Writing Your Business Plan, Step 13: Refining the Plan

June 1, 2009 at 6:00 am Leave a comment

Your business plan is most likely going to need a little fine-tuning to make it better reflect your business.  The 12 steps we’ve discussed are fairly general for most small businesses.  Here are a few things you’ll want to elaborate upon, depending on your situation.

Remember the Executive Summary?

Do you remember when we started this?  We first worked on the Executive Summary.  In Step 1, we wrote a draft for this.  Now, we are going to go back and refine it.  Go back, read the post, and write the Who, What, Where, Why, and When of your business.

Seeking financing from a Bank

These days it is challenging but not impossible to get bank financing for your business.  Banks are most nervous about getting paid back on the loans they extend.  You’ll want to make sure you provide them with enough information.  SCORE recommends providing the following:

  • Amount of loan you are requesting.
  • How you will use the funds.
  • What will this accomplish (how will it make the business stronger)?
  • Requested repayment terms (number of years to repay). You will probably not have much negotiating room on interest rate, but you may be able to negotiate a longer repayment term, which will help cash flow.
  • Collateral offered, and a list of all existing liens against the collateral.

Seeking financing from Investors

Investors are going to want to see what your business’s short-term and long-term growth is expected to be.  They want to know that they are going to be rewarded for their investment.  SCORE recommends including the following with your plan:

  • Funds needed short term
  • Funds needed in two to five years
  • How the company will use the funds, and what this will accomplish for growth
  • Estimated return on investment
  • Exit strategy for investors (buyback, sale, or IPO)
  • Percentage of ownership that you will give up to investors
  • Milestones or conditions that you will accept
  • Financial reporting that you will provide
  • Involvement of investors on the board or in management

Information to provide depending on the Type of Business

You’ll also want to provide different information, depending on the type of your business.  Here are a few different types of wedding industry businesses (not all inclusive) and details you may want to include.

Manufacturing Businesses: Wedding Invitations, Wedding Gowns, etc.

If you manufacture and carry inventory you’ll want to include details about your production.  SCORE recommends including:

  • Present production levels
  • Present levels of direct production costs and indirect (overhead) costs
  • Gross profit margin, overall and for each product line
  • Possible production efficiency increases
  • Production-capacity limits of existing physical plant
  • Production capacity of expanded plant (if expansion is planned)
  • Production-capacity limits of existing equipment
  • Production capacity of new equipment (if new equipment is planned)
  • Prices per product line
  • Purchasing and inventory management procedures
  • Anticipated modifications or improvements to existing products
  • New products under development or anticipated

Services Business: Wedding Planners, Officiants, etc.

If you have a service business, you are selling yourself as a product.  You may have little if any inventory or assets.  SCORE recommends including the following:

  • Prices
  • Methods used to set prices
  • System of production management
  • Quality control procedures
  • Standard or accepted industry quality standards
  • How do you measure labor productivity?
  • What percentage of total available hours do you bill to customers?
  • Breakeven billable hours
  • Percentage of work subcontracted to other firms
  • Profit on subcontracting?
  • Credit, payment, and collections policies and procedures
  • Strategy for attracting new clients

Retail Business: Dress Shop, Shoe Store, etc.

If you have a retail business, you’ll want to provide details on your store policies and your inventory.  SCORE recommends including the following:

  • Company image
  • Pricing: Explain mark-up policies. Prices should be profitable, competitive, and in accord with the company image.
  • Inventory:
    • Selection and price should be consistent with company image.
    • Calculate your annual inventory turnover rate. Compare this to the industry average for your type of store.
  • Customer service policies: These should be competitive and in accord with the company image.
  • Location: Does it give the exposure you need? Is it convenient for customers? Is it consistent with company image?
  • Promotion: What methods do you use and what do they cost? Do they project a consistent company image?
  • Credit: Do you extend credit to customers? If yes, do you really need to, and do you factor the cost into prices?

Hybrid Businesses: Photographers, DJs, etc.

You may have a combination of these businesses.  Photographers provide a service, but they sometimes carry inventory of albums and photo processing goods.  DJs also provide a service, but have a lot of equipment and fixed assets.  Make sure to tweak the “extra details” of your business to provide as much information as you can.

Congratulations!

You’ve made it through the 13 steps of writing your business plan!  Maybe you’ve just been reading along… and maybe you’ve been writing along… whichever one it is, it is a start and you should be proud.  Tomorrow, we’ll talk about how the business plan is constantly evolving.

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Entry filed under: 13 Step Business Plan, Plan It, Strategy.

Insider to Insider: Mami Ogata, Owner of Botanical Art Design The Evolution of Your Business Plan!

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