THE BUSINESS PLAN
THE BUSINESS PLAN
Teresa Brown had already thought through the hard international marketing questions suggested in chapter 3. She knew her product and knew where to buy it. As a result of her work experience, she also knew how to market the product in the United States. But what she hadn't done was put those thoughts on paper.
In the beginning, you might have only a notion of your plan tucked away in your head. As the business grows, it will be necessary to formalize your plan and stick to it. Putting out brushfires in order to maintain marginal survival is hardly a wise use of anyone's time.
The underlying concept of a business plan is to write out your thoughts. By raising, then systematically answering basic operational questions, you force self-criticism. Once on paper, others can read it, and you can invite their opinions. Don't let your ego get in your way. Ask for constructive criticism from the most experienced people you can find. Often it is better to ask strangers, because friends and relatives tend to want to shield you from hurt. Explain to your readers that you want to hear the bad news and the good news. The more eyes that see the plan, the more likely you will: (a) identify hazards while you still can act or avoid them, and (b) spot opportunities while you easily can act to maximize them.
A business plan can be as brief as 10 pages and as long as 50. On the average, they run about 20 pages. Every outline is usually about the same. Table 7-2 suggests an outline format for your business plan.
How To Begin the Business Plan
Stop everything, and begin writing. The first draft of your plan will contain about 80% of the finished draft and you can finish it in less than 2 days. One measure of the success of the process is the amount of pain it causes you. By looking at your business as an onlooker would, you might find that some of your vision, a pet project for instance, might have to be abandoned.
Often, you can complete the process in 8 steps:
1. Define long-term objectives
2. State short-term goals
3. Set marketing strategies
4. Analyze available resources (personnel, material, etc.)
5. Assemble financial data
6. Review for realism
7. Rewrite
8. Implement
Defining Long-Term Objectives. Start with the objectives of your import/export business. Think ahead. What do I want the business to be like in 3 years? 5 years? 20 years? How big a business do you want?
Stating Short-term Goals. Define your import/export business in terms of sales volume and assets. Be precise; state them in measurable units of time and dollars.
Setting Marketing Strategies. If, like Teresa Brown, who is marketing bead fringe from Egypt, you have done your homework and applied the marketing concepts offered in chapter 3, this part of the business plan should be simple.
If not, go back and review the marketing section of chapter 3, because nothing will happen with your business until you make a sale. If sales aren't made, projections and other plans fall apart. Profitable sales support the business, so be prepared to spend 75% of your planning time on market efforts. Ultimately, the best marketing information comes through your own industry—here or overseas. Talk to those with experience. Talk to United States and foreign manufacturers as well as other importers/exporters. Don't overlook the data that you can find in libraries.
Make your market plan precise. Describe your competitive advantage. Outline your geographical and product-line priorities. Write down your sales goals. List your alternatives for market penetration. Will you sell direct or through agents? What is the advertising budget? Travel in an import/export business is a must. What is the travel budget? How much will it cost to expand your markets? What will be the cost of communications?
Analyzing Available Resources. Now for the pain. You must now ask yourself whether you have the resources to make the plan work. Take a management inventory. Do you have the skills to market your products? Do you need administrative or
accounting skills? Will you need warehouse space? Will you need translators? How much cash will you need?
Assembling Financial Data. After all the dreaming and reality testing of the first four steps, you must now express them in terms of cash flow, profit and loss projections, and balance sheets. Figure 7-1 shows a pro forma sales projection (3-year summary, detailed by month for the first year, detailed by quarter for the second and third years). Figure 7-2 is a pro forma income (profit and loss) statement (detailed by month for the first year, detailed by quarter for the second and third years). Figure 7-3 is a pro forma balance sheet, and Figure 7-4 is a pro forma cash-flow statement (detailed by month for the first year, detailed by quarter for the second and third years). This usage of pro forma means estimating information in advance in a prescribed form.
The cash flow and the profit and loss projections serve double duty. They quantify the sales and operating goals, including use of personnel and other resources expressed in dollars and time. As a guide to the future, you can use them as control documents and measure progress toward goals. The balance sheet shows what your business owns, what it owes, and how those assets and liabilities are distributed.
Reviewing for Realism. Your plan must not set contradictory goals. A coherent plan fits together. You cannot be expanding the introduction of goose liver from China at the same time you are getting out of animal products and into irrigation machinery. Look at your plan as a whole and ask, "Does this make good business sense?"
Rewrite. Now that the first draft is complete, let at least 10 experienced people look at it. Ask them to be critical and to tell you the truth. Let them know up front that you have a lot of ego in this project, but that because you want to be a success, you want their criticism, no matter how much it hurts.
Implementation. In the words of President (General) Dwight Eisenhower, "The plan is nothing; planning is every-thing.'Your business plan provides a road map, but the acid test is whether it will work. Like a map, you might have to detour to get where you are going, so don't put the map on the shelf and forget about it. Use it as an operating document. Review it and revise it as experience dictates.
Now you're ready to go. You've done your homework and
written your business plan. If you've gotten this far, you have the style and determination to make it work.
By now, you have written your first letter and made your first contact. As an importer, you've asked for literature and samples or, as an exporter, you've sent them. You want early orders, and if you have done your homework, they should start rolling in, but be patient. Everything takes a little longer in international business.
SUCCESS STORY: Teresa Brown flies regularly to Europe and the Middle East, where she buys products with the ease of a professional buyer, which she now is. Her profits are remarkable and she has a lifestyle she designed herself.
