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    Business Planning 101: The DreamSpring Guide

    February 8, 2024

    Business Planning 101: The DreamSpring Guide
    17:14

    As an entrepreneur, having a business plan creates your roadmap to future success. Business plans help you think through budgets, financials, hiring, marketing, and more, while also ensuring your business is ready for changes, disasters, and your exit strategy.

     

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    Your business plan is your vision for the future — a showcase of how you want to build your small business. This document should be a living plan; you’ll want to return to it and make changes along the way, so it continues to reflect your true plan for the road ahead.

     

     

    Business Planning 101 Quick Links

     

     

    Traditional Business Plans 

    No two businesses are alike, and no two business plans look exactly the same. You’ll want to include most sections below, emphasizing the elements that are the most relevant to your business, but don’t be afraid to add information that is helpful to you or external stakeholders. 

    Some entrepreneurs keep the formatting simple, while others opt for a presentation-style approach that incorporates product images and lively formatting that fits the feel of the business. Once you have a format and aesthetic that matches your personality, it's time to dig into the core components   Business_Planning_icon1-1

     

     

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    Executive Summary

    The executive summary is a concise overview of the entire business plan. Despite appearing first, it is often written last to ensure that it accurately reflects the contents of the plan. The executive summary highlights key aspects such as the business concept, mission statement, products or services offered, target market, competitive advantage, and financial summary. It should captivate the reader's attention and provide a quick snapshot of the business. Think of the executive summary as the quick pitch for your business — how would you articulate who you are and what you do in 500 words or less? 

    Business Description

    This section delves deeper into the nature of the business. It outlines the business' history, its mission and vision statements, and its legal structure (sole proprietorship, partnership, corporation, etc.). The business description may include details about the founder’s background, the inspiration behind the business, and any significant achievements or milestones. This section can dig into the “why” behind your business and share more about your vision. 

    Market Analysis

    A thorough market analysis is crucial for understanding your industry, target market, and competition. This section examines market trends, size, and growth potential. It identifies target customer demographics, behaviors, and needs. Competitive analysis provides insights into existing and potential competitors, their strengths and weaknesses, and the business' unique value proposition in the marketplace. This section is one of the drier elements, but the importance of a market analysis shouldn’t be understated. You wouldn’t build a coffee shop next door to a Starbucks, but why? Make sure that you have research and statistics to back up your overview. Many local governments have details about their county’s demographics and market if you need specific information, and public libraries have experts who can help you with business research. 

    Organization and Management

    Here, the business plan introduces its organizational structure and key team members with their roles. Details about the founders, management team, and any advisors or mentors are included. This section may also highlight the team's expertise, qualifications, and relevant experience that positions them for success in the industry. Are you working alone right now? This section can be used to outline your future hiring plan and share more about your plan for how the small business will grow. 

    Products or Services

    Clearly define the products or services offered by the business. This section provides in-depth information about the features and benefits of the offerings. It may also discuss the development process, intellectual property considerations, and any unique selling points that differentiate the products or services from competitors. 

    Marketing and Sales Strategy

    The marketing and sales strategy outlines how the business plans to attract and retain customers. It includes the marketing mix (product, price, place, and promotion), sales channels, and promotional activities. Additionally, this section may detail the sales process, customer acquisition strategies, and methods for building brand awareness.

    Funding Request (if applicable)

    For businesses seeking external funding, this section outlines the financial requirements and the purpose for which the funds will be used. It includes details about the amount of funding needed, the desired terms, and the potential return on investment for investors. This section is often included in business plans for start-up businesses or when businesses are seeking loans or equity financing.

    Financial Projections

    Financial projections provide a glimpse into the expected financial performance of the business over a specified period, typically three to five years. This section includes income statements, cash flow statements, and balance sheets. It should also consider key financial metrics such as break-even analysis, return on investment (ROI), and growth projections. Realistic and data-driven financial projections are essential for demonstrating the business' viability to investors or lenders.

    Appendix

    The appendix includes supplementary information that supports and adds depth to the main body of the business plan. This may include résumés of key team members, detailed market research data, additional financial information, legal documents, and any other relevant materials. While not every detail belongs in the main sections of the business plan, the appendix allows for a comprehensive presentation of supporting documents.

