How to Create a Business Plan

Put your strategy for success in writing with these guidelines.

Do you have a plan for how you're going to achieve success this year? Too many remodelers operate without a written plan that will direct their business to the type of success they want it to have.

"Remodelers who operate without a written plan often manage to run a 'successful' business, but it comes at the cost of spending too much time on the job and losing out in other areas of their life," says Clay Nelson, president of Clay Nelson Life Balance, a division of Consulting Services Network LLC. Some remodelers say they carry their plans in their heads, but that usually isn't specific or consistent enough to really guide the business — and it requires employees to be mind-readers.

Nelson cites four major benefits of a written plan:

  • It shows you the gaps in your current thinking that keep you from succeeding fully.

  • It converts your mind from a place where you store data to a place where you create the company's vision.

  • It's a tool for communicating responsibilities to other employees.

  • It tells you when you're done, and it can be revised, leaving a record of what used to be and what is now.

Some remodelers shy away from creating a plan because conditions change so rapidly. But that's even more reason to create a plan, Nelson says. "Without a plan, rolling with change will be increasingly difficult, ending up in your being run by your circumstances instead of being focused on your goals." He suggests writing a plan that will cover the next two years, as a longer period won't have enough solid information about conditions to be useful.

Nelson divides the business plan into five key sections:

  • Company analysis. This includes information on how your company began, how it grew to the size and shape it is today and what the company's mission statement includes. This section also should include a description of the target customers, including income range, location and demographics, and your assessment of your existing market.

  • Strategic planning. This section lists specific goals for the coming year, assumptions you make about being able to achieve those goals, strengths to explore, weaknesses to overcome, opportunities to explore, and how and by whom each part of your strategy will be implemented.

  • Management team. This portion details key employees, their strengths and how those will be used to achieve goals. It also should include job descriptions to ensure that all duties are covered and there are no overlaps.

  • Financial analysis. Creating financial statements provides a strong overview of resources and how the plan is working. They also will be required if you want to borrow money to expand. The key documents are an income (profit and loss) statement, a balance-sheet statement, a cash-flow statement and a break-even analysis, which focuses on the amount needed to cover all expenses.

  • Summary statement. This single page summarizes the business plan. Although this part is written last, Nelson suggests putting it at the front of your bound plan. It addresses the company's current status, the year's objectives, your competition, strategies, resources and income requirements.

With the plan written out, the final step is to act on it. "You have to be 100 percent committed to doing what you have written in your plan and be willing to be held accountable for getting it done," Nelson says. "You have to communicate it with your team and enroll them into being part of your success."

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