Writing a Business Plan: A Step-By-Step Guide (Part II)

1. A Bit of a Review. To recap the main points of Part I, a business plan is a map to take you from Point A (conception of your business) to Point B (execution and financial success) via the safest, quickest and direct route.  A business plan forces you to think about your ideas and their validity; to examine how you will make money, and how much; the appeal of your products and/or services; etc.  In other words, to plot where you are, where you're going and how you'll get there.  Anyone can write a business plan if they are prepared to put in the time and sweat, and put up with the frustrations.  A business plan should include: <ul> <li>Cover page</li> <li>Table of contents</li> <li>Executive summary</li> <li>Business description</li> <li>Mission and Vision statements</li> <li>Market definition</li> <li>Description of products/services</li> <li>Organization and Management</li> <li>Exit strategy</li> <li>Financial analysis and management</li> <li>Attachments</li> </ul> 2. Where Do I Start? Let's first agree that writing a business plan is a process, not an end unto itself.  Having said that, choose your favorite word processing program, a comfortable chair, music or silence as you prefer, a cup of tea or a glass of wine, and start by outlining the sections enumerated above. 3. Business Description This is your first opportunity to describe what you will sell, whether they are services or products. This should be no more than a paragraph. 4. Mission and Vision Statements Mission and vision statements are classically defined as the inspiring words chosen by leaders to clearly and concisely convey the direction of the company.  Nevertheless, ask 10 consultants the difference between a mission statement and a vision statement, and you're likely to get 10 different answers.  That's because few see or understand the difference, or believe it is a matter of semantics.  However, the differences are significant as each statement is a different tool to read the map to your destination and plot your course. The simplest way to differentiate between the two is to think that you will use your Vision Statement to be a Visionary, while you will use your Mission Statement to be a Missionary.  That is, as a visionary, you see and express the potential in your ideas...what is possible.  As a missionary, you carry out the work to achieve this potential.  The company's vision is all about what is possible.  The mission is what it takes to make the vision come true. Vision and mission statement do share some commonalities.  Powerful vision and mission statements should be understood by all and appeal to everyone's emotions.  They should resonate with your suppliers, customers and your employees.  It should resonate with you.  It should make each feel proud, excited, energized, and part of something bigger than themselves.  Vision and mission statements should also serve as a benchmark to your success.  Hence, you should avoid using words that are not measurable.  For example, many vision and/or mission statements use the word "best."  But what does it mean to be the "best"? How do you measure it?  Unless the word is defined, a better term might be "industry leader", or "market leader".  You're either number 1 or you're not (sorry Avis).  Once crafted, you should use your vision and mission statements to make strategic and critical decisions.  You should also use them to create the culture that is critical your success.  Hence, take time to craft each, or as my grandfather used to say: "Think, reflect, and then think some more." 5. Vision Statement A vision statement is simply a statement about what you want your company to become.  A well-crafted vision statement should be succinct and provide a clear direction of where the company is headed.  In my opinion, the most powerful vision statements are also the simplest.  However, it is no simple task to craft a "simple" vision statement. A few well-crafted words can go a long way.  Can you image (or perhaps recall) how NASA's employees, suppliers, and the American public felt upon hearing President Kennedy's vision statement for the organization?  To quote: "BY the end of the decade, we will put a man on the moon."  No ifs, and, or buts about it.  Clear, simple, concise.  How about Martin Luther King Jr.'s vision statement for all? To quote: "I have a dream." Vision statements tend to fall into two categories.  Namely: 1) short, to the point, and clear; and, 2) long, tedious and confusing as if writing by a committee of managers who have no idea who their employees are and what they do.  Too many vision statements fall under the second category because, as I've said before, they use terms which cannot be measured.  Examples of favorite terms used by poorly crafted vision statements are: "best", "customer-focused", "excellent service", "superior quality", "highest standards", etc. A well-crafted vision statement should have: 1) an inclusive word, 2) an action, 3) an outcome resulting from the action.  For example: "We will be number or number 2 in any business we are in." (Jack Welch, General Electric). Your Vision Statement should set your destination and hence should be set 5-10 years into the future.  As such, it should not be revised as often as your Mission Statement. As you craft your Vision Statement, remember that it is a Universal law that you will never be greater than the vision that guides you.  For example, it is often said that Olympic athletes gets to the Olympics by mistake.  It is a vision of greatness that drives the Olympic athlete to be the best in the world.  Your Vision Statement should inspire, energize, stretch everyone's expectations and drive you (and your employees, if you have any) to your ideal goal.  If not, why sweat it?  So like my grandfather used to say, quoting from Donald Douglas: "Dream no small dream."  However, while a well-crafted vision statement should stretch expectations and aspirations and help you think outside your comfort zone, it should be realistic, credible and measurable. 6. Mission Statement Simply put, a mission statement is a precise description of what your company does and how it will achieve its vision statement.  While your Vision Statement tells everyone what your destination is, your Mission Statement tells everyone how you'll get there. As you craft your Mission Statement remember to make it clear and as succinct as possible (this latter is time-consuming and requires much refinement of your words).  Your Mission Statement should also incorporate your values and measurable criteria, and include some or all of the following: <ul> <li>The moral/ethical position of your company</li> <li>Your desired public image</li> <li>Key strategic influences</li> <li>Description of the target market</li> <li>Description of the products and/or services</li> <li>The geographic scope of your business</li> <li>Expectations of revenues and profits</li> </ul> For example, ABC Co. will operate in the Greater Seattle Metropolitan Area providing custom-tailored suits to men between 25 and 60 years of age with income in excess of $100,000 per year, with an objective to earn $1MM in revenues and $250,000 in profits by 2015. 7. Closing Remarks In closing Part II of this series, let me quote two statistics lest you think that this is an exercise in futility. <ul> <li>A Watson Wyatt study indicates that, where employees understand the company's mission and goals, companies enjoy a 29% greater return than were employees are clueless.</li> <li>A Workplace 2000 Employee Insight survey revealed that, companies where employees would rather leave than stay, many mission statements are just words on paper.  42% of employees who were inclined to leave said the company's mission and vision statements were rarely, if ever, used to set priorities and maintain focus.</li> </ul> Best wishes to everyone for a Happy and Profitable New Year. 2009-01-05T07:03:41Z

-13.1942

328 2707

true

8006

writing-a-business-plan-a-step-by-step-guide-part-ii

2009-01-06T17:37:55Z

In Part II of this series, we start to explore the nitty-gritty of writing a business plan.

Writing a Business Plan: A Step-By-Step Guide (Part II)

2009-02-24T09:48:16Z