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A Winning Business Plan Template

April 16, 2010 by Frank Goley, Business Consultant

I have been writing business plans for over twenty years and have perfected a business planning process that works for most businesses and business plan purposes. The result of that process is an eight section business plan. Here is the winning template for that business plan. You can adapt it for your business planning purposes and change the order of the sub-sections to meet your particular requirements. My business planning process is detailed in my book: The Comprehensive Business Plan Workbook – A Step by Step Guide to Effective Business Planning.

1.0 Executive Summary

1)     Company Information

2)     Business Plan Purpose & Objectives

3)     Company Goals & Vision

4)     Company Mission Statement

5)     Company Description

6)     Company Purpose

7)     Company Situation

8 )     Founders, Management & Principals Capabilities

9)     Products & Services

10)  The Competition

11)  Keys to Success

12)  Finance

13)  Growth & Expansion Goals

14)  Sales Forecast

15)  Return on Equity / Return on Investment

2.0 Company Overview

1)     Company Establishment

2)     Company History

3)     Company Structure

4)     Company Ownership & Legal Formation

5)     Facilities & Locations

6)     Products & Services Overview

7)     Trends Affecting the Company

8 )     Customers

9)     Competitive Strategy

10)  Company’s Strengths & Weaknesses

11)  Company Performance

12)  Company Finance

13)  Company Assets

3.0 Management and Operations

1)     Employees

2)     Management Philosophy

3)     Management Requirements

4)     Management Gaps

5)     Organizational Structure

6)     Founders / Directors / Principals / Management / Key People

7)     Management Administrative Procedures & Controls

8 )     Decision Making Teams & Processes

9)     Company and Management Objectives, Goals and Strategy

10)  Compensation Structure

11)  Human Resources

12)  Outsourcing

13)  Consultants and Advisors

14)  Products and Services Production and Delivery

15)  Distribution System

16)  Order Turn Around

17)  Suppliers and Vendors

18)  Service Standards

19)  Customer Service Plan

20)  Quality Control

21)  Costs Minimization

22)  Technology

23)  Production and Operation Advantages

24)  Capacity

25)  Safety Procedures

26)  Inventory

27)  Environmental Considerations

4.0 Products and Services

1)     Products and Services Description

2)     Awards, Honors & Achievements

3)     Case Studies

4)     Product and Service Mix and Price Points

5)     Life Cycle6)     Production Strategy

7)     Research and Development Strategy

8 )     Space Utilization

9)     Departments Descriptions

10)  Future Products and Services

11)  Effects of Technology

12)  Computerization Requirements

13)  Company Sales Literature and Brochures

14)  Internet Strategies15)  Electronic Ordering and Fulfillment

16)  Inventory Method and Management

17)  Regulatory Compliance

18)  Product and Service Liabilities

5.0 Marketing Plan

1)     Industry Overview

2)     Industry Distribution

3)     Market Segments Description

4)     Market Segment Needs

5)     Market Segmentation Strategy

6)     Market Trends

7)     Market Growth

8 )     General Nature of the Competition

9)     Customer Choice Factors10)  Product and Service Competitive Comparison

11)  Competitive Analysis

12)  Competitive Positioning

13)  Competitive Edge

14)  Marketing Strategy

15)  Marketing Programs

6.0 Strategic Plan

1)     Company Objectives

2)     Potential Problems and Risks

3)     Risk Analysis

4)     Company Strategies, Strategic Tactics and Strategic Programs

5)     Sales Strategy

6)     Sales Programs

7)     Strategic Alliances and Joint Ventures

8 )     Operating Budget

9)     Sales Forecast

10)  Milestones

11)  Control Mechanisms

7.0 Financials

1)     Sources and Uses of Funds

2)     Financial Strategy

3)     Capital Equipment Valuation

4)     Company Collateral

5)     Assumptions

6)     Financials / Valuations / Financial Analysis / Budgets

7)     Exit Strategy

8 )     Harvesting Value Strategy

9)     Venture Risk

10)  Effects of Investment and Finance on Cash Flow

11)  Tax Strategies

8.0 Appendix

1)     Resumes

2)     Customer Testimonials / Recommendation Letters

3)     Letters of Intent and Interest / Memorandums of Understanding

4)     Reference Letters

5)     Joint Venture and Strategic Alliance Agreements

6)     Land Purchase Agreements

7)     Product and Service Agreements

8 )     Other Agreements9)     Contracts, Leases and Pre-Sale Commitments

10)  Patents, Trademarks, Service Marks, Copyrights and License Agreements

11)  Brochures and Advertising Materials

12)  Industry and Marketing Analysis and Studies

13)  Market Research and Supporting Articles

14)  Product Line Pictures, Renderings and Illustrations

15)  Facilities and Equipment Pictures and Layouts

16)  Maps and Photos of Business Locations

17)  Construction Plans, Timelines and Disbursement Schedule

18)  Engineering Studies

19)  Company Registration and Charter

20)  Company and Principals’ Credit Reports

21)  Tax Returns

22)  Quarterly and Annual Reports

23)  Appraisals and Valuations

24)  Feasibility Studies

Posted in Business Planning. Comment

