TES 032 - What to Have in a Business Plan

Hey there, real quick before we jump into the episode, listen, if your earnings treadmill hasn't set you free yet, running faster won't either. Listen, hustle without principles just going to burn you out. So here's what I want for you. I want you to join me for my money machine experience Live. It is three free trainings. Deep dive into how to escape the treadmill and build a money machine that actually works for you. All right, grab your spot here by going to moneymachinelive.com and I'll see you in the free training. Hey there. I'm Mel Abraham, the author of the number one best selling book the Entrepreneur's Solution and the founder of Business Breakthrough Academy, where we teach you how to design a business and create a life, a life of financial freedom and peace of mind. And welcome back to this episode of the Entrepreneur Solution show. And this one, we're going to get the opportunity to answer a question that came in on our question line and@askmelnow.com and it's a question about the proper way to do a business plan for an online business. And so after this brief introduction, we'll come back and we'll answer Marie's question. But remember that every single one of these episodes have certain takeaways, tools, templates, worksheets, things to help you and help you accelerate your success. So make sure that you go to melabraham.com session032 to make sure that you get the proper downloads. And if you're not at your computer or you happen to be running or at the gym, go ahead and text mylegacy one word, no spaces mylegacy to 38470. We'll make sure that we get you the download link. So I'll see you back here right after this brief introduction and we'll listen to Marie's question from St. Lucia.

Welcome to the Entrepreneur's Solution where highly successful entrepreneur Mel Abraham becomes your entrepreneurial mentor. Here, Mel reveals his business building strategies and even gets a chance to answer your questions. Mel Abraham, a CPA by education, but an entrepreneur by exhilaration and a true believer in the entrepreneurial way of life. It's through entrepreneurship that we create community, support society and live our dreams.

It's where possibility meets reality again and you can have the life and lifestyle you want. One of freedom and peace of mind. Welcome to this episode of the Entrepreneur's Solution where it's time for you to be bold, dream big, and live life your way.

Hey there, Mel Abraham. Welcome back to this episode of The Entrepreneur's Solution show and we get a chance to answer a question that came in on the.

Question line. And this question comes from Marie in St. Lucia and it's about business plans. So let's go ahead and let's listen to Marie's question.

Hi Mel, this is Marie Piazza and I'm calling from St. Lucia. I'd like to know how to make an online business plan. I have had businesses before, but physical businesses. So I want to know what the key things I have to know about online business plan plan and how to go about doing that. Thank you very much.

