Strategic Business Plan

A strategic business plan should not be confused with a business plan. The strategic business plan is a much shorter precise document. A strategic plan can be used as the foundation and framework of a business plan. A strategic business plan emphasizes growth and financing, management and organizational structure, financial planning, budgets and forecasting, corporate governance, as well as marketing strategies, tactics and implementation

Writing a strategic business plan is an exercise that improves or influences strategic efforts.  It communicates core strategies and objective of every manager, tracks the status of the plan’s development, establishes performance metrics, and can be quickly readily adjusted to meet changing business conditions. A strategic business plan is designed to be flexible and dynamic.

Entrepreneurs and business managers are often so preoccupied with immediate issues that they lose sight of their ultimate objectives. That's why a business review or preparation of a strategic plan is a virtual necessity. This may not be a recipe for success, but without it a business is much more likely to fail. A sound strategic business plan:

• Forces you to look at the whole business
• Focuses attention on important questions
• Helps clarify and communicate your goals and objectives
• Becomes a means of assigning priorities
• Becomes a framework for daily decision-making and better management
• Helps maintain a “proactive” business attitude
• Serves as a benchmark to track performance
• Stimulates development of a new/future business opportunities
• Becomes a tool to access capital, acquire business partners, attract employees
• Increases your chance of success by serving as your road map

The SBDC offers a class for Strategic Business Plan writing, NxLevel for Entrepreneurs CEO.

The following is an outline intended to provide direction, purpose, and discipline, with the end result being a workable business plan.

The elements of a business plan include:

1. Introduction (Executive Summary)
2. Marketing
3. Management
4. Operations
5. Finance

1. The Introduction to your business plan should:

• Give a summarized description of the business.
• Explain the type of business.
• Discuss the ownership of the business and its legal structure.
• List the skills and experience you bring to the business.
• Discuss the products and services offered.
• Discuss the advantages over your competitors.

2. The Marketing section of your business plan should:

• Identify the demand for your product or service.
• Identify your customers and their locations.
• Identify your competition and their locations
• Explain your pricing strategy
• Identify selling strategy
• Explain how your product or service will be advertised.
• Explain how your product or service will be delivered.

3. The Management section of your business plan will:

• Identify the owner/owners and key employees.
• Discuss the skills and experience they bring to the business.
• List your professional advisors (banker, lawyer, mentor, etc.)
• Define your organizational structure

4. The Operations section of your business plan will:

• Method of production for product or services
• Site selection
• Building and equipment required
• Human resources including job descriptions
• Policy and procedures
• Identify suppliers
• Distribution process

Now you will need to create financial forecasts/projections in order to create a realistic business model. Financial projects will help in determining what will happen to your business related to sales, expenses, sources, and use of cash.

5. The Finance section of your business plan will:

• Explain your source and amount of initial equity capital.
• Develop start up costs budget
• List monthly operating expenses and sales revenue
• Provide Pro Forma Statements for your business
• Develop a monthly income statement for the first year.
• One to two years monthly cash flow statements that tie to the annual income statements.
• three years of projected annual cash flow and income statements.
• three years of annual balance sheet statements
• Discuss your breakeven point.
• Provide your Personal Financial Statement,
• Include current credit report
• Provide three years of past personal tax returns (and business tax returns for a purchased business)

Financial Projections

Pro Forma Statements
Pro Forma Financial Information, or Pro Forma Financial Statements, are essentially projections of the financial performance of the business in the future based upon documented assumptions. A common use of Pro Forma information is to present financial statements as they would be if a proposed change were to take place, in this case the opening of a business.

Balance Sheet
The Balance Sheet captures the financial condition of the business. It reflects the asset, liabilities and equity (equity = assets – liabilities). You must project month by month for year one and annually for years two and three.

Income Statements
The Income Statement reflects the financial performance of your business and reflects revenue from sales, variable costs, fixed cost, and net profit.

Cash Flow
Cash flow reflects sources and uses of cash. This statement demonstrates that you have enough cash to keep the business operating.

Break Even Analysis
Break even helps you determine the sales volume necessary to cover your fixed and variable costs. Break even can also be used to determine target selling price and quantity.

Personal Financial Statements
For all those owning more than 20% of the business, personal financial statements are required by lenders. Personal statements present your personal assets and liabilities as well as net worth.

For additional assistance with the creation of your business plan, the GRSBDC offers Business Plan Overview, a course designed to guide you through the writing of your business plan. You may also visit the SBA Business Information Center (BIC) for assistance with free software packages to develop your business plan.