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There are four key areas that you should focus on when developing a business plan for your consulting business..
If you've found yourself holding a pink slip from your corporate employer or perhaps are just tired of the old 9 to 5 grind, one of the best ways to get back on your feet might be turning your experience and skills into a consulting gig since just about anyone who possesses specialized skills can hang out a shingle of their own. But before you do, you might want to consider taking the time to create a business plan for your new venture, which will not only help you map out the opportunities before you, but also the threats. While business plans doesn't appeal to everyone, especially if you don't ever expect to raise capital for your business, it can be a critical factor in getting your business off the ground, says Jennifer Leake, a certified management consultant and founder of Consultants Gold , an online community dedicated to helping consultants run their ventures successfully. That's why, as you get started, Leake offers the following tips for developing a plan:
But crafting a business plan for your new consulting company doesn't mean you should stick to the average template you can find online, as you should spend your time focusing on the elements that most often make or break companies in your industry. "Writing a business plan for a consulting firm sounds fairly straightforward because there are so many who call themselves 'consultants,' but it can be quite difficult for many reasons," says Michael Hermens, president of Finance Forward , a financial advisory firm in Dallas. That's why Hermens says that you should focus on four key areas when fleshing out your business plan: 1. Value Proposition Answer this question: What is your specific value proposition? "Thousands of ex-IT programmers are now 'Social Media Consultants,' " says Hermens. "What do you do that thousands of other people don't?" The keys to building a solid value proposition are to give decision makers solace that they made the right decision, he says, which can be done in three ways: 1. Offer a service guarantee, 2. Build and take prospects through a well-defined methodology, or 3. Specialize so narrowly that it is easier to increase your stature. "The challenge with a guarantee is that larger firms don't normally purchase on that basis and smaller firms generally take a service guarantee as a tacit admittance of being mistake prone," says Hermens. "A well defined methodology or approach takes a while to build, but is well worth it for prospects who do not know you. Narrow focus helps potential consultants gain exposure, increased stature helps clients be satisfied with their hiring decision."
Dig Deeper : Nobody Buys a Value Proposition 2. Target Market Answer this question: What is the best target market for you, or do you hunt every potential client that might possibly need your services? "Understanding your target market is the most difficult planning activity," says Hermens. But developing an understanding of the competitive landscape is crucial, particularly go-to-market and pricing strategies, as well as the specific problems that the industry or market segment is trying to solve. "Gaining insight into how companies in your industry go to market, the basis on which consulting firms compete, matters," he says. "In strategy consulting, it might be references of former clients or the published knowledge share that gets clients interested. In large IT deployments, it is probably the strength of the methodology. With forensic consulting, your name and personal credibility is a huge selling point." In other words, determining how you should go to market, how (or how much) you charge your clients, and your familiarity with specific industry jargon and problems the industry is trying to solve, are crucial in planning your consulting business, according to Hermens. One approach offered by Beth Corson, founder of Your FundingKey Advisors , is to choose a few industries and then outline the size and type of businesses that you'd like to work within those industries. "Rather than the desperate approach of taking any client that comes along, be selective and create a clear road map of where you want to go," she says. "Several years from now, your client roster should be fairly close to the plan that you make now. By working with similar clients in a specific industry, your company creates a level of expertise that makes it easier to perform well and get new clients because you understand their unique challenges and how to overcome them."
Dig Deeper : How to Define Your Target Market 3. Marketing Answer these questions: How do you market your consulting business? What tactics do you employ to get in front of decision makers to evaluate your offering? There's no question that in order to get your new consulting venture off the ground, you'll need to market your skills and experience to potential clients. That can be difficult, though, when you're a sole proprietor, since time spent marketing is time you're not billing for. While you can always hire an outside firm to help, your fledgling business might find the cost prohibitive. The answer, then, is to be creative in finding ways to promote your offering. One way to do that could be through landing public speaking engagements, which can be very effective at promoting your knowledge and point of view on your industry's challenges, says Hermens. Another option can be to partner with other companies that might offer complementary services to your own, a tact that may also help you build experience in new areas. But, at some point, you must develop your own client relationships independently if you want to keep your company growing.
Dig Deeper : How to Promote Your Consulting Business 4. Employees Answer these questions: If you have employees, what is the best way to deploy them, given the reality of project work? Do you plan to pay them hourly, by confirmed project, or salaried? "The issue here is how do you leverage yourself to grow revenue?" says Hermens. "Consultants who develop their brand can write books and charge an hourly rate, but they still cannot serve two clients simultaneously. Leverage allows your consultancy to flourish as your company takes on more projects." The key, then, is to think about how you align revenue arrangements with employee compensation and how to pay employees to ensure they are available when you need them by asking yourself questions like: Do you pay a salary and risk a lull in projects? Or, perhaps you pay employees on a project basis, only when they work, risking their availability when you get a new contract? "The goal here is to align revenue with employees compensation in the beginning as your consultancy grows," says Hermens. "Once your business becomes large enough, put key people on a salary, with performance bonuses. They will stick with you, have learned your go-to-market strategy, and know your methodology inside and out."
Dig Deeper : The New Rules of Employee Compensation
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Executive summary executive summary is a brief introduction to your business plan. it describes your business, the problem that it solves, your target market, and financial highlights.">.
Growth Management and Strategies (GMS) is an ambitious innovative new company that is attempting to turn the small business consulting business on its head. With an experienced consultant at the helm as President, GMS intends to grow at more than 50% per year through solid customer service, a great sales plan, proven competitive strategies, and a group of people that bring dynamic energy to the company and the sales process.
The goal for this plan is financial: GMS needs a Small Business Adminstration (SBA) loan, and this document is one step in the process. It is also a road map for the company. The document gives all present and future employees, as well as the owner a sense of purpose that may exist without the business plan, but becomes more relevant after the business plan is written, reviewed, shared, and edited by all. It is a living document that will last far beyond the SBA loan purpose, or if that doesn’t occur, to bring an investor on board.
GMS’s financials are realistic, and based on very conservative sales figures relative to the industry as a whole. That is because one of the goals of GMS is to build the business one client at a time, and to serve each client as if it were the last. This is how loyalty is generated, and cultivated. Customer service is what GMS will do best, and is a large part of the company’s overall mission.
The objectives for Growth Management and Strategies are:
The company mission is to serve small business clients that are in need of logistical, technical, and business strategy services. All projects will be chosen based on the availability of human resources, and each individual employee will be given the respect of a contract worker, and will share in profits for each job. Politics have no place at Growth Management and Strategies, and to limit the affects of favoritism, the company will implement and clearly communicate a performance review policy that applies to those at the bottom as well as the top of the leadership ladder. Credit will be given to the person who performed and/or innovatively modified a project, and compensation will be both financial and in the form of commendation.
Growth Management and Strategies is a company that respects the needs and expectations of its employees and clients. If either is compromised, adjustments will be made so that the company culture may remain intact.
Our keys to success are:
Growth Management and Strategies was established as a C corporation. The company’s headquarters are located in Boston, MA, near Copely Place. The company was established as a result of the efforts of its owner, Bill Dawson, and his experience in leading small businesses into prolonged periods of growth and innovation. Dawson worked for McKinsey before being hired away to Bain and Company. A Harvard graduate, Dawson spent hundreds of hours each week for nearly a year, slowly building the company to where it is now.
The company has had numerous successes this year, including one client that was purchased by a major multinational conglomerate, and another that experienced product sales growth of over 700% the first year.
This start-up summary table lists all the costs associated with establishing a lease, purchasing office equipment, and pulling together the other resources necessary to get the business off the ground. Furniture, LAN lines, and additional technology purchases are a must in order to properly communicate with clients, and to establish a website.
Other services included in the start-up summary are legal consulting fees, kept to a minimum thanks to resources provided by Nolo. Incorporation fees are included in the legal fees line item.
The free cash flow (cash balance) appearing in this start-up table is high relative to other small consulting businesses of its size. The owner is preoccupied with maintaining positive cash flow, and is risk averse enough to understand that during months in which contracts are not available, the corporation must sustain itself. With this said, planned debt leverage is low, therefore risk to the lender is relatively low as well.
Start-up | |
Requirements | |
Start-up Expenses | |
Legal (Incorporation, Books) | $350 |
Stationery, Basic Office Supplies, etc. | $300 |
Collateral Materials (Printing and Design) | $1,500 |
LAN, Wireless Network Setup | $550 |
Business and Liability Insurance | $250 |
Lease Deposit and First Month | $5,400 |
Market Research Data | $1,250 |
Website Hosting | $100 |
Computer, Printer, other Expensed Equip. | $4,500 |
Total Start-up Expenses | $14,200 |
Start-up Assets | |
Cash Required | $45,800 |
Other Current Assets | $0 |
Long-term Assets | $0 |
Total Assets | $45,800 |
Total Requirements | $60,000 |
Start-up Funding | |
Start-up Expenses to Fund | $14,200 |
Start-up Assets to Fund | $45,800 |
Total Funding Required | $60,000 |
Assets | |
Non-cash Assets from Start-up | $0 |
Cash Requirements from Start-up | $45,800 |
Additional Cash Raised | $0 |
Cash Balance on Starting Date | $45,800 |
Total Assets | $45,800 |
Liabilities and Capital | |
Liabilities | |
Current Borrowing | $0 |
Long-term Liabilities | $25,000 |
Accounts Payable (Outstanding Bills) | $0 |
Other Current Liabilities (interest-free) | $0 |
Total Liabilities | $25,000 |
Capital | |
Planned Investment | |
Dawson | $35,000 |
Other | $0 |
Additional Investment Requirement | $0 |
Total Planned Investment | $35,000 |
Loss at Start-up (Start-up Expenses) | ($14,200) |
Total Capital | $20,800 |
Total Capital and Liabilities | $45,800 |
Total Funding | $60,000 |
Growth Management and Strategies is wholly owned by Bill Dawson, and is classified as an LLC.
Growth Management and Strategies offers a variety of services to the small business client. Many of the services are customized for each client, and a bidding process is observed. The company also offers a traditional fixed rate sheet for its services.
The target customer owns a small business, and is generally dissatisfied with the revenue that the business is generating, or is dissatisfied with the daily management of their business. The customer is likely to operate a business worth between $200K and $10 million, with growth rates of between 1-10%, or even a negative growth rate.
Market growth, that is, the predicted growth in the small business sector within the Boston/Cambridge Metro area is expected to be around 3% per year. This may increase due to additional SBA lending programs designed to match the strengths of research and faculty grant work with the needs of the market and small businesses willing to take new products to market. Regardless of the market growth, the company’s customer base is far more dependant upon service needs, and a solid reputation. Mr. Dawson is well respected within the community, and has built a number of relationships with high profile individuals, and is a frequent contributor to the business section of the Boston Herald.
The corresponding market analysis table below breaks the potential market down into tactical sub-markets.
These are not the only differentiators used to determine the market potential for a client, they are simply a starting point for the sales team as they reach out to this group of small businesses, owners and investors.
Market Analysis | |||||||
Year 1 | Year 2 | Year 3 | Year 4 | Year 5 | |||
Potential Customers | Growth | CAGR | |||||
200K – $500K Revenue | 4% | 1,250 | 1,300 | 1,352 | 1,406 | 1,462 | 3.99% |
$501K – $3 million Revenue | 1% | 320 | 323 | 326 | 329 | 332 | 0.92% |
$3 million – $10 million Revenue | -5% | 129 | 123 | 117 | 111 | 105 | -5.02% |
Other | 0% | 0 | 0 | 0 | 0 | 0 | 0.00% |
Total | 2.82% | 1,699 | 1,746 | 1,795 | 1,846 | 1,899 | 2.82% |
The target market strategy involves isolating potential customers by revenue, then drilling down to very specific needs via the sales team’s needs analysis methodology.
The first tier customers, businesses with over $3 million in revenue, is more experienced in outsourcing and may find themselves more comfortable hiring Growth Management and Strategies on retainer. Strategically, a retainer helps maintain consistent cash flow, even if during some months these customers will require more services than what they have paid for that month. This issue will be addressed in the Personnel topic.
The second tier customers, those businesses operating at revenue levels of $501K – $3 million, typically are very excited to have moved out of the home office stage, and into a new level of stability. If they are self-funded, these businesses can be the most challenging to work with because they are often not willing to part with company shares, and don’t yet have a sense of what kind of marketing investment is necessary to grow a business at this stage. The company will serve these small businesses based on a bid cycle, and needs analysis.
The third tier customers are easier to identify, and more ubiquitous than the rest. These small businesses are operating on $200K – $500K in revenue, often are operating out of a home, and have a firm sense of their market and potential, yet have trouble executing their plans effectively, or following through on growth strategies that generate wealth. Again, the strategy is to provide these businesses with a short needs analysis, and focus on the quantity of such customers to maintain a solid revenue stream.
This industry is split up between a variety of players, including small businesses advising small businesses, such as the case with Growth Management and Strategies, to large conglomerate multinational consulting firms that send in newbie MBAs and use their name recognition to convince their clients that every one of these MBAs will generate over $300K a year in value. Sometimes they do, but when they don’t, GMS plans to be there.
At the other end of the spectrum, there are a wide variety of mom and pop consulting firms owned by very talented people who simply don’t have the marketing resources or expertise to reach a broader spectrum of customer.
GMS is somewhere in between. With years of guerrilla marketing experience, and a long-term plan for success, Mr. Dawson is determined to build the company each client at a time, and to focus on a sales team that outperforms all the competitors.
GMS is planning to grow exponentially within the first two years, to over $2 million in consulting revenue. At this point the service business analysis will be re-evaluated from the outside in.
