Whether you are creating a new business—and thus a new business plan—or you are just recrafting a blueprint for an existing business, there is still much to learn about how this plan is a living, working entity that can serve as a guide to ultimately manage a thriving business in the year ahead.
In order to create a solid business plan for your organization, you must first start with the basic components of the strategy. Let’s walk through each of the vital steps to creating a business plan.
Step 1: Executive summary. Start at the very beginning, with a description of your business. This might include your goals, financials, products and services, strategies, and your market. Keep it brief, yet specific.
Step 2: Product and services. This is when you want to go into a bit more detail. Start with the problems or pain points that your customer faces—and identify how your product or service can solve this challenge. Customer research can be included in this step, as those insights are very helpful. Also, indicate if you have any IP (intellectual property) like trademarks or patents.
Step 3: Your market and customers. There is much to consider about your market. Is it big or small? Is it growing or contracting? What are the key trends in your market to watch? What is your position in your market? Are there segments in your market? Is retention of customers high? Is it possible to upsell and cross-sell? Is there a risk of consolidation? Write it all down and list it all out so you can better understand your market and your customers.
Step 4: Competitors. Identify who your top competitors are. What are their strengths? What are their weaknesses? What trends or shifts are happening among your competitors? Is there a new competitor just coming? What opportunities can you leverage to grow your market share?
Step 5: Sales and marketing. Now that we understand the market, product and services, and competitors, we must also consider how we will market and sell to the customers. This is a key step in order to grow the business. Consider specific marketing strategies if you plan to launch new products or services. Also, you may want to consider pricing strategies as well.
Step 6: Operations. Identify how operations is or will run in your business. Also, consider major investments that may be needed to meet demand. Will investment in a new piece of equipment, as an example, increase productivity? By how much? Will it ultimately lower costs? By how much? Or will it generate new customer demand? By how much? The more you can quantify all of this the better. Also, in this step, you may want to consider any improvements that are needed in the supply chain in order to meet demand.
Step 7: Milestones and metrics. Looking at the months ahead, what are some key numbers you want to hit or exceed? Keep in mind year-over-year trends. Hitting these will help keep your business momentum rolling forward.
Step 8: Organizational structure. In this phase of the planning process, we must consider the overall organizational structure of the business. Create a description of your leadership team. Are there new hires you made in the past year, or will you need to make in the year ahead? Write that down. Did you experience or do you expect turnover of executives? This is something to consider. Will you need to shift responsibilities to get more done with the same staff? Will technology change the organizational structure? These are all key things to consider.
Step 9: Financials. The final step is to identify revenue, profit margin, net income, debt, cash flow, planned capital expenditures, and balance sheet. It is essential to track all of this in order to identify debt to income ratio and any new sources of funds that might be available. Don’t skip this step. It is crucial to ensuring a successful business plan.
This 9-step process will help you craft a blueprint for your business. Your business plan is the launching off point for a new business or an important step to continually improving your existing business. If you already have a team, make sure to go through this process with them, so everyone understands the top priorities and market objectives for the business.
