The Fundamental Elements of An Effective Business Plan

By: Paul E. Roberts, Principal – Roberts Statistical & Consulting Services, Los Angeles

Businesses, especially small to medium sized companies from $1-30 Million in topline sales, whether they be in the startup phase or organizations with years of experience in their marketplace, need focus to drive both growth and profitability. While oftentimes a company’s success is determined by being in the right place and space at the right time, having a clear understanding of the market and using the data acquired through research and through company experience, provides valuable tools to help guide that success.

One of the tools that at times is overlooked, especially within established organizations, is the business plan. Often created at a business’s inception, it is often set aside once a company gets going as other factors and pressures take precedence over the original plans. An effective business plan not only establishes the baseline for an organization, it also is a living document allowing the company to pivot and adjust as it grows both within the organization and in the markets the company serves.

According to the website definitions.net, a living document “Is a type of document within a document management system that is created with a defined mechanism and process to edit, manage, control, review, revise, update, share and communicate each updated version of the document accurately and efficiently. Living documents are used in government, legislation, education, universities, business and technology companies and for various other purposes.”

Writing and maintaining an effective business plan as a living document can help your company stay focused on the tasks at hand yet have the agility to change direction and purpose when market needs and new opportunities arise.

What’s Involved:

Effective business plans start out to provide an argument for an organization’s existence. In our experience, there are four essential aspects that need to be described and delineated:

·???????Who we are, why we are, and where we are at now

·???????Where we want to go

·???????What are the challenges

·???????How we are going to get there

Once we have these ideas and understandings in place, we can then begin to flesh out the details. While each section of a business plan can be described in many ways, they all boil down to the following basics which are described in detail below:

·???????Executive Summary

·???????Business Description

·???????The Marketplace

·???????Organizational Leadership

·???????Facilities and Operations

·???????References and Supporting Documentation

We know that each business, like everyone, is unique. The way each of these segments are prioritized and described will be different for every organization.

Executive Summary:

At the beginning of a business plan, it is important to describe to the reader what the plan is about in an efficient and concise form. This executive summary will describe the purpose of the organization. It can include a company’s mission statement and any other points to peak the reader’s interest to want to know more.

Business Description:

A good business description section will take the Executive Summary and expand on the company in greater detail. This is the “Who We Are, Why We Are and Where We Are Now” segment of the business plan. This is where you can describe what the company does and/or intends to do, it’s beginnings and why the purpose of the organization matters. It’s truly where you get to tell your company’s story.

The Marketplace:

Readers of business plans want to know that the leadership of an organization know what the company is doing and why it exists. This is a good place to detail the “Where We Want to Go” description in the plan. Having and up to date understanding of the market the company works in, it’s share of the business locally, regionally, nationally, and internationally will go a long way to establishing its business presence.?Knowing that the company’s leadership is actively involved in the industry and “has the pulse” of the market is vital to its overall success. Understanding supply-chain issues, where prices are going especially on products where market volatility affects their availability, can enhance the trust the company provides in the marketplace. Even if the business focus is only at the local market level, it is important to know who the players are from a regional, national, and even an international scale to see where the market is going and where customers are gravitating.

Also, delineating a clear understanding of competition in a company’s market area will give the organization a clearer view. Knowing who they are and how they come to market can create advantages and opportunities. At times, even your competitors can become your best customers.

Organizational Leadership:

Every business plan needs to give the reader the opportunity to get to know the company’s leadership. This creates great added value, especially when the business plan is used as part of an effort to raise money for an organization and/or create collaborative prospects with other business and market leaders. More than just a regurgitation of a person’s resume, this is a section where a company’s executive leadership can share their passion for the business’s purpose and industry.

Facilities and Operations:

Detailing the company’s operations in a business plan with quantifiable numbers brings additional legitimacy, especially to existing legacy businesses. Like the locations page on the business’s website, you can describe where the company provides its goods and services and what location handles which market area.

References and Supporting Documentation:

This last section of a business plan can provide the reader with additional links and sources for more information about the company and how it goes to market. This can include everything from testimonials (sanitized and/or non-sanitized), partnership agreements, and additional photographs and documents supporting the business plan’s case. These should always be selected and included with the specific reader in mind.

With all the details of the business plan in place, it can then be organized for its specific purpose. That can be internal, for heads of departments and employees to get a clear understanding of the company’s purpose and goals, to external, where it can be used to help raise capital, become additional proposal documentation, and give partners and stakeholders a better understanding of the organization.

A Business Plan is a Living Document:

And remember, a business plan is a living document! When new opportunities arise in existing and new markets, this plan should be reviewed as needed to adjust and memorialize the company’s purpose and goals. An annual review at a minimum would help to keep an organization focused and growing in the right way for that company. It will also keep the business on track with its own Key Results Areas and Key Performance Indicators to make sure the company is measuring the right things at the right time.

Does your company need a business plan? Is your existing business plan due for a refresh? Has your company lost focus and you are looking to re-energize it? RobertsSCS is here to work with you to bring your business processes into focus. Call us today at (310) 972-8243 or reach out to us at [email protected]

About RobertsSCS:

Roberts Statistical & Consulting Services ─ RobertsSCS ─ offers results-oriented strategies, mentoring, and insights to optimize operations for legacy companies looking for 21st Century upgrades to improve profitability, increase sales growth, and future-proof systems for sustainability.

Using 30-plus years of operating and management experience, RobertsSCS works with businesses with $1-30 million in revenue to create better efficiency, synergy, and outreach.?We provide developmental, strategic, and executable plans of action at multiple levels: wholesale, retail, B2B, and B2C for organizations desiring to maximize industry market share.

Understanding the market environment and the status of each business we work with allows us to provide customized insights on growth and profit opportunities at the local, regional, and/or national market level.