Real World Business Plans

Each business is unique, faces its own challenges to growth, and needs a unique Business Plan. There are templates available which attempt to walk entrepreneurs through the complex business planning process, but they cannot deal with the myriad of real world opportunities and challenges facing today's businesses . R.L. Hasenpflug & Associates works with its clients to build real Business Plans for real businesses.

All Business Plans are built around the same elements. But their scope, order and emphasis will change, depending on each business’ unique situation.

    Executive Summary
    Management Team
    Market Plan
    Technology Plan
    Operating Plan
    Risk Analysis
    Financial Plan

Executive Summary

Despite its name, an Executive Summary is not a summary of the other parts of the Business Plan. It is, instead, the place where you articulate your overall strategy. Do you have a disruptive technology that will displace existing technologies? Have you identified an un-served market? What is the value proposition that makes your idea different and will be the basis for its success? Every successful business has a vision or central strategy, and this is where you must state yours.

Your Executive Summary is also your sales pitch. Whether you need to raise capital or attract partners, you are writing a Business Plan because you need to convince someone to support you. The Executive Summary is where you make your pitch. To be effective, you must understand your audience and their needs, and tailor your Executive Summary around them.

To be credible, a Business Plan should include clearly delineated milestones. Although they will be elaborated in other parts of the plan, the Executive Summary is the appropriate place to first lay them out. 

Management Team

No business can succeed without qualified people. You need a diverse team, one with expertise in the many areas needed to build and run a successful business. Some may be current or prospective employees, others part-time consultants or members of advisory boards. This is the area where you name them and show what they bring to your enterprise. If you are still recruiting key members of your executive team, say so and lay out the skills you are seeking.

Although every management team is unique, there are certain basic functions required by every business. These include:

Chief Executive Officer – This is the person who will be running the business and be its primary spokesman to both customers and investors. Ideally she/he will have a successful track record in the industry and, for a startup, demonstrated experience in managing a startup. At a minimum he/she must understand and support the business strategy, be an articulate communicator and a proven team builder. It is not necessary that the CEO be one of the original founders, but he/she must have their confidence and support.

Chief Marketing Officer – This should be someone with knowledge and experience in your industry or a closely related industry. If you are going after a consumer market, consumer industry experience is key. He/she is not necessarily your chief sales person – that may be the CEO or an outside sales force, depending on the business – but they must be someone who can develop, and execute, a comprehensive marketing strategy.

Chief Technical Officer – In technology-based businesses, this may be the key position and in many cases even the original founder. Depending on the requirements of the business, project management experience may be more important than technical expertise. For businesses in complex technical areas, you may also need to identify other individuals with expertise in specific technologies.

Chief Information Officer – For software or internet-based businesses this may be a key position, assuming some roles traditionally associated with the CTO.

Chief Operating Officer – If the business involves the production and shipment of products, this often overlooked member of the team may be key to success. Today most production is outsourced, often offshore. Although cheaper, more easily ramped up and more flexible, such systems can be complex and require an experienced manager to assure commitments to customers are met.

Chief Financial Officer – This is not simply the business’ chief bookkeeper. It is the member of your management team who tracks progress as you grow, updates your plans as needed, gives early warning of internal and external threats, and manages investor relations. Experience in business planning and startup operations is crucial. If you have an exit plan which includes an IPO, experience in this complex specialty may also be important, although not necessarily as part of a startup team.

It may be useful to include a formal organization chart.  And if you have already identified key outside service providers, i.e., corporate counsel, patent counsel, or CPA firm, you may want to mention them as well.

Market Plan

Every business, even those which are technology-based, must have identified markets for their products or services. Key components of a Marketing Plan include:

Market Analysis – How big is your market? How fast is it growing? What are the key factors driving its growth? What is the nature and size of your key competitors? If you are currently serving this market, what is your share and how has that changed over time? And don't forget to clearly define your target market; do not assume your reader will understand it the same way you do. This last is especially important if you are targeting a niche which hasn't been previously identified.

Sales Goals – What are your revenue goals and expectations, both initially and over the period of the Business Plan? A few years ago accelerating time to market was a key component of many startup plans. In today's more conservative environment, realistic long-term goals are usually more important. 

