A business plan is an essential tool for a business owner. This business plan is as good for a fortune 500 company as it is for a sole proprietor. Not to get super cheesy but a business plan is more than just some document you file away.
A business plan is you guiding light.
When starting a business it’s your first plan of action and a system to organize yourself, your company and your help (if you have any)
When times are tough or confusing its the unbiased voice of reason from a time when things made more sense
When times are good it’s the rational guidance of how to continue developing while limiting risk
In any situation there will be variables so this isn’t a one size fits all with no effort from the reader. This is a one size fits all because it gets you to think critically about issues.
1. System Model Model System Method
I use the system-model-model-system method of writing a business plan. This is something I made up and I’m not sure if there is a more widespread approach that is similar. It basically acknowledges all the planning stages of observing the marketplace to creating a plan of action. It’s 4 basic parts and I will go into more detail in a moment but here are the basics.
#1 System – Observe the system outside existing in the world already. In our case it’s the construction marketplace. You have no control of this system you merely observe it.
#2 Model – This is your construct or “understanding” of the system#1 above. You observed the system and you create a model or in other words a belief about how that system works.
#3 Model – Now that you have observed the system#1, and created a model#2 of how the system works you can create a model#3 of how your business will need to work. This model is the model of your business. It describes what need to happen within your business in order to function in the marketplace.
#4 System – The last system is the system#4 you put in place to achieve that model#3 you image for you business. It’s the employee manuals, the software and the scheduled events organized so that you business runs as you would want it to and as closely to the model#3 you created.
Understanding the SMMS (system-model-model-system) method is important because it creates a complete chain of unique points in which your business plan relies on. This will allow you to finely control your processes, better asses weak points and most importantly will serve as the main structure of you business plan.
2. Business Plan Prompt
These are all the consideration of the business plan. All the questions and issues that can and should be covered. Answer these questions below and it will create your business plan for you.
This is the raw unedited master business plan outline. You will not find a better business plan outline. It has a lot of random words and phrases thrown in but I wanted to give you a real glimpse into an unedited business plan prompt.
Statement of purpose
Why will it be successful.
What will we provide.
Brief short term & long term goals.
Competition and feasibility study
UPDATE REQUIRED: ANNUAL
Summary on market competition and whether is increasing or decreasing and why.
Calculated win/lose percentage of bids for the company as a whole.
Where we get our information and how can acquire more.
10 companies in close competition with ours and prepare a report;
Differences in pricing and management.
Where they are getting their work from.
Comparison of our advantages and disadvantages.
Ways we can model ourselves after more successful companies.
A short summary of any new competition and whether they can be absorbed.
Is our location relevant to our employees and customers? Is it convenient?
Does it allow for the physical storage of necessary inventory? Organized?
Does it make sense financially? What is the next best alternative?
Does it represent us well to visiting customers or vendors?
Is the office arrangement efficient? Are resources available?
Is it well equipped? Tools, computers, ect?
Where would our next good location be?
Is there a specific hierarchy with explicit benefits and responsibilities?
Why does this structure work and what are the other options?
Would dividing the business into Strategic business units benefit?
Create a specific chart with each position having a sop that gets larger with each promotion.
How are we organizing/coordinating our activities, files, ect.
What standardized paperwork should we create?
How can we find the best personnel? How can we retain them?
How can we continue training them?
How can we make the best use of them?
How can we track their success or failure?
What step can we take to reduce risk of employee lawsuits?
Contact and employment lawyer
Carefully & regularly track employee performance citing at least one good and one bad quality.
Get approval from upper management to display a careful consensus
Have a witness present.
Arrange for safe return of company property and access abilities.
Document the actual event.
How can we tie their work effort directly to their pay?
What information would help us in advance?
Relevant market reports
Goals and benchmarks
What are our goals based on forecasting. How accurate are we?
What new trends should we study?
Where are new opportunities?
How often will our staff need these forecasts?
What is the best legal structure concerning taxes?
Spending loans as income and repaying with profit to avoid taxes
What is the best legal structure in acquiring work?
What legally issues do we deal with?
List every one!!
Insurance, bonding ect ect
- High level summary
- Existing marketing plan review, new goals and challenges and review of current market and product line.
- Situational analysis
- Company analysis
- Market share
- Customer analysis
- Value drivers
- Decisions process
- Concentration of customer base for specific products
Competitor analysis ( see comp/feas. study)
- Subsidiaries, joint ventures, subs distributers
- Company analysis
- Climate (possibly move to competition and feasibility report
- Pest analysis micro and macro
- Political and legal environment
- SWOT analysis( internal; strengths/weaknesses external opportunities/threats)
- Pest analysis micro and macro
- Market Segmentation ( for each segment)
- Percent of sales
- What they want
- How they use our products
- Support requirements
- How to reach them
- Price sensitivity
- Proposed marketing strategies.
- Remember the 4 p’s
- Be creative with strategies
- Long term & short term projections
- Old data
- Break even analysis on marketing expenses
Where have our customers been coming from?
What are new methods of attracting customers?
Can we train our staff with sales skills?
Have our leads been increasing/decreasing?
How customers to reach us/ pay us? Customer interaction mechanisms
Can we increase our services?
What will sell the customer? What do they want? Are we trying to meet their needs or ours?
Market analysis and corresponding model
Bid presentation packets
How do we produce our product? What are the steps?
Typical project overhead percentages
Who is involved?
Can we standardize for the sake of efficiency?
Types of bids such as gmax and their systems
What can go wrong?
Pricing data especially related to marketing
Information intake and metabolism
Creating reports and disseminating information from external and internal sources
Have we calculated the cost/reward on all of our actions?
Project costing real time and post analysis
Project closeout reports with calibration info
Creating reports on each section of business plan
How often will we need reports and on what for whom?
Collecting feedback from employee, estimator, customer, architect ect?
What information is available to us? What’s the source?
recording tracking and verifying financial source documents
What outsourced reports are available? Government and private
What information are we not analyzing?
How are we measuring our progress? Critiquing quality and source
How are we managing security of information and equipment? Theft and emergency backup
How are we maintaining records?
- workers by trade/company/name
- any action that could have legal ramifications
- general description of work
- official notifications
Startup resources: cash, equipment, personnel, office, available slack(affordable losses)
What resources will need readily available?
What resources give us a competitive edge?
What resources are we lacking?
How do we supply inventory? Why does this work or not work?
Should extra revenue go as dividends or re-invested? Why? How? What?
What investments can we make on behalf of employees?
Will new office sites be rented by (your company) through their vertically integrated management company?
Focus us intangible investments such as, training, systems, market shares(cartel)
3. Accounting Spreadsheet
This picture below is a spreadsheet which can be used as the starting template for an accounting summary. The number aren’t added up correctly because this is merely a template that you would need to fill in.
It’s basically a financial map. Often people in business, myself included, in good times spend too much money and in bad times ignore our financial reports for any distraction. But when you plan ahead and create this report it’s easier to sober yourself up and admit whether you are on the correct course or need a change.
Remember that most sections need the SMMS method applied. This means information coming in (S#1), being assessed (M#2), creating a goal (M#3) and then implementing a strategy (S#4) for achievement.
If a business has no sensory information coming in(S#1) then the entire system collapses. That’s why you notice throughout my outline notes relating to internal financial reports or external market projections. Because without a regular feed of reliable information its hard to make decisions. Also, many people have an idea about how they want things to work but rarely ever create employee manuals or business procedures for executing(S#4) their ideas. So while the idea is right their performance is poor when attempting to execute.