Thanks for that question. That's a great question to ask Maria. And you know, one of the things that I want to do is actually I'm going to answer this in two parts. The first part I'm going to talk about in this session and then in the next session we'll talk more specifically about online business plans. But let's first get our arms around this concept of a business plan and what a business plan outline is. Now, many of you may have heard me speak. In fact, I just finished up one of my three day deep dive workshops, Business Breakthrough Academy just recently. 100 entrepreneurs that was there. It was tons of fun. It was off the charts amazing to see the visions and the things that people are doing and the difference they're making in society. So I hope that I get a chance to see all of you there one of these days. But the bottom line is this. I believe that one of the most important things to get first is this business model. And we've talked about that in a previous session. Then we come to this concept of a business plan. I know we get caught up many times with business plans. And I see business plans left and right. As an angel investor, as an analyst, as a consultant, as a strategic consultant, an advisor and mentor, I see business plans a lot. And typically what happens is we create this document and it's a beautiful document that ends up being put on the shelf, collecting dust and never used for anything. Well, my philosophy is that if we're going to use or create the business plan, there's a couple things to think about. One, the process of getting the plan in place is the most important. It's not the plan itself. It's actually the process that we go through, the exercise. I mean, think about it this way. The champion that is out there running the decathlon and doing all those events and doing all of that, it's all the preparation work that they did for that moment that's most important. And it's the same thing with business plans. It's all the preparation work, it's the process that's more important than the ultimate document. And when we get the process right, the growth that comes out of it, the knowledge, the understanding of your, of your business, is what is more important, the actual written document itself. So having that in mind, let's talk about the document and let's talk about the process and what each element of that document may be. Now, what I'm going to give you is a fundamental outline of what business plans typically have in them and my thoughts on them. Depending on the industry, depending on the business. And you get a chance to tweak it and adjust it to make it make sense for the right audience, for the right industry, for the right product. So this isn't like shackling you and saying this is the only way to do it, this is a way to do it. It's a format to look at. And then we tweak it and adjust it on an as needed basis. So one of the first things that you're going to see when you open up a business plan is this concept of an executive summary. And so this actually, though it's the first thing in the business plan, it's the last thing to do. So let me take you through the sections real quickly and then we'll talk about what's in each section and what it takes to put that together. So we've got the executive summary, we've got the company background or the company summary. We've got the offering, the products, the services, what it is we do that we're going to describe in the business plan. You've got the marketplace. I mean, who are our customers? What market are we operating in? What geographic, demographic, psychographic are we dealing with in the context of this market? And what are our strategies, strategies and tactics? What are the things that we're going to do to make this a success? What's the broad strategy, the umbrella strategy? And what are the specific tactical maneuvers and action plans and action items and milestones that we're going to take to really move this forward? And so that's the strategy. And we spent a lot of time looking at strategy in that context. Then who's your team? Especially with startup companies or new companies, the team, the management, the people become extremely important because they are really, really the primary element that will drive success in that place. Because I got to have a good team in place that's going to execute well and make good choices, make good decisions based upon the analysis and so we look really heavily at the team. And then the last piece is this concept of, you know, what's the financial look of this business? What does it look like in that context? What is the revenues? What are the costs? What are the risks? What are all of the money factors that come into play in doing that? So your typical business plan is going to follow this format. Executive company offering, market or industry, strategy and tactics, team and management, money and financials. So that's how the format is. Let's dig a little deeper. And Marie, interestingly enough, online versus offline traditional business or online business, these factors still come into play. I'm going to identify some distinctions in the next episode with respect to online businesses and the things that I would want to see in a business plan for an online business in addition to these elements or things that we would want to discuss. But let's start with the executive summary. This is going to be one to two pages, max. You do not want this to carry on. It is a summary and it's a way for us. It's almost like your elevator pitch or your, you know, for those of you that have been through business Breakthrough Academy, your global purpose statement, your emotional story element that comes into play that frames what you do, the problem, the solution, the market, the competition, the team, the financial and the milestones in just a couple of paragraphs. It's at a high level. But the idea with this executive summary is to entrance them, to invite them, to enroll them, to say, hmm, interesting, interesting topic, interesting product, interesting team, interesting market. Looks like there's something there. And it's to get them to continue to read. It's to get them to continue to say, I want to learn more. That's the whole purpose of that executive summary, and it's to be respectful of whoever you're giving it to. The reader's time, whether it's an angel investors, we get a ton of business plans to look at and possible investments. So I want to give them all the meat and potatoes, the real key magnets, the real key hooks about this business, positive and negative, to make sure that I can get their attention quickly and get them to continue to move on. Now, mind you, this is actually done last. So we're going to do all the other sections first and then we're going to extract the pieces from those sections to create the executive summary after we've done everything else but the executive summary is the first thing that they're really going to see. The second piece is this concept of what the. What's the company. It's about who you are, what you do, giving the perspective of vision. And here's the thing that I would, I would invite you to do when you start talking about vision, those of you that have been through business Breakthrough Academy understand this is that it's not some academic ivory tower consultant consultantees, if that's even a word.

