LONG-TERM PLANNING SUCH AS BUSINESS AND STRATEGIC PLANS TYPICALLY INVOLVE TAKING A FIVE-YEAR PERSPECTIVE OF THE EVOLUTION OF A NEW OR EVOLVING BUSINESS MODEL. THESE LONGER-TERM OUTLOOKS SERVE AS A DIRECTIONAL COURSE FOR NEARER TERM BUSINESS OBJECTIVES AND THE INITIAL YEARS SHOULD BE RELATED TO NEAR TERM PLANS SUCH AS OPERATING BUDGETS AND PLANS.
Business Plans – New Business Models
When starting a new business, it is imperative that you can calculate the fiscal impact of your new business. The business model and the financial results need to be projected out from 3-5 years in standard financial statements (i.e., balance sheet, profit, and loss and cashflow). First you need to ensure that you consider all aspects of the business operation, the market the business will compete in, and the resources necessary to get it up and going, and how long it will take for it to become viable and subsequently profitable. The key components of a business plan are the following:
- Company Overview
- Legal Structure
- Key Personnel
- Market Size
- Competition
- Initial Investment
- Human Resources
- Financial Projections
Strategic Plans – Existing Business Models
Strategic Plans are similar in scope to Business Plans in that they include 3-5 years of financial projections. The projections need to include organic growth rates, new growth opportunities (i.e. products, services, markets, and acquisitions). They differ in that they focus more on the growth opportunities and operational efficiencies and leveraged relationships gained as an experienced business model.