How to make a business plan to produce effective results ?

One of the most difficult and time-consuming processes facing the small business owner is the creation of an effective and comprehensive business plan. Business plans differ in size and scope depending on the type of businesses involved as well as the operating history of the small business. This article will describe the process of organizing and producing an effective and comprehensive business plan for a small business. In addition I will describe how a prospective small business owner can beat the odds and use this business plan to help their small business succeed.

The first decision for a prospective small business owner is to make the choice of a type of business to get involved in. Both product and service suppliers can be adapted as a small business. However before you choose your product or service, there are several items you should keep in mind. A prospective small business owner should attempt to select a business that they have some degree of knowledge. Considering the substantial barriers that a small business owner can face, a lack of knowledge of your chosen area of business can be insurmountable. Ideally a small business should be selected that is simple to understand and inexpensive to run, and within the owners area of expertise. Many small businesses however are not.

 

The first action taken in the creation of a small business is to put together a comprehensive, high-quality business plan. A business plan is a summary of the small business owners operational, financial and marketing plans as well as a detailed description of the backgrounds of the key personnel that will form the management team of the proposed business. The importance of this document can not be understated or underrated. A well researched and thoughtfully created business plan shows that the prospective owner is serious about their proposed future venture. A poorly constructed or sloppy business plan reflects poorly on the future owners and shows that they are either not well versed in their business venture, or just too lazy to care about the venture. A business plan that is well researched and organized should act as a blueprint for the future activities of the business, as well as a strategy of implementing of the future goals of the business. The business plan should also include a contingency strategy in the event the business must peruse alternative plans in order to adapt or survive under uncertainty. An effective business plan should be like a magnet and be able to attract venture capital from prospective investors

 

The business plan should be very comprehensive in scope and should include a mission statement (the purpose of the company), the goals and objectives of the business, as well as some financial information. The4Ps of marketing should also be described in detail, that is, Product, Place, Price and Promotion as well as a detailed competitive analysis. A business owner should always tailor the FINAL version of the business plan to their own personality. A prospective small business owner may be requested to describe in detail their business plan on various occasions. If you did not write your own business plan or used a standardized program to create this plan you will come across as either lazy or having a lack of concern or knowledge about your business which can both be fatal errors when you present your plan to ” outsiders”.

 

The first step of the comprehensive business plan is to state the mission of the business. This can be as simple as saying “I would like to sell flowers in Brooklyn for a profit”. This is a relatively basic and broad statement that merely states the company’s purpose and future goals. In addition, it is recommended that prospective small business owner prepare a short executive summary that clarifies and highlights the key points of the business plan to prospective investors. Investors and financial groups that loan money to small businesses have notoriously short attention spans; therefore an actual business plan should not be too long or too short. Ideally it should be between10-50 pages in length, depending on the complexity and operating history of the proposed business.

 

The second part of the business plan should include a detailed description of the proposed (or actual) business. This portion of the business plan should include the type of business form used (partnership, corporation etc.) as well as the type of business (merchandising, manufacturing service, franchise or other). A statement of the potential opportunities for growth should be included. The hours of operation should be included as well as the proposed method of servicing your customers.

 

The third step is the description of the company’s history. Many prospective companies will be startups and therefore will not have much of an operating history. It is OK to be in a startup as long as the rest of the business plan is strong and focused. If the company is not a startup, then a description of past history, operational as well as financial, future goals, and the method of implementation are warranted.

 

The fourth step that must be considered while constructing a small business plan is product or service being offered by your company. As easy as this sounds, there can be a great difficulty in selecting a product. A description of how the product or service you intend to offer (or are) offering will benefit the consumer should be included in the business plan. A description of the anticipated demand for your product or service should be included as well as potential cash flow from your product or service. One of the primary difficulties a small business faces is the type of product or service they will be selling to the public. In the case of a service you certainly do not want to be in an area where many other companies offer the same service as you do. This type of over saturation can lead to cutthroat competition and increasing costs to remain competitive (as we will describe later an in-depth comprehensive competitive analysis must be performed before deciding on the choice of a service or product for your company). As far as the choice of a product a prospective small business owner may choose to market a common product under a license from a third party or may want to become a distributor of one or more existing products. If possible a prospective small business owner should choose a product or service that they are familiar with or have experience with and they should attempt to select as simple a product or service as is possible.

