5 Business Plan Process
Learning Goals
- To understand the business plan process
- To get familiar with the business plan model and its parts.
A business plan is an exploration tool, a planning tool, and a communication tool. Writing a plan is a process that begins with the intent to realize a solution to a problem or a pain point. The plan is a theoretical exercise and a place to think about your solutions and to test the ideas with data and evidence. It is a lot like building a styrofoam cake model and using modeling clay to mimic fondant and gum paste or building a chocolate showpiece with foam board and a hot glue gun. It provides the opportunity to work through many problems while minimizing risk and waste. It is a way to learn as much as you can about yourself and the idea before investing substantial amounts of your’s and others’ time, resources, and or money.
It is not uncommon in our industry to start a home-based business because you have the skills, a kitchen, a couple of spare hours a week, and relatives and friends who want to buy baked goods. You start this endeavor without much if any planning. Because you are good at making product, and the price is right, it organically evolves and grows. One day you realize you aren’t even sure you are covering your costs and labor let alone making any profit. You may not be paying yourself a living wage given the hours of dedicated work and planning. But your customers ( friends and family) love the product and the price. You feel accountable to your customers. People have come to rely upon you, the product you produce and the affordable price of the product. You are conflicted because you want to profit and build a sustainable business but concerned. This scenario is where many of us find ourselves. It is a perfect moment to stop, reflect, and begin the process of creating a plan. If you want to create something that will knowingly support you and your personal goals, you must plan for those goals. You can not hope that the goals will be met by chance.
There are many ways to create an effective business plan, and Footrepreneurs start them at many points in a business startup. The business plan model we will explore and develop is based on processes that build upon each other to tell the story eventually.
The Process
Exploration:
In a metaphorical sense, the Foodtrepreneur is like a mushroom forager. The problems are the woods and mushrooms, the solutions. You must search the woods to find the prized mushroom. You go out into the world, listen, pay attention, watch, and see problems. Sometimes you will hear your friend share a problem, and you also listen to the voice inside of you that says, ” I know how to solve this problem” or “I want to be the person to solve this problem.” Acknowledging and listening to the voice is the kick-off to the process. Your impetus to want to solve the problem is a strong indication that you have a Foodtreprenur mindset.
An example of this process is when you are in a kitchen and hear one of the other employees talking about plastic wrap. “This is screwed up. We use so much plastic wrap! It is horrible for the environment! What the heck?!” You make a mental note or jot it down in your notebook. Metaphorically, your colleague walked you to the woods, and now you are intrigued and want to find the mushroom. You think, “I too care about this, and I want to be the person to solve this enormous problem.” I may not be the expert in plastics, but I can start trying to figure this thing out. You start drawing up ideas, asking questions, reading books, and digging.
Another example, you are helping your aunt plan for their daughter’s christening, and several of your relatives will not eat foods with artificial food coloring. Your aunt laments that there isn’t a bakery that decorates cakes without artificial food colors. You think, wait, I can solve this problem! I know how to decorate cakes. I wonder how many other people in this community would buy decorated cakes and pay a premium if all-natural food colors like dried beets etc.? You start digging into the data and looking for all-natural food colors etc.
When people begin writing a business plan, it is thrilling to put to words all the ideas and concepts in your head. During this part of the process, it is also an optimum time to reflect, explore and document the following:
- What is the problem?
- What solution are you trying to provide?
- Who do you intend to serve?
- Do they need or want this solution?
- Where is the optimum location to reach the people with the problem?
- What are your goals and dreams for the business?
- How do you want the company to show up in the world?
- How do you define your role in the whole process?
During the exploration phase of the business plan, the writer has to articulate the problem initially and then rely upon their imagination and intuition to put a solution into words or pictures. It is foraging and digging to unearth a vision of the solution.
It is also an opportune time to recognize your gaps in understanding and or skills. The gaps often become apparent when you are looking for solutions. For example, You want to start that bakery where absolutely no artificial food color is used, but you realize that there is no source for the all-natural food colors to be applied to sweet bakery items. You can stop and let the idea go and start over, or you can say, “Wait, I am going to be the person that starts that company” But wait, I am not a food chemist”! Okay, you can stop, or you can dig in and find resources, see if you can find a food chemist to partner with or to hire. What is the compensation for a food chemist? You start to amass numerous questions. And begin digging for the answers.