Teresa Brown had already thought through the hard international marketing questions suggested in chapter 3. She knew her product and knew where to buy it. As a result of her work experience, she also knew how to market the product in the United States. But what she hadn't done was put those thoughts on paper.
In the beginning, you might have only a notion of your plan tucked away in your head. As the business grows, it will be necessary to formalize your plan and stick to it. Putting out brushfires in order to maintain marginal survival is hardly a wise use of anyone's time.
The underlying concept of a business plan is to write out your thoughts. By raising, then systematically answering basic operational questions, you force self-criticism. Once on paper, others can read it, and you can invite their opinions. Don't let your ego get in your way. Ask for constructive criticism from the most experienced people you can find. Often it is better to ask strangers, because friends and relatives tend to want to shield you from hurt. Explain to your readers that you want to hear the bad news and the good news. The more eyes that see the plan, the more likely you will: (a) identify hazards while you still can act or avoid them, and (b) spot opportunities while you easily can act to maximize them.
A business plan can be as brief as 10 pages and as long as 50. On the average, they run about 20 pages. Every outline is usually about the same. Table 7-2 suggests an outline format for your business plan.
How To Begin the Business Plan
Stop everything, and begin writing. The first draft of your plan will contain about 80% of the finished draft and you can finish it in less than 2 days. One measure of the success of the process is the amount of pain it causes you. By looking at your business as an onlooker would, you might find that some of your vision, a pet project for instance, might have to be abandoned.
Often, you can complete the process in 8 steps:
1. Define long-term objectives
2. State short-term goals
3. Set marketing strategies
4. Analyze available resources (personnel, material, etc.)
5. Assemble financial data
6. Review for realism
7. Rewrite
8. Implement
Defining Long-Term Objectives. Start with the objectives of your import/export business. Think ahead. What do I want the business to be like in 3 years? 5 years? 20 years? How big a business do you want?
Stating Short-term Goals. Define your import/export business in terms of sales volume and assets. Be precise; state them in measurable units of time and dollars.
Setting Marketing Strategies. If, like Teresa Brown, who is marketing bead fringe from Egypt, you have done your homework and applied the marketing concepts offered in chapter 3, this part of the business plan should be simple.
If not, go back and review the marketing section of chapter 3, because nothing will happen with your business until you make a sale. If sales aren't made, projections and other plans fall apart. Profitable sales support the business, so be prepared to spend 75% of your planning time on market efforts. Ultimately, the best marketing information comes through your own industry—here or overseas. Talk to those with experience. Talk to United States and foreign manufacturers as well as other importers/exporters. Don't overlook the data that you can find in libraries.
Make your market plan precise. Describe your competitive advantage. Outline your geographical and product-line priorities. Write down your sales goals. List your alternatives for market penetration. Will you sell direct or through agents? What is the advertising budget? Travel in an import/export business is a must. What is the travel budget? How much will it cost to expand your markets? What will be the cost of communications?
Analyzing Available Resources. Now for the pain. You must now ask yourself whether you have the resources to make the plan work. Take a management inventory. Do you have the skills to market your products? Do you need administrative or
accounting skills? Will you need warehouse space? Will you need translators? How much cash will you need?
Assembling Financial Data. After all the dreaming and reality testing of the first four steps, you must now express them in terms of cash flow, profit and loss projections, and balance sheets. Figure 7-1 shows a pro forma sales projection (3-year summary, detailed by month for the first year, detailed by quarter for the second and third years). Figure 7-2 is a pro forma income (profit and loss) statement (detailed by month for the first year, detailed by quarter for the second and third years). Figure 7-3 is a pro forma balance sheet, and Figure 7-4 is a pro forma cash-flow statement (detailed by month for the first year, detailed by quarter for the second and third years). This usage of pro forma means estimating information in advance in a prescribed form.
The cash flow and the profit and loss projections serve double duty. They quantify the sales and operating goals, including use of personnel and other resources expressed in dollars and time. As a guide to the future, you can use them as control documents and measure progress toward goals. The balance sheet shows what your business owns, what it owes, and how those assets and liabilities are distributed.
Reviewing for Realism. Your plan must not set contradictory goals. A coherent plan fits together. You cannot be expanding the introduction of goose liver from China at the same time you are getting out of animal products and into irrigation machinery. Look at your plan as a whole and ask, "Does this make good business sense?"
Rewrite. Now that the first draft is complete, let at least 10 experienced people look at it. Ask them to be critical and to tell you the truth. Let them know up front that you have a lot of ego in this project, but that because you want to be a success, you want their criticism, no matter how much it hurts.
Implementation. In the words of President (General) Dwight Eisenhower, "The plan is nothing; planning is every-thing.'Your business plan provides a road map, but the acid test is whether it will work. Like a map, you might have to detour to get where you are going, so don't put the map on the shelf and forget about it. Use it as an operating document. Review it and revise it as experience dictates.
Now you're ready to go. You've done your homework and
written your business plan. If you've gotten this far, you have the style and determination to make it work.
By now, you have written your first letter and made your first contact. As an importer, you've asked for literature and samples or, as an exporter, you've sent them. You want early orders, and if you have done your homework, they should start rolling in, but be patient. Everything takes a little longer in international business.
SUCCESS STORY: Teresa Brown flies regularly to Europe and the Middle East, where she buys products with the ease of a professional buyer, which she now is. Her profits are remarkable and she has a lifestyle she designed herself.
Comments
Post a Comment