Every year, as an investor, I look at scores of business plans from eager entrepreneurs who seek funding for their emerging enterprises. Most plans are not well written and I find only a few that are excellent. I invite the founders with poorly conceived plans to improve their efforts and return when they are ready to present again.
At the end of a presentation, I take time to share with the entrepreneur what they need to do to develop an optimal business blueprint.
High achievers who have thoughtfully prepared outstanding plans, with reliable assumptions, often receive the funding they need for company growth.
I contacted my good friend, Thomas Harrison, chairman of Diversified Agency Services, an Omnicom division, to share his views with me on the key elements of a great business plan. Over the years, he has seen numerous presentations from companies Omnicom has purchased that represent a vast number of firms within the Omnicom firmament of marketing organizations. He, too, has seen a combination of terrific and terrible plans.
“Mr. Harrison,” I asked, “what counsel would you give an aspiring business builder on the development of a great plan?”
“Alan,” he said, “I think some people get confused between a business plan and a marketing plan. A business plan is a genetic, molecular definition of my business. It crystallizes why I’m in business; it shouts what I do for the world, for consumers, for my customers. It dissects my business DNA and how it is unique and it clarifies why my customers should do business with me.
“The plan is the blueprint; it’s the architect’s renderings that show the skeleton of the business the DNA of the business. The plan allows me to be crystal clear about that skeleton and how it supports my vision of my value (the business value) to my customers. It explains exactly why customers will buy what I make/sell and what it is about my product that will delight my customers.”
Ten key points:
What should be included in a well-conceived business plan? Tom recommends the following:
1. Describe why your company is relevant. What is the need being addressed?
2. Explain the overall state of the market and any important trends.
3. Explain why customers will buy your product or service.
4. Describe, in detail, who your customers are.
5. Explain who your current competitors are and their advantages.
6. Explain which competitors you will displace.
7. Describe your product offerings, how they compete with other brands and why they are needed.
8. Provide an overview of the various resources, including the people that will be needed to deliver what’s expected by the customer.
9. Describe corporate priorities and the processes to achieve them.
10. Included three thorough financial plans: one that’s conservative, one moderate and one optimistic, each with realistic and achievable sales revenues, margins, expenses and profits on a monthly, quarterly and annual basis.
“The purpose of the plan is to allow you, and everyone involved in the business, to know the building blocks of the business and its purpose for existing,” Tom continued. “The value of the plan is to think, visualize and memorialize the business DNA so that successors can work consistently with the original vision, character and purpose of the business through future generations.”
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