The Engine for a Better Business Model

Building a Small Business That Warren Buffett Would Love - Available Spring, 2012

The Business Plan - Well Yeah There is an Outline but This is Not War and Peace

If you perform a web search on the term “business plan outline” or peruse your local book warehouse, you will inevitably come across a half dozen, varying outlines. My motto is: find one that you are comfortable with and then get very comfortable with that outline. If you are dusting off the old business plan or starting from scratch then you need to familiarize yourself with a good outline. And remember, this is not an Ayn Rand novel.

Here is the one I use:

Executive Summary

The Business

Vision and Mission

Strengths and Weaknesses

Legal Structure

Business Description

Product or Service Description

IP Property Description

Location

Management Personnel

Records

Insurance

Security

Litigation

Risk Factors

Major Forecasted Achievements – Milestones and Goals

The Marketing

Markets

Competition

Distribution and Sales

Marketing

Industry and Market Trends

Strategy

The Operational Plan

Organizational Structure

Management and Personnel

Legal Structure

Equipment and supplies

Accounting and Legal

Daily Operations and Processes

The Financials

Uses of Funds

Income Statement

Cash Flow Statement

Balance Sheet

Income Projections

Breakeven Analysis

The Supporting Documents

A Living, Breathing, Implementable Document

In a perfect world, your business plan would sprout arms and operate the cash register but the truth is, it is probably dead in a drawer somewhere next to an old Kenny Roger’s CD that you keep around for “me” time. Your mission is to find that drawer, open drawer, grab feather duster and get to work. Your business plan contains your hopes and dreams for the business as well as how to operate the whole thing. It sure as heck deserves a better fate than Kenny.

As far as the living, breathing and implementing part, your business plan should be wired into your business. At a minimum, this is accomplished by reviewing and tracking the key elements of the plan in bi-weekly and quarterly meetings. According to Dr. Matt Marvel, Professor of Entrepreneurship at Western Kentucky University, “the bane of most entrepreneurs is the lack of business plan implementation. For the most part, business owners find it difficult to integrate the plan into the business. This is a critical failure point for most small businesses.”

Let’s examine specific sections and see how you are stacking up:

The Vision and Mission

Sometimes viewed as the enlightening, blue sky statement that hangs on the manager’s wood paneling wall. It sounds idealistic and cute but typically runs into a brick wall called reality. The real world says to hell with the idyllic view of how the business should run, I’m in charge. The Mission Statement though is the reason why you went into business in the first place. The Vision and Mission at a minimum are the driving forces of the business. They serve as the fountainhead used to slog through the daily onslaught of reality and should be kept in the forefront and reviewed daily. If the overall mission or vision for the business has not been developed then stop now, do not pass go, do not collect $200. Get to work putting a solid mission statement together by asking yourself “who do we serve, why do we serve them and how do we serve them?” What is the overall purpose for being in business? What should the business look like now and in the future? Write it down and read it out loud at every meeting.

Business Description and Product or Service Description

This section typically states: “we will deliver quality service and products in a unique and outstanding environment. Our customers will be wowed by us until their heads explode.” Great! Now the question is, how is this glorious statement going to impact the business? What is the standard for following up on customer satisfaction and product quality? Do you survey the customer on a regular basis, bring up the results in team meetings and pow-wow on solutions to the situation? You should be.

This brings us to our next area of planning and integration: