How to Write a Viable AND Practical Business Plan
If you want to start and grow a tax and accounting practice, the first thing you need to do is create a business plan.
While this task can be time-consuming, business plans allow you to methodically think through your service offerings, competitive edge (i.e. what differentiates you from your competition), target market, financials, and much more.
Think of your business plan as the foundation—an invaluable tool to keep you and your business focused and efficient in pursuing your long and short-term goals.
So, what should you include in your business plan?
The most important ingredients of a business plan should include (in order):
1. An Executive Summary
An executive summary is a brief introduction and summary of your business plan. It should include a description of your business (including your mission/vision statement), what problems you solve for customers, who your target market is, financials, and your company’s growth plan.
Your Mission Statement should define your company's business, its objectives and its approach to reach those objectives.
For example:
“We provide valuable tax consulting and management services for individual and business clients seeking to maximize their earnings and minimize their debts.”
Your Vision Statement should describes the desired future position of your company.
For example:
“We provide the expertise to help our clients realize their financial goals so they can lead happier, more fulfilled lives.”
A executive summary should grab your reader’s attention, inform them about who you are, and offer them a reason to read the rest of your business plan. It’s not uncommon for potential investors to make initial decisions based on your executive summary, so it’s very important to spend the time to get it right!
2. A Market Analysis
A market analysis is an assessment of your current market. It should include information about the size of the market (both in volume and in value), the various customer segments and their buying patterns, your competition, and the economic environment including barriers to entry and regulatory restrictions.
Be sure to narrow your target market to a manageable size. Many businesses make the mistake of trying to appeal to too many target markets. Research and include the following information about your market:
Distinguishing characteristics – What are the critical needs of your potential customers? Are those needs being met? What are the demographics of the group and where are they located? Are there any seasonal or cyclical purchasing trends that may impact your business?
Size of the primary target market – In addition to the size of your market, what data can you include about the annual purchases your market makes in your industry? What is the forecasted market growth for this group? For more information, click this great market research guide from the Small Business Association for tips and free government resources that can help you build a market profile.
How much market share can you gain? – What is the market share percentage and number of customers you expect to obtain in a defined geographic area? Explain the logic behind your calculation.
Pricing and gross margin targets – Define your pricing structure and gross margin levels, and any discount that you plan to use.
3. Company Description
The company description section of your business plan provides a high-level review of the different elements of your business. This is akin to an extended elevator pitch and can help readers and potential investors quickly understand the goal of your business and its unique proposition.
What to include:
The nature of your business and the marketplace needs that you are trying to satisfy.
How your products and services meet these needs.
Specific consumers, organizations or businesses that your company serves or will serve.
Competitive advantages that you believe will make your business a success such as your location, expert personnel, efficient operations, or ability to bring value to your customers.
4. Organization and Management
This should include:
Organizational structure — Create an organizational chart that visually details your company's internal structure including everyone’s roles, responsibilities, and relationships between individuals within an entity.
Ownership information — This section should also include the legal structure of your business (S-corp, LLC, sole proprietor, etc.) along with the subsequent ownership information it relates to. Important ownership information that should be incorporated into your business plan includes names of owners; percentage ownership; extent of involvement with the company; forms of ownership (i.e., common stock, preferred stock, general partner, limited partner); outstanding equity equivalents (i.e., options, warrants, convertible debt), and common stock (i.e., authorized or issued).
Management profiles — List the key people in your company and their backgrounds. Provide resumes that include the following information:
Name
Position (include brief position description along with primary duties)
Primary responsibilities and authority
Education
Unique experience and skills
Prior employment
Special skills
Past track record
Industry recognition
Community involvement
Number of years with company
Compensation basis and levels
Board of Directors' Qualifications — The major benefit of an unpaid advisory board is that it can provide expertise that your company cannot otherwise afford. A list of well-known, successful business owners/managers can go a long way toward enhancing your company's credibility and perception of management expertise. If you have a board of directors, be sure to include their names, positions on the board, extent of involvement with the company, background, and historical/future contribution to the company’s success.
5. Marketing and Sales Management
Marketing is the process of creating customers, and customers are the lifeblood of your business. In this section, you’ll want to detail your marketing strategy and overall sales strategy.
Your marketing strategy should include:
A market penetration plan (i.e. how you plan to break into your market and get the word out about your business).
A growth plan (i.e. how you plan to grow your business once you’re established. Most practitioners will choose horizontal or vertical growth strategies).
A channels of distribution strategy (i.e. the way in which your product will travel from your business to its end customer).
A communications strategy (i.e. how you plan to reach potential customers whether through social media, advertising, networking, etc.).
Your overall sales strategy should include:
A sales force strategy.
If you are going to have a sales force, do you plan to use internal or independent representatives? How many salespeople will you recruit for your sales force? What type of recruitment strategies will you use? How will you train your sales force? What about compensation for your sales force?
Your sales activities
Document your process for converting leads to customers. When a lead comes in, what is the next step? How about after that? List out all of the tasks involved with transitioning that lead to a paying customer.
6. Service or Product Line
Describe your service and/or product, emphasizing the benefits to potential and current customers. Focus on why your particular product will fill a need for your target customers.
What to include in your service or product line section:
Description of Your Product/Service
Details About Your Product’s Life Cycle
Intellectual Property.
Research and Development (R&D) Activities.
7. Funding Request
If you are seeking funding for your business venture, this is where you can detail your requirements/needs. Be sure to include:
Your current funding requirement (i.e. how much capital you are seeking).
Any future funding requirements over the next five years.
How you intend to use the funds you receive.
Any strategic financial situational plans for the future, such as: a buyout, being acquired, debt repayment plan, or selling your business.
When you are outlining your funding requirements, include the amount you want now and the amount you want in the future. Also include the time period that each request will cover, the type of funding you would like to have (e.g., equity, debt), and the terms that you would like to have applied.
8. Financial Projections
The company financials should be developed after you've analyzed the market and set clear objectives. That's when you can allocate resources efficiently. Be sure to include the following financial statements in your business plan packet:
Historical Financial Data — This includes your company's income statements, balance sheets, and cash flow statements for each year you have been in business (usually for up to three to five years). Often creditors are also interested in any collateral that you may have that could be used to ensure your loan, regardless of the stage of your business.
Prospective Financial Data — Most of the time, creditors will want to see what you expect your company to be able to do within the next five years. Each year's documents should include forecasted income statements, balance sheets, cash flow statements, and capital expenditure budgets.
Make sure that your projections match your funding requests; creditors will be on the lookout for inconsistencies. It's much better if you catch mistakes before they do. If you have made assumptions in your projections, be sure to summarize what you have assumed. This way, the reader will not be left guessing.
Finally, include a short analysis of your financial information. Include a ratio and trend analysis for all of your financial statements (both historical and prospective). Since pictures speak louder than words, you may want to add graphs of your trend analysis (especially if they are positive).
Want more tips on how to write the perfect business plan?
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