of each individual product or service did you sell? Break these figures up by month (as shown in the graph above) as this will, again, show up regular high and low periods which will then allow you to forward plan. For example in high sales periods you know that you will have to order more stock and put on more staff whereas in low demand periods you order less. You can plan for these peaks and troughs in advance… because you have statistically shown that they are coming. An example of a detailed sales analysis is shown on page 15.
  • Did your competitors do anything that impacted on your business? If so, what was it?
  • How did it affect you?
  • Are they likely to do it again?
  • What did you (or could you) do about it?
  • Budgets - income and expenses. This is extremely important and we will look at this in detail later in the document. Over the years these statistics will build an extremely accurate picture of your expenditure habits and sales that will show trends. With this information you can anticipate what is going to happen and proactively avoid any pitfalls or take advantage of upcoming opportunities. You can forecast – with a fairly high degree of accuracy – how much you will earn and spend in the coming year. While you might have an accountant to look after the “book keeping” for you, it is essential that you know exactly where your money is being spent and what your income is made up of.

The answers to these and any other questions relevant to your particular industry and business will give you a solid base upon which to build your plans for the future. Knowing how you got to where you are now can show you where you went right… and where you went wrong and gives a clear

Conclusions

Looking at the above information – what conclusions can you draw? For example:

  • What will you do again next year and why?
  • What won’t you do again next year and why?
  • What will you do differently and why?
  • Were there any lessons to be learned?
  • What were they?
  • Did you spend money on areas that were unsuccessful / unsuccessful?
  • How much?
  • Was this money well spent? Why / why not?
  • Which products sold well / not well?
  • Will you expand your product line?
  • Are there any products you should discontinue?

Overview of Current Situation

It is very important to have a firm grasp of your current business environment. This is where you look at what is happening around you right now. Things that are happening that could potentially have an impact on your business. This will:

  • give you a clear idea of any issues that might get in the way of your plans in the foreseeable future
  • give you the opportunity and the time to take proactive action on any of these issues. This is much better than having to “react” to a change or problem that you didn’t anticipate.

It’s like having a high powered torch in a tunnel as opposed to a match!

A good overview of your current situation will involve looking at:

  • the business environment in which you are operating
  • your strong and weak points
  • what your competitors are doing.

Business Environment Analysis

What exactly does “business environment” mean?

At its widest view point it can mean the sum total of a number of external and internal factors that affect you and the organisation you work for.

External factors could include such things as:

  • Political issues. The stability of the Government can have a dramatic affect on the country’s or state’s economy.
  • Legislative issues. New legislation can have an impact on your particular industry.
  • Economic Trends. Are people spending money? What are they spending it on and so forth.
  • Social Trends. What’s in.. what’s not? Safety & security issues as well as environmental protection issues etc are considered here.
  • Competitors. What is your competition doing and how does that affect your business?
  • Technology. This is an area that is constantly changing and can have quite an impact on the way business is done.

Also known as a PLESCT Analysis this is a thorough look at the world around you and the influences various issues may have upon your customers, suppliers and therefore your business. Doing this type of research means that you should not be caught unawares by new legislation, trends, changes or advancements. PLESCT stands for: Political, Legislative, Economic, Social, Competitor and Technology and looks at each of these sectors and how they may affect you positively – or negatively .

Doing a PLESCT Analysis

Some of the issues to consider when doing this analysis can include such things as:

Political issues. Here you should look at the general political stability of the country or state.

  • Is there an election due? People get nervous around election times and are cautious about spending / investing their money
  • Has there just been an election? In which case is the new government likely to make changes to the status quo – and if so, how will this affect you?
  • International economic and social environment – how stable is the situation?

and so on….

For example changes in government often have an impact on businesses dealing with health, education and employment as existing programs are often changed or discontinued after an election, or new programs are introduced. International economic crises often have a big impact on our own market as does the increasing threat of terrorism or conflict situations.

Legislative issues

  • Have any new legislations been passed / or amended that affect your industry?
  • If so, what will you have to do to comply with them? How will these changes affect:
  • staff?
  • resources?
  • policies and procedures?
  • costs?
  • Do you need to obtain any licenses or permits?

For example all staff working in the childcare industry, or dealing with under 18′s, must have a Blue Card, while industries dealing with tobacco or alcohol have very strict licensing laws.