Some institutional message about vision. This is actually an emotionally compelling, aspirational vision. It's something that if I state it, when I state it, what I want it to do is instill emotion in the reader to go and yeah, I'm for this. That gets them to rally behind it. They go, this is something that's a mission, it's a movement, it's something that's driven from the heart out, not intellectually out. Hopefully that makes sense. Is that the more emotionally compelling, aspirational and inspirational and motivating that vision is, the more it drives movement. Getting them to say, I want to get behind this, the better off you are to bringing them into your battle, where they're going to go shoulder to shoulder with you, toe to toe and be willing to wage battle with you out there in the marketplace. Then we want to talk about the nuts and bolts of the business. Where's it located?

Who are the players? We'll talk deeper about team Is it a bricks and mortar store? Is it a combination of bricks and bricks and mortar? Or online? Is it in the us Is it in Europe? Is it in some other country? What are the nuts and bolts of the operations? Is it manufacturing? Is it distribution? Is it direct sales? What are, what are the nuts and bolts of the operation? And then what's the structure? What's the organizational structure to the company? Maybe it's in a holding company, maybe it's a corporation, maybe it's an LLC in Australia. Maybe it's a trust.

What are the elements of that company? And at the same time in this section, we kind of give the backstory on the products, services in the company, the history that the journey that has got us there. I mean, I think that when you look at different companies, there's a history of the journey that really got us there. You look at Jessica Alva's company and the whole thing about.

Organic and.

Cared for products for youth and babies. And what they've done is they've got a compelling vision, emotionally compelling. It's attractive. There's a backstory to it and there's a structure to it and the nuts and bolts. So think about that in the company, in the company summary section, Per se, who are the players and all of that in the next section in the offering, this is really about what do you do? What are the products that you're going to offer? What are the products that you can offer now, in other words, and what stage are they in? Are they in prototype stage? Are they in idea stage? Do you have a proof of concept, or do you actually have traction in the marketplace and you're already making sales? What is it? What are the products? What are the services? You know, do you create bundles of products and services in that context where you've got packages and different packages that are out there? This section is really focused on the needs of the marketplace that you're serving, the unmet needs that you're serving, the other needs that you're serving, the problems that you're solving with your products, and the benefits that are created about your products. And the other thing to make sure is clear here is what is the uniqueness? We talked about this at Business Breakthrough Academy also is three to five uniques. What are the uniques that you bring to the table? What's the distinction about your product and service compared to those alternate products and services that might exist from your competitors or out there in the industry? So we want to be really clear about what our products and services are, who they serve, how they're distinct and unique, what needs.

That they work from or they serve, what benefits that the customers will get and what the perceived value is. Then we turn around and want to look at the market closer. This is who our customer is. This is really digging in and saying, what type of market is it? Is it a wholesale market? Is it a retail market? Is it a consumer market? Is it a business market? Is it a mass market? Is it a niche market? Defining the market is important. Also defining what is the catalyst for this offering? You know, was there a change in the market? What are the changes that are going on in the market right now? What's the dynamics of the market and the customers? What's the demand that's being created? What's the trigger for the demand that's being created? I want to be really clear about the geography. Where is my market? Is it broad, based across the world? And in another session, we talked about this concept of probable potential and possible market and that we can't serve everyone. So in this section, in fact, many times when I see a business plan and in there it says, oh, the geography of my market is. Is global. But you're a small provider, your geography might be global, but your access to a global market is non existent because you don't have the capital to do it. You don't have the reach to it to do it. You don't have the platform to do it. So in this area, when we're talking about the whole idea of geography where your market is, I want you to be realistic and not some idealistic big world view. Say yes, the potential is this, but we're focusing on this and here's why we're focusing on this small group of the market to really capture it, get a foothold, get traction and grow from there. Want to understand how you're going to deliver it to them? What's the delivery mechanism? Is it an online, is it face to face? Is it personalized? Is it automated? What's the system of delivery? What's the delivery of that benefit that we talked about in the offering? How are we serving those needs? What's the potential growth in the market? And again, I want be realistic. If you're turning around saying this market's growing at 100% a year, that might be great, that it's growing at 100% a year. But financially, if you look at that, you probably can't participate in 100% growth per year because you don't have the infrastructure to do it in many cases. Now, some might, but most of them will not. And the other thing to think about is if I'm in a fast growth market, the one thing I can always count on is competition. Competition will come into play.

