How to Create a Successful Business Plan

A good business plan enables you to build a strong foundation for your business, provides it integrity and helps to make you responsible towards your business. So, a proper business plan is inevitable in the success of a business. Charting a business plan can be nerve-racking, but with the right steps, it is a cake-walk.

Major sections of a business plan:

1. Executive Summary: Being the most critical section of a business plan, it is the first section that a reader sees. For the sake of perfection, you can write this section after you complete all other sections. It should provide a snapshot of your business, a mission statement, business history, current profile, founder’s details, locations, services offered, number of staff, future plans, and current profile in brief.

2. Market Analysis: This section indicates how well you have researched the prevalent market conditions. The chances of success, details of your industry, growth rate, market shares, current market trends, customer details, details of competitors and their products, comparative study of the products with respect to their strengths and weaknesses and so on can be included.

3. Company Description: This section provides a high level perspective of your industry and company, which helps the reader understand the relation between the two. It includes nature of your industry, company history, target customers, potential solutions that you will offer to target customers, and so on.

4. Organization and Management: This section should deal with how your staff is organized. The organization hierarchies, division of labor, profiles of managers, Board of Directors and Company Owner are to be included. This section should also include details of salary, perks and incentives.

5. Marketing and Sales Management: This section should help you to decide the marketing strategies for the sale of your goods and services.

6. Product Details: As the name indicates, this section describes the products or services that your business proposes to offer. You will need to provide details of current market research, benefits of products to customers, competitive advantages and copy rights or trade secrets with respect to your product.

7. Funding request: This section includes all that a bank or investor would need to know to understand the funding requirements of your business.

8. Financials: This section provides support, if you request for outside funding. Unless it is a startup company, this section should include your company’s financial track record for the past few years.

9. Appendices: This is where you will include all those details which you will not be able to fit into the other sections, but your readers might want to see.

While charting your business plan, you should think of the various audiences like bankers, investors, and professionals. Keeping properly formatted, short paragraphs is highly recommended in a business plan. You can include bulleted points to highlight the important points. It is nice to include complex data in the form of tables, or charts.

An 8 Step Process For Designing A Chart of Accounts

Many business owners and bookkeepers are confused by what accounts should be used in their chart of accounts. When there is unclarity about the design of the chart of accounts, one of three things usually happen:

* There are not enough accounts. When this happens, there isn’t enough detail in the financial reports to get information about what is happening in the business.

* There are too many accounts. This leads to too much detail on the financial reports, so they are difficult to read and use for high level decision making. This can also cause bookkeeping errors as the bookkeeping staff can easily become confused about where to record transactions.

* The account names are confusing. This also can lead to confusion and inconsistency in recording transactions. In addition, accounting staff and business management may not be on the same page with how accounts are being used.

How do you design a chart of accounts to ensure you can get good, clear, and consistent reporting information? First, you must realize that you’re in control of the chart of accounts and it’s up to you to design it. You could just have one account on the profit and loss statement called “expense”, but that wouldn’t give you good information, would it? We have to find the balance between too little and too much detail. Here’s an 8 step process to help you determine what should be on your chart of accounts.

1. If you’re designing accounts for a new business, begin with a standard chart of accounts (QuickBooks has several to choose from for various industries) and then add to it as described below.

2. Add accounts for income that is specific to your business and occurs regularly. You can have just one revenue line, but chances are you earn revenue from more than one type of product or service. Use a more general account for anything that does not occur regularly.

3. Add cost of goods sold accounts that correspond with your revenue accounts. If you have web design revenue, you would also have web design cost of goods sold.

4. Add expense, asset, and liability accounts that are specific to your business and make sense to you.

Now you have a chart of accounts for your business, but we’re not done. You need to review it again while asking the following questions:

5. Do I really need this account or is there a similar account where the information could be gathered? If so, would viewing those two accounts together be more helpful?

6. Is it obvious what types of transactions would belong in this account? If your account name doesn’t make sense to you or the accounting staff, rename it to something that is logical to you.

7. Why will I need to see this information on my income statement or balance sheet? How will this information be used later? If you don’t really need to see it separately, perhaps the data belongs in another account.

8. Is there another way to get this information if I use a more general account type? For example, could you track departments by class in QuickBooks and eliminate accounts for specific departments? If so, set up the other tracking mechanisms and utilize the generalized account.

Each time you think you may need to add an account to your chart of accounts, ask yourself these questions first. Selectively adding accounts will lead to better visibility into your operations. If you’re unable to answer the above questions to guide your chart of accounts design, you should have an accounting consultant help you with the process. If you’re not getting the information you need from your financial reports, a redesign of how you gather and view information may be in order.

Copyright (c) 2010 Kelly Totten

Charting the Course – Business Plan Development & Research

As it is necessary to understand the direction and strength of the wind, before sailing, one must know the contrary winds in business. Charting a development strategy for a large or small business requires detail information about the competition. Too many entrepreneurs launch out with a dream, but never bring it down to the real world where men, women and children make the decisions “to buy or not to buy.” What are the qualities and flaws of the competitive products or services? Where and how are they sold? What are the prices and discounts? Who sells them? The provider’s reputation, financial strength, history and sales staff provide important clues to the nature of competition a product faces. The best ways to research include:

· Search the Internet for information, critiques, or evaluations of your competitors;
· Purchase the product or service for your personal evaluation;
· Find out what potential consumers think about it;

Getting this information requires a bit of work and research. Visit the competitor, interview their customers, sit in a place where you can observe the operation, and keep records. Who’s buying? What are they buying? At what price? Always look for any wrinkles in the competitor’s operation.

Once you have drawn a picture of the competitor, compare your own business plan to that. What advantage does your business strategy, location, products or services have over the competition? In particular, consider the pricing. Can you compete on price? If your goods are higher in price explain why. You may succeed with higher prices, but there will have to be reasons why people will pay more for your products. The aesthetics of the store, the nature of a guarantee, the skills of the sales staff and other features make be an attraction. How does your business compare to the competition? You want to compose your strategy based on the competition. All of this information will give you a clue to the potential you have of beating the competition. If you can beat the competition you have a better chance of being the business to survive.