Economic issues and trends

  • What is the current economic climate?
  • Does the current international climate have an effect on us?
  • Are people spending more / less money?
  • What are they spending it on?
  • Are they likely to spend it on your product or service?

For example, the cost of living is currently rising faster than wages – things such as petrol prices and interest rates are increasing rapidly and people are thinking twice about spending their hard earned money.

Social issues and trends

  • People will often be influenced in their purchase decisions by “what’s IN”, or may wish to keep pace with friends
  • Environmental issues such as water saving, conserving energy and so on can have an impact on people’s purchasing decisions and so need to be considered
  • Cultural issues also need to be considered – people from different countries and backgrounds have views and customs that may dictate how they make their purchasing decisions.

Competitor information – This is a very important part of your business environment analysis – you need to know as much as you can about your competitors. Questions you need to ask are:

  • Who are they?
  • Where are they located?
  • How big are they (compared to you)?
  • Do they have any affiliations?
  • What are their promotional activities?
  • How do they advertise?
  • What do they advertise?
  • How does their product range compare to yours?
  • How do their prices compare to yours?
  • How does their service compare to yours?
  • What impact do they have on your business?

The answers to these questions will give you an overview of how you compare to them and what you can do to improve, and therefore win extra business.

If practical, a product/price comparison grid is an excellent way of keeping an eye on how you are faring against them.

It’s also a good idea to also do a SWOT Analysis on your main competitors (next section) – you need to be able to:

  • counter their strengths
  • take advantage of their weaknesses
  • take advantage of the same opportunities and
  • maximise their threats.

Technology -

  • Is there any new technology available that will have an impact on the way you do business?
  • Is it viable for you to adopt this new technology from a cost point of view?
  • Can you afford not to adopt this new technology from an efficiency point of view?
  • What impact does the internet and electronic means of communication have on your business?

Internal influences also need to be taken into considerations and could include:

  • The overall economic state of your business. Is it doing well or not?
  • Change of ownership or management of the business. This could have a big affect on the internal workings of the company and the company morale.
  • Change of direction for the business. Are you offering new services or products?
  • Updating or upgrading of the business. New premises, new equipment etc.
  • Down or Upsizing. Are you laying off staff or hiring more?

Looking at the PLESCT Analysis and your internal influences in detail will give you a firm understanding of what is going on around you, and will help you:

  • avoid unpleasant surprises that could be costly and damaging to your business
  • stay a step ahead of your competitors
  • help you take advantage of new opportunities quickly
  • minimise the impact of negative trends…..

SWOT Analysis

A SWOT analysis allows you to have a deep down, honest look at your organisation in terms of its strengths, weaknesses, opportunities and threats and to look at ways to make you stronger.

Strengths

What are your organisations strong points? For example:

  • Do you have a great location?
  • Is it easily accessible?
  • Is it a long established company?
  • Does it have an excellent reputation?
  • Does if offer anything unique?
  • Do you have a lot of repeat business?
  • Are your prices the best?
  • Are you a market leader?

and so on.

Weaknesses

What are your organisations weaknesses? For example:

  • Is it a newly established business and not yet well known
  • Is the infrastructure in the surrounding area poor making it difficult for customers to get to you?
  • Are there any problems with suppliers or staff?

and so on. A point to remember is that not all weaknesses are negative and could be viewed as opportunities for improvement.

Opportunities

What opportunities are there that you could take advantage of? For example:

  • New legislation opening new markets to you
  • New housing or business developments bringing new customers into your area
  • New technology that will make your production or processes more efficient
  • Introduction of new product or service lines that will increase revenue

and so on.

Threats

What things could stop you from achieving your goals? For example:

  • A new competitor in the marketplace
  • A change in legislation that will mean major changes to your business practices.
  • Re-zoning of your area or roadways changing and taking customers away from their current routes (where you are located)

and so on.

Conclusion:

When looking at your SWOT Analysis what areas need to be addressed?

  • Strengths – what can you do to capitalise or maximise on them?
  • Weaknesses – what can you do to minimise or negate their impact. Which of them can be turned around to become a strength?
  • Opportunities – what do you need to do to take advantage of these opportunities? How can you ensure you get your slice of this opportunity?
  • Threats – what can you do to avoid or minimise the impact of the threat?

The answers to these questions will form part of your business plan.

Objective for Next Year

Having looked at your past analysis and current business situation you should now have a solid grasp of your business and where it needs to go to remain successful. Your endeavours to date will now give you a clear direction – or objectives – to aim for in the next one to three years.

