Blueprint for a Killer Business Plan — Part 4: How You’ll Run Your Business

This fourth (and final) post in our blog series, “Blueprint for a Killer Business Plan,” (see Part 1, Part 2 and Part 3) will fill in the specifics on what to include in the parts of your business plan that go into operations, financials and management. These “nuts-and-bolts” details demonstrate that you clearly understand the bottom line practices, the processes, and the overall administration of How You’ll Run Your Business profitably and logically.

While this may be the most important part of your plan, it is often the hardest part to write or even think about, especially for non-numbers types. But as the old saying goes, “The devil is in the details.” So, you’ve got to buckle down and get this right if you ever want to have a successful business.

What goes in the operations section?

The operations plan section describes the physical necessities of your business’s operation, such as your physical location, facilities, and equipment you’ll need to start out and grow your business. This can be as simple as explaining how you’ll be working virtually and need a computer, programs, phones, and a desk. Or it can include facts as complicated as what you need to open an office or manufacture a product.

“You need to do two things for your reader of the business plan in the operations section,” according to the Small Business Administration (SBA). “Show what you’ve done so far to get your business off the ground (and that you know what else needs to be done) and demonstrate that you understand the manufacturing or delivery process of producing your product or service.”

So, divide the operating section into two parts, starting with the Stage of Development section, that explains:

  • Production Workflow. A high-level, step-by-step description of how your product or service will be made or offered, identifying the problems (or risks) that may occur in the production process.
  • Industry Association Memberships. Show your awareness of your industry’s local, regional, or national standards and regulations by telling which industry organizationsyou are already a member of and/or which organizations you plan to join and telling what steps you’ve taken to comply with the laws and regulations that apply to your industry. Also include specific degrees, certifications, and training that make you and your business uniquely suited to fill a need.
  • Supply Chains. An explanation who your suppliersare and their prices, terms, and conditions. Describe what alternative arrangements you have made or will make if these suppliers let you down.
  • Quality Control. An explanation of the quality control measures that you’ve set up or are going to establish.

The second part is the Production Process section, that lays out the details of your day-to-day operation, such as:

  • General. Do an outline of your business’s operations, such as the hours of operation, and the days the business will be open. If the business is seasonal, be sure to say so.
  • The Physical Plant. What type of premises are they and what are the size and location?
  • Equipment. The same goes for equipment. Besides describing the equipment necessary and how much of it you need.
  • Assets. Make a list of your assets, such as land, buildings, inventory, furniture, equipment, and vehicles. Include legal descriptions and the worth of each asset.
  • Special requirements. If your business has any special requirements, such as water or power needs, ventilation, drainage, etc., provide the details in your operating plan, as well as what you’ve done to secure the necessary permissions, such as zoning approvals, materials, production, inventory, and cost.

The “dollars-and-cents” of your financial plan.

The financial section of your business plan determines whether or not your business idea is viable and will be the focus of any investors who may be attracted to your business idea. The financial section is composed of three financial statements: the Income Statement, the Cash Flow Projection and the Balance Sheet (along with a brief explanation/analysis of these three statements). See a sample in all three in this SBA article.

Start with a complete list of your monthly operating expenses. Include such items as:

  • Salaries (including your own)
  • Rent or mortgage payments
  • Telecommunication expenses (including internet costs)
  • Utilities
  • Promotion
  • Office supplies

Then, you can put together your Income Statement, showing your revenues, expenses, and profit for a particular period. The SBA says that it’s, “…a snapshot of your business that shows whether or not your business is profitable.” (Revenue minus Expenses = Profit/Loss.) See a sample in this SBA article.

Next, put together your Cash Flow Projection, that shows how cash is expected to flow in and out of your business. As part of your business plan, the Cash Flow Projection will show how much capital investment your business idea needs.

The third part is the Balance Sheet reporting your business’ net worth at a particular point in time. It summarizes all the financial data about your business in three categories; assets, liabilities, and equity.

Who’s managing the show?

The management team section of your business plan is your opportunity to paint a picture of your team and showcase their finest attributes. This may not be applicable, though you could use it to highlight new employees being brought in or existing employees that are taking on some new leadership responsibilities.

If you’re a startup or looking to expand, there may be team members you know you’re lacking. In that case, mention those roles, and what your plans are to fill those holes. Include which people might currently be taking on multiple responsibilities or sharing duties.

In this section, you may want to include a separate section outlining the legal structure and ownership of your organization. The legal structure of your business is important data for any funding source to have. Are you an LLC? A corporation? A sole proprietor? This will also affect how you file your taxes.

The ownership structure of your business is going to be important data to include. Who owns what percentage of your business? Banks and investors will want this information to be clearly spelled out.

Do I really need all these nuts-and-bolts?

Definitely! It may all sound hard (and you may need help from an outside accounting or bookkeeping firm, too), but you need to clearly understand your business organization and financial picture. According to Forbes, “You should have a plan in order to get yourself organized, to ensure you have some type of viable commercial potential, you have focus and hopefully aren’t going to run out of money or starve before you get going.”

In fact, Harvard Business Review (HBR) says “…the real key to succeeding in business is being flexible and responsive to opportunities. Entrepreneurs often have to pivot their business once it becomes clear that their original customer is not the right customer, or when it turns out that their product or service fits better in an alternate market. Because of these realities, business plans written at the start end up nothing more than a fable.” They go on to say that, “Startups chances of venture viability rose by 27% if the plan was created in the sweet spot when founders were talking to customers and preparing marketing.”

Business plans sound like a lot of work, right?

Yes, but all that hard work is necessary if you want to make sure your business succeeds. Benjamin Franklin’s famous quote is certainly true when it comes to putting in the time to do a thorough, well thought out business plan. Keep in mind his sound advice, “Failing to plan is planning to fail.” This is true for business just starting out and those growing their businesses.

It’s no surprise that, according to Dun & Bradstreet, the primary cause of business failure, is lack of business planning. If you want to steer clear of disaster and disappointment, simply follow our 4-part Blueprint for a Killer Business Plan.

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