Three Critical Components of Your Complete Business Plan

Three Critical Components of Your Complete Business Plan June 18, 2021Leave a comment
Gear teeth meshing with words "Business" and "Plan"

While developing a strategic plan can involve a variety of details and formats, the most basic has only three components:  Operational, Finance, and Marketing.  While this approach may seem to be an over-simplification, it can help guide the process, especially for those new to the idea of planning.

For nearly twenty years now, I have been teaching leadership, management, and finance classes in the graduate program at New York University; first in the Graphic Communications Management & Technology program and more recently in the master’s program in Integrated Marketing.

In the most recent semester, I taught the final course in the program: “Capstone: The Business Plan”.  This course requires each student to research, prepare, write, and present a comprehensive business plan for a business with a special focus on how integrated marketing will help the business achieve its planning objectives.

The recommended format for the business plan shows these three components:

1.  The organizational plan

How the enterprise will be designed and structured

2.  The financial plan

Sources of funding, revenue and expenses

3.  The marketing plan

How the organization plans to reach the desired audience

It begins with an overarching business strategy showing the scope of the business concept and category research to show the financial potential, the anticipated target audience (using what I call the three “graphics”; demographics, geographics and psychographics) and their competitive strategy, with a particular emphasis on how their offering will be differentiated.

The marketing section is developed with brand positioning, customer acquisition strategies and tactics and a customer retention plan for lifetime value.  Prospect data acquisition and lead generation channels and systems are included.  Customer service processes are clearly articulated.

The financial plan includes projections for the company, a budget (annual and three-year pro-forma), and full profit & loss estimates.  It also requires lifetime value analysis (that is, the amount of revenue and profits expected from key accounts over a period of years) and most importantly, cash flow estimates for the initial year in a format that will be monitored and updated annually (as I remind my students, companies don’t go out of business because they run out of profits, they go out of business because they run out of cash!).

The learning objective of the Capstone course is to teach graduating students how to think about the fundamentals that drives a business.  Organization, finance, and marketing are the three foundational pillars upon which a solid business plan is built.  This is true for new business ventures and for any going concern.

Does your plan include these essential elements?  Is the operation design, structure and process reviewed annually? Is there a robust, detailed marketing plan? (note I did not say “sales plan”:  this is also needed but ideally as a sub-set of the marketing plan.)  Does the financial plan include a detailed customer analysis and lifetime value projections and cash flow estimates?

For a detailed outline you can use to develop your business plan, send me an email at joe@ajstrategy.com.

Leave a Reply

Your email address will not be published.