GlobalBX

Writing a business should be the first step before you start your business. Reducing your ideas to writing will greatly assist you along the way as you develop and mature your thoughts and decision making. It is often in the process of writing the plan itself that your vision is strengthened and galvanized into you mission statement and direction. Though a business plan, in order to be effective, needs to be a working and actionable document updateable at least on an annual basis and more often if situations warrant. A good business plan will contain the below components which are essential to the overall plan’s depth and ultimate success:
 

Cash Forecasts. Perhaps the biggest failing of entrepreneurs and business owners alike is their failure to carefully contemplate and plan for amount of cash that will be needed to adequately fund the business’s growth and day-to-day operations. It has been often said, “tongue in cheek,”  that one should carefully evaluate and plan for the cash flow that will be needed to run a business and then they should double it Often owners will spend cash without thinking ahead or re-forecasting for the next months and years only to find, if they had a “do-over” that they would have been more prudent with their spending. Developing a systematic and cautious methodology for spending that includes checks and balances, layers of approval, ample cushions and available credit are good defenses to ensure sound cash management practices. Great caution should be exercised to ensure that credit is only used when needed and not when convenient, when there is adequate investment in the expenditure/project by the company, and when there is a sound, reliable and predictable basis for repayment.
 

Budgets. Knowing and documenting how you have carefully planned to spend your business resources is an essential component of prudent spending. Although you will always need to be open to opportunities you will want to first run any expenditure against the litmus test of does the expenditure align with your mission statement and the business plan itself. Most new ventures need to be passed over, as often the best business deals are those that we do not participate in. Being true to your goals and ultimate destination is your first priority and a good sound and logical budget is a specifically tailored tool to help you get there.
 

FTE’s (Full Time Equivalents). Knowing how many people you have on staff at any given time and then the additional resources that will be needed at critical path moments is perhaps the single largest issue facing owners. Knowing when to hire and their appropriate skill set is essential to both developing and delivering a good product at a fair price and on time. Failure at any of these variables will cause financial and operational disaster.
 

Marketing Plan. Determining how you are best going to reach your clients is one of the keys to financial success. Having a well thought out marketing plan is essential to a good business model and plan. All marketing efforts will need to be in line with your goals and aspirations so as to take your further along the path to success and not further away from it. Marketing plans should be well delineated to cover numbers of new clients sought, closing ratios, times from initial contact to a prospect to conversion to a customer, a overall budget by marketing category, and a cost per lead.
 

Demographics. Being aware of your market and whether it is shrinking or growing, aging or getting younger and the ability to reinvent yourself are a necessary part of a well thought out business plan. Knowing how your product or service interrelates to the daily needs of your service market as well as its many varied attributes are important variables, which cannot be overlooked.
 

Written Case for Support. A thorough business plan should be compelling. Like a good book, it should flow easily from section to section and all of its individual components should “dovetail” well one with another. In the right hands and with the right reader, they will want to invest when they are finished with its reading as they believe the story told is realistic, attainable and profitable.

A well-written and thought out business plan is essentially a road map for business owners. It will cover how they are to be incorporated and what entity type they will chose, whether a C or S Corporation, LLC, LLP or Partnership. It will also delineate who the key players are, their management strengths, where the business is located and what size it is anticipated to be when it reaches full maturity. Writing a business is indeed an investment, but if you do it right, it will help you avoid unnecessary pitfalls and roadblocks and do much to ensure both your financial and operational success.