    SWOT Analysis

    SWOT analysis is a strategic planning tool that assesses the business' internal strengths and weaknesses and external opportunities and threats. This analysis helps businesses leverage their strengths, address weaknesses, capitalize on opportunities, and mitigate potential threats. Including a SWOT analysis demonstrates a thoughtful understanding of the business environment.

    Risk Analysis

    Identifying and analyzing potential risks is an integral part of business planning. This section discusses the risks and challenges that the business may face and outlines strategies for mitigating these risks. It demonstrates a proactive approach to managing uncertainties and prepares the business for potential obstacles.

    Implementation Plan

    The implementation plan outlines the specific steps and timelines for executing the business strategy. It breaks down the business plan into actionable tasks, assigns responsibilities, and sets milestones. An effective implementation plan ensures that the business can turn its strategic vision into tangible and measurable results.

    Exit Strategy (if applicable)

    While not always included, an exit strategy outlines the planned exit of the business owners or investors. It may include scenarios such as selling the business, merging, going public, or passing the business on to family members. An exit strategy provides clarity on the long-term goals and intentions of the business. 

     


    Lean Model Canvas Business Planning 

    If you’re feeling overwhelmed by the size and scope of a traditional business plan, the lean model canvas may be the right fit for you. This is a much more succinct way to plan out a business, and it offers a more visual framework. This is often utilized by new businesses and start-ups.

     

    DreamSpring Lean Model Canvas Template (2)

     

    To complete the lean model canvas as your business plan, you’ll want to work your way through the components outlined below, starting with the challenge/problem your customers face that your business seeks to solve. You’ll then progress through your solution and identify your customers, key resources, marketing channels to reach your customers, revenues and costs, and relationships. The idea behind the lean model is that it presents your business in a highly visual format over one to two pages. 

     

     

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    The Lean Canvas Components 

    • Key Problems: Identify the key problems or needs that your target customers are facing. This component helps you define the pain points your product or service aims to address. 

    • Key Solutions: Articulate your unique solution to the identified problem. This section outlines how your product or service effectively solves the challenges your customers are experiencing. 

    • Key Metrics: Define the quantitative measures that indicate the success of your business. Key metrics can include customer acquisition cost, customer lifetime value, conversion rates, and other performance indicators. 

    • Unique Value Proposition (UVP): Clearly communicate the unique value that your business provides to customers. Your UVP should highlight what sets your offering apart from competitors and why customers should choose your product or service. 

    • Channels: Specify the channels through which you will reach and engage with your target customers. This could include online platforms, social media, partnerships, or traditional marketing channels. 

    • Customer Segments: Identify the specific groups or segments of customers that your business is targeting. Understanding your target audience allows for more effective marketing and tailored solutions.

    • Cost Structure: Outline the key costs associated with running your business. This includes both fixed and variable costs, such as production, marketing, personnel, and overhead expenses.

    • Revenue Streams: Clearly define how your business will generate revenue. This could involve product sales, subscription fees, licensing, or other monetization strategies.

    • Advantages: Highlight any unique advantages or barriers to entry that your business possesses. This could be proprietary technology, exclusive partnerships, or a particularly skilled team.

    • Customer Relationships: Describe how your business will interact and build relationships with customers. This includes customer support, feedback mechanisms, and any other strategies for fostering long-term connections. 


    It is important to note that business exit and disaster preparedness are not typical features of the lean model canvas, so if you do opt to use this route for your small business, you should add these sections to ensure your business is ready to face adversity.  

     

     


    Disaster Planning and Preparedness 

    Disasters and emergencies aren’t uncommon; whether manmade natural crises or unanticipated events, you need to ensure your small business is ready. By including disaster readiness and preparedness into your small business plan, you can have the documentation, process, and preparation needed to weather any storm.     Business_Planning_icon2-1

     

     

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    Types of Disasters 

    Emergencies can take many forms, but common situations that impact small businesses include: 

    • Technology failures, data breaches, cyberattacks, and unexpected software glitches. 
    • Weather-related and natural disasters (floods, hurricanes, fires, etc.). 
    • Unanticipated business interruptions (pandemics, power outages, supply chain failure, etc.). 