 

When problems arise is often where the product being offered is new or completely unique to the marketplace. Most small business owners seek to protect a new product against potential theft by competitors. A common but at times misguided way of accomplishing this task is to seek a patent from the U. S. Government. A patent is an expensive and time consuming process that more often than not requires the help of an attorney to accomplish. In addition ALL patents require a detailed description of the product and how it operates. (ALL of these product descriptions are public information that is available at the website www.uspto.gov .) As a matter of law patents are protected for only20 years and a new patent can be issued for a similar product that has a “material change’ from your product. What is a material change? It depends on what a judge thinks. In addition the cost of defending your patent if it is infringed upon is yours. Many smaller businesses may not have the capital to go through a protracted defense of a patent especially against a gigantic company. A better and far more workable idea may be to seek a non disclosure/ non compete contract from your current employees. What this states is that all the employees that sign the agreement are bound to keep the companies designs confidential and if they leave the company they cannot compete against your company in your industry for a reasonable period of time. This type of agreement is easy to enforce and can be easily drawn up and executed. If a company has a catchy logo it can seek a trademark for this logo. If the company has a nice jingle or a song that can be used to advertise this product then the company can seek copy write protection for this song or jingle. As a rule this is easier and cheaper to get then a patent and the protection is much longer (at least75 years).

 

Another common problem that occurs with a product for a small business is” How do I produce this item?” If it is a small business that only needs a small amount of this product then it may be able to produce this amount on premises. However, if larger quantities of this product are needed then it may be necessary to find a way to manufacture this product in another location. As a general rule strangely enough small businesses usually seek foreign producers for these goods.  Many assume that it is cheaper to produce abroad. This may be true, but the overall quality of foreign produced goods, along with the additional cost of transportation must be considered. In addition if there is a problem in a foreign country with the production of your goods how will you solve this problem? A better idea is to produce these goods domestically, and, if possible, locally. The advantages of this are myriad. The quality of the finished good is usually higher domestically. Transportation costs will be significantly less and if there is a problem it can be corrected more easily than in a foreign nation. However the best advantage to the small business may be in part psychological.  Post9/11 customers perceive that products “Made in the U.S.A” are better than goods produced in a foreign country. This bolsters a feeling of patriotism and helps to protect domestic jobs. In addition, if possible, it may be advantageous to produce these goods as locally as possible to your headquarters. This is socially responsible behavior, stating publicly that you are employing people from, and supporting your local community.

 

However the first question a small business owner would ask is how do I get a potential manufacturer locally? In that regard it is a good idea is to contact the union that covers the area that your product is in. Given the fact that many jobs are being exported overseas unions will now bend over backward to help a potential customer find the right manufacturer. If that does not work then a trade association in the area of your product can be helpful in getting you started. A small business owner may also find that there may be significant incentives available to produce products locally. In NY as well as other areas there are Economic Development Zones available. These EDZ are economically disadvantaged areas in and usually around an inner city. Doing business in an EDZ can create significant advantages for your business. Companies that move to or expand in one of10 EDZ in New York City (among those available are Far Rockaway and South Jamaica  in Queens, East New York, The Brooklyn Navy Yard and Southwest Brooklyn among others) may be eligible for significant incentives. Among these incentives are wage, sales, investment and real property tax credits as well as discounted rates on utilities. In order to qualify for these incentives a business must either net new investment or job growth in New York State. Further information on this worthwhile program is available at http://home.nyc.gov./html/sbs/html/ez.html. Based on the available incentives and the other advantages I listed before, I strongly recommend that a small business consider producing their products domestically and if possible locally.

 

Once this is settled, the next decision that the prospective small business owner faces is the location for the companies physical location .This is, at times, a difficult and emotionally charged decision process. Most business owners do not conduct enough competitive analysis to correctly determine the place they would like to open in. Most small business owners look for the most glamorous and densely populated areas to open in. In New York City, Manhattan is a favorite of new small business owners even though it may be prohibit ally expensive to open there. In addition the competition in Manhattan may be much greater than the outlying areas. I have found that business is like a battle, it is best to establish a safe “beachhead” before you move out into more dangerous territory. Small business owners would be better off starting up operations in an area that they are familiar with. In a “home” area an owner may have contacts in the local community and they will be known to their customer base. In addition if there are problems with the business they can adjust operations more quickly in a familiar area than in an unknown environment. There is no shame in starting off small in your home area and considering expansion later if the business is successful. Many small businesses are also dependent upon a steady flow of traffic through the area of the business which provides prospective customers for their goods and services. For those types of businesses it is vital to conduct a head count analysis (the number of customers that pass through in a given area in a specific period of time) which gives the owners a good idea of the amount of people that move through a given area at a particular time of day. Therefore it may be important to place this type of business in a heavily trafficked area that can provide the necessary customer base.

 

Another consideration for the selection of a product or service is the potential barriers to entry into the marketplace. Do you need a high degree of specialized training and knowledge to use the product such as with some high tech electronics? Do you need a specialized license to do business that may require years of training such as with a doctor or lawyer? If you are involved with food preparation you and your employees must take a food preparation training course before you can open. Almost all businesses require licenses or permits needed to operate and there is quicker way to fail then not applying for, and getting the necessary paperwork from both the city and state and other municipalities before you open up. There are some businesses that not only require a licenses but may require expensive insurance (such as a car service) before they can open for business. Many businesses will have to have some form of insurance in order to start up not only for legal but for protective purposes. Before you start up a small business you MUST research the barriers to entry, determine the costs of these barriers and make sure you are compliant with all of the regulations that govern your proposed business or face the prospect of being closed down due to non compliance.

