January Planning Quiz
Question 1 – Should your business have a business plan?
This is up to you but you will find any business that is achieving great results will have a business plan. It doesnt need a full blown essay but here are 10 reasons why your business should consider a business plan
“Writing a business plan or putting together an investor deck allows you to think more clearly about what you’re doing and where you are going. Key point to remember though is that the minute that your business plan hits the printer it is already out of date, so don’t depend on it as your to-do list. Think of it as a roadmap.” ~ Paige Brown, BookingMarkets
2. Gain a Deep Understanding of Your Market
“Although it took several weeks and I’ve barely looked at it since, I credit my business plan for helping me understand a brand-new industry in an extremely deep way before actually entering it, and for forcing me to deeply examine how we would fit into the market and what TalentEgg’s probability of success was. As a “risk averse” entrepreneur, it was critical. ” ~ Lauren Friese, TalentEgg Inc.
“The biggest reason to write out a business plan regardless of any financing option concerns is that it can help you stay organized and remain on track. Businesses without a plan can easily get off-target, and revenues will suffer as a result. Creating a plan with expense projections, revenue forecasts, and more can help a small business remain committed to its long-term goals.” ~ Andrew Schrage, Money Crashers Personal Finance
4. Practice Makes Perfect
“It’s great to write one simply to throw it away. The mental gymnastics are great. The plan is basically worthless the moment you’re finished – but it will force you to think about things you might not have otherwise.” ~ Brent Beshore, AdVentures
5. Confirm the Math
“A lot of ideas sound great on paper and even in discussions. However, simple math can make or break an idea. Before we launch any new idea, we at least create a financial model to project the ROI from several realistic scenarios. You can save a lot of time and frustration thinking through the numbers, and making sure it’s possible to hit your revenue and profit goals.” ~ Phil Frost, Main Street ROI
6. Iron Out Possible Kinks
“Writing a business plan allows you to really think things through. Your plan should question the validity of your ideas, the product/service target markets and so on. It should force you to do your own proper due diligence.” ~ Nicolas Gremion, Free-Ebooks.net
7. Foster Alignment
“Writing a business plan is an ideal way to make sure that everyone on your founding team is aligned with the current and future plans for the business. In the early stages of a company, it’s imperative for founding team members to be on the same page as to how they’ll work together on moving the business forward to great success. Avoid any miscommunications by getting it all on paper early.” ~ Doreen Bloch, Poshly Inc.
8. Hold Yourself Accountable
“A business plan is a great tool that allows founders to articulate their vision and future plans for their company. When using any business plan format, there are standard questions that force you to think & create a long term vision and strategy for your idea. Once these are down on paper, they can serve as a guide to allow you to track your progress and hold yourself accountable for the future.” ~ Aron Schoenfeld, Do It In Person LLC
9. Know Your Message
“Business planning is incredibly helpful for describing what you do, understanding who your competitors are, and crafting a realistic three to five year plan. Each of these activities is crucial if you are looking to launch or expand a venture, and learning to speak concisely about your company will always be crucial no matter what stage you’re in.” ~ Garrett Neiman, CollegeSpring
10. Establish Benchmarks
“Business plans are a valuable, iterative, document that can serve as a successful benchmarking tool. Where did your business exceed expectations? In what areas did your strategy maybe fall short? While it’s fine to “pivot” your company based on what you’ve seen in the market, having something in writing puts the onus on you to be honest about your company’s performance. ” ~ Charles Bogoian, Kenai Sports, LLC
Question 2 – What are the four groups of KPI’s that most successful businesses work with?
Efficiency – Reducing waste and making the most of your resources.Finding ways to improve staff productivity.Lowering inventory days on hand to reduce storage costs.
Growth – Increasing your sales, measured by gross and net revenue.Improving wealth, measured by business equity.
Health – Balance debt and equity levels to the best proportions.Balance inventory levels with trade payables to get the best performance.Optimizing trade terms to speed up receipts.
Resilience – Reducing credit risk by optimizing debt levels.Improving profitability to increase interest coverage.Reducing financial risk by increasing equity-to-asset levels
Question 3 – Forbes blog about Business Plans mentions the top 10 Questions a plan should answer – does your business plan answer these?
1) What is the need that your business exists to satisfy?
- Every business exists because of some noticeable opportunity that you have discovered within the market. So you must clearly define the need and/or problem you are solving with this business.
2) How will your business satisfy the need?
- Introduce and describe the business itself. Consider including a mission or vision statement with objectives detailing how the business satisfies the need in the market.
3) How does your company differentiate itself?
- Describe your business model and competitive advantage. This will help you to outline how the business will sustain its position within the market.
4) Who will be the key players in the business?
- Name the management team, board and advisers to the business. Highlight their expertise and experiences.
5) How big is the market you are entering?
- Only after understanding the industry you are entering – its size, attractiveness and profit potential – can you truly justify the opportunity.
6) Who will you be targeting as customers?
- Narrowing down your target customer will help enhance and define your marketing strategy.
7) What will be your most effective marketing and promotional strategies?
- Once you’ve identified your target client, you’ll need to develop and implement a strategy on how best to reach them (e.g. PPC, television, radio, social, etc). And this in large part will be influenced by where your target client consumes information.
8) What are the economics of your business?
- Define your revenue streams including pricing structure, costs, margins and expenses.
9) How much money is required to get your business started and generating revenue?
- Identify needed capital requirements by determining where your business stands today, and what is needed in order to move forward. Also, if you are in need of outside funding, what will be the sources and uses of funds requested.
10) What needs to happen to break-even?
- Play around with financial projections and forecasts to determine the volume of sales needed to cover your expenses and to become profitable. Include monthly breakdowns for the first two years.