Business Plan Development – Plan Length, Development Time and Packaging

April 15, 2010 by Frank Goley, Business Consultant

Business Plan Length

A Comprehensive Business Plan will typically be over 50 pages and can be upwards of 100+ pages.  This is highly dependent on the size, scope and sophistication of the business, venture or project.  From the Comprehensive Plan it is a simple task to form your Ancillary Plans (such as a Funding Plan).  Ancillary Plans typically are no more than 30 pages with 20-25 pages being the goal.  Ancillary Plan brevity forces you to decide what is most important and necessary for the type of plan and the intended audience. 

Business Plan Writing and Development Time

300 Hours would be the maximum in most circumstances with 75-100 hours being a typical range.  Again this depends on the scope and complexity of the Business Project.

Packaging

1)     Clear Front Cover, Dark back cover, bound

2)     Cover clearly denotes the Type of Business Plan (i.e. Funding Plan), Your Company Name and name of the Venture Project.

3)     First page should contain any Disclaimers, Non-Disclosure Requirements and Proprietary Protections. 

4)     Table of Contents

5)     Organized by Sections

6)     Cover Letter accompanies the Plan with Hot Button highlights for the specific reader.

7)     Use a Long Version Executive Summary, Fact Sheet, Venture Overview, Investment Overview and / or  Loan Summary (as applicable for your type of deal and targeted reader) to solicit interest.  Follow up with the Business Plan if serious interest is obtained, after having your Non-Disclosure Agreement signed (if applicable and really necessary—unnecessary NDs turn off potential investors).

8 )     Neat.  No sloppiness or errors.  Good Grammar and Punctuation.

9)     Use concise language.  This is a business document, not prose.  Don’t be too technical for external plans.

10)  Have paper copies, email version and online versions.  When sending a Paper Copy to someone, also include a DVD so different parts can be printed off as needed for department or committee review.

11)  Keep your Loan Package and the Business Plan as separate documents.  The Loan Summary should accompany the Loan Package and the one sheeters (Venture Overview, Fact Sheet and Investment Overview) should accompany the Business Plan (these summaries can be used as standalone documents as well).  

12)  Package is specific to the audience.  Include Sections specific to that audience’s requirements and interests. Each Business Plan is packaged and edited for the Type of Plan and customized for the audience.  Select the particular sections from your Comprehensive Plan and adjust as necessary to target the audience and use.

13)  Some examples of specialty / ancillary Business Plans:

a)     Funding Business Plan:  i.e. for Lenders, Venture Capitalists, Investors, Finance, etc.

b)    Strategic Plan:  i.e. For the Strategic Planning Team, Sales Manager, Strategic Partners, Suppliers, Customers, etc.

c)     Marketing Plan:  Internal Company Version and External Version (i.e. for Customers).

d)    Sales Plan: Combine the applicable parts of the Strategic & Marketing Plans for your Sales Division.

e)     Supplier Plan

f)     Customer Plan

g)    Distributor Plan

h)     Government Relations Plan

i)      Public Relations Plan

j)      Technical Plan

k)     Engineering Plan

l)      Joint Venture Plan

m)   Strategic Alliance Plan

n)     Product Development Plan

Posted in Business Planning. Comment

Business Plan Organization – Part Two

April 14, 2010 by Frank Goley, Business Consultant

This blog post on Business Plan Organization is a continuance from my previous blog post, and the reason why it starts with item # 7. We pick up with Section 6 of the Business Plan, the Strategic and Sales Plan, and continue to the end of the plan, Section 8, The Appendix. You can find items # 1 thru 6 in the previous post. Organization of your business plan can be the make or break of an effective business plan so it is an important aspect to spend some time on. Good organization will also certainly make your business plan process better and much easier to develop a good plan.

7)  Section Six:  Strategic & Sales Plan

The Strategic Plan puts the Marketing Plan into action, showing how to implement the Marketing Plan into a cohesive and executable Sales Plan.  The Strategic Plan develops a system to effectively deal with Potential Problems and Risks and culminates in producing Company Strategies, Tactics and Strategic Programs. These programs are implemented through the developed Sales Programs and Sales Plan.  Operating Budgets, Control Mechanisms, Milestones and Sales Forecasts are also integral parts of the Strategic Plan. 

The Strategic Plan provides a process for Strategic Management, Auditing and Reassessment.  It measures performance, has control functions and corrective actions, reassessing when and where necessary.  Strategic Planning is top-down and bottom-up, completely integral to your Company’s Operations, from the Vision and Leadership of the CEO, to Management’s Implementation Oversight, to the Sales and Operations Units. It provides company-wide Strategic Vision, Focus, Structure and Discipline, while providing an atmosphere of learning and awareness, with a process for identifying deficiencies and, in turn, fixing those challenges.