Typically small business clients will learn about the consulting services market through word-of-mouth experience passed on through a friend or contemporary. Still, outbound sales teams dominate this category, and the stronger your sales team and name recognition, the greater your odds of finding clients willing to place your company on retainer or accept your company’s bid. The most competitive players in this market tend to have some of the best sales teams in the industry, that is, people who know not only how to communicate the technical needs analysis in a non-technical way, but in addition, are able to follow through and execute on promises and provide accurate, industry specific information that is useful to the client even before the deal is made.
Price is also important, and operates on a complex tiered system that is dependant upon the effectiveness of a particular salesperson, the word-of-mouth (WOM) advertising already in the mind of the potential client, and the ability of the client to reform the way they think about their own business. The demands of turning a business around, or pushing it to the limits of its potential are in direct proportion to the price of each bid. GMS must be careful not to be lured into out bidding a competitor, only to find that the customer has no plans to modify their business plan, and are seeking a “magic bullet” that may or may not exist. Competition in this industry leads to frustration and burnout for many people, and it takes a strong sense of purpose to push the business beyond the realm of the high-intensity, low-return client.
GMS will pursue a strategy in line with the experience of the owner, and implementation will be performance based and follow a clear path. Milestones are important to the implementation of this plan, and so is the vision and the will of the company’s owner, Mr. Dawson. The overall company strategy is tied very closely with the sales strategy, that is, with the front lines of the business. One of the biggest threats to any strategy is that they can become too high-minded, and not literal enough to translate into action. This will not be the case with GMS, a solid company that hires top talent and achieves it’s goals on time and on budget.
GMS has a significant competitive edge in the following areas:
GMS’s marketing strategy revolves around a three-tiered focus. At the top of pyramid one, imagine a customer service ideal. This ideal is also included in the competitive comparison.
Pyramid three has at the top a team-centric company culture. Tactics revolve around building this culture from the ground up so that it rewards innovation and determination, and management shows no personal bias or favoritism except when a salesperson or consultant is outperforming the mean. Although this strategy appears to be an internal management goal or company summary object, it is highly relevant to marketing’s performance because without integrity standards and a consistent company culture, GMS’s marketing will feel disconnected and unsupported, and will suffer as a result. A more detailed breakdown of tactics and programs related to this strategy is available in the full marketing plan.
GMS plans to develop and train 5-6 new salespeople by year two. Upon start up, the primary sales contact will be Mr. Dawson, but this will change as the revenues increase, and the company is able to invest in human capital.
GMS has a sales strategy that focuses on an initial needs analysis. Once the results of the needs analysis has been forwarded or described over the phone to a potential client, the salesperson will ask for a personal interview, a chance to sit down and discuss specifics. At no time should this be perceived by the potential client as “pushy” or “agressive.”
The goal of this sales process is to get behind the numbers, and the business successes, to identify where the client’s needs lie. Once this is mapped out, GMS will decide how these problems can be best addressed, and will offer both a bid and some action points. If the client wants to use the action points to move forward on their own, this is very acceptable. GMS’s research has in fact shown that the clients that choose this path, often come back to seek additional information, and more often than not, accept the bid.
This strategy differs from the course often taken by large consulting firms in that the customer is not condescended to, or treated as if the knowledge isn’t right there in their own heads. Often, consulting companies will send a large ego to clean up a client’s mess, and find that the strategy backfires when the client only chooses to give the consultant the chance to bid. GMS’s sales strategy revolves around customer service and empowerment, not condescension and sales “closers.”
Sales forecast is based on the assumption that most of the revenue will be the result of consulting bids. The growth in retainer revenue is about 30% lower than the expected yearly growth in consulting bids of 80%/year. This may seem like an agressive number at first glance, but this is not a large company being discussed in this business plan. The smaller the company, often the larger the opportunity for exponential sales growth, and especially if the firm uses sound sales and marketing strategies to take share from the larger, less nimble consultancies.
The Needs Analysis service is listed only to highlight the fact that some outside information gathering firms/consultants will be used to compile the necessary information. This poses some risk because there are no costs associated with the Needs Analysis efforts. Nevertheless, GMS is confident that this product will set the company apart from the competition, and generate sales far in excess of the costs incurred.
Sales Forecast | |||
Year 1 | Year 2 | Year 3 | |
Sales | |||
Job Bids | $257,493 | $463,487 | $834,276 |
Retainer | $549,337 | $714,138 | $928,379 |
Needs Analysis | $0 | $0 | $0 |
Other | $0 | $0 | $0 |
Total Sales | $806,829 | $1,177,624 | $1,762,655 |
Direct Cost of Sales | Year 1 | Year 2 | Year 3 |
Job Bids | $0 | $0 | $0 |
Retainer | $0 | $0 | $0 |
Needs Analysis | $10,151 | $11,673 | $13,424 |
Other | $0 | $0 | $0 |
Subtotal Direct Cost of Sales | $10,151 | $11,673 | $13,424 |
The milestones table includes one listing each for the business plan and the marketing plan. Each of these are crucial to the long-term and short-term success of GMS. The other milestones are also important, but most are simply tasks necessary in starting up almost any business. Nevertheless, the most important milestone in this table is financial. The SBA loan will determine whether this company will have the working capital to operate for 5-12 months with little or no immediate revenue. If GMS cannot find the working capital to meet the minimum cash flow expectations set forth in this document, the company will dissolve and the owner will turn his talents elsewhere. Therefore, it is possible that the line item for “SBA Loan” may be changed to acquire family or friends as investors. Ideally it will not come to that and Mr. Dawson will be able to retain full control of the company, and direct it entirely based on his vision.
Milestones | |||||
Milestone | Start Date | End Date | Budget | Manager | Department |
Business Plan | 7/1/2003 | 8/1/2003 | $250 | Dawson | NA |
Select and Purchase Equipment | 7/15/2002 | 9/1/2002 | $4,500 | Dawson | NA |
Establish Sales Routine, Methods | 8/12/2002 | 8/22/2002 | $0 | Dawson | NA |
Setup LAN, Utilities, Office | 8/1/2002 | 9/1/2002 | $450 | Dawson | NA |
Marketing Plan | 6/1/2002 | 7/1/2002 | $250 | Dawson | NA |
Corporate Minutes, Board Selection | 9/1/2002 | 9/15/2002 | $0 | Dawson | NA |
SBA Loan | 10/1/2002 | 11/1/2002 | $250 | Dawson | NA |
Totals | $5,700 |
The management team will initially consist of Bill Dawson. A Harvard MBA, and world-renowned consultant for major Fortune 500 companies, Mr. Dawson has built a reputation based his customer-centric approach to consulting, a relative anomaly in the world of high profile consulting. Many consultants are trained to believe they are right and the client was put on this earth to learn from the consultant. That is not the case for GMS, as the management team (Dawson) takes a different tact. The consultant acts as an interviewer, learning all that is possible to learn about the client in a one or two week period. As a management tool, this approach is very effective because it gives the sales team flexibility in dealing with potential customers, and relieves the uncomfortable pressure to close the sale.
Mr. Dawson’s approach to managing customers is also the approach he will take in dealing with his salespeople. GMS doesn’t need a hefty management structure, or administrative overhead. Many of those processes may be handled through outsourcing and Internet technology. On the contrary, the management structure at GMS is designed to reward the performer and educate the underperformer. Each salesperson is given a battery of psychological and rational tests, and most importantly, are screened based on how well they will fit into the Dawson management style. This leaves little to chance, and encourages a team atmosphere that remains light-hearted and fun.
This table demonstrates how GMS plans to start acquiring clients. One salesperson will be trained initially, and that person will later head a team of salespeople as the company expands. The promise of growth, and chance to work for a strategically positioned consulting business is enough to have three major players bidding for the job. Although each will see a major cut in salary from their current position, the chance to share in company profits (10%) and growth is enough to draw them to a low base, high commission position that offers no guarantees.
Personnel Plan | |||
Year 1 | Year 2 | Year 3 | |
Salesperson #1 | $54,000 | $62,000 | $68,000 |
Other | $0 | $0 | $0 |
Total People | 1 | 3 | 5 |
Total Payroll | $54,000 | $62,000 | $68,000 |
The Financial Plan is based on a pending SBA loan, and a corresponding cash flow amount held in a highly liquid account.
General Assumptions | |||
Year 1 | Year 2 | Year 3 | |
Plan Month | 1 | 2 | 3 |
Current Interest Rate | 7.00% | 7.00% | 7.00% |
Long-term Interest Rate | 5.50% | 5.50% | 5.50% |
Tax Rate | 31.83% | 32.00% | 31.83% |
Other | 0 | 0 | 0 |
The Break-even Analysis table is based on the assumption that each hour worked can be billed at approximately $70 per unit, and the employees will start at approximately $25/hour. This doesn’t include the cost of the payroll burden, however the assumptions are fairly accurate. Fixed costs are related to the lease and other monthly costs.
Break-even Analysis | |
Monthly Revenue Break-even | $10,203 |
Assumptions: | |
Average Percent Variable Cost | 1% |
Estimated Monthly Fixed Cost | $10,075 |
The following table and chart show the Projected Cash Flow figures for Growth Management and Strategies.
Pro Forma Cash Flow | |||
Year 1 | Year 2 | Year 3 | |
Cash Received | |||
Cash from Operations | |||
Cash Sales | $806,829 | $1,177,624 | $1,762,655 |
Subtotal Cash from Operations | $806,829 | $1,177,624 | $1,762,655 |
Additional Cash Received | |||
Sales Tax, VAT, HST/GST Received | $0 | $0 | $0 |
New Current Borrowing | $0 | $0 | $0 |
New Other Liabilities (interest-free) | $0 | $0 | $0 |
New Long-term Liabilities | $0 | $0 | $0 |
Sales of Other Current Assets | $0 | $0 | $0 |
Sales of Long-term Assets | $0 | $0 | $0 |
New Investment Received | $0 | $0 | $0 |
Subtotal Cash Received | $806,829 | $1,177,624 | $1,762,655 |
Expenditures | Year 1 | Year 2 | Year 3 |
Expenditures from Operations | |||
Cash Spending | $54,000 | $62,000 | $68,000 |
Bill Payments | $191,326 | $481,392 | $581,431 |
Subtotal Spent on Operations | $245,326 | $543,392 | $649,431 |
Additional Cash Spent | |||
Sales Tax, VAT, HST/GST Paid Out | $0 | $0 | $0 |
Principal Repayment of Current Borrowing | $0 | $0 | $0 |
Other Liabilities Principal Repayment | $0 | $0 | $0 |
Long-term Liabilities Principal Repayment | $0 | $0 | $0 |
Purchase Other Current Assets | $0 | $0 | $0 |
Purchase Long-term Assets | $0 | $0 | $0 |
Dividends | $0 | $0 | $0 |
Subtotal Cash Spent | $245,326 | $543,392 | $649,431 |
Net Cash Flow | $561,503 | $634,232 | $1,113,224 |
Cash Balance | $607,303 | $1,241,536 | $2,354,759 |
The following table and charts are the Projected Profit and Loss and Gross Margin figures for Growth Management and Strategies.
Pro Forma Profit and Loss | |||
Year 1 | Year 2 | Year 3 | |
Sales | $806,829 | $1,177,624 | $1,762,655 |
Direct Cost of Sales | $10,151 | $11,673 | $13,424 |
Other Costs of Sales | $0 | $0 | $0 |
Total Cost of Sales | $10,151 | $11,673 | $13,424 |
Gross Margin | $796,679 | $1,165,951 | $1,749,231 |
Gross Margin % | 98.74% | 99.01% | 99.24% |
Expenses | |||
Payroll | $54,000 | $62,000 | $68,000 |
Sales and Marketing and Other Expenses | $6,000 | $6,000 | $6,000 |
Depreciation | $0 | $0 | $0 |
Rent | $42,000 | $42,000 | $42,000 |
Utilities | $7,800 | $7,800 | $7,800 |
Insurance | $3,000 | $3,000 | $3,000 |
Payroll Taxes | $8,100 | $9,300 | $10,200 |
Other | $0 | $0 | $0 |
Total Operating Expenses | $120,900 | $130,100 | $137,000 |
Profit Before Interest and Taxes | $675,779 | $1,035,851 | $1,612,231 |
EBITDA | $675,779 | $1,035,851 | $1,612,231 |
Interest Expense | $1,375 | $1,375 | $1,375 |
Taxes Incurred | $215,990 | $331,032 | $512,789 |
Net Profit | $458,414 | $703,444 | $1,098,067 |
Net Profit/Sales | 56.82% | 59.73% | 62.30% |
The following table is the Projected Balance Sheet for Growth Management and Strategies.
