Completing and Implementing the Business Plan chapter 12 Completing and Implementing the Business Plan

Chapter Objectives Identify how the decisions you have made can be organized into your business plan. Describe the focus, format, and content of a superior business plan. Formulate specific actions to take in the first three months after the completion of the business plan. Define mileposts to judge the progress involving your plan implementation.

Primary Objectives Ensure the opening remarks and introduction of each section of your plan create the most favorable impression for the reader. Communicate in a captivating and persuasive manner the decisions you have made regarding the products and services, other profit centers, target markets, and the marketing strategies.

Business Plan Objectives Present the operational decisions concerning how the business will be managed and the business team. Present the service quality standards that have been adopted, environmental management practices, and risk management. Lay out the financial strategy in terms of financial analysis, your funding plan, and key actions to be taken in the first 60 days.

Plan Template A template for organizing your plan consists of three parts:

Dual Purpose Display the specific decisions and proposed actions that the business owner has adopted and will follow in the course of launching the business concept. (continued)

Dual Purpose (continued) Create a promotional document that inspires and convinces the reader that the person behind the document has attended to all the details in order to succeed and thereby solicit the readers’ commitment to support the plan.

Part I: Introduction The introduction section of the business plan includes the cover letter and executive summary.

Cover Letter Your cover letter is a customized invitation addressed to a person you would like to read the plan with a purpose in mind. One of the most important cover letters will be to someone you wish will help finance your business.

Executive Summary It functions as the preface in that it introduces the reader to what follows. Both the letter and the executive summary fit into part I and create a positive first impression with the reader. Each introduces the reader to the contents of your document.

Timing of the Executive Summary The executive summary is written at the conclusion of the final business plan document. When writing your plan, your ideas will change, you will discover new possibilities, and you will rethink parts of the plan you have written previously. Thus, it makes sense to formulate your executive summary after all the changes have been made and the plan has been carefully reviewed and edited.

Part II: Business Description It is the place to demonstrate your knowledge about the business venture, your business concept, its market, and the nature of the competition. It is equally important to describe your management team and to highlight any management practices that will be central to your operation. (continued)

Part II: Business Description (continued) This is where you will identify how and when you will promote the product to your target market. This is where, depending on the products and services, the management practices will be highlighted as well as the service standards and environmental management policies. It’s also a description of how you will handle risk and liability.

Products and Services This plan component describes the core business activity and also shares with the reader the specific part of the market you consider your customer base. A company providing river trips illustrates this element. Clarity of your products, services, or experience helps to define how you will establish a high level of service and customer loyalty in your offerings.

Market Analysis Can you describe your customer? Carefully identify and segment your market. If you can provide geographic information about where your market is likely to come from, then you enhance the potential success of the marketing effort. For some entertainment or retail businesses, the three most important assets for success are location, location, location.

Competitive Analysis Consider a variety of variables in order to compare your business with others: Products Expertise Price Reputation Quality Location Selection Appearance Reliability Sales method Stability Credit policies Advertising Image

Marketing and Promotion There are at least three information items that may help you make effective choices when outlining your marketing plan. Target market How is your market most likely to find out about you? Do you have information about the decision-making behavior of the market segments of primary interest? (continued)

Marketing and Promotion (continued) 2. Careful assessment of the competition for your target market What does their advertising emphasize? How can you differentiate your package from theirs? What are your known strengths relative to the other companies, and what opportunities do you have to ensure the market recognizes your distinctive assets? (continued)

Marketing and Promotion (continued) 3. Marketing mix How will you price your services? What channels of distribution do you plan to use, and how will you promote your services? Can you describe proposed advertising, personal sales, publicity, and sales promotion you plan to undertake and the expected returns from these efforts? If you will have an Internet marketing presence, what will it entail?

Management Your organiza-tional chart is a beginning point in addressing how services will be provided.

Part III: Financial Strategy Financial plan: The financial statements belong in this section. Financial analysis: Each of the assessment tools you used in evaluating profitability belong here. Key action steps: Your time line launch and implementation of the plan are then described.

Financial Plan Your effort to describe the profitability of the business plan will involve presentation of pro forma financial statements: Income statement Cash flow statement Balance sheet

Financial Analysis The decisions you made in evaluating your statements may include ratio analysis and break-even analysis. Your financing decisions will cover start-up costs and working capital. The decisions about preferred funding sources need to be addressed. Finally, the details of the accounting system you will adopt are presented.

Key Action Steps Implementation of a business plan requires coordination of several action-oriented steps, and keeping track of all the scheduled meetings, approvals, and follow-up actions is essential for avoiding a false start. The use of a program evaluation and review technique (PERT) chart can be a valuable tool for scheduling and controlling the steps to be taken in plan implementation. (continued)

Key Action Steps (continued) Table 12.1 (page 247) illustrates several steps that can be placed in a PERT chart: Register business name, DBA, license. Select the business location; confirm business address for courier services. Befriend a banker. Set up bank account, obtain corporate tax number, and order checks. Establish public utility and phone accounts. Order business stationery and cards. Preview print media promotional strategy. (continued)

Key Action Steps (continued) Order printed promotional materials and start on Web site design; find reliable service provider. Launch Web page and Internet reservation system. Meet with lawyer. Meet with accountant. Join networking groups for products. Meet with local state destination marketing officials and distribute brochures.