Monday, January 30, 2012

Business plan: Executive summary

(Writing a Business Plan)
The Executive Summary is the single most important section of the Business Plan. For many readers it could be the only page of the document that they read and for this reason you should keep it down to a single page, with as much 'white space' and bullet points as is reasonable ... The point is to be as concise as you can while engaging interest and excitement to learn more.

Remember, the key question your readers will have in their mind is What's in it for me? Assuming that the majority of the readers of a Business Plan are investors, whether they're making a loan or buying shares, then you've really got to use this section of the plan to show them how this idea is going to make them more money than the alternatives open to them.

Because this section is the most critical to get right then it is wise to make it the very last thing that you write; although, of course, it's often a good idea to start drafting things much earlier as you go along and making tweaks and refinements as you get more detail.

It's not usual to be able to write even the simplest business plan in a day because to do it right there is a lot of work to do on each of the sections; and re-work, refinement and refining will serve you well at this stage. It's much easier to do it now than after investment resources have been committed and expensive changes have to be made.

A good exercise is to try to answer the following questions in a single paragraph:
  • Why what you propose is needed
  • What you will do
  • How you will do it
  • Who you will do it for
  • When you will do it
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Thursday, January 26, 2012

How to write a business plan

As I've got another one to write in the next couple of weeks, I thought I'd start a mini-series on How to write a business plan. Today's post is simply an overview of where we're headed, but tomorrow we'll look at Why have a business plan in the first place - despite conventional wisdom, they're not always necessary in the detail that's often talked about.

But, if you're going to put together a business plan, here are the major headings to cover:
  1. Executive Summary A concise summary of your Business Plan. No more than one page long, and normally it should be the last thing you write, after all the rest is pulled together
  2. Business products/service A concise description of your business and what it will do. This section should give overview information on each of the revenue streams you envisage, and over what time frame.
  3. Analysis of market opportunity This should be consistent with your financial plan and should justify the activity: just because it's built, they won't necessarily come! This section could include an assessment of the Business Landscape and your view of Market segmentation along with Competitor analysis (showing their strengths and weaknesses).
  4. Team skills, experience and resources Background information about the skills and experience you (and your team if appropriate) have that will help you realise your business plan 
  5. Sales and marketing Describe the market – end user, sector and segment descriptions. Identify customer priorities and needs. Outline a recommended approach to the market, including how you plan to position and brand your offering; and how you will reach the customers you are targeting 
  6. Financial Plan A basic financial plan needs to show :Forecast sales; Costs (fixed and variable); Cash flow analysis; Funding requirements and recommendations. 
  7. Strategic action plan List the actions required to realise the plan. 
It doesn't sound like much, but there's a lot of work to go into making this coherent and credible. And this outline will only serve the most generic of situations - chances are that your plan will need to delve into more detail in some areas than others, and add some sections of information. But keep the whole thing under twenty pages in length. And keep it updated - there's little point in writing a plan and filing it away. If it's to be useful, it should be usable and used!
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Wednesday, January 25, 2012

How to make cost savings

I got asked for more detail after yesterday's post on using cost justifications to support a business project. In this hard-pressed and competitive economy it's important to seek a positive return in months. 
For example, replacing paper forms and processes with electronic ones on iPad, iPhone and Android phones and tablets can give some real, measurable benefits:
  • Great savings in time as paper forms don’t have to be transcribed; no delays in processing, no lost forms and no errors in transcribing or mis-keying 
  • Staff can be unchained from desks and workstations and data submitted at once, straight into existing line of business systems 
  • Increased accountability as time and location can be recorded automatically, photos attached to documents etc 
  • There are competitive advantages in being seen to work efficiently and effectively with attractive technology like the iPad (rather than paper)

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Tuesday, January 24, 2012

Cost justification is vital

You should almost never do a business project just because it feels like a good idea. The most successful projects come with a cost justification that's going to deliver benefits as near-certain as possible.

Colleagues have just taken a paper-based process and turned it into an electronic form, almost an 'app,' that runs on iPad, iPhone and Android phone and tablet computers ... It is estimated to save £20k

So, how do we calculate this?
  • Sixteen users are each saving about half an hour per week; that's one full eight hour day
  • Assuming that it costs about £50 per hour to employ someone (not just salary, but space and utilities and other support costs) ... That's about £400 per week
  • At fifty weeks in a year you've found a saving of around £20,000
This £20k saving is achieved with a software project that, in this case, was £5k. That number is going to change depending on the size and scope of the project, but here was to take a suite of paper processes. 
So, the client has got a really fast payback that justifies the project in a matter of months; and it only took a few weeks to implement. And it compares very well indeed to the cost of developing a custom application on a mobile device, such as Aviva's experience of spending £30k on an application to run on BlackBerry PlayBooks!
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