Ten Fundamentals of a Business Plan

Let’s hope and pray that 2009 is better to car dealers than the last two years have been, but instead of just hoping and praying that business will turn around this year, take matters into your own hands and aggressively storm the market with a positive mental attitude, focused actions and a strategic plan of attack.

Do you think Tony Dungy or Bill Belichick would ever start a football game without a sound game plan? Do you think General Schwarzkoph would have led the invasion of Kuwait without an operations plan? The answer is no. Effective leaders execute well-planned strategies, and the best way to lay out a sound business strategy is to write a thorough business plan. If you haven’t written one yet, you are making one of the most costly, and often fatal, mistakes of running a business.

A business plan is no guarantee for success. It is, however, a prerequisite. And a business plan on the back of a napkin is better than no business plan at all. Below are ten fundamentals of a business plan and a brief description of each:

1. Vision – The Executive Summary. Every team needs a vision of what the future will be like when you reach your goals and are operating successfully. The executive summary is an abbreviated summary of that vision. It dictates who you are, what you do, why you do it and how you are going to achieve your goals. It contains a vision statement, a mission statement, and validated comments about our market and the business opportunity.

2. History – A brief account of the company’s roots and how it began. Remember, history can be boring for many readers, so keep this section short and sweet. It’s relevant because it illustrates the foundation of the company and gives insight to the direction of the future.

3. Goals and Objectives – Every organization or team needs goals that are SMART (Specific, Measurable, Achievable, Realistic and Time-Phased). Goals provide a target on which the team can focus their thoughts, actions and energy. Every goal needs objectives that serve as the stepping stones that pave the way to its attainment. Goals and objectives give the team clarity for its vision. They provide joint direction that helps guide the team and build momentum.

4. The Team – Biographies of the Key Players. Every team has all-stars. These are the players in key roles who are charged with executing the business plan. No matter how good the plan is, its ultimate success depends on the talent and drive of the key players. The best-laid plans will ultimately fail without a focused and talented team, just like the best teams and best players will ultimately lose without a game plan. Don’t hold back either. This is your opportunity to sell your team to the world—be loud and be proud.

5. The Product or Service – This is what you do, why people pay you money. This section describes in detail the product(s) or service(s) you offer. Be specific. Be different. This is the “secret sauce” about your business that you’re selling. You have to sell it to yourself, to employees, to investors, to banks and ultimately, to customers. As a car dealer, you must be able to answer the most basic of questions: Why should I buy a vehicle from you?

6. The Market – Wikipedia defines consumer market research as “a form of applied sociology that concentrates on understanding the behaviors, whims and preferences of consumers … and aims to understand the effects of comparative success of marketing campaigns.” The marketing section of your plan has a distinct and important purpose of describing the market demographics of your business and associated buying habits in reference to your product or service. This is where you describe your niche in detail to illustrate your understanding of your customer and why they will choose you.

7. Strategy - The strategic section of your plan is the nuts and bolts of your business idea. This is where you describe in full detail your game plan for winning. This is where you describe how you’re going to achieve your goals and objectives. This section is the framework that holds together the entire plan by laying out a detailed strategic plan of action and allows for tactical reactions to any contingency that may arise.

8. Financial Projections – The financial projections section of a business plan typically accounts for a five-year period—two years of historical and comparative data and three years of informed projections based on the demand of the market and the company’s ability to meet a percentage of that demand.

9. Exit Strategy – Most businesses have a specific life cycle. They start up, they grow, they change hands, they go public, etc. The exit strategy depicts the projected life cycle of the business and the long-range plans of the owners. It also lays out a detailed exit plan for any investors as a way to specify and minimize the financial risk of their investment in your company.

10. SWOT Analysis – The final section of a business plan candidly highlights four strategic factors of influence that are used to evaluate the Strengths, Weaknesses, Opportunities and Threats of a business. The first two factors highlight the key strengths and weaknesses of the organization while the second two illustrate the current opportunities for expansion and threats to the existing business model. The purpose of the SWOT analysis is to identify the internal and external factors that will affect the ability of the organization to achieve its stated goals.