Pro Forma Balance Sheet | |||
Year 1 | Year 2 | Year 3 | |
Assets | |||
Current Assets | |||
Cash | $607,303 | $1,241,536 | $2,354,759 |
Other Current Assets | $0 | $0 | $0 |
Total Current Assets | $607,303 | $1,241,536 | $2,354,759 |
Long-term Assets | |||
Long-term Assets | $0 | $0 | $0 |
Accumulated Depreciation | $0 | $0 | $0 |
Total Long-term Assets | $0 | $0 | $0 |
Total Assets | $607,303 | $1,241,536 | $2,354,759 |
Liabilities and Capital | Year 1 | Year 2 | Year 3 |
Current Liabilities | |||
Accounts Payable | $103,090 | $33,878 | $49,035 |
Current Borrowing | $0 | $0 | $0 |
Other Current Liabilities | $0 | $0 | $0 |
Subtotal Current Liabilities | $103,090 | $33,878 | $49,035 |
Long-term Liabilities | $25,000 | $25,000 | $25,000 |
Total Liabilities | $128,090 | $58,878 | $74,035 |
Paid-in Capital | $35,000 | $35,000 | $35,000 |
Retained Earnings | ($14,200) | $444,214 | $1,147,658 |
Earnings | $458,414 | $703,444 | $1,098,067 |
Total Capital | $479,214 | $1,182,658 | $2,280,725 |
Total Liabilities and Capital | $607,303 | $1,241,536 | $2,354,759 |
Net Worth | $479,214 | $1,182,658 | $2,280,725 |
Business ratios for the years of this plan are shown below. Industry profile ratios based on the Standard Industrial Classification (SIC) code 8742, Business Management Consultants, are shown for comparison.
Ratio Analysis | ||||
Year 1 | Year 2 | Year 3 | Industry Profile | |
Sales Growth | 0.00% | 45.96% | 49.68% | 6.98% |
Percent of Total Assets | ||||
Other Current Assets | 0.00% | 0.00% | 0.00% | 43.95% |
Total Current Assets | 100.00% | 100.00% | 100.00% | 75.76% |
Long-term Assets | 0.00% | 0.00% | 0.00% | 24.24% |
Total Assets | 100.00% | 100.00% | 100.00% | 100.00% |
Current Liabilities | 16.97% | 2.73% | 2.08% | 31.78% |
Long-term Liabilities | 4.12% | 2.01% | 1.06% | 17.26% |
Total Liabilities | 21.09% | 4.74% | 3.14% | 49.04% |
Net Worth | 78.91% | 95.26% | 96.86% | 50.96% |
Percent of Sales | ||||
Sales | 100.00% | 100.00% | 100.00% | 100.00% |
Gross Margin | 98.74% | 99.01% | 99.24% | 100.00% |
Selling, General & Administrative Expenses | 41.90% | 39.27% | 37.09% | 85.31% |
Advertising Expenses | 0.00% | 0.00% | 0.00% | 1.02% |
Profit Before Interest and Taxes | 83.76% | 87.96% | 91.47% | 1.90% |
Main Ratios | ||||
Current | 5.89 | 36.65 | 48.02 | 1.88 |
Quick | 5.89 | 36.65 | 48.02 | 1.48 |
Total Debt to Total Assets | 21.09% | 4.74% | 3.14% | 55.78% |
Pre-tax Return on Net Worth | 140.73% | 87.47% | 70.63% | 3.41% |
Pre-tax Return on Assets | 111.05% | 83.32% | 68.41% | 7.72% |
Additional Ratios | Year 1 | Year 2 | Year 3 | |
Net Profit Margin | 56.82% | 59.73% | 62.30% | n.a |
Return on Equity | 95.66% | 59.48% | 48.15% | n.a |
Activity Ratios | ||||
Accounts Payable Turnover | 2.86 | 12.17 | 12.17 | n.a |
Payment Days | 27 | 61 | 25 | n.a |
Total Asset Turnover | 1.33 | 0.95 | 0.75 | n.a |
Debt Ratios | ||||
Debt to Net Worth | 0.27 | 0.05 | 0.03 | n.a |
Current Liab. to Liab. | 0.80 | 0.58 | 0.66 | n.a |
Liquidity Ratios | ||||
Net Working Capital | $504,214 | $1,207,658 | $2,305,725 | n.a |
Interest Coverage | 491.48 | 753.35 | 1,172.53 | n.a |
Additional Ratios | ||||
Assets to Sales | 0.75 | 1.05 | 1.34 | n.a |
Current Debt/Total Assets | 17% | 3% | 2% | n.a |
Acid Test | 5.89 | 36.65 | 48.02 | n.a |
Sales/Net Worth | 1.68 | 1.00 | 0.77 | n.a |
Dividend Payout | 0.00 | 0.00 | 0.00 | n.a |
Sales Forecast | |||||||||||||
Month 1 | Month 2 | Month 3 | Month 4 | Month 5 | Month 6 | Month 7 | Month 8 | Month 9 | Month 10 | Month 11 | Month 12 | ||
Sales | |||||||||||||
Job Bids | 0% | $1,000 | $1,500 | $2,250 | $3,375 | $5,063 | $7,594 | $11,391 | $17,086 | $25,629 | $38,443 | $57,665 | $86,498 |
Retainer | 0% | $500 | $875 | $1,531 | $2,680 | $4,689 | $8,207 | $14,361 | $25,133 | $43,982 | $76,968 | $134,695 | $235,716 |
Needs Analysis | 0% | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 |
Other | 0% | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 |
Total Sales | $1,500 | $2,375 | $3,781 | $6,055 | $9,752 | $15,800 | $25,752 | $42,218 | $69,611 | $115,412 | $192,360 | $322,213 | |
Direct Cost of Sales | Month 1 | Month 2 | Month 3 | Month 4 | Month 5 | Month 6 | Month 7 | Month 8 | Month 9 | Month 10 | Month 11 | Month 12 | |
Job Bids | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | |
Retainer | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | |
Needs Analysis | $350 | $403 | $463 | $532 | $612 | $704 | $810 | $931 | $1,071 | $1,231 | $1,416 | $1,628 | |
Other | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | |
Subtotal Direct Cost of Sales | $350 | $403 | $463 | $532 | $612 | $704 | $810 | $931 | $1,071 | $1,231 | $1,416 | $1,628 |
Personnel Plan | |||||||||||||
Month 1 | Month 2 | Month 3 | Month 4 | Month 5 | Month 6 | Month 7 | Month 8 | Month 9 | Month 10 | Month 11 | Month 12 | ||
Salesperson #1 | 0% | $4,500 | $4,500 | $4,500 | $4,500 | $4,500 | $4,500 | $4,500 | $4,500 | $4,500 | $4,500 | $4,500 | $4,500 |
Other | 0% | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 |
Total People | 1 | 1 | 1 | 1 | 1 | 1 | 1 | 1 | 1 | 1 | 1 | 1 | |
Total Payroll | $4,500 | $4,500 | $4,500 | $4,500 | $4,500 | $4,500 | $4,500 | $4,500 | $4,500 | $4,500 | $4,500 | $4,500 |
General Assumptions | |||||||||||||
Month 1 | Month 2 | Month 3 | Month 4 | Month 5 | Month 6 | Month 7 | Month 8 | Month 9 | Month 10 | Month 11 | Month 12 | ||
Plan Month | 1 | 2 | 3 | 4 | 5 | 6 | 7 | 8 | 9 | 10 | 11 | 12 | |
Current Interest Rate | 7.00% | 7.00% | 7.00% | 7.00% | 7.00% | 7.00% | 7.00% | 7.00% | 7.00% | 7.00% | 7.00% | 7.00% | |
Long-term Interest Rate | 5.50% | 5.50% | 5.50% | 5.50% | 5.50% | 5.50% | 5.50% | 5.50% | 5.50% | 5.50% | 5.50% | 5.50% | |
Tax Rate | 30.00% | 32.00% | 32.00% | 32.00% | 32.00% | 32.00% | 32.00% | 32.00% | 32.00% | 32.00% | 32.00% | 32.00% | |
Other | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 |
Pro Forma Profit and Loss | |||||||||||||
Month 1 | Month 2 | Month 3 | Month 4 | Month 5 | Month 6 | Month 7 | Month 8 | Month 9 | Month 10 | Month 11 | Month 12 | ||
Sales | $1,500 | $2,375 | $3,781 | $6,055 | $9,752 | $15,800 | $25,752 | $42,218 | $69,611 | $115,412 | $192,360 | $322,213 | |
Direct Cost of Sales | $350 | $403 | $463 | $532 | $612 | $704 | $810 | $931 | $1,071 | $1,231 | $1,416 | $1,628 | |
Other Costs of Sales | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | |
Total Cost of Sales | $350 | $403 | $463 | $532 | $612 | $704 | $810 | $931 | $1,071 | $1,231 | $1,416 | $1,628 | |
Gross Margin | $1,150 | $1,973 | $3,318 | $5,522 | $9,140 | $15,096 | $24,943 | $41,287 | $68,540 | $114,180 | $190,944 | $320,585 | |
Gross Margin % | 76.67% | 83.05% | 87.76% | 91.21% | 93.72% | 95.54% | 96.86% | 97.79% | 98.46% | 98.93% | 99.26% | 99.49% | |
Expenses | |||||||||||||
Payroll | $4,500 | $4,500 | $4,500 | $4,500 | $4,500 | $4,500 | $4,500 | $4,500 | $4,500 | $4,500 | $4,500 | $4,500 | |
Sales and Marketing and Other Expenses | $500 | $500 | $500 | $500 | $500 | $500 | $500 | $500 | $500 | $500 | $500 | $500 | |
Depreciation | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | |
Rent | $3,500 | $3,500 | $3,500 | $3,500 | $3,500 | $3,500 | $3,500 | $3,500 | $3,500 | $3,500 | $3,500 | $3,500 | |
Utilities | $650 | $650 | $650 | $650 | $650 | $650 | $650 | $650 | $650 | $650 | $650 | $650 | |
Insurance | $250 | $250 | $250 | $250 | $250 | $250 | $250 | $250 | $250 | $250 | $250 | $250 | |
Payroll Taxes | 15% | $675 | $675 | $675 | $675 | $675 | $675 | $675 | $675 | $675 | $675 | $675 | $675 |
Other | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | |
Total Operating Expenses | $10,075 | $10,075 | $10,075 | $10,075 | $10,075 | $10,075 | $10,075 | $10,075 | $10,075 | $10,075 | $10,075 | $10,075 | |
Profit Before Interest and Taxes | ($8,925) | ($8,103) | ($6,757) | ($4,553) | ($935) | $5,021 | $14,868 | $31,212 | $58,465 | $104,105 | $180,869 | $310,510 | |
EBITDA | ($8,925) | ($8,103) | ($6,757) | ($4,553) | ($935) | $5,021 | $14,868 | $31,212 | $58,465 | $104,105 | $180,869 | $310,510 | |
Interest Expense | $115 | $115 | $115 | $115 | $115 | $115 | $115 | $115 | $115 | $115 | $115 | $115 | |
Taxes Incurred | ($2,712) | ($2,629) | ($2,199) | ($1,494) | ($336) | $1,570 | $4,721 | $9,951 | $18,672 | $33,277 | $57,841 | $99,327 | |
Net Profit | ($6,328) | ($5,588) | ($4,672) | ($3,174) | ($714) | $3,337 | $10,032 | $21,147 | $39,678 | $70,714 | $122,913 | $211,069 | |
Net Profit/Sales | -421.85% | -235.27% | -123.57% | -52.42% | -7.32% | 21.12% | 38.96% | 50.09% | 57.00% | 61.27% | 63.90% | 65.51% |
Pro Forma Cash Flow | |||||||||||||
Month 1 | Month 2 | Month 3 | Month 4 | Month 5 | Month 6 | Month 7 | Month 8 | Month 9 | Month 10 | Month 11 | Month 12 | ||
Cash Received | |||||||||||||
Cash from Operations | |||||||||||||
Cash Sales | $1,500 | $2,375 | $3,781 | $6,055 | $9,752 | $15,800 | $25,752 | $42,218 | $69,611 | $115,412 | $192,360 | $322,213 | |
Subtotal Cash from Operations | $1,500 | $2,375 | $3,781 | $6,055 | $9,752 | $15,800 | $25,752 | $42,218 | $69,611 | $115,412 | $192,360 | $322,213 | |
Additional Cash Received | |||||||||||||
Sales Tax, VAT, HST/GST Received | 0.00% | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 |
New Current Borrowing | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | |
New Other Liabilities (interest-free) | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | |
New Long-term Liabilities | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | |
Sales of Other Current Assets | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | |
Sales of Long-term Assets | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | |
New Investment Received | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | |
Subtotal Cash Received | $1,500 | $2,375 | $3,781 | $6,055 | $9,752 | $15,800 | $25,752 | $42,218 | $69,611 | $115,412 | $192,360 | $322,213 | |
Expenditures | Month 1 | Month 2 | Month 3 | Month 4 | Month 5 | Month 6 | Month 7 | Month 8 | Month 9 | Month 10 | Month 11 | Month 12 | |
Expenditures from Operations | |||||||||||||
Cash Spending | $4,500 | $4,500 | $4,500 | $4,500 | $4,500 | $4,500 | $4,500 | $4,500 | $4,500 | $4,500 | $4,500 | $4,500 | |
Bill Payments | $111 | $3,332 | $3,479 | $3,979 | $4,770 | $6,032 | $8,072 | $11,398 | $16,867 | $25,925 | $41,023 | $66,337 | |
Subtotal Spent on Operations | $4,611 | $7,832 | $7,979 | $8,479 | $9,270 | $10,532 | $12,572 | $15,898 | $21,367 | $30,425 | $45,523 | $70,837 | |
Additional Cash Spent | |||||||||||||
Sales Tax, VAT, HST/GST Paid Out | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | |
Principal Repayment of Current Borrowing | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | |
Other Liabilities Principal Repayment | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | |
Long-term Liabilities Principal Repayment | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | |
Purchase Other Current Assets | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | |
Purchase Long-term Assets | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | |
Dividends | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | |
Subtotal Cash Spent | $4,611 | $7,832 | $7,979 | $8,479 | $9,270 | $10,532 | $12,572 | $15,898 | $21,367 | $30,425 | $45,523 | $70,837 | |
Net Cash Flow | ($3,111) | ($5,457) | ($4,198) | ($2,425) | $482 | $5,268 | $13,180 | $26,320 | $48,244 | $84,987 | $146,837 | $251,376 | |
Cash Balance | $42,689 | $37,232 | $33,034 | $30,609 | $31,092 | $36,360 | $49,539 | $75,859 | $124,103 | $209,090 | $355,927 | $607,303 |
Pro Forma Balance Sheet | |||||||||||||
Month 1 | Month 2 | Month 3 | Month 4 | Month 5 | Month 6 | Month 7 | Month 8 | Month 9 | Month 10 | Month 11 | Month 12 | ||
Assets | Starting Balances | ||||||||||||
Current Assets | |||||||||||||
Cash | $45,800 | $42,689 | $37,232 | $33,034 | $30,609 | $31,092 | $36,360 | $49,539 | $75,859 | $124,103 | $209,090 | $355,927 | $607,303 |
Other Current Assets | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 |
Total Current Assets | $45,800 | $42,689 | $37,232 | $33,034 | $30,609 | $31,092 | $36,360 | $49,539 | $75,859 | $124,103 | $209,090 | $355,927 | $607,303 |
Long-term Assets | |||||||||||||
Long-term Assets | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 |
Accumulated Depreciation | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 |
Total Long-term Assets | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 |
Total Assets | $45,800 | $42,689 | $37,232 | $33,034 | $30,609 | $31,092 | $36,360 | $49,539 | $75,859 | $124,103 | $209,090 | $355,927 | $607,303 |
Liabilities and Capital | Month 1 | Month 2 | Month 3 | Month 4 | Month 5 | Month 6 | Month 7 | Month 8 | Month 9 | Month 10 | Month 11 | Month 12 | |
Current Liabilities | |||||||||||||
Accounts Payable | $0 | $3,217 | $3,347 | $3,822 | $4,571 | $5,767 | $7,698 | $10,846 | $16,020 | $24,585 | $38,858 | $62,782 | $103,090 |
Current Borrowing | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 |
Other Current Liabilities | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 |
Subtotal Current Liabilities | $0 | $3,217 | $3,347 | $3,822 | $4,571 | $5,767 | $7,698 | $10,846 | $16,020 | $24,585 | $38,858 | $62,782 | $103,090 |
Long-term Liabilities | $25,000 | $25,000 | $25,000 | $25,000 | $25,000 | $25,000 | $25,000 | $25,000 | $25,000 | $25,000 | $25,000 | $25,000 | $25,000 |
Total Liabilities | $25,000 | $28,217 | $28,347 | $28,822 | $29,571 | $30,767 | $32,698 | $35,846 | $41,020 | $49,585 | $63,858 | $87,782 | $128,090 |
Paid-in Capital | $35,000 | $35,000 | $35,000 | $35,000 | $35,000 | $35,000 | $35,000 | $35,000 | $35,000 | $35,000 | $35,000 | $35,000 | $35,000 |
Retained Earnings | ($14,200) | ($14,200) | ($14,200) | ($14,200) | ($14,200) | ($14,200) | ($14,200) | ($14,200) | ($14,200) | ($14,200) | ($14,200) | ($14,200) | ($14,200) |
Earnings | $0 | ($6,328) | ($11,915) | ($16,588) | ($19,761) | ($20,475) | ($17,139) | ($7,107) | $14,040 | $53,718 | $124,432 | $247,345 | $458,414 |