8 )  Section Seven:  Financials

If you develop an effective Strategic Plan through our a well prescribed process, completing the Financial Section will not be as difficult as often anticipated.  The principal reason why business owners have such a hard time constructing the Financial Section is most often due to a cursory job on their Strategic Planning Process.  Financial Projections are not believable or realistic when the Strategic Plan doesn’t do an adequate job of harnessing the Market Plan into an achievable well thought out Company Strategy.  Good Financial Forecasting starts with a well developed Product or Service Plan (Section 4), a well researched Market Analysis and resulting Marketing Plan (Section 5) and culminating into a solid Strategic Planning Process (Section 6).  This ensures your “best guesses” as to future performance are well researched and developed.  This is why it is so critical that you work through a good Business Planning Workbook in a building block order; otherwise, your Financials will be lacking accurate forecasting.  The culmination of a good Strategic Planning Process makes for solid Financial Projections.

Probably the most important of all the Financials is the Cash Flow Statement. The Cash Flow will assist you on a daily basis in running your business effectively.  Simply put, the Cash Flow shows the influx of cash and the outflow of cash in your Business. Cash Management is absolutely critical in successfully running your business, project or venture.  The Cash Flow Statement is also very important when you are seeking funding for your operation and analyzed closely by lenders, investors and venture capitalists alike. Your Cash Flow is also critically important to your relationship with your Suppliers. Having a Supplier Business Plan containing a history and projection of Cash Flow can really help your Suppliers become good partners in managing your cash flow, thereby, enhancing your profitability significantly.   

The Cash Flow Statement should be your guiding force in Financial Modeling and Cash Management.  Effectively managing your Cash creates leverage, which will lead toward increased profitability.  The leverage is created within a Cash Flow Management System as it shows how much cash is necessary to grow and finance your Company.  Many businesses focus on the Profit and Loss Statement, which is very important; however, they often over look the Cash Flow Statement.  Good financial analysis focuses on the Cash Flow Statement, then relates it to the Profit & Loss components (i.e. minimizing costs), which in turn increases Profitability and results in a stronger asset and equity base on the Balance Sheet.  Financials and good Financial Management stem from the inter-connectivity of a Company’s Financials.  Don’t forget how important Cash Flow Management is to your Company’s future profitability and net worth.

Another very important Financial, which works hand in hand with the Cash Flow Statement and Cash Management, is your Company’s Target and Actual Budget.  Budgets are used principally for two purposes:  Planning and Control.  A Budget matches short term targets with long term Strategic Planning, while providing an indicator of future problems ahead.  A good Budgeting System will indicate when Costs and Expenses are heading over Budget (Actual vs. Target), providing the business owner time and opportunity to correct the problem before it significantly affects Cash Flow.  Your Budget is an extension of (and a result of) your Cash Flow Statement, helping you to effectively control and plan your operational cash, costs and expenses. 

We recommend Rolling Budgets which look forward 12 months on a monthly basis, budgeting an additional three months at the end of each quarter.  This way you always have a 12 month continuous outlook for Planning Purposes, yet provides you real time Cost Basis for Control purposes.  A Budget should be flexible so that you can separate the effects of variations between Actual and Estimated results.  Moreover, a Budget is a tool to evaluate your Business Units (Departments) and Management’s Performance.  Needless to say, assembling a good Budget requires the input of your entire organization, which in turn, is a very good thing.  Just as your Business Plan should be an integral part of your Company’s every day operations, so too should your Cash Flow, Cash Management and Budgeting Process be intertwined fully into company operations.

It is important to understand how your Financials relate to each other as you build and develop them.  This is why Financial Software Programs are so beneficial, making Financial Analysis, Development and Projections a snap (once you have developed a solid Strategic Plan).  There’s a lot of back and forth between the Profit and Loss Statement, Balance Sheet and Cash Flow Statement.  When using a Financial Software Program, it is important that the program allows you to customize the Formats for your specific needs and download the Financials into Excel Spreadsheets for maximum utility and flexibility. 

When making Financial Projections, the projection period differs for the particular company, venture or project.  For instance, a large scale Real Estate Development Project’s Cash Flow Projection could be three, five or ten years, depending on the project scope and length. Also Real Estate Companies and Projects typically require additional Financials, such as, the Construction Cost Analysis and Cash Flow, Schedule of Real Estate, Construction Cost and Disbursement Schedule, and so on (Note:  some of these may be applicable to other business sectors as well- for instance, a Tire Distribution Company may have substantial real estate holdings, hence, a Schedule of Real Estate would apply).  Also, for Real Estate Companies and Projects (as well as for companies applying for business finance), the Loan Package is an important aspect of your Business Plan.   

A very important component of the Financial Section is the Assumptions sub-section.  This details the assumptions you have utilized in developing your financials.  It is important to list the various calculations and formulas used in developing your Financials since those formulas can be company, deal or project specific.  Detailed assumptions provide transparency to your Financials. 