Customer Analysis – Who are the major customers in your market, their unique characteristics and relative market shares? Who is growing and who is not? What is the value proposition they expect from your product or service? If you have a transformative technology or product, what benefits will it bring to your customres?

Competitive Analysis – Who are the existing suppliers/competitors? What are their strengths, weaknesses, and relative market shares? Be as specific as possible.

Marketing Strategy – Once you have identified your customer base, how will you convince them to purchase from you? Will it be on the basis of price, enhanced functionality, quality, or something else? And how do you intend to get your message to them: through trade shows, advertising, a direct sales force, or some other route?

Sales Organization – This is a discussion of the type of sales organization needed to support your Market Strategy and how you plan to build it.

Media Strategy – If your marketing strategy includes PR and/or paid advertising, you will need to discuss your media strategy, including key differentiators and messages.

International Markets – If international markets are part of your plans, you may want to develop separate strategies in this area. Marketing strategies written for domestic markets seldom translate well overseas.

Marketing Budget – Sales and marketing cost real money. You may want to include specific budgets for these activities.

Technology Plan

Although this section may be omitted from non-technical Business Plans (or incorporated into the Operating Plan), it is a key part of any technology based Business Plan. But it can be difficult to write. You must discuss the benefits of your technology as well as its technical aspects and uniqueness. And it needs to be expressed in terms that support your overall Business Strategy.

If your plan requires the development of new technologies or software, discuss how you intend to accomplish this, including a budget and a timeline with clear benchmarks.

If you have proprietary technology, you need to include a discussion of your intellectual property strategy. If you decide not to pursue patents, you need to explain why. If your plans include manufacturing, development or marketing in foreign countries, you may also need to address realistic IP protection in those challenging environments. 

All of this must be in terms that give the reader a basic understanding of your technology without giving away too much proprietary information. One solution is to insist on non-disclosure agreements (NDAs) before giving anyone more than the Executive Summary. Most VCs will not sign NDAs, however, and small or startup companies normally do not have the financial resources to enforce them even if they are signed. An alternative strategy is to include a summary Technology Plan in your Business Plan while also writing a more detailed version that can shared selectively.

Operating Plan

If you intend to sell manufactured products, whether on a resale basis or of your own manufacture, you must have a plan to produce and deliver them. It must be realistic and adequately detailed to show it has a reasonable chance of working. For a startup, it may depend on outsourcing to minimize costs while maximizing flexibility. Outsourcing may be partially or totally dependent on offshore vendors, although offshoring includes many risks and logistical challenges may offset any direct cost savings.

You need to include a realistic estimate of unit costs, detailed by key components and showing projected changes over time. Identify key vendors if they are pertinent.

One concern, especially if you decide to depend heavily on offshore suppliers, may be protecting your IP. High-tech startups should address this concern directly.

Risk Analysis

There are forces, both internal and external, which can derail even the best plan. Sophisticated readers, especially VCs, expect you to address them. This means a brief discussion of risks, their probability, and how you intend to minimize or contain them.

Specific risks to be address will depend on the assumptions which underlie your Business Strategy. Possible areas of concern include:

Financial Plan

Whether it is stated in terms of sales, net profits, return on investment, or share price, business success is ultimately measured in dollars and cents. Thus your Financial Plan will define your success.

A Financial Plan should include projected Cash Flow, Balance Sheet, and Profit & Loss Statements for the next five years. Although out-years may be based on general assumptions, the first one or two years should be developed with as much detail as possible. Special care must be taken to assure estimated costs during a startup period are as reasonable as possible. It needs to include a comprehensive list of assumptions, which will be the basis for any meaningful analysis by readers of the plan.

If you are seeking funding, include a Funding Plan. This should detail the kind of financing being sought (equity, loans, working capital financing, or some combination of these), the terms being offered, timing of the investment, and payback schedules or an exit strategy as appropriate. You may also want to include projected ROI for equity investors, although most investors will ignore your calculations and make their own.

If your exit strategy includes an IPO, you may want to discuss this in general terms even though it would normally be beyond the five-year horizon of your Financial Plan.

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