         
      In addition to being frightening, the above disasters share a few key common traits: They separate the business owner from data and critical documentation, and they make it difficult or impossible for the business to operate.  
         

     

    By thinking through preparedness in your business plan, you can bypass some of the challenges related to obtaining replacement documents and get your business up and running quickly.

     

    Risk Assessment 

    The first step in effective disaster planning is a thorough risk assessment. Small businesses need to identify potential hazards relevant to their location, industry, and operations. Consider both natural and manmade disasters, with thought given to inventory and service delivery components, impacts to staff, technology needs, data storage and backup, and equipment or supplies.  

         
     

    Questions to ask yourself during this risk assessment may include: 

    • What disasters are common in my area? Is my location prone to flooding, storms, etc.? 

    • How likely is a cybersecurity issue, and what do I have in place to protect my business’ digital assets?

    • Are there any industry-specific concerns I need to prepare for? 

    • How secure is my physical location?
       
    • Am I totally dependent on my suppliers/vendors? 

    • What does my insurance policy cover? 

    • Do I have the capital I need to restore operations if a disaster strikes? 
     
         

     

    By weaving your strengths and weaknesses from a risk assessment into your small business plan, you can limit threats to your operations and prepare for an unexpected event.  

     


    Succession Planning and Exit Strategies 

    Just as you plan the successful start and growth of your small business, you should also prepare for your exit. What does a smooth transition look like? Whether you plan to sell your business or pass it to a family member, thinking through your exit can preserve the value of your business and ensure your hard work pays off.    Business_Planning_icon3-1

     

     

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    Exit Strategies 

    • Sell Your Business - One common exit strategy involves selling the business to an external buyer. This could be an individual entrepreneur, a competitor, or a larger corporation looking to expand. Small business owners considering this option should conduct a thorough valuation of their business to determine its market value and attract potential buyers. 

    • Transition Management to Family Members - Succession planning often involves passing the business down to family members. This approach requires careful consideration of family dynamics, the capabilities and interests of potential successors, and strategies to ensure a smooth transition. Open communication and a clear plan are crucial to address potential challenges.

    • Employee Purchase - Selling the business to key employees through a buyout arrangement is another option. This strategy can be rewarding for loyal employees who have a deep understanding of the business and may be motivated to continue its success. Financing options and terms of the buyout need to be carefully structured. 

    • Merger - Small business owners may explore merging with or forming partnerships with other businesses. This strategy can provide synergies, expanded market reach, and shared resources. Mergers and partnerships can take various forms, and before going down this path, you should consider their long-term goals and compatibility with potential partners.

    • Liquidation - In some cases, liquidating the business assets and closing operations may be the chosen exit strategy. While this may be the least favorable option in terms of preserving the business as a going concern, it can be a viable choice if other strategies are not feasible or if you need a quick exit. 

     

    Succession and Exit Planning 

    If you’re looking to exit your business, the first step is to identify potential successors. If you have a candidate in mind that lacks a particular skill or desired trait, mentorship and training programs can help prepare them for future responsibilities once you’ve left the business. To best prepare your successor, you’ll want to document processes and help with the transfer of knowledge. Beyond operational procedures, you know your business best. Take time to download your experience and know-how as much as possible to best position your company for success. In order to make sure that the day-to-day operations have a seamless transition, think through what makes your business special, and provide any additional context in customer files. Your exit will also require financial planning as you work through your business’ financial health and tax implications. You’ll want to be clear and transparent about the current strengths and weaknesses, so your successor isn’t surprised.  Many business owners require the guidance of processional experts — attorneys, financial advisors, etc., to make a successful exit. Be sure to pull in any external support needed to best position your business. They can also help with valuation, due diligence of a sale, and help with a business continuity plan. 

     


     

    Get ready to turn your ideas into action

    Time to fulfill your entrepreneurial dreams! With a well-crafted business plan, you'll build a thriving venture, create jobs, impact lives, and make a positive difference. Start planning today and join the ranks of passionate entrepreneurs shaping a brighter future.

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    Business planning is often the first step in thinking through what you want your business to be, and what it will become down the road. You can access free templates from a variety of sources online, including SCORE. You can also seek business planning support from your local small business development center. Happy planning!

     


     

     

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