The Business Planning Process
A good business plan lays out what you want to do
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A better plan details how you will do it
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A great plan explains why
- The complexity of the business
- The degree to which business strategies have been clearly defined
- The availability of industry research
- The amount of published company literature
The following explains the objectives and activities of each phase in the process. Again, business plans are as individual as companies, and the following outline is only meant to give an idea of the process and should not be considered an outline for your business plan.
Descriptive Information Phase: The first phase of the business plan development process typically starts with an introductory meeting where the descriptive information about the business is outlined. The following represents typical information that will be covered during the first phase:
- Products / services features and benefits
- Technology descriptions and classifications
- Infrastructure and organizational models
- Key employees, officers, and board members
- Service providers
- Legal information
- Company history
- Ownership status
- Key suppliers and vendors
Market Information Phase: The second stage in the development process is to arrive at an accurate description of the markets in which the company competes with its products and services. An in-depth understanding of the market is required in order to obtain funding. Typical elements include:
- Target market definitions and mechanics
- Market size, segmentation, and growth
- Current target market customer profiles
- Current and future competitor matrix
- Market opportunity
Market Strategies Phase: The third phase in the business plan development process seeks to answer the following questions: How do we compete now and how will we position ourselves to compete effectively in the future? Typical topics addressed in the market strategies phase include:
- Goals, objectives and milestones
- Marketing and sales programs
- Differentiation
- Pricing
- Penetration
- Distribution channels
- Competitive advantages
- Current and sought alliances
Business Model Phase: Based on the information from previous phases, current and future business models are defined. Issues covered may include:
- Resource leveraging
- Use of information technology to monitor the workflow and automate and support business processes
- Value chain
- Value propositions
- Mission statement and corporate values
- Critical risks and contingency planning
Financials Phase: The last and final phase of the business plan development process covers past and projected financial performance. In essence, making the financials is the art and science of translating your goals and business model into numbers. Typical issues covered are:
- Assumptions
- Historical and projected income statements, statements of cash flow, and balance sheets
- Customer acquisition/other growth costs
- Ratio and break-even analysis
- Cash flow analysis and projected use of funds
Following completion of these phases, an executive summary is developed and the plan is edited to an appropriate length. Typical follow-up services include additional in-depth market research, preparation of presentations, coaching, and plan updates based on funders' input and deal structure/term sheet analysis. The plan and financials are delivered in both printed and electronic forms and cited research is cataloged and delivered in a binder.