The gaps and skills that are missing or underdeveloped can be resolved by seeking assistance. If your talent and gift are the making of phenomenal food, you may lack expertise or skills in other areas. No one person is expected to be proficient in all areas required to start and run a business or enterprise. Some skill areas that will be necessary are :
- Bookkeeping
- Administrative organization
- Computer and software skills
- Accounting
- Labor management
- Legal proficiency
- Data sourcing
- Building and repair
- Writing
- Marketing and promotion work
- Electrical, plumbing, and mechanical skills
- Sanitation
- Production flow and efficiencies
One person can not be good at all areas or domains needed to conceive, create and manage a business. Still, we can be good at assessing our areas that need bolstering by either engaging in professional development and or find people with complementary skills to help or mentor you during this journey. It is a great time to assess your gaps during the exploration phase and then create a plan to remedy the gaps. For example, If I am a fantastic bread craftsperson and there is a need and demand for my product, this does not mean I am good with or will have the time to fix equipment, do the accounting, collect on accounts payable or do the bookkeeping. So I admit and accept this and highlight the gaps. These highlighted gaps then get built into the business plan and are accounted for, making the business plan and eventual enterprise more likely to succeed.
Self-reflection, honest appraisal of skills, and transparency are essential leadership skills that will serve a Foodtrepreneur, business, customer, and investors well.
Planning
The planning phase is a time to formalize the findings from the exploration phase using a business plan format. The business plan has dedicated sections where the Foodtrepreneur will write specifics and develop ideas about the project. For this course, we are going to use the following structure for the business plan.
Problem & Solution: This section defines the problem and the solution that has prompted the plan’s development.
Business from Conception to Execution Timeline
Look below at timeline and try to move up into this section
Legal & Licensing: Business entity identification and structure, and licensing
Support: This section of the plan is dedicated to defining all the people that will support, partner, and expedite the plan and business.
Location: In this section, the plan will address where the business will operate, what type of zoning might be required, construction considerations for the site, and the aesthetics of the overall location.
Menu: The menu section will articulate products or solutions the business will offer, in what format, and at what price.
Logo: The logo is a visual identifier. It communicates your brand and your business identity.
Aesthetic Board: The aesthetic board is the place to create the feel of the business by using visual cues. It is trying to convey the vibe and is in direct alignment with your brand. How do you want customers to feel? What will they experience when doing business with you, through packaging, the retail storefront colors, and fixtures, the visuals the sounds like music in your business, etc.
Equipment & Ingredients: The software, equipment, small wares, and ingredients necessary to provide the solutions and or products.
Promotion: In this section, you will identify your target market, describe how your brand, detail how you will market, and create momentum for your business.
Operations: This section will have two parts, “Front of the House” and “Back of the House.” In the “Front of the House,” you will detail how the administrative and or retail part of the business will operate. In the “Back of the House,” you will describe how the day-in and day-out business production, distribution, or operations are conceived.
Money: For this class, we will write about the startup assumptions, operation assumptions, how much money we conceive we will need, where we plan on searching for the money and how and if the funds will be paid back.
Summary: This part of the plan should be written at the end of the process. It is a summary and works best after the Foodtrepreneur has the big picture in mind. The summary is the “hook,” meaning when a person opens the plan to read and reads this section; they are drawn in to read the rest of the plan.
Pitch: This is is an extension of the plan. It is ideally a short five-minute presentation that captures, engages. It convinces the audience, typically potential financial supporters, that there is a problem and you are the person to create an organization that will provide the solution.
Communication
In the communication phase of the process, the Foodtrepreneur populates all the plan sections with details and supportive information. The goal is to draw or paint a clear, reasonable, and actionable picture for the reader, investor, advisor, and partner.
As a Foodtrepreneur, you understand that a community needs and would support a bakery during the exploration phase. You have established proof of this assertion through initial data and witnessing consumer patterns. You identify as a skilled baker with years of experience in both production and management. You have a deep desire to lead an organization. This phase is all about supporting those assertions by communicating to the reader the solution to the problem using the plan’s structure.
Here is an example of assertions with information that would be addressed in the Problem & Solution section of the plan:
The town of Randomville needs a bakery ( Problem).
How do I know this? Your reader will not know this for sure until you prove it by sourcing and providing additional supportive information like the following:
- The number of residents in Randomville?
- The average household income in Randomville?
- The profiles of the residents including habits and or interests.
- The likelihood of these folks choosing to shop at a bakery over a grocery store or coffee shop is illustrated by consumer patterns.
- The number of times a week potential customers are likely going to shop at a bakery.
- The projected or expected average purchase dollar amount at the bakery
- What products would these folks likely respond to at the bakery and why?
- The competitors loosely or directly
As the Foodtrepreneur and author of a business plan, your plan will be more robust if you put yourself in the reader’s place and write a list of all the information you might need to justify the problems and solutions. This reader perspective-taking is a way to strengthen the plan leading to potential financial support.
Once you have completed the following Check Your Understanding section, the subsequent chapters will focus on each distinct area of the business plan with actionable activities to check your understanding and build your business plan.
Timeline:
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