One overall objective will have a number of Key Strategies – each of which will, in turn, have a set of tactics designed to help achieve each strategy and therefore the ultimate goal.

  • Your objective is WHERE you want to be in a given period of time (ideally 1 – 3 years0
  • Your Key Strategies are WHAT you need to do to achieve the objective and
  • Your Tactics are HOW you are going to go about actually making it work

Key Strategies

The objective, as stated, is where you want to be. The key strategies are the issues you need to address in order to achieve the objective; WHAT needs to happen. For example if your objective is to increase your revenue by 10% over the previous year, then typical key strategies could be:

  1. Introduce a new product range to fill an identified market need
  2. Decrease expenditure by 15%
  3. Increase your customer base by 10%

All of which would work towards achieving the overall objective.

Obviously strategies will be determined by your own business and industry needs, so think about the things you need to do to achieve your goal.

Tactics

Each strategy will have a series of tactics (or steps) that need to be taken to make that strategy work. As mentioned, these will outline HOW you will go about each strategy. For example.

Key Stratey 2: Decrease expenditure by 15%

2.1 – Review all current suppliers to ensure we are getting the best product for the best price

  • 2.1.1 Offer tender opportunitities to new suppliers
  • 2.1.2 Research new suppliers via web, phone calls etc
  • 2.1.3 Review all suppliers on an annual basis.

2.2 – Introduce new procedures regarding unnecessary printing of emails and other documents to decrease amount of paper being used

2.3 – Re-use single sided documents as scrap paper / memo pads to save paper

2.4 – All electrical equipment and lights to be turned off when not in use

2.5 – Review discounting policy and determine if this could be replaced in a more cost effective manner

2.6 – Review consumable usages

and so on.

Once again, the tactics will depend entirely on what strategies you need to fulfil and should be as detailed as possible. These tactics will form part of your action plan. If there is a cost involved, or extra resources, then detail them here.

Sales Forecast for Next Year

Forecasting is neither as scary nor as complicated as it sounds – if you keep accurate sales records!

Sales forecasting means making an “educated” guess on how much revenue you will earn in the coming year and for this reason accurate records are essential and indispensable. You need to know where your sales came from – by product or service and even by month or week of sale. This may seem overkill but eventually this data will give you a complete and detailed picture of exactly how your business is performing. For example spikes (up or down) in sales figures don’t happen for no reason – detailed statistics can show up these spikes which might be due to such things as:

  • Promotional or advertising campaigns
  • New trends
  • New products
  • Competitor initiatives
  • Seasonal fluctuations
  • Economic climates and so on….

For example – the Tourism Industry is very much affected by high and low seasons. They usually know well in advance when demand will increase or decrease. Travelling to Europe in their winter is low season and demand is not as high as going in their spring or summer time. Knowing this tourism operators can plan for these periods by developing specific products designed to increase sales and take advantage of increased demand in high season. They can also accurately forecast revenue because they have a solid knowledge of who their customers are and when they travel on a month by month basis.

The same may well apply to your own industry.

A review of past years sales statistics can give you an excellent idea of how your sales happen on a month by month basis. You can read the trends like a story – allowing you to estimate with a large degree of accuracy what sales you can expect to make and know how much you will need to spend in the next year.

But what good does all this do you in forecasting? When you have collected this data for a number of years you can start to build up a picture of:

  • peaks and troughs in your sales
  • popular and less popular products,
  • popular times of the year
  • effects of advertising and/or promotional campaigns and so on

Sales figures rarely drop (or increase) for no good reason.. the trick is to be aware of what is going on around you so that you know why increases or decreases happen. This is where your PLESCT and SWOT prove valuable.

Armed with all this accurate and well researched information you should be able to make a reasonably accurate prediction on how many of each product you will sell in the coming year.

Action Plan

Points for your action plan will come from the tactics. By putting them into an actual action plan, detailing what needs to be done, by whom and by when, you can ensure that each task (or tactic) is done on time and will therefore take you that step closer to reaching your objective.

That, ladies and gentlemen, is basically it!

By following these logical steps you can:

  • gain a greater awareness of the environment in which you operate
  • avoid major pitfalls that may come your way
  • realise your strengths
  • overcome weak points
  • take advantage of opportunities that are presented to you and much more

Templates for building a better business plan can be found on www.lptraining.com.au