Creating a Successful Business Plan – The Contents, Part 2
For our last two posts, we have been delving into Business Plans — both why they are so important, and what should be contained in every business plan. Last time, we started to take a look at those contents, and today, we are finishing up with the last several sections — Business Objectives, Financial Requirements & Securities, Management & Staff, Products & Services, and your Marketing Plan.
If you have missed our previous posts for this topic, you can click here for Part One and click here for Part Two. Today, we will begin with Business Objectives.
Under this heading, provide detailed information about your sales objectives, staffing changes, additional products and services, where the business is headed, and where you’d like it to be in one, two, three, four, and five years.
Note that for these objectives to work, they must be good for everyone — the customer, your employees, and the business itself — and be measurable.
In addition to financial scorekeeping, include methods of tracking technician time, advertising results, customer satisfaction, and demographic trends.
You must develop a realistic road map to the attainment of each objective. These objectives need to be written clearly and concisely, and assembled in an easy-to-read format. Objectives should also provide for the description and attainment of personal goals.
Every business must grow to survive and prosper. Therefore, it’s necessary to establish specific goals to ensure that the business continues to flourish. Areas to consider when establishing business goals include:
- Gross sales and profits, as well as net profits
- Expenses and cash flow
- Increases in hours sold per technician, hours per repair order, car count, average invoice amount, and customer frequency
- The optimum number of employees
- Improvements in the facility itself and its location
- Additional products and services
- Additional shops/locations
Once you’ve established your overall objectives, you’ll need to decide when during your five-year plan you feel they’ll be accomplished. Make a list of each year and the corresponding objectives in those years.
Finally, your business objectives need to provide for a “balance” between your business and personal life. Far too many shop owners get so caught up in the day-to-day running of their business, that they allow their personal lives to suffer as a result.
Financial Requirements & Securities
A financial proposal demonstrates the following to the investor or lender:
- Your shop’s current financial position and it’s expected growth
- How acquired funds will be distributed
- How the funds are to be repaid (most important!)
The financial proposal should always include a current balance sheet, an income statement reflecting the current period and year-to-date, a current statement of cash flow, and comparative financial statements for the last three to five years.
In addition, the proposal should include five-year projections, prepared on a year-by-year basis. These projections must include:
- Startup costs (if applicable)
- Projected income
- Projected gross profits by department
- Operating budget (projected expenses)
- Projected net profits
- Projected cash flow
- Projected equity building
Many lenders or investors know that entrepreneurs often take quite an optimistic approach when preparing their financial projections by overstating the potential. While you should attempt to be conservative, don’t be too conservative! Strike a balance here as well.
Management & Staff
Your management plan — along with your marketing and financial plans — sets the foundation for and facilitates the success of your business. Since your people are your most valuable resource, they obviously play a major role in the implementation of your business plan.
To begin with, you’ll need to provide an organizational chart outlining each staff position, listing the individuals who function in those positions and the reporting relationships. After this is done, compose a few paragraphs expressing confidence in your staff’s skills and abilities.
Products & Services
Under this heading, describe the products and services you sell, and who they’re sold to. Also, include any copyrights or patents you might own.
Marketing is an extremely important part of any business plan. With customers these days routinely shopping prices and services, you’ll need a fully developed marketing plan, complete with a detailed budget. Included under this heading would be a brief description of who your main customers are, where they’re located, their reasons for doing business with you, your competitive advantages, and the results of any previous marketing/advertising efforts.
To begin a marketing plan, describe what segment of the repair market your business occupies. For example, your shop may be a full-service maintenance and repair facility servicing only domestic vehicles, or only imports, or only fleets.
Next, provide a broad list of the types of people who are your primary customers, as well as those that comprise your target market. Current customer statistics should include, among other things:
- Whether they’re homeowners or renters, and their age range and average income level
- ZIP codes where they reside
- What percentage are male and female, and their marital status
- Occupation and education
- Number of vehicles in each household
- Average sale per invoice
- Average number of visits annually
- Average dollars spent annually
- Total number of customers in database, etc.
In defining a target market, a newly established business will need to research the market and provide assumptions, while an existing business can rely on statistics/percentages from its business history.
Also, list the names of five of your strongest competitors, their strengths and weaknesses, as well as the competitive advantages you feel you have. Competitive advantages might include better location, reduced overhead, contacts in the industry, specialized equipment, endorsements, affiliations, certifications, etc.
Advertising and business growth go hand-in-hand, so you’ll have to do some form of advertising on a consistent basis. As part of your business plan, therefore, you should include an advertising budget and calendar; samples of ads, brochures, flyers, newsletters, and any other printed advertising materials you’ve created; samples of online ads; a marketing map; advertising tracking forms and data; and follow-up materials.
Also note other methods of advertising you use, such as thank-you calls; TV and radio spots; on-hold messaging; license plate frames, cups, pens, or other branded freebies; community programs and promotions; and environmental programs.
Presenting Your Business Plan
You’ve labored extensively developing your business plan, and now you’re getting ready to present it to a lender. Although you believe you’ve developed the plan to the best of your ability, you may still have reservations about submitting it. If that’s the case, it’s best to have it reviewed by an outside expert before you present it to the targeted individual. Enlist an attorney or accountant, a banker (other than the one to whom you may be presenting your plan, of course), a business consultant or an experienced business owner, the owner or manager of a similar business or a counselor at SCORE (Service Corps of Retired Executives).
Once your business plan has been proofed for spelling and grammar, and reviewed for content and structure, give serious consideration to its “packaging.” You may wish to incorporate color wherever possible. You can punch the pages and insert them into a three-ring binder, or have the pages bound in some other fashion. Also, make sure to print your pages double-sided to as not to waste paper and appear too lengthy and bulky.
Make several copies of your business plan; lenders quite often have review boards or loan committees where multiple copies of the document may be required.
While you need to do what you can to protect the ideas in your business plan, you may still want input from outside resources. One very common method to protect your plan is with a legal document known as a nondisclosure form (NDA). Once drafted by your attorney, make sure it’s signed by whomever is going to read your business plan.
Finally, consider your business plan a “live” document, and review it at least monthly to compare performance against your stated goals.
There’s a saying that’s been around seemingly since the beginning of time: “If you fail to plan, you plan to fail.” Why not plan to succeed by developing a solid, well-thought-out business plan today!
Need assistance with your business plan? We can help! Business Planning is just one of the many topics covered in Guerrilla Shop Management, which begins January 7th. Call 800-755-0988 today for more information or to enroll, or click here.