by Bart Basi
Part I of II
There is no precise road map for preparing a strategic business plan. The length of the plan and areas of focus will depend on the industry, the stage of the company’s development, the complexity of its business, and the intended audience, but a well-written strategic plan is essential to the capital raising process for your company. It is a way for an investor to review your company’s potential. Today, most investors and banks will not even consider putting money into your company without first seeing a strategic plan.
Starting from scratch
Basics and background on your company should include the following:
- The specific business you are in
- The product you sell
- The customer base you service
- The background of your business, including a short history of who started it, the highlights of its progress, and the roles of the personnel over the years, and
- The current ownership of your company.
Market overview
You also need a market overview to provide a broad view of the market sector and the specific niche being targeted. An ongoing business that wants to develop a new product or service, or service a new market, will need to show the demand for the product in the target area.
With this, you should be convincing people:
- There is a market need for your product
- You understand the potential customer’s needs
- Your product meets consumers’ needs
- You can sell your products at a profit.
Other questions that may need to be addressed in the market analysis section to make your strategic plan more complete is asking: Who are the potential customers and industries that would be interested in our business? What are the expectations of price, quality and service from these groups?
Another aspect to consider when conducting a market analysis is identifying your competition. All too often strategic business plans fail to acknowledge the presence and potential of all forms of competition, so this section should also discuss competitive responses to your product offerings, both those that have occurred and those that are anticipated. Provide a rationale for the expected responses from the competitors, both current and long-term.
Identify your team
One of the major areas of a strategic plan is a company’s key management team members. As a result, this section will receive significant attention from everyone. In preparing a strategic plan, this section should consist of, explain the company’s management team, how each person be compensated and what investment each individual owns, and identify board members.
Many agree that one of the strongest factors for success in a company’s growth is the track record of its management. Let your reader know about the key people in the company and their backgrounds and highlight for the reader how the people surrounding the owner complement the owner’s own skills. If you’re just starting out, show how each person’s unique experience will contribute to the success of the venture.
The remaining elements of your strategic plan will be covered in the next installment of the Financial column.
Bart Basi is an expert on closely held enterprises. He is an attorney, a certified public accountant and the president of the Center for Financial, Legal & Tax Planning, Inc. He can be reached at 618.997.3436.