Financial Projections need to be believable and realistic. If anything, they need to be conservative.  Too often we also see extremes of too few numbers or too many numbers.  Provide best case, worst case and expected Financial Projections, along with simple and detailed formats.  Remember that if you build out your Financials as a result of a good Strategic Planning Process, the financial results will most likely be believable and realistic as possible.  We find that if your Financials have truly conservative numbers (yet still see profitability), you will often exceed your Plan which becomes a great Psychological boost for your Company (and any lenders or investors).

9)  Section Eight:  Appendix

The Appendix Section of a business plan can be aptly called the Due Diligence section.  It contains the “proof in the pudding”.  It contains all the Bulky Documents which supply merit and proof to your Business Plan’s assertions. Since the Appendix is large in volume, it is important to have a separate Table of Contents with Tabbed Sections for easy reference for this section.

Posted in Business Planning. Comment

Business Plan Organization – Part One

April 13, 2010 by Frank Goley, Business Consultant

Overview

The organization of a Business Plan is very important.  I use an eight section business plan format that is in a specific order as each section builds from the previous section (note:  you may have to jump back and forth on a limited basis between the Products and Services Section and the Marketing Section, as well as, the Strategic Section, depending on the extent of your market and product development to date).  There is fluid thought and connected reasoning employed to achieve a Business Plan that reaches its intended purpose (i.e. to run a business, to buy a business, to enter a Joint Venture, to finance a business, to complete a particular project, etc).  Although the Executive Summary is the first section of a Plan, it should be written last.  All the other Sections should be developed in a build block order provided in a Business Plan Workbook Process.  

A Business Plan is a business document; you are not writing prose.  It should contain a precise and concise format and be organized into numbered Sections and Sub-Sections, which contain specific information in short, paragraph form.  Business Plans should be produced in paper form, computer format and online format.  Computer Format means the Business Plan is integrated into the Company’s Computer Network.  It also means the Table of Content’s Sections are hyperlinked so you can easily navigate and access information on the Plan just by clicking on the links. 

You should have your Business Plan uploaded securely, online (via login and password access) on your website so that Key Managers, Employees, Sales People, etc can access the information remotely no matter their location.  You can have different versions available online for particular purposes, segregated by different logins and passwords.  For Example, you can have your Sales Plan accessible remotely so your Salespeople can use it as a sales tool or update it with up to the minute feedback for the Sales Manager and the Marketing Department.  Another example would be having your Funding Business Plan accessible online with versions for different audiences:  bankers, venture capitalists, angel investors, etc. 

Business Plan Sections 

1)     Table of Contents 

The Table of Contents is one of the most important parts of the Business Plan.  The TOC should be very detailed and well organized so that the reader and user can find and access the information easily and quickly.  You can write a great Business Plan with all the necessary information in it, but if the reader can’t easily find or access the information, then the Plan ceases to be a useful tool. 

The TOC should be organized by each Section and Sub-Sections of the Business Plan with the corresponding page numbers.  It is strongly recommended that your Business Plan be developed as an outline document, with all the Sections and Sub-Sections in the Table of Contents hyperlinked to the page where the information resides.  This way the reader and user can access the information quickly and easily. 

2)     Section One:  Executive Summary 

The Executive Summary should be written last.  Why?  Because it organizes and summarizes the entire Business Plan.  You cannot achieve this effectively until all the other sections (2 thru 8 ) of the Plan are completed.  We suggest developing two renditions of the Executive Summary – a short version of 2 – 3 pages in length and a longer version of 5 – 7 pages.  The short version should be written after the long version is completed, keying on the most significant information from the long version. 

The Executive Summary gives the reader a quick overview of the important facts contained in your Business Plan.  The long version of the Executive Summary can act as a standalone document to be used to succinctly explain your Business and generate interest in your opportunity, or products and services.  For instance, the long version of the Summary can be sent to a Venture Capital Firm to generate and gauge initial interest, to be accompanied by your one-sheeters:  Fact Sheet / Venture Overview / Investment Overview.  If interest is indicated, you can send the VC Firm a custom tailored Funding Business Plan (customized to their particular investment requirements) which will contain the short version Executive Summary. 

Brevity, yet completeness and inclusiveness, is key when writing your Executive Summary.  It should be concise yet have adequate detail about your Business Plan.  It may take several attempts to achieve this balance. 

3)     Section Two:  Company Overview 

This section encapsulates who you are as a Company: the History, Structure, Ownership, Locations, Products and Services Summary, Strengths and Weaknesses, Performance, Customers, Trends, Company Assets and so forth.  This section comes first in the Business Plan (following the Executive Summary) since it serves as an introduction to the necessary details and background of your company. 

4)     Section Three:  Management and Operations 

This section builds on the Company Section explaining in more detail who will run the company and how it will be run.  You can have the greatest business idea but lack the right people to execute your Plan.  Therefore, the Management and Operations Section is one of the most important elements of the Plan. 

