Profit Growth Strategies By Brian Tracy

Transcription

1 Profit Growth Strategies By Brian Tracy Developing Your Business Plan Introduction Any goal can be accomplished if you break it down into enough small steps. (Henry Ford) The business plan is as essential to business success as a blueprint would be in the construction of a building. Each of the lessons in this course on marketing, selling, cost analysis, pricing, break-even analysis and budgeting are ingredients that go into the final business plan. The creation of a business plan, and the process of developing it, contributes to clarity of focus, teamwork, organized effort and profit growth. The failure to develop a clear, detailed business plan leads to a lack of direction, inaccuracies, confusion and wasted resources. The business plan is the foundation document for entrepreneurial success. In this lesson you will learn how to: Develop a mission statement for your business Determine the strategic objectives you must attain Identify the activities necessary for business success Create a blueprint for your business plan 1

2 Developing Your Business Plan The business plan is the most important document in thinking through every single aspect of the business, before you commit time, money and resources to producing and selling the product or service. Your business plan is the critical document that a banker or lender will want to see before providing you with the money you need. The most important part of the business plan is that it forces you to think through all the critical ingredients that are necessary for you to achieve business success. 1. The starting point of a business plan is for you to develop a mission statement for your business. a) What are your values? What do you stand for and believe in? b) What is your long-term vision for your business? What would it look like in five years if you were successful? c) What is your purpose for being in business? Why are you in business at all? d) Based on the above, what is your mission? What do you want to accomplish for yourself and your customers by starting your business? 2. Strategic objectives these are the goals that you must achieve to build a successful business. a) What level of sales do you want to reach over the next years? b) What level of profitability do you want to achieve from these sales? c) What kind of a reputation do you want to achieve for your company, and for your products and services? d) What kind of a company do you want to build in the years head? 2

3 3. Tactical objectives these are the activities that you must engage in to accomplish your strategic objectives. a) What kind and quality of products and services do you intend to produce? b) What are your marketing and sales plans to achieve the revenues that you desire? c) How will you attract the financing you need to build and run your business? d) How will you attract the necessary people you require for business success? e) How will you grow and expand with new products, into new markets, when your business is successful? 4. There are several strategic variables that you must consider in the development of your business plan. a) Product policy you must determine the characteristics, design and mix of products/services offered. b) Customer policy you must define the specific types and characteristics of the customers to whom you intend to sell your products and services. c) Promotion policy how will you market and sell your products to your customers? d) Distribution policy how will you distribute and deliver your products and services to your customers? e) Competitive emphasis in what areas are you going to develop superiority or excellence over your competitors? f) Pricing policy how are you going to charge for your products and services? g) Financing policy where and how are you going to obtain short-term and longterm capital? 3

4 h) Investment policy how are you going to allocate the funds that you receive in terms of product development, research, sales, promotion and your offices and facilities? 5. A business plan is a summary of all of the information that you have developed so far in this program. It includes the following ingredients, in order: a) The Executive Summary which describes the mission of the company, the scope of the market, the demand for the product or service, and the expected sales and profitability of the company. b) The concept the reasoning behind your decision to enter into the market to offer these products and services. c) Objectives your goals for the business in terms of sales, revenues, profitability and growth over the next years. d) Market analysis a complete description of your analysis and the reasons you have to believe that there is a substantial profit opportunity in offering your products and services. e) Production includes a complete description of everything that you will need to produce and offer your products or services to the market. f) Marketing a complete description of how you intend to market, advertise and sell your products and services in a competitive market. g) Organization and people a complete description of the talents, abilities and skills you will need, and how you intend to attract and remunerate the key people necessary for the success of your business. h) Financial projections complete budgets, break-even analysis and expected sales and expenses for the next months. i) Ownership includes a complete description of the ownership of the company, the investors required and the plans for raising the necessary funds. 4

5 6. Accompanying this section is a complete list of the individual ingredients of the business plan: a) The break-even analysis and the budget is the foundation of the business plan. b) Thinking through and answering all these questions accurately is a key test of the entrepreneur. c) The planning process forces you to think accurately about the key issues that determine business success or failure. 7. Every number that you prepare for a business plan must be carefully analyzed. a) Be sure to thoroughly check out every important number for yourself. b) Check your assumptions carefully before including them in your business plan. c) Remember, in a new business, everything costs twice as much, and takes three times as long. d) In good business planning, make it a policy never to trust to luck. e) Make it a habit to seek for the fatal flaw in any business plan, or important financial projection. Developing a complete business plan before starting operations will save you enormous amounts of time and money, and many months and years of hard work, frustration and failure. The process of planning, and thinking through every detail, sharpens your mind and awareness, and makes it far more likely that you will be successful. A good business plan gives you a competitive advantage over the entrepreneur or businessman who has failed to prepare one. 5

6 Action Exercises 1. What are the three most important parts of the planning process as they apply to your current business? 2. Become your own management consultant; imagine that you have been hired to develop this business plan by someone else. What are the three most important questions you would ask? 3. Imagine that you are a banker who is being asked to lend money to the person with this business plan, and your job is to be skeptical about each number and projection. What three numbers would you be most concerned with? 6

7 4. Begin with the largest numbers, especially your sales projections, and carefully analyze them for accuracy. In what three areas is accuracy most important? 5. Take your best estimate for break-even and profitability and then triple the length of time you have projected. This will be more accurate. What are the three most dangerous numbers or projections in your planning? 6. Take your most conservative estimate of costs, add 20% to that as a fudge factor, and then double that amount. What are the three worst things that can go wrong? 7

8 7. Finally, once your business plan is complete, have someone else with business experience read and ask you questions about it. What are the three best questions that someone could ask you? What one action are you going to take immediately as the result of your answers to the above questions? In preparing for D-Day, the plan was not important, but the process of planning was indispensable. Dwight D. Eisenhower 8