 

 

A marketing plan may not be at the top of every new business owner's to-do list, but it should be. While a business plan helps map the direction for your company, a marketing plan helps your company understand how to get there by detailing important steps on the road to creating customer relationships

one must be clear and insight views and updates of market.

Firstly to make sure it fits to business needs.

business as business needs a bank loan, customers, investors so as to make it run otherwise the business are going to die.

plan must be realistic that can be implemented, f you plan the plan that can not be acoumplished the plan will be100% fail.

it clear define responsibilities for implantation, you have to be able to identify a single person will be responsible for significant task.

A useful first rule of business planning is to decide what you are actually trying to achieve and always keep this in mind. Write your aim large as a constant reminder to yourself, and to anyone else involved. Keeping your central aim visible will help you minimise the distractions and distortions which frequently arise during the planning process. An increasingly vital and perhaps second rule of business planning is to establish a strong ethical philosophy at the outset of your planning. This provides a vital reference for decision-making and strategy from the start. A strong clear ethical code communicates your values to staff, customers, suppliers, and creates a simple consistent basis for operations which conventional financials, processes, systems and even people, do not address. It is very difficult to introduce ethical principles later into an enterprise, especially when planning shifts into implementation, and more so if problems arise relating to integrity, honesty, corporate responsibility, trust, governance, etc., any of which can have massive impact on relationships and reputation. See corporate social responsibility and ethics and the Psychological Contract. It is easy to address issues of ethics and corporate responsibility when you are the owner of a new enterprise. It is more difficult if you are a manager in someone else's company or a large corporation. Nevertheless ethics and corporate responsibility are highly significant in planning, and strong justification for their proper consideration can now be made. There are now plenty of recent examples of corporations - indeed entire national economies and governments - which have failed because of poor regard to ethical considerations. The world is changing and learning, slowly, but it is, and anyone ignoring ethics in planning today does so at their own peril. A third crucial requirement for business plans is return on investment, or for public services and non-profit organisations: effective use of investment and resources, which is beyond simple 'cost control'. For the vast majority of organisations, whether companies, public services, not-for-profit trusts and charities, all organisations need to be financially effective in what they do, otherwise they will cease to function. Ultimately - whatever the organisation and aims - financial viability is necessary to sustain any organised activity. While it's essential to manage ethical and socially responsible aspects of organisational aims, these must allow for adequate return on investment (or in less traditional and 'non-profit' enterprises, must allow for the effective use of investment and resources, according to the financial requirements of the particular organisation). Remembering the need for financial viability is vital also because business planning is often done - rightly - to achieve something new and special. This tends to focus thinking on creativity, innovation, ambition, quality, excellence, perhaps even social good, etc., which can easily distract planning away from the basic need to be financially viable - and crucially not to make a loss. By treating return on investment as a vital requirement of planning we increase the likelihood that plans will be viable and therefore sustainable. Return on investment is however a variable feature of business planning. It is flexible according to the type of enterprise, its main purpose and philosophy. In a conventional profit-driven corporation return on investment (at an optimal rate) is typically a strong strategic driver for local planning and decisions, and by implication also a basic requirement of the enterprise as a whole. On the other hand, in a business or organization less focused on shareholder reward, such as a public services trust or charity, or a social enterprise or cooperative, return on investment (at a relatively lower rate), may be a requirement simply to sustain viable operations, according to the aims of the enterprise. In the first example, return on investment is the aim; in the second example, return on investment enables some other higher aim to be achieved. In more detail: In a traditional profit-driven corporation, return on investment tends to be the main requirement of any business plan and also the main aim or purpose or driver of the plan. In most traditional corporations return on investment tends to be at the heart of all activities, since typically the corporation exists to maximize the yield (profit and growth effectively) of shareholder funds invested in the business. Planning in traditional corporations at times forgets this basic obligation, especially when a junior manager is asked to 'write a business plan' for the first time. In traditional profit-driven corporations, when a new manager starts to write a business plan or operational plan for the first time (and for some experienced managers also, for the umpteenth time), the manager wonders: What is the aim? What am I trying to achieve? Often when they ask their own manager, the manager has the same doubts. The central aim is usually return on investment.

The first action taken in the creation of a business is to put together a comprehensive, high-quality business plan. The business plan should include a mission statement (the purpose of the company), the goals and objectives of the business, as well as some financial information. Following points must be included in business plan:

1. Comprehensive business plan is to state the mission of the business.

2. Business plan should include a detailed description of the proposed (or actual) business.

3. Description of the company’s history.

4. Details of product or service being offered by your company.