5)     Section Four:  Products and Services 

Now that you have developed the Company and Management / Operations Sections, it is time to describe your Company’s Products and Services in detail.  This section identifies why your Product and Service is unique and where weaknesses reside.  Customer and Market identification, analysis and segmentation starts in this section to be later developed in the Marketing Plan and implemented through the Strategic Plan. 

6)     Section Five:  Marketing Analysis and Plan 

The Marketing Section explains in great detail how your Product and Service will be positioned and distributed in the market, supported by detailed, believable market research.  This section deals with your Industry, Market Segments, Target Markets, Market Trends and Growth, General Competitive Environment, Customer Choices and Competitive Analysis / Positioning / Edge, to culminate in your Marketing Strategy and Programs.

In the next blog I will pick up with Section 6, the Strategic Plan.

Posted in Business Planning. Comment

Business Plan Implementation

April 12, 2010 by Frank Goley, Business Consultant

A Business Plan is a dynamic document: it changes on a daily, weekly and monthly basis.  By having your Plan accessible on your Company Computer Network and Online, the CEO, Executives, Management and Key Employees can use it and update it easily and effectively.  In order for a Business Plan to be successful, it must be intertwined into the fabric of your business.  Just writing and developing the Plan is only half the battle.  Without effective Implementation, a Plan is just a document without “a soul” or purpose.  A Business Plan must become a “living” document within your Organization.  By using computer technology and high speed internet, a Business Plan can be readily adopted into your Company’s every day operations. 

Some Tips for your Plan’s Implementation 

1)     Ensure it is a part of your daily, weekly, monthly, quarterly and annual Operational, Performance and Strategic Planning. 

2)     It is the Key Driver behind your Marketing Team and Sales Team.  It is actually used as a Sales Tool to realize sales goals. 

3)     Forces your Marketing Team and Sales Team to work closely together.  Field updates and comments are instantly accessible to the Marketing Team and Sales Managers via the Company’s Computer Network, enabling both divisions to provide real time solutions and support to the Sales Team. 

4)     Has full support of the CEO, providing a system of communication among all levels of your Company. 

5)     Specific Implementation goals are set, met and monitored through the Strategic Planning and Management Process.  Implementation Responsibilities are assigned to specific key people and departments. 

6)     The Plan is an integral part of the entire Company – when a given employee turns on the computer at her desk in the morning, the first thing to appear is that person’s goals and responsibilities for that day, with expandable tabs for forward looking outlooks (weekly, monthly, etc.). When the CEO turns on her computer in the morning, up pops the Company’s Daily, Weekly and Monthly Goals, with highlighted areas showing Actual verses Projected performance, along with potential problem areas and opportunities.  From the top / down to the bottom / up, the Business Plan is the unifying factor within a Company clearly spelling out tasks, goals and performance on a daily, operational basis. 

7)     A Plan’s flexibility and ability to adapt and change on a daily basis is key to its implementation.  It must be a fully adopted Process into the daily operations of a Company in order that the Company knows where it stands, where it’s going and what areas need addressing at any given time. 

8 )     Just Talking about the Plan, Developing the Plan and having a Completed Plan aren’t enough to achieve success.  It must be fully adopted and implemented to obtain its derived success.  I cannot stress this enough:  Make the Completed Plan a part of your Business by utilizing computer and internet technologies. Make it a real-time, living Process, adapted to specific Department’s needs and responsibilities. 

9)     Each stage of the Company’s Growth must match assumptions with outcomes and determine how to proceed to the next milestone in the Strategic Plan. 

10)  Business Plan Coordinating and Monitoring: An overall Coordinator for the Business Plan must be selected.  That coordinator is responsible for bringing together the various parts of the business plan into one Comprehensive Plan, along with monitoring the continuing process of following the Plan.  It is very important that the Key Strategic Objectives and Tactical Objectives are clearly defined, assigned to the right people and overseen by the CEO and the Coordinator – ensuring progress, goals and dates are being satisfied and met.  Systems are in place for individuals, teams and departments to monitor and track their areas of responsibility, reporting to the Business Plan Coordinator, who in turn, reports to the CEO and Executive Management. 

The Plan monitoring process should be streamlined and be as simple as possible.  It should be integrated as a complete system into the Company’s Computer Network so that individuals, teams and departments can add information and share information while ensuring the Coordinator, CEO and the Executive level of the Company can track and manage its progress.  The Coordinator works with the Strategic Planning Department to make note of shortfalls, determine the need for re-forecasting and call meetings to ensure the Business Plan is on track and changes are made as needed.  This, in turn, is coordinated with the CEO and Executive Management, keeping them informed and updated via the Company’s Computer Network. 

Both the CEO and Coordinator are responsible for discussing and communicating the Goals of the Business Plan with company’s employees.  The Coordinator is responsible for daily management of the Plan’s objectives, while the CEO keeps a global outlook and vision, providing the major direction the Company is taking.  The Coordinator position should be a Senior VP position with indicative, as well as, broad based experience in Business Planning and the Industry. 