Total Capital | $20,800 | $14,472 | $8,885 | $4,212 | $1,039 | $325 | $3,661 | $13,693 | $34,840 | $74,518 | $145,232 | $268,145 | $479,214 |
Total Liabilities and Capital | $45,800 | $42,689 | $37,232 | $33,034 | $30,609 | $31,092 | $36,360 | $49,539 | $75,859 | $124,103 | $209,090 | $355,927 | $607,303 |
Net Worth | $20,800 | $14,472 | $8,885 | $4,212 | $1,039 | $325 | $3,661 | $13,693 | $34,840 | $74,518 | $145,232 | $268,145 | $479,214 |
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Written by Amy Rigby | April 5, 2019
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Starting a business is an inherently optimistic endeavor. Despite the odds , we entrepreneurs do everything in our power to set ourselves up for success, hoping that our business will defy the statistics and be among the minority that makes it past the 10-year mark.
But if we’re so concerned about success, why is it that so many of us place so much intense focus on our online business ideas , but ignore the tried-and-true business plan ? Research has shown that having a business plan can boost your average annual growth by 30% and increase your chances of succeeding by 16% !
There’s a lot of debate in the entrepreneurial world about whether business plans are valuable , and while we at Foundr are certainly all about execution, we’re not about to argue with what the research clearly shows about the benefits of proper planning.
And before you think, “I’m just starting out—what good is a business plan for me?” I feel you.
When I started my business in 2013, I didn’t have a plan, much less a formal business plan. And guess what? Three months into it, I ran out of money. I didn’t know who my clients were or how to find them because I had never put much thought into it. I flip-flopped among several seemingly unrelated services (videography, photography, copywriting, and more).
Thankfully, I have since streamlined my services and am about to celebrate six years in business, but I think I could’ve avoided many mistakes if I had at least made a simple business plan for myself when I started.
To help you have the best chances of succeeding in your business, I’ll walk you through the basic components of a business plan.
A business plan is a roadmap for where you want your business to go. It can be one page or multiple pages, but at its core, it answers:
While it’s not required when starting a business, having a business plan is helpful for a few reasons:
As you can see, planning can pay off—especially if you’re seeking funding .
Before you begin writing your business plan, consider your audience. A business plan will be written differently depending on who’s going to end up reading it. Bankers, for instance, have different motivations than equity investors (venture capital fund managers and angel investors).
In this review of the literature , researchers found that bankers are most concerned about whether you can repay the loan; therefore, they’re more likely to scrutinize the financial section, looking for good cash flow and the opportunity for taking collateral.
VCs and angel investors, on the other hand, are more interested in potential growth and return on investment; so they’ll likely focus on your capabilities, the service you’re offering or the product you’re selling, and the market you want to enter.
If you’re simply creating a business plan to help you stay focused on your business goals, then you’re more likely to write about your plans for the future and milestones you want to reach, rather than any history or track record.
Business plans vary depending on the business and its audience, but below are some of the basic components of a business plan that apply across the board.
Begin with an executive summary that introduces the reader to your business and gives them an overview of what’s inside the business plan.
Here’s an excerpt from the U.S. Small Business Administration’s example consulting business plan :
We Can Do It Consulting provides consultation services to small- and medium-sized companies. Our services include office management and business process re engineering to improve efficiency and reduce administrative costs.
In this section, you can dive deeper into the elements of your business, including answering:
Here’s an example of an ecommerce business’ mission :
Liquid Culture’s mission is to present consumers with designs, styling and clothes that energizes any outdoor activity. Whether it be snowboarding, running along the beach, or drifting down a river, Liquid Culture has comfortable, durable clothing that will look and feel wonderful.
Before starting a business, you want to make sure you understand the market you’re entering. Is your target market large enough that you can make enough money? Is the market already saturated with products and services like yours? How will you stand out? Investors will be interested in seeing what you put here because this will help them become confident that you know what you’re getting into and that your business has the potential to grow.
The market analysis section will answer:
FireStarters’ competitive advantage is offering product lines that make a statement but won’t leave you broke. The major brands are expensive and not distinctive enough to satisfy the changing taste of our target customers. FireStarters offers products that are just ahead of the curve and so affordable that our customers will return to the website often to check out what’s new.
The target customer owns a small business, and is generally dissatisfied with the revenue that the business is generating, or is dissatisfied with the daily management of their business. The customer is likely to operate a business worth between $200K and $10 million, with growth rates of between 1-10%, or even a negative growth rate.
Writing this section is pretty straightforward, detailing exactly what you’ll be selling.
In this section, you’ll outline your marketing strategy to ensure you have a plan to get clients and customers and make money.
Your T-Shirt! will run ads in several teen/young adult magazines whose readership demographics are similar to Your T-Shirt!’s.
This section is particularly important if you wish to secure a bank loan or investors’ money. If you’ve been in business for a while, you can include past revenue. If you’re brand new, you’ll have to forecast your revenue .
The financial section can include many types of forecasting and graphs, but a few common ones are:
To better understand what you need to put into each component of your business plan, it can help to look at examples. Here are some free resources that can help:
By now, I hope you’re ready to blast through creating your business plan so you can move on to the fun part: building your business.
To recap, here are the basic components of a business plan:
Remember, the purpose of a business plan is to secure funding or serve as a guide for you (or both). Don’t get stuck on this step. You can always revisit and revise your business plan later. What’s most important is that you take action now.
Have you created a business plan? Share any advice you have for your fellow entrepreneurs in the comments below!
Amy Rigby is a freelance writer who specializes in content marketing and copywriting for startups. She's written for ABCNews.com , GoDaddy , Outdoorsy , and Trello . Connect with Amy on LinkedIn
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Back to Business Plans
Written by: Carolyn Young
Carolyn Young is a business writer who focuses on entrepreneurial concepts and the business formation. She has over 25 years of experience in business roles, and has authored several entrepreneurship textbooks.
Edited by: David Lepeska
David has been writing and learning about business, finance and globalization for a quarter-century, starting with a small New York consulting firm in the 1990s.
Published on February 19, 2023 Updated on February 27, 2024
A key part of the business startup process is putting together a business plan , particularly if you’d like to raise capital. It’s not going to be easy, but it’s absolutely essential, and an invaluable learning tool.
Creating a business plan early helps you think through every aspect of your business, from operations and financing to growth and vision. In the end, the knowledge you’ll gain could be the difference between success and failure.
But what exactly does a business plan consist of? There are eight essential components, all of which are detailed in this handy guide.
The executive summary opens your business plan , but it’s the section you’ll write last. It summarizes the key points and highlights the most important aspects of your plan. Often investors and lenders will only read the executive summary; if it doesn’t capture their interest they’ll stop reading, so it’s important to make it as compelling as possible.
The components touched upon should include:
Remember that if you’re seeking capital, the executive summary could make or break your venture. Take your time and make sure it illustrates how your business is unique in the market and why you’ll succeed.
The executive summary should be no more than two pages long, so it’s important to capture the reader’s interest from the start.
In this section, you’ll detail your full company history, such as how you came up with the idea for your business and any milestones or achievements.
You’ll also include your mission and vision statements. A mission statement explains what you’d like your business to achieve, its driving force, while a vision statement lays out your long-term plan in terms of growth.
A mission statement might be “Our company aims to make life easier for business owners with intuitive payroll software”, while a vision statement could be “Our objective is to become the go-to comprehensive HR software provider for companies around the globe.”
In this section, you’ll want to list your objectives – specific short-term goals. Examples might include “complete initial product development by ‘date’” or “hire two qualified sales people” or “launch the first version of the product”.
It’s best to divide this section into subsections – company history, mission and vision, and objectives.
Here you’ll go into detail about what you’re offering, how it solves a problem in the market, and how it’s unique. Don’t be afraid to share information that is proprietary – investors and lenders are not out to steal your ideas.
Also specify how your product is developed or sourced. Are you manufacturing it or does it require technical development? Are you purchasing a product from a manufacturer or wholesaler?
You’ll also want to specify how you’ll sell your product or service. Will it be a subscription service or a one time purchase? What is your target pricing? On what channels do you plan to sell your product or service, such as online or by direct sales in a store?
Basically, you’re describing what you’re going to sell and how you’ll make money.
The market analysis is where you’re going to spend most of your time because it involves a lot of research. You should divide it into four sections.
You’ll want to find out exactly what’s happening in your industry, such as its growth rate, market size, and any specific trends that are occurring. Where is the industry predicted to be in 10 years? Cite your sources where you can by providing links.
Then describe your company’s place in the market. Is your product going to fit a certain niche? Is there a sub-industry your company will fit within? How will you keep up with industry changes?
Now you’ll dig into your competition. Detail your main competitors and how they differentiate themselves in the market. For example, one competitor may advertise convenience while another may tout superior quality. Also highlight your competitors’ weaknesses.
Next, describe how you’ll stand out. Detail your competitive advantages and how you’ll sustain them. This section is extremely important and will be a focus for investors and lenders.
Here you’ll describe your target market and whether it’s different from your competitors’. For example, maybe you have a younger demographic in mind?
You’ll need to know more about your target market than demographics, though. You’ll want to explain the needs and wants of your ideal customers, how your offering solves their problem, and why they will choose your company.
You should also lay out where you’ll find them, where to place your marketing and where to sell your products. Learning this kind of detail requires going to the source – your potential customers. You can do online surveys or even in-person focus groups.
Your goal will be to uncover as much about these people as possible. When you start selling, you’ll want to keep learning about your customers. You may end up selling to a different target market than you originally thought, which could lead to a marketing shift.
SWOT stands for strengths, weaknesses, opportunities, and threats, and it’s one of the more common and helpful business planning tools.
First describe all the specific strengths of your company, such as the quality of your product or some unique feature, such as the experience of your management team. Talk about the elements that will make your company successful.
Next, acknowledge and explore possible weaknesses. You can’t say “none”, because no company is perfect, especially at the start. Maybe you lack funds or face a massive competitor. Whatever it is, detail how you will surmount this hurdle.
Next, talk about the opportunities your company has in the market. Perhaps you’re going to target an underserved segment, or have a technology plan that will help you surge past the competition.
Finally, examine potential threats. It could be a competitor that might try to replicate your product or rapidly advancing technology in your industry. Again, discuss your plans to handle such threats if they come to pass.