In that element. So if I've got high growth, how does competition affect that growth on a long term basis? I want to see when I read that business plan that you've thought about the competition and the growth conjunction with each other, how that might impact that. And then again, coming back to this, what's your distinction in your market? What's your positioning in your market? Why are you unique? Why should they buy from you? Why should they look at your product and your service as an alternative, as a new step in for what they're currently using to solve those needs? And you know, what is that element that attracts them to, to your market? Then we go into the strategy. The strategy is, is all about how are we positioning ourselves in the market, how we position ourselves in the industry, what are the timelines, the specific timelines and milestones that I want to hit that let me know that I am on track, I need to hit. You know, I want to get prototype done in three months. I want to test the market for that fourth month. I want to get feedback. I want to tweak in that fifth month and I want to hit the market again in, in the six month. What are the key milestones and timelines that we have in place? So I, as the reader of the business plan, and you as the creator of the business plan, are getting very clear and distinct understandings about the elements that are going on your business, what we can expect one month to the next month to the next month, and making sure that you've thought everything through. So I have positioning, I have timelines from the strategy. What are the tactics that you're going to use specifically step by step, the tactical action items that you're going to take to bring this to a reality? And then how do those strategies and tactics create connection with the marketplace? Remember, I talk about this. It's not about ABCs always be closing, it's about ABCs being always be connecting. How do I use it to create connection with the marketplace, my consumers, my customers, my clients, and loyalty, to build that intimacy and build that loyalty with my customers to a high level and building it in that context. So again, it's positioning, timelines and milestones, tactics, connection and loyalty. And then we start to talk about team. And this again, I said it's really important. It's about who are the players that are going to drive the bus? Who's the management team, the executives, the management team and the key players that are going to be the decision makers in this business. They're going to be the drivers of this business. And it could be, in your case, Maria, it could be simply just you and I get that. And at some point we may leverage you and bring some other folks in, but who are the players, the key players in this business? What are their backgrounds? You can have the resumes in there, but what are their key educational backgrounds? Experience, past experience, past successes, how they've dealt with challenges in the past, what kind of challenges they've dealt with? Understanding that is really important. And. And then what are the roles and the functions they're going to play? And I call this the core functions. What are the core functions that they're going to serve in that perspective? And then ask yourself, what are the critical outcomes that they're going to be responsible for from that business? And I want to explain all of that in the team section of the business plan. And then when we get through all of this, we finally get a chance to look at the money side, because we put all of this together in a mixture. We do some projections and we start to figure Out. If we do this right, when we do this right, what does the business look like from a financial standpoint? And this is where we start to do projections of revenues, of costs, of the profits that are going to be derived once we pay all the expenses, when we can anticipate getting cash flow. What you know, what they say in the industry? What's our burn rate? You know, how much cash are we going through on a monthly basis? And for those of you that know me well, you know that I look at cash as the fifth food group. And cash is the life's blood. It is oxygen to your business. So we need to make sure that we understand what our cash in and our cash out is and how we're going to maximize that cash flow on an ongoing basis. To do that, and as an investor, as someone reading a business plan or putting a business plan together, I want to understand that to a level of detail that we can then manage it. You'll typically create forecasts three to five years out to try and understand where this business could go, what the potentials are with that. And then that last piece of what ifs. In the industry, we call it sensitivity analysis. But what we're really looking at is what if something bad happens? What's the worst case? What's the mid case, what's the best case? If all we do is look at things as lollipops and tulips and everything's great, everything's hunky dory, and nothing else is gonna go wrong, then you really haven't thought it through. Because one thing's for certain. We will get a plan done. And as soon as the plan's done, things will not go as planned. It's just the way plans work. So we need to be really careful, really clear and honest with ourselves that, hey, we know that the plan is not going to go as planned. Exactly. So what are the what ifs? What do we do if all of a sudden a supplier.

