And, if you already have sufficient business funding, should you skip strategic business planning altogether?
For any situation, this article describes seven essential exercises to contemplate. You can incorporate the answers into a traditional business plan, or create a flexible slide presentation that powerfully communicates your vision to others.
Do you have a crystal clear idea of the types of business undertakings that align with your gifts, talents, passions, and strengths? Have you thought about what your business can be the very best in the world at doing?
If the answers are "yes," you are in an excellent position to choose the ventures that can give you the greatest satisfaction and results.
If you're not yet totally clear, developing a set of "business success criteria" can enable you to select worthwhile endeavors with much deeper insight, and thus set the conditions for successfully pursuing them.
Why is this so important? Many people wander into businesses, projects, and professions opportunistically, meaning that they grab something that comes along because it's available and convenient. At times, this may be necessary for financial reasons. But unless we understand our underlying success criteria, we might not recognize the options that truly fuel and inspire us -- those that are best suited to our passions and strengths.
Some of your criteria could be practical considerations, and others more lofty. But all of your criteria will be essential to achieving balance, fulfillment, prosperity, and higher contribution in your life.
Do you know which audiences are best suited to, or already seeking, what you plan to offer?
Identifying your market niche involves brainstorming a set of potential target markets, and then combining and narrowing down the lists by comparing them against various criteria.
After selecting a niche that clearly portrays your perfect client or customer, you'll want to research it further to gain a more comprehensive understanding of it.
The more you learn about the needs, wants, frustrations, pain, and challenges of your audience, the more precise your marketing and product development efforts can be.
Competitors consist of other companies currently offering the same or similar products or services, companies that could offer the same or similar products or services in the future, and also companies that could remove the need for your products or services.
If you have no close competitors, look for comparable businesses offering similar products or services in related industries. If they produce complementary wares, they might become valuable affiliates or collaborators.
To ensure that you can compete or collaborate successfully with the very best providers in your market, you first want to identify the key features of your own offerings.
You'll also identify the value elements (the special, intangible qualities, such as top-notch expertise, satisfaction warranties, or stellar customer service) that your business offers or will offer.
You then perform a competitive analysis to see how your value elements compare with those of other companies.
Have you thought about how well positioned you are to take advantage of all of the positive internal and external forces in your business?
In contrast, how well can you minimize or manage the risks associated with the negative forces?
You can determine the internal factors under your control (your business strengths and weaknesses) and external factors (opportunities and threats) via a "SWOT analysis."
You then devise strategies to harness your "strengths and opportunities" while reducing or working around your "weaknesses and threats."
Are you planning to do business in a domain already filled with competitors, where there's only a small chance of thriving? "Blue ocean strategizing" can help you rechart the waters.
Derived from Harvard Business School's "Blue Ocean Strategy," this process repositions your business if it's in a highly competitive niche.
You can rework your offerings to include new features and eliminate, increase, or decrease others. You can also target new audiences. In so doing -- much like the wildly successful CNN, Cirque du Soleil, Curves fitness for women, Southwest Airlines, and many other businesses -- you can map new directions and ultimately sail away from your competition.
Have you identified a purpose, visionary goals, and a set of guiding values to aim your business endeavors toward the right targets? After developing your core philosophy, you can make periodic course corrections in relation to it.
Thomas J. Watson, Jr., former IBM chairman, explained it like this: "If an organization is to meet the challenges of a changing world, it must be prepared to change everything about itself except its basic beliefs as it moves through corporate life. . . . The only sacred cow in an organization should be its basic philosophy of doing business."
Importantly, your business values, once defined, can become screening tools to first attract, and then later evaluate, personnel, partners, and clients.
Do you know how to convey the benefits of your products and services? Based on the results of all preceding activities, this process entails creating and polishing a concise description of your offerings that differentiates you from your competition and positions you as the market leader.
Known as either a unique selling position or proposition, a USP is the unforgettable business promise you share with the world. For example: FedEx's classic, "When it absolutely, positively has to be there overnight."
In conclusion, when you've completed this process, you'll have a powerful business manifesto of guiding principles to inspire any financial backers and prospective employees, partners, or clients.
Bankers can be nervous little critters and need to be assured of two things:
1. Your company is stable and has enough cash flow to pay back the loan with interest.
2. The owners of the company, that's you, has the intention to pay back the loan.
A business plan demonstrates that the company has the assets in place to secure the business loan if all else fails. It also shows that you, as the owner, has the foresight to plan ahead. The business plan gives the banker just about everything they need to know about your company.
What should be included in a business plan? It's not a complicated document to put together. You'll need an executive summary which should be about two pages long and is just, as the title says, a summary of your plan. Also included should be an overview of the history of your company, its industry, the market, competitors, the products, and marketing strategies. The business plan doesn't have to be 300 pages long. As long as all the required information is included it can be 10 to 15 pages in addition to the financial statements.
The business plan also includes the historical financials for the last three years and projected profit and loss statements, balance sheet and cash flow projections for the next three years. If the historical statements can be put together by your account so much the better.
A banker would probably also want to see an aged listing of your accounts receivable and payable. A list of your major accounts would be appropriate as well.
Bankers use the information to learn about the company and the principals. It also gives them documentation for the loan committee to justify the loan, interest rates, and loan covenants.
Of course the bank won't use the business plan as the only information and sole documentation but will verify it with outside information, credit reports, a Dunn's report, and if necessary onsite inspections.
The business plan also serves as a check point. Down the road the banker can look at your current performance and compare it to projected performance in the plan. If there are huge variances, an explanation will be necessary.
Appearances count in a business plan. Have a few trusted advisors read it for clarity; if they don't understand your plan, the banker won't either. And what isn't understood doesn't get approved. Triple check for spelling and grammatical errors, first impressions count. Finally, even if you use a program for forecasting, check the math, and check that any changes you've made in your forecasting model are carried through to your narrative in the plan. It's confusing to find one number for total sales in the financial statements and another one in the narrative.
Have the plan copies on good paper. You can print on both sides of the page if the paper is heavy enough in weight to stop the bleed through to the other side. It's not necessary to use a gold embossed leather binder, but do use a new binder.
Creating a solid business plan is the first step in answering the question: How do I get a business loan?
Both Adele Sommers & Dee Power are contributors for EditorialToday. The above articles have been edited for relevancy and timeliness. All write-ups, reviews, tips and guides published by EditorialToday.com and its partners or affiliates are for informational purposes only. They should not be used for any legal or any other type of advice. We do not endorse any author, contributor, writer or article posted by our team.
Adele Sommers has sinced written about articles on various topics from Blogging, Site promotion and Retirement. Adele Sommers, Ph.D. is the author of the award-winning "Straight Talk on Boosting Business Performance" program. She helps people "discover and recover" the profits their businesses may be losing every day through overlooked performance potential. To sig. Adele Sommers's top article generates over 14800 views. to your Favourites.
Dee Power has sinced written about articles on various topics from Credit Cards, Sales and Negotiation and Business Plan. Want to know about other ways to finance your business? Dee Power has written several books including. Dee Power's top article generates over 450000 views. to your Favourites.