Now it’s time to explain how you’re going to find potential customers and convert them into paying customers.
When you did your target market analysis, you should have learned a lot about your potential customers, including where to find them. This should help you determine where to advertise.
Maybe you found that your target customers favor TikTok over Instagram and decided to spend more marketing dollars on TikTok. Detail all the marketing channels you plan to use and why.
Your target market analysis should also have given you information about what kind of message will resonate with your target customers. You should understand their needs and wants and how your product solves their problem, then convey that in your marketing.
Start by creating a value proposition, which should be no more than two sentences long and answer the following questions:
An example might be “Payroll software that will handle all the payroll needs of small business owners, making life easier for less.”
Whatever your value proposition, it should be at the heart of all of your marketing.
Your sales strategy is a vision to persuade customers to buy, including where you’ll sell and how. For example, you may plan to sell only on your own website, or you may sell from both a physical location and online. On the other hand, you may have a sales team that will make direct sales calls to potential customers, which is more common in business-to-business sales.
Sales tactics are more about how you’re going to get them to buy after they reach your sales channel. Even when selling online, you need something on your site that’s going to get them to go from a site visitor to a paying customer.
By the same token, if you’re going to have a sales team making direct sales, what message are they going to deliver that will entice a sale? It’s best for sales tactics to focus on the customer’s pain point and what value you’re bringing to the table, rather than being aggressively promotional about the greatness of your product and your business.
Pricing is not an exact science and should depend on several factors. First, consider how you want your product or service to be perceived in the market. If your differentiator is to be the lowest price, position your company as the “discount” option. Think Walmart, and price your products lower than the competition.
If, on the other hand, you want to be the Mercedes of the market, then you’ll position your product as the luxury option. Of course you’ll have to back this up with superior quality, but being the luxury option allows you to command higher prices.
You can, of course, fall somewhere in the middle, but the point is that pricing is a matter of perception. How you position your product in the market compared to the competition is a big factor in determining your price.
Of course, you’ll have to consider your costs, as well as competitor prices. Obviously, your prices must cover your costs and allow you to make a good profit margin.
Whatever pricing strategy you choose, you’ll justify it in this section of your plan.
This section is the real nuts and bolts of your business – how it operates on a day-to-day basis and who is operating it. Again, this section should be divided into subsections.
Your plan of operations should be specific , detailed and mainly logistical. Who will be doing what on a daily, weekly, and monthly basis? How will the business be managed and how will quality be assured? Be sure to detail your suppliers and how and when you’ll order raw materials.
This should also include the roles that will be filled and the various processes that will be part of everyday business operations . Just consider all the critical functions that must be handled for your business to be able to operate on an ongoing basis.
If your product involves technical development, you’ll describe your tech development plan with specific goals and milestones. The plan will also include how many people will be working on this development, and what needs to be done for goals to be met.
If your company is not a technology company, you’ll describe what technologies you plan to use to run your business or make your business more efficient. It could be process automation software, payroll software, or just laptops and tablets for your staff.
Now you’ll describe who’s running the show. It may be just you when you’re starting out, so you’ll detail what your role will be and summarize your background. You’ll also go into detail about any managers that you plan to hire and when that will occur.
Essentially, you’re explaining your management structure and detailing why your strategy will enable smooth and efficient operations.
Ideally, at some point, you’ll have an organizational structure that is a hierarchy of your staff. Describe what you envision your organizational structure to be.
Detail who you’ve hired or plan to hire and for which roles. For example, you might have a developer, two sales people, and one customer service representative.
Describe each role and what qualifications are needed to perform those roles.
Now, you’ll enter the dreaded world of finance. Many entrepreneurs struggle with this part, so you might want to engage a financial professional to help you. A financial plan has five key elements.
Detail in a spreadsheet every cost you’ll incur before you open your doors. This should determine how much capital you’ll need to launch your business.
Creating financial projections, like many facets of business, is not an exact science. If your company has no history, financial projections can only be an educated guess.
First, come up with realistic sales projections. How much do you expect to sell each month? Lay out at least three years of sales projections, detailing monthly sales growth for the first year, then annually thereafter.
Calculate your monthly costs, keeping in mind that some costs will grow along with sales.
Once you have your numbers projected and calculated, use them to create these three key financial statements:
You’ll need monthly projected versions of each statement for the first year, then annual projections for the following two years.
The break-even point for your business is when costs and revenue are equal. Most startups operate at a loss for a period of time before they break even and start to make a profit. Your break-even analysis will project when your break-even point will occur, and will be informed by your profit and loss statement.
Lay out the funding you’ll need, when, and where you’ll get it. You’ll also explain what those funds will be used for at various points. If you’re in a high growth industry that can attract investors, you’ll likely need various rounds of funding to launch and grow.
KPIs measure your company’s performance and can determine success. Many entrepreneurs only focus on the bottom line, but measuring specific KPIs helps find areas of improvement. Every business has certain crucial metrics.
If you sell only online, one of your key metrics might be your visitor conversion rate. You might do an analysis to learn why just one out of ten site visitors makes a purchase.
Perhaps the purchase process is too complicated or your product descriptions are vague. The point is, learning why your conversion rate is low gives you a chance to improve it and boost sales.
In the appendices, you can attach documents such as manager resumes or any other documents that support your business plan.
As you can see, a business plan has many components, so it’s not an afternoon project. It will likely take you several weeks and a great deal of work to complete. Unless you’re a finance guru, you may also want some help from a financial professional.
Keep in mind that for a small business owner, there may be no better learning experience than writing a detailed and compelling business plan. It shouldn’t be viewed as a hassle, but as an opportunity!
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Starting and running a successful business requires proper planning and execution of effective business tactics and strategies .
You need to prepare many essential business documents when starting a business for maximum success; the business plan is one such document.
When creating a business, you want to achieve business objectives and financial goals like productivity, profitability, and business growth. You need an effective business plan to help you get to your desired business destination.
Even if you are already running a business, the proper understanding and review of the key elements of a business plan help you navigate potential crises and obstacles.
This article will teach you why the business document is at the core of any successful business and its key elements you can not avoid.
Let’s get started.
Business plans are practical steps or guidelines that usually outline what companies need to do to reach their goals. They are essential documents for any business wanting to grow and thrive in a highly-competitive business environment .
A business plan gives companies an idea of how viable they are and what actions they need to take to grow and reach their financial targets. With a well-written and clearly defined business plan, your business is better positioned to meet its goals.
A business plan is not just important at the start of a business. As a business owner, you must draw up a business plan to remain relevant throughout the business cycle .
During the starting phase of your business, a business plan helps bring your ideas into reality. A solid business plan can secure funding from lenders and investors.
After successfully setting up your business, the next phase is management. Your business plan still has a role to play in this phase, as it assists in communicating your business vision to employees and external partners.
Essentially, your business plan needs to be flexible enough to adapt to changes in the needs of your business.
As a business owner, you are involved in an endless decision-making cycle. Your business plan helps you find answers to your most crucial business decisions.
A robust business plan helps you settle your major business components before you launch your product, such as your marketing and sales strategy and competitive advantage.
Many small businesses fail within their first five years for several reasons: lack of financing, stiff competition, low market need, inadequate teams, and inefficient pricing strategy.
Creating an effective plan helps you eliminate these big mistakes that lead to businesses' decline. Every business plan element is crucial for helping you avoid potential mistakes before they happen.
Having an effective plan increases your chances of securing business loans. One of the essential requirements many lenders ask for to grant your loan request is your business plan.
A business plan helps investors feel confident that your business can attract a significant return on investments ( ROI ).
You can attract and retain top-quality talents with a clear business plan. It inspires your employees and keeps them aligned to achieve your strategic business goals.
Starting and running a successful business requires well-laid actions and supporting documents that better position a company to achieve its business goals and maximize success.
A business plan is a written document with relevant information detailing business objectives and how it intends to achieve its goals.
With an effective business plan, investors, lenders, and potential partners understand your organizational structure and goals, usually around profitability, productivity, and growth.
Every successful business plan is made up of key components that help solidify the efficacy of the business plan in delivering on what it was created to do.
Here are some of the components of an effective business plan.
One of the key elements of a business plan is the executive summary. Write the executive summary as part of the concluding topics in the business plan. Creating an executive summary with all the facts and information available is easier.
In the overall business plan document, the executive summary should be at the forefront of the business plan. It helps set the tone for readers on what to expect from the business plan.
A well-written executive summary includes all vital information about the organization's operations, making it easy for a reader to understand.
The key points that need to be acted upon are highlighted in the executive summary. They should be well spelled out to make decisions easy for the management team.
A good and compelling executive summary points out a company's mission statement and a brief description of its products and services.
An executive summary summarizes a business's expected value proposition to distinct customer segments. It highlights the other key elements to be discussed during the rest of the business plan.
Including your prior experiences as an entrepreneur is a good idea in drawing up an executive summary for your business. A brief but detailed explanation of why you decided to start the business in the first place is essential.
Adding your company's mission statement in your executive summary cannot be overemphasized. It creates a culture that defines how employees and all individuals associated with your company abide when carrying out its related processes and operations.
Your executive summary should be brief and detailed to catch readers' attention and encourage them to learn more about your company.
Here are some of the information that makes up an executive summary:
Your business description needs to be exciting and captivating as it is the formal introduction a reader gets about your company.
What your company aims to provide, its products and services, goals and objectives, target audience , and potential customers it plans to serve need to be highlighted in your business description.
A company description helps point out notable qualities that make your company stand out from other businesses in the industry. It details its unique strengths and the competitive advantages that give it an edge to succeed over its direct and indirect competitors.
Spell out how your business aims to deliver on the particular needs and wants of identified customers in your company description, as well as the particular industry and target market of the particular focus of the company.
Include trends and significant competitors within your particular industry in your company description. Your business description should contain what sets your company apart from other businesses and provides it with the needed competitive advantage.
In essence, if there is any area in your business plan where you need to brag about your business, your company description provides that unique opportunity as readers look to get a high-level overview.
Your business description needs to contain these categories of information.
The market analysis section should be solely based on analytical research as it details trends particular to the market you want to penetrate.
Graphs, spreadsheets, and histograms are handy data and statistical tools you need to utilize in your market analysis. They make it easy to understand the relationship between your current ideas and the future goals you have for the business.
All details about the target customers you plan to sell products or services should be in the market analysis section. It helps readers with a helpful overview of the market.
In your market analysis, you provide the needed data and statistics about industry and market share, the identified strengths in your company description, and compare them against other businesses in the same industry.
The market analysis section aims to define your target audience and estimate how your product or service would fare with these identified audiences.
Market analysis helps visualize a target market by researching and identifying the primary target audience of your company and detailing steps and plans based on your audience location.
Obtaining this information through market research is essential as it helps shape how your business achieves its short-term and long-term goals.
Here are some of the factors to be included in your market analysis.
Here is some of the information to be included in your market analysis.
A marketing plan defines how your business aims to reach its target customers, generate sales leads, and, ultimately, make sales.
Promotion is at the center of any successful marketing plan. It is a series of steps to pitch a product or service to a larger audience to generate engagement. Note that the marketing strategy for a business should not be stagnant and must evolve depending on its outcome.
Include the budgetary requirement for successfully implementing your marketing plan in this section to make it easy for readers to measure your marketing plan's impact in terms of numbers.
The information to include in your marketing plan includes marketing and promotion strategies, pricing plans and strategies , and sales proposals. You need to include how you intend to get customers to return and make repeat purchases in your business plan.
Sales strategy defines how you intend to get your product or service to your target customers and works hand in hand with your business marketing strategy.
Your sales strategy approach should not be complex. Break it down into simple and understandable steps to promote your product or service to target customers.
Apart from the steps to promote your product or service, define the budget you need to implement your sales strategies and the number of sales reps needed to help the business assist in direct sales.
Your sales strategy should be specific on what you need and how you intend to deliver on your sales targets, where numbers are reflected to make it easier for readers to understand and relate better.
Providing transparent and honest information, even with direct and indirect competitors, defines a good business plan. Provide the reader with a clear picture of your rank against major competitors.
Identifying your competitors' weaknesses and strengths is useful in drawing up a market analysis. It is one information investors look out for when assessing business plans.
The competitive analysis section clearly defines the notable differences between your company and your competitors as measured against their strengths and weaknesses.
This section should define the following:
In your business plan, you need to prove your industry knowledge to anyone who reads your business plan. The competitive analysis section is designed for that purpose.
Management and organization are key components of a business plan. They define its structure and how it is positioned to run.
Whether you intend to run a sole proprietorship, general or limited partnership, or corporation, the legal structure of your business needs to be clearly defined in your business plan.
Use an organizational chart that illustrates the hierarchy of operations of your company and spells out separate departments and their roles and functions in this business plan section.
The management and organization section includes profiles of advisors, board of directors, and executive team members and their roles and responsibilities in guaranteeing the company's success.
Apparent factors that influence your company's corporate culture, such as human resources requirements and legal structure, should be well defined in the management and organization section.
Defining the business's chain of command if you are not a sole proprietor is necessary. It leaves room for little or no confusion about who is in charge or responsible during business operations.
This section provides relevant information on how the management team intends to help employees maximize their strengths and address their identified weaknesses to help all quarters improve for the business's success.
This business plan section describes what a company has to offer regarding products and services to the maximum benefit and satisfaction of its target market.
Boldly spell out pending patents or copyright products and intellectual property in this section alongside costs, expected sales revenue, research and development, and competitors' advantage as an overview.
