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Business Plans

Business plans are usually created to plan how the company will operate over the next five years. Leadership from every department of the company should have input into the plan, since each department manager is usually responsible for achieving the goals and budgeted financial amounts in the plan.

Plans can be very formal or less formal, depending on the requirements of the leadership. Often, if the business receives investment funding from outside sources, such as banks, a more formal business plan will be necessary.

A business plan will have several sections that guide readers through the long-term planning of the business:

  • History of the company.
  • Mission statement of the company.
  • The code of conduct for the company.
  • The goals and objectives over the next five years.
  • Assumptions that were made in developing the plan.
  • An employee headcount and organization chart by year.


  • A financial section that will include:
    • Forecasted sales and expenses for each of the next five years.
    • Capital expenditure plans.
    • Revenue and margin by platform, product or service.
    • A list of any cost reduction initiatives.
    • Financial performance bridge from one year to the next.

The history of the company is important. It reminds everyone that the company is about people, and that many people have worked hard and relied on the company. It helps to provide a sense of unity for the employees and stakeholders.

The mission statement should clearly state what the company's purpose is. The statement will also state what the company's product or service is and how it will make its mark in the world.

The code of conduct will state the company's moral obligations and how employees should conduct themselves while employed there. It will usually expand on these ideas with a set of rules that all employees and stakeholders should know and follow.

The goals and objectives of the company will show the readers of the plan where the company is going and how it is going to get there. Will the company grow though acquisitions, what are the plans for new revenues? Will plants be opened or closed, etc.

Any long-range plan has assumptions. No one knows exactly what is going to happen in the future, especially four and five years from now. The reader needs to know what the assumptions are so he can make his own decisions about the information. Common assumptions are that the current business with the customer will continue through out the next five years. In reality this is usually not a certain event. Also, it is necessary to make assumptions about acquisition of new work in the future that is not certain at the time of the creation of the plan.

An organization chart is included for each year of the plan. It will plan out how each area of the company will look in the future. This is a planning tool, and the dollars associated with the organization chart changes need to be accounted for in the financial section of the plan.

The financial section will have revenue and costs for each year of the plan. It will show the programs, products or services and how revenues and costs will look each year in each area. If capital expenditures are going to be made for new work or in order to achieve cost reductions, the costs for this will be incorporated in the financials.

The financial section should read like an income statement for each year with revenues and expenses and net income. This section should show the readers what is changing from year to year. This is usually accomplished with a financial bridge. The bridge will show financially what has changed from year to year. Has the volume of business gone up, or have cost reductions created income? A list of improvements is usually made with the financial impact for each improvement.

The business plan is a great tool for every business. It is the vision of leadership and the plan to get there. Managers at every level of the business are usually held responsible for making the plan happen. A monthly financial analysis is done to compare actual results to the budget, with each department required to explain the variances to the budget.




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