Many times when it comes to writing a business plan operators are anxious to get this step correct. Usually the only reason a plan is written up is to present the bank with a document to gain approval of finance for the business. Or it could be because the operator knows that all the big corporations have business plans, so it makes sense to write one up as well. Many times money is spent on a sample caf
What is a SWOT analysis (also known very simply as a SWOT) and why is doing one important to your business? Use this sample SWOT analysis to help you do your own SWOT. All small businesses need to include a SWOT in their strategic planning. SWOT is a key element of successful strategy development.
The definition of SWOT analysis is that it is an acronym for the strengths, and weaknesses of the internal organization and the opportunities and threats of the environment external to the organization. The importance of doing a SWOT is that it provides an opportunity for small business owners to identify and analyze the strengths of, and opportunities available to, the business. It also helps to identify and minimize internal weaknesses and develop management strategies for external threats.
The most effective use of a SWOT analysis is within the planning process. But analysis and plans must be followed with actions. Develop your SWOT and build an action plan that includes who, what, where, when, why and how to deal with the strategies.
The sample SWOT analysis below will help you develop your own. The best approach is to include key members of your organization in the process. If you are a one-person business; then do it on your own or try to do it within your network of business acquaintances.
The Internal Organization: strengths and weaknesses. Ensure that you build on your strengths and manage and control your weaknesses.
Strengths
Strong in-house training program that has cross-trained staff to learn a number of functional areas. Action: Leverage that training to develop employees with even more depth and value to the organization. Exceptional customer service. It is well recognized by customers through regular customer service surveys and feedback. Action: Leverage the strong customer relationships to find out more about what customers want and need. Have a well developed new product development process; successfully adding two new products a year. Action: Using customer input, look to add more than two new products a year and/or add new product differentiation elements to existing products.
Weaknesses
Average order size ($) is small. Large volume of orders needed to increase sales. Action: Develop more new products to ‘bundle’ price with existing products. Cost of goods sold is high (due to small order size). Action: Develop sales plan to sell more volume and larger orders. Internal organization has grown quickly and added layers of management. Action: Re-assess the need for each management position and work to reduce the layers to not more than three. Understand the limitations of span of control.
External Factors:
The external environment (also known as the macroenvironment) is about the opportunities and the threats that the organization faces. These external factors are not controlled by the business, but we can manage to minimize threats and maximize opportunities. To be successful in managing the external environment’s impact on your business you must track economic indicators and understand how they impact your business and what you need to do about them.
Opportunities
Partnerships or alliances with competitors, suppliers or customers. For example, if a large contract is up for bid, you may want to partner with a competitor (one that you trust and value – hopefully you have competitors like that in your network) to put together a joint bid. New potential customers are entering your market or you have identified another customer group for your products and services. For example, telephone companies added many more customers with the introduction of wireless mobile phones. Marketing costs are decreasing with the widespread introduction of digital technology and with the increase in social media applications. For example, you can produce a cross-media marketing campaign with a farther reach than ever before, for less dollars.
Threats
Vulnerable to local and global economy slowdowns. If economy is slow, sales drop. Action: Provide products or services that answer customer needs in good times and bad. Ensure that your products or services are the highest value for the money. Changing legislation and/or penalties. For example, the increased cost of operating for businesses with an environmental cost. Action: Consider what you can do to change your processes (before you are forced into a more costly change by government actions) and capitalize on those changes by communicating to your market the actions you have taken and why. Competitors. There are good competitors and bad competitors. The good ones understand how to run a business, how to develop products or services and price them accordingly. The bad competitors undercut on price without understand their cost structure – the goal is to get the orders at all costs. Eventually they go out of business or are bought out. But while they continue to do business, they drag the market down and make you look like you are over-charging (even worse, that you are gouging the market). Action: Use a variable price strategy and ensure that your costs are as low as possible. Also build a strong, ‘untouchable’, differentiation strategy that will ensure that your price is supported by the value and benefits of the product.
To build your own strengths, weaknesses, opportunities and threats analysis for your business, use the above sample SWOT analysis in your strategy planning. Make sure that you clearly understand and can identify your organization’s strengths and weaknesses and that you know what the opportunities and threats are in your industry. Once you’ve used the SWOT model to complete your own SWOT analysis, make sure you update it annually – as your business and your external environment is constantly changing and evolving.
When creating your financial projections for your cafe, save time and hassle by starting with an existing Excel financial model that just needs adjustment to reflect your specific business. Given that, here are a couple key areas to consider on which most of the other numbers will hinge.