Isn'T going to supply us on a timely basis? What happens to our operations? So I want to see that someone has really thought that through and thought about the downsides. In fact, when I work with my clients, when I work with businesses, when I work with entrepreneurs and boards of directors, one of the things that I do is we go through this and we take the process of doing this. You see, everything that we're doing here is a process. And it's so important, the processes, the plan isn't as important. Like I said before, we take them through the process and we Develop the strategies, we develop the tactics, we figure out the forecast, we do the what ifs, and they create the document. And many times what I end up doing is I put the document aside and say, great, we've got one done. Now let's go back to the drawing board and let's do it another time. And the reason for me doing that is to create alternatives. What I want to do is I want my, you know, my. The people that I work with or myself or the people that I mentor to have alternatives. If we examine and really look at the possible upsides and the possible risks and downsides before whatever comes, we can solve the problems, we can anticipate the problems, have some alternatives, some options in place to reduce the risk. Some people look at entrepreneurs and say, oh, they love to take risks. And I've said it all along, absolutely not. That's completely false. Entrepreneurs don't love to take risks. We're mitigators of risk. We're reducers of risk. Our focus is to figure out how can we move something forward at the lowest risk possible. It's not about taking risks. It's about taking strategic risks that we've thought through. The business plan process allows you to do that because you think about things like the company and the offering and the market and the strategy and the tactics and the team and the money side of it and the what ifs and all the risk points. And so my invitation to you is that if you're going to go through this process, ask yourself what happens if and come up with another plan, an alternative B. And I'm not saying that. I have some friends that say, oh, don't have a plan B, don't have a plan B, don't have a plan B. It's not about having a destination be, it's about having a path be. And they're different. I hope you understand the distinction. When I say don't, I get. I get it. Don't have a plan B, which means that don't have a destination. It's like for me, when I got my partners and I broke up, I had a choice. Go and follow my dreams and go continue to build my own business, or I could have gone and gotten a job. Now that plan B was go get a job. So I figured, you know, I can do a couple of things if I turn around and go and try and it doesn't work. And then I go and take plan B, which is getting a job. That's not what I mean by plan B, because that's a Different destination. What I talk about plan B is that trying to build this, but this strategy, these tactics aren't working. What's the next plan to still get me to that destination? So I'm not asking to have alternative destinations. I'm asking to have alternative paths to the same destination. And you do that by thinking about what ifs and alternatives and options. So I hope, Marie, this is the foundation we're going to get more specific to online businesses in the next segment. I hope this helps you and hope it helps all of you out there to understand that the process of business planning is more important than the plan itself. And again, if you want to get the guidebook, which I'm actually giving you some templates for business plans here to download, go ahead and go to melabraham.com session032. If you're not at your computer, you want to make sure that you get this, then go ahead and text mylegacy one word, no spaces to 38470. And if you want to get your question answered just like Marie did, go ahead and go to askmailnow.com leave me your question there. We'll make sure that we get it in an upcoming episode so you can feel supported, so you can get the tools, so you can get the guidance you need to carry your dreams forward. So I hope you had fun on this. I had fun on this. I hope you found it of value and if you did, do me a favor, share it with a friend. Let's get this information out into the world because the more people that are out there creating these micro economies, these micro entrepreneurial endeavors that are making a difference, the better society will be. That's just my belief that the entrepreneurs are the key to shifting and changing the things that we're doing, changing lives. And if you haven't done so already, make sure you subscribe. So you stay with me and I get a chance to stay with you. It's the only way I get to be your entrepreneurial mentor. And until we get a chance to see each other in the next episode, where I'm going to dig a little deeper and be more specific about an online business, online business and those specific elements of a business plan, may your vision be grand, your journey epic, and your legacy significant. See you soon. Cheers. Bye.

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