At this stage of your business plan, the reader needs to know what your business plans to produce and sell and the benefits these products offer in meeting customers' needs.
The supply network of your business product, production costs, and how you intend to sell the products are crucial components of the products and services section.
Investors are always keen on this information to help them reach a balanced assessment of if investing in your business is risky or offer benefits to them.
You need to create a link in this section on how your products or services are designed to meet the market's needs and how you intend to keep those customers and carve out a market share for your company.
Repeat purchases are the backing that a successful business relies on and measure how much customers are into what your company is offering.
This section is more like an expansion of the executive summary section. You need to analyze each product or service under the business.
An operations plan describes how you plan to carry out your business operations and processes.
The operating plan for your business should include:
This section should highlight how your organization is set up to run. You can also introduce your company's management team in this section, alongside their skills, roles, and responsibilities in the company.
The best way to introduce the company team is by drawing up an organizational chart that effectively maps out an organization's rank and chain of command.
What should be spelled out to readers when they come across this business plan section is how the business plans to operate day-in and day-out successfully.
Bringing your great business ideas into reality is why business plans are important. They help create a sustainable and viable business.
The financial section of your business plan offers significant value. A business uses a financial plan to solve all its financial concerns, which usually involves startup costs, labor expenses, financial projections, and funding and investor pitches.
All key assumptions about the business finances need to be listed alongside the business financial projection, and changes to be made on the assumptions side until it balances with the projection for the business.
The financial plan should also include how the business plans to generate income and the capital expenditure budgets that tend to eat into the budget to arrive at an accurate cash flow projection for the business.
Base your financial goals and expectations on extensive market research backed with relevant financial statements for the relevant period.
Examples of financial statements you can include in the financial projections and assumptions section of your business plan include:
Revealing the financial goals and potentials of the business is what the financial projection and assumption section of your business plan is all about. It needs to be purely based on facts that can be measurable and attainable.
The request for funding section focuses on the amount of money needed to set up your business and underlying plans for raising the money required. This section includes plans for utilizing the funds for your business's operational and manufacturing processes.
When seeking funding, a reasonable timeline is required alongside it. If the need arises for additional funding to complete other business-related projects, you are not left scampering and desperate for funds.
If you do not have the funds to start up your business, then you should devote a whole section of your business plan to explaining the amount of money you need and how you plan to utilize every penny of the funds. You need to explain it in detail for a future funding request.
When an investor picks up your business plan to analyze it, with all your plans for the funds well spelled out, they are motivated to invest as they have gotten a backing guarantee from your funding request section.
Include timelines and plans for how you intend to repay the loans received in your funding request section. This addition keeps investors assured that they could recoup their investment in the business.
Exhibits and appendices comprise the final section of your business plan and contain all supporting documents for other sections of the business plan.
Some of the documents that comprise the exhibits and appendices section includes:
The choice of what additional document to include in your business plan to support your statements depends mainly on the intended audience of your business plan. Hence, it is better to play it safe and not leave anything out when drawing up the appendix and exhibit section.
Supporting documentation is particularly helpful when you need funding or support for your business. This section provides investors with a clearer understanding of the research that backs the claims made in your business plan.
There are key points to include in the appendix and exhibits section of your business plan.
Martin luenendonk.
Martin loves entrepreneurship and has helped dozens of entrepreneurs by validating the business idea, finding scalable customer acquisition channels, and building a data-driven organization. During his time working in investment banking, tech startups, and industry-leading companies he gained extensive knowledge in using different software tools to optimize business processes.
This insights and his love for researching SaaS products enables him to provide in-depth, fact-based software reviews to enable software buyers make better decisions.
Table of Contents
In the intricate tapestry of entrepreneurship, a business plan is a meticulously crafted document that serves as more than just a roadmap; it is the compass steering a venture toward success. This comprehensive guide aims to dissect the components of a business plan, unraveling its layers to reveal the intricacies that transform an idea into a thriving business.
The executive summary serves as the gateway to the business plan, offering an initial handshake between the business and stakeholders. It goes beyond a mere introduction; it functions as a strategically crafted teaser, encapsulating the essence of the business in a concise narrative.
This pivotal section provides a sneak peek into the core elements, vision, goals, and strategic direction of the business. Crafted with a delicate balance of conciseness and clarity, the executive summary is designed to be an indispensable tool, especially for busy stakeholders who require a quick overview.
It plays a crucial role in shaping the first impressions of the business plan, setting the tone for what follows. The art lies in distilling complex information into a digestible format without losing the essence. In doing so, the executive summary becomes a compass, guiding stakeholders towards the comprehensive details within the business plan, ensuring they are well-prepared and informed for the journey ahead.
Positioned at the epicenter of the business plan, the company description serves as the narrative heart that intricately weaves the tale of your venture. It goes beyond being a mere introduction; it is a profound revelation of the business’s identity, mission, vision, and the unique value proposition it brings to the market.
By delving into the company description, readers gain a solid foundation for understanding the purpose and positioning of the business in the market landscape. It acts as a compass, guiding stakeholders through the motivations, aspirations, and distinctive qualities that define your venture.
This section sets the stage for deeper exploration, encouraging stakeholders to connect with the ethos of your business. It is here that the seeds of understanding are sown, laying the groundwork for a comprehensive comprehension of how your business aims to stand out and thrive in its chosen market.
The market analysis section of a business plan acts as a strategic guide, navigating the business through external complexities. It involves a deep exploration of industry dynamics, consumer behavior, and competitive forces. By understanding these aspects, businesses can leverage opportunities and tackle challenges in their chosen market. Analyzing industry trends, consumer preferences, and competitors’ strategies informs strategic decision-making. This section not only identifies growth prospects but also prepares the business to adapt to potential obstacles, ensuring a well-informed and resilient approach in a dynamic market.
The organizational and management section of a business plan serves as a spotlight on the human capital that propels the business forward. This section introduces the key players of the management team, providing a comprehensive overview of their roles, responsibilities, and relevant experience. By showcasing the expertise and skills of the team members, the business establishes credibility and competence. This not only reassures stakeholders about the leadership driving the organizational ship but also instills confidence in their ability to navigate challenges and capitalize on opportunities. In essence, this section is a crucial element in building trust and showcasing the collective strength of the team that will be instrumental in the success of the business.
In business plans, the products or services section transcends simple descriptions, offering a thorough exposition that goes into the unique features, benefits, and value proposition for the target market. This section serves as the bridge connecting the business’s offerings with the specific needs and demands of its intended audience. By delving into the distinctive qualities and advantages of the products or services, businesses not only communicate what they offer but also articulate why it matters to their customers. This strategic approach not only helps differentiate the offerings in a competitive landscape but also ensures a clear alignment between what the business provides and what the market desires, laying a solid foundation for success.
Crafting a successful business plan necessitates the development of a well-thought-out marketing and sales strategy. This section serves as the tactical blueprint for reaching customers and driving revenue. It goes beyond outlining generic approaches delving into specific details such as marketing channels, pricing strategies, and sales tactics, all meticulously tailored to the nuances of the target audience. By doing so, businesses ensure a systematic and strategic approach to market penetration. TThe marketing strategy is a dynamic roadmap to showcase products, convey value, and build brand loyalty. This intentional and detailed planning is vital for businesses to not only enter the market effectively but also sustain and grow their customer base over time.
The financial plan turns raw data into a compelling narrative of the business’s economic viability. This section incorporates essential elements such as income statements, balance sheets, and cash flow statements , offering stakeholders a comprehensive view of the business’s fiscal health. The financial plan examines current status and charts a path for future growth by analyzing revenue, expenses, and cash movements. It’s a vital decision-making tool, allowing stakeholders to evaluate sustainable growth, investment opportunities, and potential risks for the business. In essence, the financial plan goes beyond mere numbers; it crafts a narrative that instills confidence, demonstrating the business’s financial acumen and its ability to navigate the complexities of the market while pursuing long-term success.
In scenarios where external funding is sought, the funding request section of a business plan serves as an open appeal for financial support. It requires a clear articulation of key elements: the funding amount, purpose, and expected returns or milestones tied to the investment. This section essentially provides potential investors with a compelling rationale for their involvement in the business.
By clearly specifying the funding amount, businesses demonstrate transparency and precision in their financial needs. The funds’ purpose specifies usage for product development, market expansion, or operational enhancements. This clarity is crucial in building trust and confidence among investors.
Furthermore, detailing anticipated returns or milestones associated with the investment provides a roadmap for investors to understand how their contribution will be translated into business growth. This data helps investors gauge their investment’s impact on the business’s success, including revenue targets, market share, and milestones.
In essence, the funding request section is not just a monetary ask; it is a strategic communication tool aimed at aligning the interests of the business and potential investors. A compelling funding request not only outlines financial needs but also emphasizes mutually beneficial outcomes through collaboration.
The risk analysis section in a business plan is a crucial component that identifies and assesses potential risks and challenges. It goes beyond mere recognition by providing proactive strategies to mitigate these risks. This boosts the business plan’s credibility and shows a keen awareness of uncertainties in the business environment. Confronting potential obstacles in the business plan reassures stakeholders about the company’s strategic risk management approach.
The appendix in a business plan serves as a valuable repository for supplementary materials that enhance and support the main content. This section goes beyond the narrative, offering additional documentation, charts, and graphs that enrich the business case. By providing stakeholders with access to a deeper layer of supporting data, the appendix reinforces key points made throughout the plan. Adding specific details enhances credibility and ensures a comprehensive understanding of the business’s strategies, market analysis, and financial projections. In essence, the appendix is a reservoir of valuable information that adds depth to the business plan, catering to the diverse needs and interests of stakeholders.
How Often Should a Business Plan Be Updated?
– Business plans should be updated annually or when significant changes occur, reflecting the evolving nature of the business.
What’s the Difference Between a Business Plan and a Strategic Plan?
-While a business plan outlines details, a strategic plan focuses on long-term goals, direction, and overall organizational strategy.
Is the Business Plan, the Same as the Business Model?
-No, they differ. A business plan details components, while the business model explains revenue generation and sustainability.
Crafting an effective business plan is akin to orchestrating a symphony where financial statements, a solid marketing strategy, and a clear mission harmonize to ensure success in a competitive market. Each component plays a vital role in shaping the narrative of a business’s journey from concept to thriving reality. A well-crafted business plan not only navigates the complexities of entrepreneurship but also becomes the cornerstone of sustainable success. Elevate your venture with Oak Business Consultants’ ready-to-use business plan template, or opt for our custom business planning service . Your journey to success begins with a meticulously crafted plan—let Oak Business Consultants be your guide. Download our ready-to-use template or explore our services now.
Sadaf Abbas
Sadaf Abbas, with over 16 years in the financial consulting realm, has showcased her expertise across diverse industries like Blockchain, Gaming, and SaaS. As a CFO for leading companies, she's transformed complex financial scenarios into actionable strategies. Now, as the CEO of Oak Business Consultant, her leadership has driven the firm to unparalleled heights, marking it as a benchmark for excellence and innovation. Beyond her corporate achievements, Sadaf is also a revered educator, blending theoretical and practical insights to shape the future of financial analysts and consultants. With credentials like a Master's Degree in Finance and Economics and a title of CSP, she's a force in financial analysis, business planning, and more. Dive into Sadaf's world and discover a blend of knowledge, expertise, and transformative leadership.
Business plans that turn visions into ventures..
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Tips to help you find the right business consultant for your company include specifying your goals and asking potential candidates thorough questions about their offerings and processes.
Find out more about business consultants
by Cara Hartley
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Legally reviewed by Allison DeSantis, J.D.
Allison is the Director of Product Counsel at LegalZoom, advising and providing leadership to internal teams on the d...
Updated on: August 2, 2024 · 9 min read
Why hire a business consultant, types of business consultants, how to hire the right business consultant.
A business consultant is an expert who helps business owners find solutions to their business challenges and optimize their productivity and performance.
Business consultants provide advice and develop strategies to help business owners overcome obstacles and meet their goals. A business consultant's specific responsibilities can vary depending on their areas of expertise and their clients’ individual requirements.
A business consultant’s process typically involves three phases: investigation, strategy development, and implementation.
A business consultant investigates issues hindering growth. They analyze your business’s systems and staff and external factors to identify opportunities and determine the root cause of existing problems.
After they have identified the source of the problem, a consultant can assist in finding solutions to address the issue. The consultant will factor in information they uncovered during the investigative phase (including your business’s strengths and weaknesses and external influences such as market conditions and competitor activities) to create a customized plan of action.
A business consultant can then help you implement their solutions. During the implementation phase, the consultant typically oversees staff management and training, monitors the plan and makes adjustments as necessary, and conducts evaluations to measure the overall impact of the implementation.
Business owners hire consultants for a wide variety of reasons, from addressing specific issues to obtaining big-picture input on how to achieve core objectives.
It can be challenging to figure out the next step when your company’s growth has stalled. A business consultant can provide new insights and creative approaches to help stimulate growth.
Transitions can be unsettling for staff and consumers alike. If your business is restructuring or going through a merger or acquisition, a business consultant can help facilitate a smooth transition.
Whether you are expanding into a new location, launching a new digital storefront, or offering new products, a business consultant can provide information about industry trends, competitors’ tactics, and market entry plans to help you meet your expansion goals.
There are times when you know what a project needs to succeed, but your staff doesn’t have the know-how to make it happen. A business consultant can bridge the knowledge gap by providing the external expertise needed to complete the project.
Companies often refer to business consulting services when they want to optimize their efficiency. A business consultant can evaluate your company’s operations to identify problem areas and develop time-saving and cost-reduction strategies.