Foot Traffic
Until your cafe becomes a destination through the work of your promotion strategy, it is safe to say that your primary business will be some a percentage of the foot traffic that passes by on the street, assuming you are on a city street with sidewalks. To look at revenue this way, you need to know the foot traffic per week during a normal work week, and how this number changes with the seasons or with holiday weeks over the course of a year. Next, you need to make an assumption of a percentage of this foot traffic that will enter your cafe during business hours. To base this in some reality, look at the percentages that enter a similar business. To be more exact, subtract from that number the customers who sought out the example business specifically. Finally, you need to decide on the average order size per customer who enters, taking into account those who enter and do not buy at all. Slight variations in the foot traffic assumption, the percentage who enter, and the average order size will mean huge variations in your revenue projections, so be sure to explain how all three numbers are grounded in reality.
Service Capacity
Your space needs, salary costs, and ability to generate revenue with your cafe will depend in large part on the number of servers you plan to have operating at a given time. Take into account that a server cannot serve customers nonstop from opening to closing as there will be a need for resupplying, phone calls, breaks, and clean-up. You should nevertheless have an idea of how many average orders a server can fill in an average hour to create a reasonable maximum service capacity for your cafe. Make sure to relate the service capacity you will have to the orders per hour you expect from your foot traffic in the first year. You may want to adjust the service capacity by adding additional servers or time-saving equipment like a POS system if you expect more than you can currently handle, or to give servers additional responsibilities if you believe they will be idle at first.
A business plan hopefully offers readers a complete understanding of the who, what, where, when, why and how of your business. However, it also offers them a look at you, personally. Assuming you plan to work as a key manager of the business, the plan shows readers a sample of your decision-making ability.
Being Decisive In a Business Plan
How, you may ask, can I be decisive in my business plan if there is so little information to go on about what my business must do? While it is true that any startup business must remain flexible to change its tactics as it learns more about the actual market situation it is in, business managers by their nature must be able to make decisions with incomplete information. Show that you can be decisive by presenting specific tactics you choose to pursue and why. This shows readers your confidence as well as your thinking process, allowing them to judge whether they would make the same decisions with the data you have at hand.
The danger of not being confident in your choices in your plan is that you may appear indecisive to readers. For example, if you include a huge list of marketing tactics or possible staff you may hire, readers see evidence of a writer who was able to copy lists of options from another source, but not a manager who realizes that the company cannot try and do everything.
Customer Targeting
Choosing specific customer target markets to pursue is one way to show your decision-making ability. After gathering information on the size of each customer market segment, considering how highly they will value your product or service, and examining how easily you will be able to market to each segment, you should be able to prioritize which to approach first. Although you may approach a few at the same time, be careful to take note it the marketing and operations methods required of this begin to contradict one another. If there are contradictions like this, readers will be turned off from your plan. Making specific choices like this based on the best data you can find is expected when running a business as well as when planning a business.
No Fortune 500 company could have ever achieved such a successful level without having done extensive business planning. It had to be done throughout all stages of its growth! From incubation or startup, to grow into a regional or national power certainly took meticulous planning and then precision execution of the plan.
Many entrepreneurs have brilliant plans and ideas for their business and yet fail to put these into a written document. At some point in the growth of any business, the ‘brain trust’ of the company must be expanded beyond a single founder or charismatic leader.
Of course, most small companies are started by one or two entrepreneurs who drive the startup enterprise by their vision, charisma, and aggressive leadership. There seems to be a plateau where the organization must necessarily shift gears to break through. It is at this point that the business plan is a catalyst that helps propel the small company to a much higher level.
Much of the need for a business plan is driven by the need for a communications vehicle so that the plans and strategies of the founder can be effectively and clearly understood by a ‘core group’ of managers in the company. Growth beyond the small business level can only be achieved by a group of motivated people focusing on common strategies and by the group working together to ‘make it happen’!
Every business needs a business plan! A sample business plan might be as simple as a few diagrams on the back of a cocktail napkin. (Many great plans have resulted from such a diagram as an effective communication tool!) If you are starting to develop your business plan from such a diagram, it is especially easy to come up with a rudimentary plan simply by understanding the business diagram and answering the 6 Major Questions of Who, What, Where, When, Why, and How and capturing the answers in writing.
The more detailed you can make your answers to the major questions, the more complete the resulting plan will be. After all, it should be your intent to fully explain the vision and mission that was intended in the original business diagram.
If you are lacking such a starting diagram, you may wish to organize your business plan along the more traditional framework by defining your company’s Product, MarketPlace, Pricing and Promotion strategies. This method was originally described in the Harvard Business Review in the 1960′s and the “4 P’s” of marketing has worked for many thousands of small to medium size companies.
By defining your business along these lines, you can flesh out extensive details of the major components of your plan. Such a sample business plan will provide a framework upon which you may constantly update and upgrade your plan as you take your plan to market and experience successes and failures. Based upon actual business experience in the field, each repetition of the planning process will improve your plan and your chances for success.
The actual format and construction of your sample business plan is much less important than the act of taking the first step to put a basic business plan down on paper.