Creating a business plan requires an understanding of the owner’s purpose for the business as well as the guiding principles for the business. A business plan typically describes the 2-5 year direction and objectives for the organization. That is, where the organization is going and how it is going to get there.
Basic Elements of a Business Plan
Check out the Small Business Association Planner for some good tools and advice. Typical business plans include:
- The purpose of the business – essentially a statement of the owner’s purpose, the company’s mission and vision
- Objectives – where will the company be 2-5 years from now (size, profitability, efficiency, ….)
- The organization – a description of how the company is organized to meet it’s purpose and objectives
- Strategies – Overall strategies for obtaining objectives
- Action plans including metrics for implementing strategies
Porter’s Five Forces
There are a number of methods for determining a business plan. One of the common is to review ‘Porter’s Five Forces’. That is to look at the most common factors that affect your business.
- Your buyers – the current and potential customers of your products and services
- Your suppliers – the basis for your products and services on. How is that changing and affecting your business?
- Your competitors – those competing with you for your business. What are your relative strengths and weaknesses?
- Substitutes – really another form of competition. What outside forces can affect your business?
- Barriers – kind of the opposite of substitutes. What can is protecting your business? How can you take advantage of that?
Obviously, you could spend a lot of time working on this and I’m not advocate wasting time. Still, if your business is important, then you need some sort of business plan to get you where you want to go. This business plan will fuel you annual strategic planning process – Part 4 of this Business Foundation series.
Question: Did you evaluate Porter’s Five Forces to create your business plan? If not, what other analysis did you find useful?