Remember: A Business Plan is just a document. It is the Implementation System installed with in a company which brings out the effectiveness of the plan and ultimate company success.

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The Top 100 Business Planning Mistakes – Part Two

April 8, 2010 by Frank Goley, Business Consultant

I have been writing business plans for over twenty years and have seen a lot of different reasons why they fail and are ineffective. I have learned by experience and through great mentors what makes a successful business plan. Good business planning comes from experience, by trial and error. This blog will give you a short cut through the business planning learning curve. I have assembled the top 100 mistakes commonly made in business planning so you can avoid them. Here are the last 50 (plus three bonus ones)…Please see my previous blog post for the first 50.

1)     Missing significant market changes caused by economic, social, demographic, technological and other trends.   

2)     Not effectively segmenting your market. 

3)     Presenting your evidence to make your market appear subservient to your Company’s needs, instead of the opposite. 

4)     Underestimating Competitive, Potential Strength and Edge. 

5)     Boldly declaring and assuming you have no competition. 

6)     Unaware of Competitor’s market plans. 

7)     Not differentiating effectively between Sales and Marketing.  Sales = dealing directly with customers.  Marketing = enticing the customer to consider your product or service. 

8 )     Justifying your Pricing Strategy solely by the cost to produce, market and sell your product or service without considering market and customer price tolerance. 

9)     Assuming your Distributors will give your Product or Service equal sales time without having an Agreement of such. 

10)  Not effectively targeting your markets by attempting to fulfill many lucrative yet unrelated market gaps. 

11)  A Marketing and Sales Strategy that is too broad or unachievable. 

12)  Underestimating the significance of Brand Name and Awareness and Product Packaging. 

13)  Failure to assess your Manufacturing Process, Operations and Alternatives in terms of costs, capabilities, serviceability, delivery and such. 

14)  Inefficient Plant, Factory and Workplace Layout. 

15)  Failure to manage costs. 

16)  Poor Inventory Control Planning:  No balance between meeting demand and minimizing costs via ordering, production, handling and storage, capital allocations, parts and product shortages, etc.  Inadequate Inventory Control System. 

17)  Failing to clearly isolate and identify all product or service costs (i.e. fixed, variable, direct, and indirect). 

18)  Poor Personnel Management Plan:  Poor hiring practices.  Lack of quality Management practices. 

19)  Failing to plan for Long-Range needs and changes in locations, facilities, equipment and machinery. 

20)  Having a Management Team with vastly unrelated experience to the industry you are in. 

21)  Missing Non-Compete and Employment Contracts which protect the proprietary nature of your business.   

22)  Giving up too much ownership to attract and attain good people and management or compensating such people too much without basing your incentives on achieving Strategic Milestones, by creating a paradigm in which an equitable payback occurs for the outlays to key people. 

23)  Absence of a prestigious, experienced, unpaid, active and objective Board of Directors (“unpaid” not referring to equity ownership). 

24)  Lack of a Succession Plan and Crisis Management Plan in the event of losing key people. 

25)  Not having enough ownership to offer in the event second round funding becomes necessary.  Lack of strong equity to leverage funding goals and terms. 

26)  Failure to solicit advice and support services from mentors, competitors, business consultants, legal counsel, accountants and financial advisors. 

27)  Inadequate accounting system and poor record keeping. 

28)  Failure to devise a Management Strategic Plan which addresses how to encourage the best possible performance of your people. 

29)  No clear lines or authority and accountability.  Poor Management control systems. 

30)  Nonexistent staff growth plans. 

31)  Poor Training Procedures. 

32)  Too much emphasis on Top Heavy Management (i.e. too many chiefs, not enough workers). 

33)  Lack of Team Building and goals.  Little coordination and communication between Departments. 

34)  Lack of a solid Strategic Planning Process and Direction. 

35)  Unrealistic, unattainable Strategic Milestones given available capabilities, resources and time frames for completion. 

36)  Lack of Alternative Plans in your Strategic Planning Process. 

37)  Failure to look ahead and plan for ways to improve Sales and Operations. 

38)  Having an established Strategic Process which doesn’t adequately manage changes in the market, production or service interruptions, not meeting scheduled tasks and deadlines and other unanticipated challenges. 

39)  Absence of an Objective, Honest Assessment of the downside. 

40)  Failure to mention and plan for pending or potential litigation or other legal liability issues. 

41)  Unreasonable or non-quantifiable Assumptions made in your forward looking outlooks and projections. 

42)  Underestimating operating expenses, taxes and hidden costs.  Lack of Financial Contingency Planning. 

43)  Terms of your Financial Deal Structure unclear as to minimum investment, return on investment, payback strategy, exit strategy, financial terms, payback period and so forth (basic proposed structure from which fruitful negotiations can commence). 

44)  Risk is too high for the offered Potential Return. 

45)  Lack of Founders’ Cash Investment into the company (10-20%).  

