Writing a Business Plan Effectively

Your Customers...

...are the lifeblood of your business. If you're not effectively meeting their needs, it's unlikely you'll convince them to buy - or buy again.

Thus, identify clearly what it is your customers need, and then determine specifically how your product or service will fulfill that need. And then be clear as to why they would come back to buy more.

Here's a little exercise...

One of the best ways to demonstrate this is to examine another company. Take a company you know and can identify well with - a company that you buy from regularly, or even the company you work for...

What does it sell?
Who does it sell to?
Why do customers buy the product/service?
Some people don't buy - why don't they buy the product or service?
Some people buy but don't buy again - why?
What special or unique solution does the product or service provide (not offered by competitors)?

Answering these questions about a business you're familiar with will give you a framework for thinking about your own business and the product or service you will offer.

Another very important group of people you will focus on when writing a business plan is...

Your Employees...

...are the driving force behind your business. They will deliver the product or service, interact with your customers, and represent the vision and values of your company. Without them, your product or service can be no more than an outstanding idea.

At this stage of writing a business plan, you need to think about these questions:

What kind of skills or talent do you need to employ for your product or service to successfully meet the needs of your target market?
What are the financial and non-financial priorities/expectations for the people you need to hire?
How would ensure you and your business meet their needs?
What does the competition offer its employees?
And how well are your competitors meeting their employees' needs?

There may be more questions, but those are the key ones. But the real questions to ask are...

If you were an employee of a company that demanded your skills and expertise, what would be important to you? Why?

Your employees are also your customers - they need to buy into your product or service and believe in it to promote and deliver it. Therefore, make the goals of employees a priority while you're writing a business plan.

Who else?

Investors...

Why not be honest with yourself at this point - if you were an investor, whose needs would be most important to you? YOURS!

Investors aren't simply looking for someone to help - yes that's part of the equation, but if you get to the heart of the matter, investors want to see a solid plan that yields them a high return on their investment.

Simply put, if when writing a business plan you haven't clearly demonstrated how you will satisfy their needs, they will move on - and quickly.

Critical questions to ask are:

Why will your business succeed?
How will you attract and protect your revenue sources and flow?

These two questions are really "if" scenarios, particularly if you are a startup company and don't have any way to really prove your answers. However, the most important question to ask of all for investors is:

Why should someone invest in your business rather than less risky, more liquid, high return instruments such as government bonds?

Investors are the toughest group of all to please in many ways. Be prepared to show potential investors a high return on investment (ROI) and some control over the business, otherwise you will find the already difficult task of attracting keen investors even more difficult.

The next group you have to consider before writing a business plan is:

Lenders...

If you need to borrow funds to get your business off the ground, you're going to have to show potential lenders why investing in your business will produce the return they are looking for. So what are they looking for?

Banks and other lending institutions will cover their investment through interest you will pay on top of the principle amount. But to make sure they can cover it, they need to have some "guarantees", even more so than investors, because of the comparatively lower return lenders expect to gain from you.

The bottom line when it comes to lenders is this...

Above and beyond writing a business plan that demonstrates your ability to attract customers, build steady streams of revenue, create profitability and generate cash flow, what of your personal or business assets will you offer as security?

Besides expecting to be paid before anyone else, lenders are going to ask you to provide collateral. It might be your house, or an asset from your business of equivalent value such as receivables or inventory - and almost always the most liquid of assets.

Note: Though we're talking about writing a business plan here, I can't stress enough how important it is for you or any entrepreneur to consider your ability to withstand the consequences should your business not achieve the financial aims you set for it. Planning a business plan is as essential to succeeding in business as writing the actual plan itself. Doing so thoroughly and thoughtfully will enable you to make better, clearer and more calculated decisions about your next steps.

Moving on, let's talk about your:

Suppliers

OK. If you're wondering why satisfying the needs of this group is important to planning your business, consider this: any product or service you sell is likely going to involve at least one supplier. Since you'll be a customer in this case, you'll need to carefully review the following when writing a business plan:

What kind of supplies and/or equipment will you need to get your product or service to your customer?
How easily or readily are these supplies/equipment available?
Can you afford what you need to profit?

One aspect of starting a business entrepreneurs commonly overlook is whether suppliers are even willing to supply or equip a new business. As a startup, you may lack the financial credibility to purchase expensive equipment or a large quantity of supplies on credit. As such, suppliers are likely to demand up front payment until your business has built its credit-worthiness.

In the meantime, you need to make sure your business can be well-equipped and stocked while maintaining profitability and a positive cash flow. Suppliers play a major role in all of that.

Last but not least - what are your goals?

There's no denying that everyone seriously looking to start a new business has goals - both financial and non-financial. Some people focus purely on their financial goals while others more on non-financial goals - such as their passions.

As an entrepreneur, you need to focus on both. Maybe you want to create financial freedom by building a multi-million dollar net worth. Or perhaps you simply want to be your own boss and quit your day job.

Whatever your goals are, you need to be clear about them, and you need to keep them out of your business plan. As yourself these questions:

What do you really want - what is the specific result you are looking for?
Why will starting this new business directly help achieve you achieve it?
What steps do you need to take to achieve it?

Remember - the answers to these last questions stay with you, not in your business plan. Writing a business plan is all about showing other people involved in your business how they fit into the picture and how it all works.

Even though your real business focus is YOU - your plan must focus on the people you need to attract.