Crises such as recessions, pandemics, and public relations issues can have a significant impact on business operations. Hiring business consultants can be a smart move during a crisis, as they can implement proven methods for responding to and managing crises. Consultants can provide the neutral perspective necessary to navigate the chaos and get your business back on track.
A business plan helps you stay focused and hit your goals no matter what stage your business is in. A business plan typically includes a description of your company, your mission statement, the strategies you will use to achieve your business’s success, and any funding requests.
A business consultant can help you create a comprehensive business plan that supports your company’s objectives in every stage and ensure that each part of the plan aligns with your ultimate vision.
Whenever a company updates its current systems or integrates new technology, there is a risk of integration failure. A business consultant with information technology (IT) experience can help minimize disruptions and confirm that your systems are functioning properly.
Business consultants offer services across multiple industries, including the financial, marketing, and tech fields.
The different types of business consultants include the following:
Tips to help you find the right business consultant for your company include specifying your goals and asking potential candidates thorough questions about their offerings and processes.
In order to achieve your goals, you should know exactly what issues you need help with. Consultants can’t solve what they can’t see. A lack of clarity about your specific challenges can make it difficult to find a candidate who can help you.
When it comes to a business consultant’s credentials, don’t just take their word for it. Reach out to their references and read reviews before making a hiring decision. Look for a consultant who has experience working within your industry and has had success helping comparable companies.
Ask the consultant what kind of tools, resources, and procedures they use to accomplish results and how they have tackled similar problems in the past. The right consultant will offer innovative solutions and use methodologies that align with your workplace culture.
You and the consultant should agree on the metrics for success and ultimate outcomes. Success metrics–or key performance indicators (KPIs)–help you monitor the impact of the consultant’s work.
For instance, if you hire a marketing consultant, you might use email open rates or the number of leads generated as success metrics and agree on a goal of a certain percentage increase within a specified timeframe.
A consulting agreement communicates expectations and provides legal protection for your business. Your consulting agreement should clearly define the details of the work and the terms that both parties agree to.
A legal expert can help ensure that your consulting agreement contains clauses outlining key information such as deliverables, payment terms, deadlines, and grounds for termination.
With our consultant contract services , a qualified attorney can help you write, revise, and customize your consulting agreement so that it is legally binding and protects your business.
A new system is only as effective as the people who maintain it. A business consultant should have the ability to train your staff on how to use the tools or systems they implement to help ensure your company’s continued success.
The cost of hiring a business consultant depends on a variety of factors, including the type of consultant you hire, the scope of the work, and whether you hire a freelance consultant or a consulting firm.
For instance, according to a 2023 survey by the Institute of Electrical and Electronics Engineers (IEEE) , engineering consultants charge a median rate of $180, while the U.S. Bureau of Labor Statistics reported a 2023 median hourly wage of $37.83 for all occupations in the Management, Scientific, and Technical Consulting Services category.
To calculate the return on investment (ROI) of a business consultant, you subtract the actual or estimated costs of the consultancy from the amount of income the consultancy is expected to bring in. The sum is the profit the consultancy is expected to generate. You then divide the sum by the costs.
The formula for ROI for a business consultant can be written as follows:
ROI = (Profit from consultancy - Cost of consultancy) / Cost of consultancy x 100%
While the ROI formula may seem simple enough, keep in mind that it can be challenging to accurately estimate profits , and the cost of hiring a consultant may offset other expenses, such as the costs associated with an unmitigated public relations disaster or the cost of hiring a full-time employee instead of a consultant.
For instance, if you are hiring a consultant instead of a full-time employee , you should take into account the total expenses associated with hiring an individual full-time vs. the cost of hiring a consultant on an as-needed basis. When you consider the costs of recruitment, hiring, training, salary, benefits, bonuses, payroll taxes, and insurance, hiring a consultant can be cheaper than hiring a full-time employee.
The decision to hire a freelance consultant or a consulting firm comes down to the consultant or firm’s relevant experience and availability, and your budget and personal preferences.
One benefit of hiring a consulting firm is that the quality of their work is backed by their brand. Another perk is that a consulting firm typically has many employees, so if an issue arises during the consulting period that is beyond the expertise of one employee, you may be able to access the full knowledge base of the firm.
Freelance consultants may have limited availability to take on consulting jobs in comparison to consulting firms, but they may be more affordable than a firm. Freelance consultants are often highly motivated to provide their best work to help build a name for themselves.
Whether you choose a freelance consultant or hire a consulting firm, you should verify their qualifications. A business consultant usually has a bachelor’s degree–typically in a field such as business administration, marketing, or finance. Some consultants may have a master’s degree, while other business consultants may have additional certifications. You should ask to see proof of their track record and details about how they have solved problems for similar clients.
Business consulting can be a rewarding career and many consultants charge top dollar for their services, so it’s important to hire someone who has the qualifications and experience necessary to help your business succeed.
A consulting agreement should include information about the scope of work, payment terms, and what happens if either party breaches the agreement. Consulting agreements often contain the following clauses:
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Going from founder-led sales to a predictable demand generation engine.
Duane Tursi, CEO, Ascension Group International .
Transitioning a business from the startup phase to a more mature, scalable operation is filled with challenges. For entrepreneurs aiming to advance their business, mastering the art of sales is crucial.
In my time, I've found that this process can be broken down into two key components: Building a repeatable and predictable demand generation engine and transitioning from founder-led sales to leadership-led sales.
The first step involves thoroughly understanding your market and identifying your ideal customer profile. Sure, that may sound like a no-brainer, but you'd be surprised how many people speed through this step, neglecting customer interviews and thorough market research.
Before really digging in, it's important to roll up your sleeves and analyze your existing customer base, study market trends and leverage data to pinpoint the characteristics of your most profitable and satisfied customers. Once that's done, heed these key steps to building success in sales.
Nyt ‘strands’ hints, spangram and answers for thursday, august 1st, the top 10 richest people in the world (august 2024), 1. develop a fully integrated sales and marketing strategy..
While your sales team plays a pivotal role in customer acquisition and customer relationship management, don’t overlook your marketing efforts. Your marketing strategy should be tactical and speak to your target audiences. After all, 96% of prospects do their own research before speaking with a human sales rep, per Hubspot’s " 2024 State of Sales Report " (download required).
This means they’re reading user reviews, visiting your website, reading your blog and scoping out your social media channels. Make sure you’re delivering content where your audience is most likely to look for it.
Depending on your business's size and budget, a marketing strategy may involve various channels. Understanding where to focus is key to meeting your audience where they are. Focus on high-quality content to build awareness and provide tools for your sales team. In fact, 74% of companies say that content marketing increases lead generation.
Here are some critical places to start:
• Content marketing: Your content program should include several different types such as blogs, ebooks, videos and webinars (the medium will vary depending on your market, goals and budget). These can all serve as tools for your sales team.
• SEO: Invest in search engine optimization (SEO) to ensure that people can easily find your content. SEO evolves on a regular basis, so it's important to follow the latest best practices. Get tactical and ensure you look at all your content channels, not just your company’s website.
• Social media: According to a Forbes writeup , "Social media and community-building efforts are where businesses spend most of their content marketing budget." Use these platforms to show your company's human side; interact with your audience, share content, build trust and foster a vibrant community around your brand.
• Email marketing. Implement targeted email campaigns and leverage this channel to cross-promote content that you've already created for your owned channels.
Focus on hiring experienced sales leaders who share your vision and understand your market. These individuals should not just be any sales leaders; they should be the trailblazers in your company who will lead your business into sales leadership.
They should be capable of performing sales development representative (SDR) functions and using platforms like LinkedIn and email to generate new leads and nurture customers throughout the sales process. Be careful not to add too many tools that could create cognitive overload, though; in its recent "State of AI Report," Hubspot found that 45% of sales professionals are overwhelmed by the number of tools in their tech stack.
Your sales leader should also create a repeatable SDR playbook and close deals. Developing these skills takes time, so I recommend seeking candidates with a track record of at least two to three years of successful demand generation and account management.
Once you have the right sales leaders in place, work together to define a clear and repeatable sales process, which should be documented in your SDR playbook. Outline each step of the sales journey, from lead generation to closing deals. These should include:
• Lead qualification. Establish criteria for qualifying leads to ensure your sales team focuses on high-potential opportunities.
• Sales training. Provide comprehensive training to your sales team on your products, market, and sales techniques.
• CRM implementation. Invest in a customer relationship management (CRM) system to manage customer interactions, track activities, and analyze performance. Use these analytics to measure against your goals.
The success of your sales team hinges on their empowerment. Equip them with the tools, resources and autonomy to thrive. Provide access to sales enablement materials, conduct regular training sessions and foster an environment that champions collaboration and innovation.
Establish transparent and fair performance metrics and attractive incentive structures to instill accountability and help drive motivation. Metrics such as sales targets, deal closure rates and customer satisfaction scores can effectively monitor progress and pinpoint areas for enhancement.
Additionally, crafting a compensation plan that acknowledges high performers and aligns with your business objectives ensures a sense of fairness and equity in the system, making the sales team feel connected and committed to your company's goals.
As your business scales, it is important to maintain the consistent quality of your product or service. You can achieve this by implementing quality control systems and providing regular employee training.
While meeting immediate sales targets is key, focusing on long-term strategic goals is equally important. To help with balance, I think sales leaders should be incentivized based on quarterly results and their contribution to the company's strategic objectives.
The journey from startup to fully-fledged business is full of challenges. However, with the right sales strategies and leadership in place, I've found that these difficulties can be transformed into opportunities for success.
As startups broaden and become more established, the focus must shift from simply generating demand to building a sustainable and efficient sales system led by experienced professionals.
Forbes Business Council is the foremost growth and networking organization for business owners and leaders. Do I qualify?
Nissan Chief Executive Makoto Uchida, left, and Honda Chief Executive Toshihiro Mibe shake hands during a joint news conference in Tokyo, Thursday, Aug. 1, 2024. Japanese automakers Nissan and Honda say they plan to share components for electric vehicles like batteries and jointly research software for autonomous driving. (Kyodo News via AP)
FILE - Logos at a Nissan showroom are seen in Ginza shopping district in Tokyo, March 31, 2023. (AP Photo/Eugene Hoshiko, File)
FILE - Logos of Honda Motor Co. are pictured in Tsukuba, northeast of Tokyo, on Feb. 13, 2019. (Kyodo News via AP, File)
TOKYO (AP) — Japanese automakers Nissan and Honda say they plan to share components for electric vehicles like batteries and jointly research software for autonomous driving.
A third Japanese manufacturer, Mitsubishi Motors Corp., has joined the Nissan-Honda partnership, sharing the view that speed and size are crucial in responding to dramatic changes in the auto industry centered around electrification.
A preliminary agreement between Nissan Motor Co. and Honda Motor Co. was announced in March .
After 100 days of talks, executives of the companies evinced a sense of urgency. Japanese automakers dominated the era of gasoline engines in recent decades but have fallen behind formidable new players in green cars like Tesla of the U.S. and China’s BYD.
“Companies that don’t adapt to the changes cannot survive,” said Honda Chief Executive Toshihiro Mibe. “If we try to do everything on our own, we cannot catch up.”
Nissan and Honda will use the same batteries and adopt the same specifications for motors and inverters for EV axels, they said.
By coming together in what Mibe and counterpart at Nissan, Makoto Uchida, repeatedly called “making friends” to achieve economies of scale, the companies plan more strategic investments in technology and aim to cut costs by boosting volume.
Each company will continue to produce and offer its own model offerings. But they will share resources in areas like components and software development, where “making friends” will be a plus, Mibe and Uchida told reporters.
They declined to say whether the friendship will extend to a mutual capital ownership, while noting that wasn’t ruled out.
The two companies also agreed to have their model lineups “mutually complement” each other in various global markets, including both internal combustion engine vehicles and EVs. Details on that are being worked out, the companies said.
Honda and Nissan will also work together on energy services in Japan. Under Thursday’s announcements, Mitsubishi will join as a third member.
Toyota Motor Corp. , Japan’s top automaker, is not part of the three-way collaboration.
Although Honda and Nissan have very different corporate cultures, it became clear, as their discussions on working together continued, their engineers and other workers on the ground have a lot in common, Uchida said.
“Speed is the most crucial element, considering our size,” he added.
Uchida and Mibe repeatedly stressed speed, openly admitting BYD is moving very quickly, but they said there was still time to catch up and remain in the game.
“In coming together, we will show that one plus one will add up to become more than two,” Uchida said.
Yuri Kageyama is on X: https://twitter.com/yurikageyama
Learn how to craft an effective marketing plan to entice guests and drive restaurant sales.
In the restaurant business, it's not enough to just make great food — you also need to be a savvy marketer . Once customers love your food, they will keep coming back, but how do you get them to try you in the first place? That's where a comprehensive marketing plan comes in, and this guide, including examples of restaurant marketing plans and a useful checklist, will help you understand why you need one and how to proceed.
A restaurant marketing plan is a strategic roadmap detailing how your business can proactively attract new customers and retain existing ones. To plan your most effective marketing strategies , you need to begin by researching and writing about your restaurant's mission, value proposition, and unique selling points (USPs). Eventually, your marketing plan can guide you in concert with this broader restaurant business plan .
There are multiple reasons why a robust and structured marketing plan can benefit your restaurant.
A trial-and-error approach to marketing may sometimes get results, but that unpredictability can involve a lot of misplaced effort — and that means wasted time, money, and resources. A thorough restaurant marketing plan, with a deep dive into your priorities, is a way to bring efficiency to your marketing strategies in the same way a business plan does for the operational aspects of your business.