46)  Amount of Stock offered is insufficient for the proposed Risk and Level of Investment. 

47)  Failing to be flexible in negotiating the Financial Structure of your project, deal or venture. 

48)  Lack of an Exit Strategy for Investors or alternative Investor Exit Strategies.  Absence of a Liquidity Strategy. 

49)  Failing to identify the Tax Benefits of a given Investment or Finance Strategy. 

50)  Failure to project the downside (have best case, worst case, expected case scenarios), as well as, have a Plan in Place to counter its negative effects. 

51)  Not having an Accountant review your Financials. 

52)  Lack of a proactive system to track, update, revise, redefine, refine and change your Business Plan as situations and events occur. 

53)  Failure to fully implement your Business Plan into Company Operations.

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The Top 100 Business Planning Mistakes – Part One

April 6, 2010 by Frank Goley, Business Consultant

I have been writing business plans for over twenty years and have seen a lot of different reasons why they fail and are ineffective. I have learned by experience and through great mentors what makes a successful business plan. Good business planning comes from experience, by trial and error. This blog will give you a short cut through the business planning learning curve. I have assembled the top 100 mistakes commonly made in business planning so you can avoid them. Here are the first 50…Please see my next blog for the remaining 50.

1)     Plans developed around a faulty process. 

2)     Plans built around badly defined strategies. 

3)     Plans lacking implementation strategies where tasks, milestones, schedules, responsibilities and accountability are clearly developed and integrated into the Company. 

4)     Plans where Goals are not stated in Quantifiable & Measurable Terms. 

5)     The complete participation and commitment of the entire Company is lacking. 

6)     The Plan failed to be integrated into the fabric of a Company. 

7)     Poorly developed Marketing Plan. 

8 )     Lack of a Detailed Competitor Analysis and Competitive Comparison. 

9)     No information on Key Employees. 

10)  Badly organized and packaged. 

11)  Management Team’s Weaknesses and Gaps not identified. 

12)  Very high Advertising Budgets. 

13)  High Salaries. 

14)  Unrealistic Sales Forecasts and Financial Projections. 

15)  Too glossy and loaded with fancy graphics- lacking substance. 

16)  No Table of Contents or the Table of Contents is organized poorly. 

17)  Badly organized sub sections unrelated to major sections. 

18)  The sections don’t relate and build on each other. 

19)  No Strategic Implementation Plan.   

20)  No clear Strategic Edge. 

21)  Too Technical. 

22)  Too wordy, not to the point. 

23)  Not focused. 

24)  Failing to identify a Unique Opportunity. 

25)  Failure to clearly show a Competitive Edge. 

26)  Unclear Management Plans and Strategic Management Plans. 

27)  Deal Terms and Financial Terms Unclear. 

28)  Legal and Accounting Structures are lacking. 

29)  Topic Presentation follows a confusing and illogical order. 

30)  Failing to demonstrate an in-depth and well-rounded knowledge of the major industry players and their potential influences. 

31)  Lack of Commitment and Strategic direction. 

32)  Poor forward-looking analysis and knowledge of the industry and market trends. 

33)  Failure to identify, quantify and develop new, unique and better capabilities, features and benefits.

34)  Failing to show adequate product or service protection from liability and competitors. 

35)  Too much red tape and uncertainty surrounding the deal or project from regulatory agencies. 

36)  Weak Strategic development plan for future improvements and expansion- not staying in tune with market needs and ahead of the competition. 

37)  Failure to consider reliability, maintenance and updating variables to keep downtime to a minimum. 

38)  Failing to obtain a third party evaluation of your product or service. 

39)  Failure to identify fundamental problems or flaws in your Research and Development Process. 

40)  Inadequate testing and test procedures. 

41)  Lack of credibility for product and service testing due to insufficient data and standards. 

42)  Inadequate safety procedures. 

43)  Overdesigning.  Failure to keep it simple. 

44)  Inadequate comparisons to competitive products and services since the current technology you are developing will be outdated and uncompetitive when it actually comes to market.   

45)  Forward looking Strategic Planning & Development Process is not tied effectively to the Product and Service’s Development.  

46)  Failing to sufficiently prove the portion of your market’s demand represents the major portion of your demand (i.e. 80/20 Rule:  20% of the customer base represents 80% of the demand). 

47)  Unrealistic, Unbelievable, Unsubstantiated Market Share Projections. 

48)  Inaccurate estimate of your products and services unit profitability. 

49)  Basing Sales Projections on higher output than demonstrated adequately in your Business Plan. 

50)  Pricing does not match Market tolerance and needs.

Posted in Business Planning. Comment

What Makes an Effective Business Plan?

