An integral part of any new
business is the development of the business plan.
A business plan looks ahead to future business opportunities,
focuses on key elements of the business and allocates human, physical
and financial resources, and preplans for future business
problems and/or opportunities. This preplanning allows you to operate
the business on a consistent basis without resorting to crisis
management. A solid business plan helps you to optimize growth
and development or a priority basis.
A business plan is applicable for not only start-up businesses, but
for ongoing business operations. An ongoing business needs a
roadmap for their operations. They need to know if they have
sufficient cash to fund the ongoing operations. They need to
know about planning for expansion and equipment upgrades. And,
what about the competition? Are you ahead of them or always
following the pack? Park of your business plan is a sales and
marketing plan that allows you to stay ahead of competition and to
gain a larger market share.
Following is information regarding
the development of those two strategic planning documents.
Are Business Plans Necessary?
To use as a
guide for developing the business
To use as a
guide to help achieve the goals you set
commitment to the business endeavor
To develop ideas
and create and refine strategies
financial objectives and how those objectives will be met
To direct the
organization on its mission
To compare the
plan with actual performance
To use as a
financial tool to raise funds from lenders and/or investors
- To maintain
consistency throughout the organization
Following is information on
two important business planning documents:
The business plan is the
major planning tool for management and potential investors.
The business plan defines the
mission of the company, itís goals and objectives and the strategies it will
employ to achieve those goals and objectives.
Today smart businesses are
documenting their expertise and delineating their future plans in the form of a
comprehensive business plan that any bank, lender, venture capitalist or other
potential investor can review as the need may arise.
The benefits derived from a well prepared business plan are enormous.
The business plan includes a
review of the proposed business venture, a review of the past and current
situation, a review of the competition, evaluation of the proposed endeavors
strategic plan for the next five years, market analysis, market strategy and
financial projections all prepared and assimilated into an easy to read, well
One of the most important aspects of a business plan, especially for a start-up
businesses. Cash flow analysis and source and use of funds are extremely
important to a start-up business.
The Source and Use of Funds statement breaks down where capital is coming from.
This can be equity, bank loans, government loans, equity from investors, etc.
Another critical element of a Bobbitt Group plan are the face-to-face reviews
with the business owners, principals and management team. Bobbitt
thoroughly reviews the complete plan with major emphasis on cost and source and
use of funds. Unfortunately when many business people read a proforma operating
statement they often confuse cash flow with profits, and vice versa.
Profits do not guarantee you that you have cash for operations. Cash flow
is a major element in operations.
The suggested outline for the
business plan is as follows:
Company history (for
startups the startup plan)
(This is a brief description not to be confused with the detailed Product
section which is included in a separate section.)
The business and its
industry. Description of the
nature and history of the business and some background on its industry.
Description and discussion
of the industry.
Plant location - space
Bill of Materials
Sales and Marketing Strategy
section will explain the entire concept of the company sales and marketing
strategy. It will include verbiage
describing the overall strategic plan.
11. PLAN IMPLEMENTATION
can develop you a wonderful business plan on paper. However, if
that plan is not properly implemented you chance for success is
Too often we find businesses doing a
business plan, and using that plan to help obtain their needed
finances, and then put the plan on the shelf to gather dust!
That type of operation is often headed for failure!
The plan is only as good as it is
implemented. As such we offer to coach, guide and direct our
clients through the implementation of the business plan. We help
you to assign various tasks from the plan with budgets and completion
dates; follow-up and results tracking.
You must establish a system of reporting
and accountability. To simply assign a task is of little use
without having a system of reporting and accountability.
An integral part of our
business plans are pro-forma operating statements prepared using our copyrighted
format. These precedent setting financial pro-formas include full
departmental budgets and are prepared using budget assumptions developed via
Bobbitt's industry experience.
All to often when reviewing
pro-forma operating statements prepared by others, we see numbers that are used
JUST TO MAKE THE PLAN FEASIBLE. Too often I see financial plans that are
based on nothing but "pie in the sky" estimates.
Our financial plans are based
upon assumptions that are prepared using industry standards and rules of thumb
that I have developed.
The Budget Assumptions are
included in all business plans as they enable the reader of the plan to
determine exactly how numbers are developed.
The business plan includes
Source and Use of Funds
Year One Start Up
Years two - five
Annual Cash Flow Analysis
Debt Repayment - Exit
For More Information Contact:
William S. Bobbitt