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Part 2 : What To Include In A Business Plan

Following on from yesterdays business strategy post on the justification for creating a sales business plan today we look at the contents:

Executive Summary

The Executive Summary is the very overview of your business, it should give the reader a true feel for what you are doing, what you hope to achieve in your first year and what financials you expect to return in the first year.

Remember, the executive summary should be written last, but is the first thing you or anyone else reviews when coming back to your business plan.

Include in your executing summary:

Structure of the business (sole trader, PLC etc.)

Keep this short and to the point, this is simply the legal standing of the business, do research into why you want to set up as which type of company and simply state the legal structure. For example, if a LTD company, who the shareholders are and what structure that is under.

The Why, What and How of your business.

A very quick overview of the work found later in this document of why you do you what you do, what it is you offer and how you deliver this. This will be covered in the within your sales business plan document, but also becomes your value proposition to customers.

Expected financials of your business (overview)

Keep this to the point, covering the headline numbers.

  • Year one turnover
  • Annual outgoings
  • Return on sales

The Overview Of Your Business

Legal Structure of the Business

Set out the structure of your business, who will own it, what share they will have and what type of legal entity it will be. For support in trying to understand what this means, review the UK Governments blog on choosing the right business structure. This gives a great overview of what the different legal structures are available and which to use when. 

Why, What and How

One thing we always try to understand about our customers is the Why, What and How, for more information on defining this, take a look at this incredible (and now infamous) video from rightly lauded business thought leader Simon Sinek

Key Personnel

We always include a list of key personnel, even if it is just the entreprenuer. Don?t forget to write why the key personnel are in the business and how they contribute to the business.

Market Segmentation

What is a typical customer?

Define your typical customer, what do they look like and where can you find them?  A few pointers on this include reviewing:

  • Are they a business or individual?
  • Where are they geographically based?
  • What is of value to these customers and how does your why, what and how align to this?

If you have existing experience of selling to this customer type, it is always of benefit to outline your experience in this sector. Perhaps you have worked with these customer types for another business, or maybe you have started selling already to this type of customer.

Different Strategies for Different Segments?

Perhaps you have different product offerings for different market segments, for instance ? you may offer a one of fee for one customer segment, whereas another segment may be on a subscription service. If this is the case, ensure you outline the varying segments and offerings to each.

Purchasing Trigger

What is the purchasing trigger for your customer? This will help in aligning marketing to your customer requirements and where to focus for new business.

Market Research

What have you found from market research?

Market research can be conducted through desk and primary research to understand the market that you are looking to interact with. Thinking of your customers and services, try to articulate within your sales business plan :

  • Who are your competitors, what is their USP and how do you compete?
  • What are your customers looking for, have you spoken to them or conducted research with them, what were the findings?
  • What are the price points being charged, where will you position yourself comparatively and wh

Competitor Analysis

Understanding your closest competition.

This doesn?t need to be geographical closeness, think about your value proposition, what competition is there from a this perspecitve also? What are these competitors doing well, what could be improved on? A good tool to use for this is known as a SWOT analysis. Think about your competition in terms of their:

Strengths

Where are the competition doing well, what elements of their business do you think are positive and what can you use as part of your Why, What and How.

Weaknesses

Are there elements where your competition not doing so well, is their marketing not targeting a specific segment to their full potential, or not at all, can you improve on this? Think of how to target these weaknesses to your benefit.

Opportunities

What opportunities do the market positioning of your competition present to your business?

Threats

Are there any threats your competition could offer in the future and how can you mitigate this?

Marketing Strategy

Marketing Positioning

Where are you going to focus marketing within your sales business plan, will it be in a bricks and mortar establishment, will you be marketing through an e-commerce website, on amazon, through eBay? Consider whether you will spend money on Google ads, joining accreditation companies, or local chambers of commerce. 

Phasing

Remember not all marketing has to happen straight away, when will you phase these elements of marketing, is a website more important than Google My Business? Conversely, does Google My Business come before eBay selling, doubtful, but these are considerations you will need in your business plan.

Budgets and Importance

Put together the budgeting for each element of the marketing plan, what will it cost to market your business at the rates outlined in the business plan? If the revenue isn?t coming through, what is the first to be removed from the plan, if revenues increase, what elements of the marketing budget would be increased?

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Financials

This element is one that entrepreneurs always seem to shy away from, but it is one of, if not?THE?most important part of the business plan. This should be given a monthly breakdown as well as a unit breakdown of sale price, which can be done whether you are selling hourly, daily or weekly consultancy such as we do, or toothpicks.

Fixed Costs

Tally together all of your fixed costs and run them through a document on when they will fall, for example insurances will generally fall once a year, whereas rent, or website hosting may be monthly. Remember fixed costs are ones that exist in the business and do not change depending on how many units you sell.

Variable Costs and Unit Material Margin

Variable costs change depend on how many units you sell, so for example, a variable cost will be the material for your toothpick machine, or travelling to a clients site for consultancy services. For a simplistic business, I will usually pool all variable costs into a unit margin calculation and then pull through the number of units sold into the overall business plan by month against fixed costs.

Profit and Drawing Down

Once you have these projections, pull it all together to deliver a profit for the business. It is at this stage that we usually look at avenues to draw down the funds from the business, depending on legal structure.

Keep it Simple

We always advise new business owners to take care with these numbers, but not to try to make them too complex. When we put together financial projections, we draw on years of experience and financial training to outline the models in the fullest we can. In a new business, this is not always absolutely required and bad financials that are poorly done and overly complex can be worse than simple numbers without over complication.

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