How can you entice curious new consumers and then convert them into loyal regulars? This is the question that should be top-of-mind for any restaurant owner, and it's precisely the question that a marketing plan can help answer. Taking time to create your plan is one of the best ways to assess which marketing channels can drive results for your business, how much you should invest in them, what success metrics you should aim for, and whether you need to alter or adjust your current promotions.
The most compelling reason to create a restaurant marketing plan may also be the most straightforward: the hospitality industry is a saturated and competitive space, and there's little doubt that your most successful competitors are devising their own marketing plans to stay ahead. Having a strategic document that reiterates your mission and value proposition sets you up to differentiate your business, address your target audience, and stay current in a fast-paced industry.
The foundation of a restaurant marketing plan is understanding who you are as a business and what you want to accomplish.
What targets does your business need to hit in order to be successful and sustainable? And how can you achieve those objectives? As you set goals, make sure they follow a S.M.A.R.T. framework:
Specific: Don't fall into the trap of making your objectives too broad or general. Narrow your focus.
Measurable: Establish how exactly you'll be able to track and benchmark any ongoing progress.
Achievable: Goals should always be realistic. If you're not pragmatic, you may be disappointed.
Relevant : Consider your overall mission for your restaurant and plan accordingly.
Time-bound: Along with being measurable and achievable, effective goals require defined deadlines.
For restaurateurs, conducting a SWOT analysis is an invaluable exercise. SWOT stands for strengths, weaknesses, opportunities, and threats, and it's a great tool for figuring out goals because it reveals where your business excels and where it struggles compared to other restaurants. To conduct a SWOT analysis for your business, consider the following:
Strengths are the internal aspects of your business that differentiate you in a positive way, like signature dishes or distinctive decor.
Weaknesses are internal factors that can negatively impact your business and hold you back, such as poor customer reviews or a lack of online presence.
Opportunities are external circumstances that you don't control but could strategically capitalize on. These can include shifting consumer preferences or social media trends.
Threats are external factors in the broader landscape that potentially pose risks. In order to decide which goals to prioritize in this first iteration of your marketing plan, you need to be ruthlessly honest about your business' problems and prospects.
But your SWOT analysis can also extend to your industry peers. Choose three to five competitors in your market that present the biggest challenge to your business, and conduct a SWOT analysis on them too. This time, how you define strengths, weaknesses, opportunities, and threats will be different. Consider these types of questions:
What are these restaurants doing well, and how could you outperform them?
What do their guests complain about, and how will you avoid these issues?
Are there ways to differentiate yourself when considering competitor weaknesses?
Based on their strengths, is there anything they do that you shouldn't compete with?
Completing your competitive analysis should help you better understand your restaurant's differentiators — and ultimately, these are the parts of your business you want to market.
A key aspect of your brand is your ideal target customer. Marketing will be much more successful if it's honed to the particular demands, desires, and preferences of the customers who are most likely to order from your restaurant.
Relevant information to consider includes:
Demographic indicators such as age, income, and the neighborhood where they live
Psychographic traits like values and reasoning for dining out or ordering in
Behaviors such as how they engage with your business
Nearby attractions (offices, colleges, retailers, other restaurants, etc.)
This data can be collected through conducting customer surveys and interviews, reviewing your sales analytics to identify trends, and by researching demographic information via online real estate databases or industry resources like the National Restaurant Association. Look for common denominators to inform your restaurant brand personality and positioning .
Think of your restaurant website as your second storefront — you want your customers to take notice when they see it. Just like your restaurant's physical appearance, your digital presence has the power to drive demand and increase business.
Your restaurant website should provide customers with essential information like your address and contact information, hours of operation, and menu. It should also be designed to be responsive or adaptive, meaning the layout seamlessly changes depending on the customer's device.
There are many methods you can incorporate into your marketing plan to build a high-converting, high-performing website that attracts traffic and generates engagement. Search engine optimization (SEO) involves refining keywords that customers often search for, such as the type of cuisine you specialize in and the area where you're located (e.g., "best tacos in San Diego"). Explore website optimization strategies that align with your S.M.A.R.T. goals.
But perhaps the most important purpose of a website is to serve as a hub for online orders , so your restaurant can reach all the prospective customers who want to buy what you're selling but may not want to dine in.
There is no one standard approach for planning a marketing budget. Every restaurant has its own circumstances, considerations, and objectives. If you're new to the scene, you may need to spend more on marketing to increase your brand's visibility. And while it's tempting to reduce a marketing budget when margins are small and money is tight — that's when investing in strategies to attract new customers and engage existing ones is more critical than ever.
You've built a website that can adeptly convert casual prospects into paying customers — but how do you convince people to visit your site in the first place?
Start by claiming your Google Business Profile and creating a Google My Business Listing. This appears as soon as people search for your restaurant online, and provides fundamental information — such as business hours, menu, photos, and reviews. Without this necessary online presence establishing your credibility and availability, curious consumers could move on to researching more enticing competitors.
Social media marketing is a key priority for restaurants today. Facebook supports a range of formats, from long-form text to captioned photos and videos, and also lets you pay for campaigns where you customize how much to spend, how long the ads should run, and the audience segments to reach.
Instagram and TikTok are favorites for sharing food content. While Instagram's gallery grids are a great way to show off your restaurant, your menu, your customer experience, and your company culture, short-form video is also highly effective, and this is where both Instagram and TikTok deliver value. Be intentional in how you add captions and hashtags to your content so that they're relevant to your menu, service offerings, location, and target audience.
Influencer marketing is another social media strategy that could help garner increased attention for your business. By partnering with the right influencers, you can reach a broader audience beyond traditional advertising channels.
Repeat business is a restaurant's bread and butter, and loyalty programs are an effective way to encourage customers to return. Modern digital loyalty programs can be integrated with many point-of-sale (POS) systems. Customers are able to accrue points, which are typically determined by what they order or how much they spend.
Email marketing for restaurants needs to be handled with care — when done right, customers appreciate receiving exclusive offers, specials, or discounts from their favorite restaurants. When optimizing your website to double as an e-commerce platform for online orders and delivery, choose a provider that will let you design and deploy loyalty programs and promotions through your POS.
Just as you claimed your Google My Business page, you'll also want to claim your page on the main restaurant review sites, where more and more customers are doing their preliminary research.
In many ways, these sites function as additional advertising and help to further boost your business' online presence. Make sure you add appetizing photos and maintain current contact and location information. Then respond to reviews to demonstrate that your restaurant cares about its guests.
Whether a review is positive or negative, it warrants a reply.
Positive reviews: Express your sincere appreciation — you might earn a repeat customer.
Negative reviews: Remain respectful to show you care about the customer's experience. Consider offering them a discount to return, or explain steps you've taken to address the issue in their comment.
An effective restaurant marketing plan takes work, but it means your business is engaging customers all day, every day — even when your store isn't open. Your performance on search engines, your presence on social media platforms and review sites, and any online advertising campaigns are all working 24/7 to build visibility for your brand. Take everything you learned from your SWOT analysis, market research, and customer research, and determine actionable steps for accomplishing your specific, measurable, achievable, relevant, and time-bound goals.
Once you've determined your objectives and the results you want to attain, the next step is to implement the strategic initiatives to hit your targets. The 2024 Restaurant Marketing Calendar & Toolkit is an invaluable resource for making this happen, with tools, tips, and templates to streamline the planning process.
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Start with a one-line description of your consulting firm. Provide a short summary of the key points of each section of your business plan. Organize your thoughts in a logical sequence that is easy for the reader to follow. Include information about your company's management team, industry analysis, competitive analysis, and financial forecast.
Step-by-step guide on writing a lean business plan with templates. Step 3. Set your rates and service packages. Following the actual industry norms to appoint your consulting fees. However, the price that you use should mirror both your expenses as well as the premium value that your expertise brings to your clients.
Step 4: Integrate your ideal schedule into the one-page consulting business plan. With step number 3, you've mapped out what you want to include in your business plan in terms of client type and nature of consulting work. In step number 4, we will build your ideal schedule into the business plan for the next 12 months.
In this section, we'll break down the key components involved in crafting a successful consultant business plan in six steps. 01. Executive summary. An executive summary serves as a concise overview of the consultant's business plan, providing a snapshot of the key components and the business' essence.
Consulting Firm Business Plan Guide. Starting your own business, or scaling up is intimidating. We're here to break it down piece by piece so you can create your very own plan. You're in the right place if…. You have an idea for a consulting firm, and you're ready to take the next step You've started a business, and you need focus and ...
Consulting Business Plan: Complete Consultant Template & PDF. This consulting business plan contains a detailed operating and marketing plan for starting and growing a successful business as a consultant. This consulting business plan is a comprehensive copy/paste example that includes an operating and marketing plan for any kind of consulting ...
Components of a Consulting Business Plan. A consulting business plan is a document that covers all aspects of your future consulting business, outlining your vision, goals, and strategies to achieve them. It removes the guesswork from how you will run your consulting business and provides a solid foundation for decision-making and growth.
2. Company Overview. This section of a business plan helps the reader get a thorough understanding of your consulting firm. The company overview offers a detailed description highlighting what type of consultancy you would run, its physical location, legal structure, mission objectives, history, and all such related information.
Picking a niche and defining your ideal client is the foundation on which you'll build your business — and get clients. You shouldn't move on with your consulting business plan until you've defined your ideal client. Once you've done that, you can move on to the next part: Magnetic Messaging. 3. Magnetic Messaging.
Consultant Business Plan Template. Prepared for: [Client.FirstName] [Client.LastName] . A consulting business plan is a document illustrating how you plan to start or grow your consulting agency. The key components include an overview of the business, team, industry, competitors, target customers, and a plan for the operations and marketing.
The keys to building a solid value proposition are to give decision makers solace that they made the right decision, he says, which can be done in three ways: 1. Offer a service guarantee, 2 ...
The objectives for Growth Management and Strategies are: Gain access to an SBA loan upon start up. Grow the company from 2 employees in Year 1, to over 10 by Year 5. Increase revenue to over $3 million by Year 3. Increase client base by 450% in three years. Maintain job costing that keeps margins above 70%.
Next steps. Download the One Page Business Plan and block off three hours to work on it. I suggest working for 50 minutes, taking a 10-minute break, and repeating that cycle three times. And, if ...
A business plan is simple—it outlines various components of your company, including how you'll measure success, what services you'll offer, and what your target market is. With a thorough business plan, you'll have a clear understanding of how you'll run your business, and you'll potentially be able to attract investors.
Business plans vary depending on the business and its audience, but below are some of the basic components of a business plan that apply across the board. ... Below is an excerpt of a market analysis section from this sample consulting business plan. Notice how detailed it gets, including specifying the target customer's business worth and ...
There are eight essential components, all of which are detailed in this handy guide. 1. Executive Summary. The executive summary opens your business plan, but it's the section you'll write last. It summarizes the key points and highlights the most important aspects of your plan.
2. Create a Business Plan. The first step for many business owners is to put together a business plan. Even a small business benefits from a business plan. Common elements of a business plan include: Executive Summary. Describe your business, your background, who your customers are, and your revenue expectations. Business Description.
Before you write your business plan, read the following example business plans written by fictional business owners. Rebecca owns a consulting firm, and Andrew owns a toy company. ... You can search the web to find free templates to build your business plan. We discuss nine components of a model business plan here: Key partnerships.
1. Summary of Your Business Plan. Better known as the Executive Summary, this component of your business plan basically outlines everything that you'll cover in detail throughout the plan. It's always the last part of the plan to be written as it should summarize the plan as a whole. Think of this as the quintessential "elevator pitch."
Here are some of the components of an effective business plan. 1. Executive Summary. One of the key elements of a business plan is the executive summary. Write the executive summary as part of the concluding topics in the business plan. Creating an executive summary with all the facts and information available is easier.
Ten Components of a Business Plan: 1. Executive Summary: The executive summary serves as the gateway to the business plan, offering an initial handshake between the business and stakeholders. It goes beyond a mere introduction; it functions as a strategically crafted teaser, encapsulating the essence of the business in a concise narrative.
Effective business plans contain several key components that cover various aspects of a company's goals. The most important parts of a business plan include: 1. Executive summary. The executive summary is the first and one of the most critical parts of a business plan. This summary provides an overview of the business plan as a whole and ...
Business consultants provide advice and develop strategies to help business owners overcome obstacles and meet their goals. A business consultant's specific responsibilities can vary depending on their areas of expertise and their clients' individual requirements. A business consultant can fulfill the following functions:
Engaging independent consultants to review plan fees and fiduciary processes can provide an additional layer of protection. Independent reviews can identify potential issues and suggest ...
The two key components of mastering sales and scaling include building a demand generation engine and transitioning from founder-led to sales leadership-led sales.
TOKYO (AP) — Japanese automakers Nissan and Honda say they plan to share components for electric vehicles like batteries and jointly research software for autonomous driving.
Nissan Chief Executive Makoto Uchida, left, and Honda Chief Executive Toshihiro Mibe shake hands during a joint news conference in Tokyo, Thursday, Aug. 1, 2024. Japanese automakers Nissan and Honda say they plan to share components for electric vehicles like batteries and jointly research software for autonomous driving. (Kyodo News via AP)
Components of an effective restaurant marketing plan. The foundation of a restaurant marketing plan is understanding who you are as a business and what you want to accomplish. Step 1: Be S.M.A.R.T. when setting goals. What targets does your business need to hit in order to be successful and sustainable? And how can you achieve those objectives?