April 5, 2010 by Frank Goley, Business Consultant

There is a preponderance of Business Plans doomed for failure in the market place.  Why is this?  And what makes an Effective Plan? Here are some key areas to pay attention to when developing your business plan…

The Right Business Plan Process

There are a lot of business planning books in the market place which attempt to explain and quantify the Business Planning Process.  Some even claim to be the most “Comprehensive”, “Final”, “End-All and Be-All” Business Planning book.  Some are workbooks or software trying to take you step by step through the Business Planning Process.  Many of these books have lots of great experience behind them and contain very useful information; yet, they lack in the actual execution of a good Business Plan or are way too in depth or technical for the entrepreneur to clearly understand.

Being someone who has been developing business plans for over twenty years, I only know one way to write an Effective Business Plan: from a Comprehensive, step by step process in a workbook, building block fashion.  A good planning workbook is understandable, simple and addresses all business types and aspects in a step by step, progressive, building block process.  Once this Process is complete, there is a simple outline or template to use to package your Business Plan per your particular uses.  But a good business plan workbook doesn’t stop there, it also addresses the Plan’s Implementation, as no Plan is effective until it is implemented and part of your Company operations.  Only then can success be consistently attained.

Strong Commitment and Involvement

The Business Planning Process, its use and implementation, must have the strong commitment and involvement of your Company’s Executives and Management. Effective business planning is a top-down, bottom-up process, yet needs the total commitment from the upper levels to ensure it encompasses the commitment of the entire company.  Upper Management and Divisional Management must also be willing to use the Plan to manage operations.  A Plan is not effective unless implemented and used through out a company.  We suggest building your Company around the Business Plan Process so that it becomes interwoven into the fabric of your operations.  It is a tool, use it. Key Management and Employees who are responsible for implementing the Plan should be actively involved in its development.  It is important that the Business Plan Development involves all levels of a Company; otherwise, commitment to it will be perfunctory. 

Realistic Short and Long Term Outlook

The Planning Process and its resulting Goals, Objectives, Tactics, Programs and Strategies should address the significant factors which affect a Company’s short and long term performance.  Outlook is just that, a projection.  Key influences to Company Performance are identified and developed into an Action Based Strategic Plan, which will in turn increase Growth, Revenues and Performance.  One of the underlying Key concepts in a good planning is promoting a Process from the Product Level to the Marketing Level to the Strategic / Performance Level.  The Strategic Tactics and Programs the Business Planning Process develops and produces is what will enhance Performance- not blind projections or just “thinking” you can exploit a market. 

Forward Thinking

The Planning Process looks backwards for things you have learned along the way which can be applied and leveraged into future success.  However, more importantly, the Planning Process must be Forward Looking, identifying trends, developments and opportunities in your marketplace and operating environment.  Having a developed Process instilled into your Company’s operations will produce forward thinking results, ensuring you consistently have a Competitive Edge and the opportunity to be a market maker and, perhaps, a leader.  A business going nowhere is one stuck in the past (i.e. past accomplishments) and the status quo, lacking a mechanism within the Company to produce solid forward thinking and predictable Growth. 

Company-wide Performance Objectives

Your company’s Goals, Strategies and Performance Objectives should be consistent throughout your entire operation.  The Plan should provide a clear picture of your Company’s direction to all your employees, as well as, customers, suppliers and strategic partners, regarding future Performance Goals.  You can’t reach that goal without your people being behind the Process and Plan Implementation. Your Company needs to demonstrate strong Leadership and Accountability to your Markets, Customers, Partners and Suppliers by “owning” your future Performance Goals and Milestones.  An Effective Business Plan, when implemented correctly, applies consistent Business Models to an ever changing market so that you can realistically achieve your Future Performance Objectives.

A Process that Constantly Assesses a Plan’s Assumptions

If Key assumptions underlying your Business Plan prove to be invalid, an Effective Plan provides specific contingency planning systems and processes to indicate clear courses of action.  An Effective Planning Process helps you to address significant deficiencies upfront and puts contingent, systematic plans in place to minimize a company’s learning curve severity, while effectively exploiting a changing marketplace.  Uncertainty and unexpected change are a guarantee in business. An effective plan has well developed systems and processes in place to adeptly manage those surprise events, turning a potentially costly experience into a profitable opportunity.  Through a solid business plan process, you will design and install a Company Structure which can develop an effective and competitive Product or Service.  This Product or Service will be exploited via a well developed Marketing Plan and successfully implemented into a winning Strategic Plan, producing expected, realistic, attainable Financial Goals.

Comprehensive and Specific Purpose Business Plans

An effectively developed Comprehensive and Internal Business Plan lays the solid foundation toward successful attainment of needed Financial Resources through an adapted, External Funding Business Plan.  Effectiveness starts with the Comprehensive (Internal) Plan, culminating in the viability of various External Business Plans – i.e. Plans for Funding, Customers, Suppliers, Markets, Regulatory purposes, etc.  A good business plan workbook provides a step by step Process which will produce the Global Plan to successfully run your business.  Other External, Ancillary Plans become a snap to “package” from the Global Plan.  It is hard to develop an Effective External Plan without having the foundation of the Comprehensive Internal Plan built. 

Posted in Business Planning. Comment