How to Write a Winning Business Plan

[Updated on 12/10/08]

Before you start your business adventure, you should have a business plan as the blueprint of how you want to go about it. A business plan provides you and your team with the guidelines and the execution plan to materialize your vision. Your business plan should span over three to five years, or even longer. A good business plan also makes it easier for you to raise capital or discuss your business with potential partners. A thorough plan includes a "plan B," just in case plan A does not work out as you expected. Keep in mind that a business plan is a live document that can start as a draft and evolve over time. In fact, it is very important that you put in place a list of checkpoints or milestones for periodical reviews and revisions.

Here are some key elements for your business plan:

1. Mission Statement, Business Goals and Objectives - What is the mission do you want to achieve via your business adventure? What are the goals and objectives following the mission statement? Your mission statement and business goals/objectives should be loud and clear as well as coherent. Be specific, so people who read your business plan immediately are set in the correct context before reading further on about details.
2. Market Analysis and Strategies - The term "market" refers to customers. You have to spend time studying the market and identifying your customers. Who are your potential or targeting customers (using profile information, such as, geography, age, gender, income, occupation)? What would they buy (using factors, such as, features, packaging, volume)? And, why (e.g. brands, price, motivation)? Based on the analysis, you'll be able to identify the market segments and estimate their potential sizes. If you are a new comer in the market, consider growing from a niche market rather than the general. You will have to explain how you come to the conclusion that opportunities exist there. How big is the opportunity window (e.g. one or five years)? Are there any competitors? How big are they? What strategies do you plan to deploy to reach out to your prospects and compete against your competitors? For example, your top-down or pushing marketing strategy would be to develop close relationships with your partners and value-added resellers (VARs). Your bottom-up or pulling marketing strategy would be to raise the awareness of your prospects via TV commercials. In any cases, you must be customer-focused and market-driven to succeed. Analyze customer behavior changes and watch out for the trend breakers (e.g. climate changes and rising oil prices). You must be loyal to your customers, before they become loyal to your business. Don't hesitate to reward loyal customers.
3. Operation Plan - This section describes how you plan to operate the business. Is it a local shop or an on-line store? If the latter, how is the site going to be hosted? How big is the team? This is the place where you put down all the implementation details of your business. How do you run the business to achieve both effectiveness (i.e. do the right things) and efficiency (i.e. do the things right)? To be effective, you need to find the right approaches to solve the problems or handle the challenges. To be efficient, you have to focus on crisp execution and performance optimization. Exercise your best judgment knowing the strengths and weaknesses of your business. Lastly, timing is critical. For every small business, time-to-market is always at the top in prioritizing numerous of daily tasks, especially when the opportunity window is small or approaching.
4. Financial Plan - Starting a business takes patience and persistence. Your business plan should at least span over three to five years, like I said before. You should lay out the plan of how to raise the capital. Based on your operation plan, try to answer the following questions. What are the costs of the goods? How much in expenses for salaries, equipments, and utilities will you have? Do you plan to get a loan? How much is the loan amount, the interest, and the related expenses? Or, are you looking for any venture funding? What is the estimated operating profit? Carefully project the revenue your business is likely to receive. Be prepared that your business is not likely to have any substantial profits any time soon especially during the economic down turn. Consult your financial adviser or accountant for proper tax planning and accounting practices.
   
5. Milestones or Checkpoints - Your business plan should include checkpoints, for example, every three or six months. You have to set quantified and measurable objectives for each checkpoint including the financial goals. At each checkpoint, you will review your progress and financial situation to see whether you have to make any adjustments to your original plan. I also recommend you do it with your family members, friends, or business partners who can give you objective opinions. The intention is to have an honest look at where you are and make sure you are on track according to your business plan.
   

A few final words about a winning business plan

Believe me, you do not need an MBA degree to set up a business plan. You can find useful information in books, such as, Business Plans for Dummies (the link is included at your right for your convenience) that contains in-depth discussion of every aspect of business planning. You can find very useful information at U.S. SBA (Small Business Administration) web site. SBA is a government organization whose main charter is to help small businesses. They also provide various workshops for small business owners including writing their business plans. Keep in mind that a long business plan is not necessarily better than a shorter one. Remember, a winning business plan is to get your points and ideas through whomever you will be talking to about your business. You may feel it is bureaucratic and time-consuming. But, in my experience, you will be rewarded for the time you spend. If necessary, you may always seek professional help.

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