Key Components Of A Business Plan
Daniel Nathanson, Ph.D. from UCLA Anderson Graduate School of Business, outlines the different components of the Business Plan and discusses the importance of crafting a detailed Business Plan.
It's really important that you make the plan into a story, a convincing compelling story,. Not a fiction. It has to be real, but it has to be convincing. The problem with creating and following too many guidelines (and you need to follow the guidelines) is that each of the different sections create a barrier to making your story. So, you need to make sure after looking at each of the sections to make the storyline make sure the storyline is still there. So, for example, first start (and people debate about this) with the executive summary. Knowing that you're going to take that executive summary, and you going to change it along the way. But just put down the overall whole picture and then that executive summary will be your value proposition. What is the primary value proposition? How is your product or service going to serve that market? Not only how is it going to serve it, but how is it going to do it better than the competition? What's out there? What's the problem you are trying to solve and how you going to solve it better? That's the key aspect of that. And, not only how you're going to solve it, but why are you going to be able to solve it when others haven't? Is it your years of experience in the industry? Is it your knowledge of a particular market? Is it the team you built?
Hopefully, it is all of those things. So, once you've done that executive summary, then you have your sections of the plan: there's a product section, the market section, marketing and sales, operations, finance, management and personnel. All those things have to be addressed in the plan. However, make sure you maintain that storyline as you go through all the really detailed spreadsheets and put all those really detailed spreadsheets in the appendix so you can maintain that story line and not get lost in the trees (basically, instead of seeing the whole forests). And then once you've finished the whole plan go back again, looking your executive summary, and I'm sure there will be changes from where you started. But once again, what is the business plan for? It's for a road map, is a communication device.
But let me say something else. As an investor, I don't see business plans anymore. I haven't seen a real business plan in 20 years. What I see as PowerPoint presentations and executive summaries, but writing a business plan is still really important to serve as your repository of information and to make sure that you're covering all the details in your business, because when you're asked questions by investors they're going to be probing into those details. The repository of information is all going to be in that business plan, and you have a business plan is going to serve as the device to make sure that you have everything covered.