The Value Proposition of a Good Business Plan

When was the last time your company put together a Business Plan? The answer I usually hear is “Well, we’re not a start-up- we’re financed…we are mature and operating, we use budgets and strategic planning instead.

Business plans are not just for start-ups anymore. A good business plan has the following components:

1.    It should have revenue projections based on well defined, measurable marketing activities aimed at:
a. Recurring business from current customers.
b. Lost business from current customers.
c. New business from current customers.
d. New business from new customers.
2.   It should have operational cost projections based on:
a. Current processes.
b. Cost reductions (return on investment) realized from new technology or new processes.
c. Investment needed to implement new technology or new processes.
3.     It should be scaleable:
a. What happens if revenue projections are exceeded by 10, 20 or 50%?
i. What additional capacity will need to be acquired in terms of:
1. Facilities costs
2. Equipment costs
3. Staffing expense
b. More importantly, what happens if planned revenue doesn’t materialize?
i. How does the plan address achieving a lower break-even level?
1. Does the plan address excess capacity and its related fixed costs?
a. How will these be pared to compensate
2. What other areas can be pared including:
a. Customer Service
b. Administrative positions
c. Operating shift reductions

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