“You don't have to fear your own company being perceived as human. You want it. People don't trust companies; they trust people.”
― Stan Slap
This section of your business plan will fundamentally answer two questions:
- Who are you?
- What do you plan to do?
Answering these questions in a concise, direct, and simple manner should provide an ample introduction of why you’re in business, why you’re different, what you have going for you, and why you’re a good bet if you’re asking for an investment.
It's also a good opportunity, if you haven’t done so already, to evaluate and put to paper some of the more intangible facets of your business principles, ideals, and cultural philosophies that will allow you to better grasp your own corporate identity. Okay, so here are some obvious and necessary components that need to be here:
- Structure of your business (ex. sole proprietorship, general partnership, limited partnership, or an incorporated company)
- The date your business was established
- The nature of your business (what are you selling?)
- The industry you are in
- Business vision, mission, and values
- Background information on your business or its history
- Business Objectives (short and long-term)
- The team
Here are some tips to help you tackle some of the more tricky ones that are listed above:
Structure of Your Business
In case you’re wondering which category you fall under, here are some common definitions:
- Sole Proprietorship: Someone who owns an unincorporated by themselves
- Partnership: Here two or more persons join to create and sustain a business while contributing some form of money, property, and skill while being directly impacted by the profit or loss of the business
- Corporation: This structure enables prospective shareholders to exchange money and/or property in exchange for capital stock.
- Limited Liability Company (LLC): This is a state-authorized business structure that falls under state specific regulations that is composed of members, who are the owners.
Business Vision, Mission, and Values
This is when you really start getting into the core of why your business exists, what you hope to accomplish, and what you actually stand for. Now, don’t spend more than a previously allocated time to get the answer to those questions together, let’s face it, as a fledgling company, you’re learning as much about yourself each day as you are about your customer. Meaning, don’t by any means feel that anything you state here is set in stone. But what this does mean is giving yourself a starting point to build on top of at a later date (hopefully when you’re in your growth phase).
First off, it’s important to clarify your values. In short, this means taking into account all the various stakeholders that your company is accountable to, that includes owners, employees, suppliers, customers, and investors. Now consider how you would like to ideally conduct business with any one of those stakeholders. Start making a list and your core values should start to emerge.
From there, you can pen down your mission statement. Let’s break those words up first, according to Dictionary.com, a mission can be defined as “an important goal or purpose that is accompanied by strong conviction,” and a statement can be defined as “a single sentence or assertion.” Now let’s put the two together to break down what you mission statement should be. It should state the purpose of why your business exists in a convincing manner in no more than a single sentence, the shorter, the better.
Here are some do’s and don’ts we’ve deduced from several experts on the subject matter.
- Create something that connects with both employees and customers
- Make it about you
- Highlight your value proposition
- Make it tangible
- Mention a specific goal
- Make it useless
- Make it long
- Make it generic
- Make it confusing
Example of a Bad Mission Statement: General Motors
“G.M. is a multinational corporation engaged in socially responsible operations, worldwide. It is dedicated to provide products and services of such quality that our customers will receive superior value while our employees and business partners will share in our success and our stockholders will receive a sustained superior return on their investment.”
Example of a Good Mission Statement: Nike
“To bring inspiration and innovation to every athlete in the world.”
Once that’s out of the way, you can move on to crafting your vision statement. Again, let’s start by defining what the word vision means. It is “the act of anticipating that which will be or may come to be.” So, what impact do you envision your business having on the world once you’ve achieved your vision? Now that you’re thinking that far down the road about your business, put it it, an assertion. You can have more than a single sentence for this one, but we don’t recommend going over three at most. Gloss it over to make sure that anyone who comes in its proximity feels any one of the following emotions; inspiration, hope, commitment, and awe.
Just like the mission statement above, here are so do’s and don’ts along with some examples:
- Make it compelling
- Make it detailed
- Paint the intended end outcome
- Highlight why your company exists
- Make it the outcome of your mission statement
- Make it bland
- Make it generic
- Make it uninspiring
- Make it obviously unreasonable
Example of a bad vision statement: Dell
“To be the most successful computer company in the world at delivering the best customer experience in markets we serve.”
Example of a good vision statement: Amazon
"Our vision is to be earth's most customer centric company; to build a place where people can come to find and discover anything they might want to buy online."
Business Objectives (short and long-term)
Now that you’ve got the “what” and “why” answered for your business, it’s time to jump into the “how.” Once you’ve figured out your vision and mission, it’s time to lay down how you’re going to execute and bring them to reality? That’s where setting goals and objectives come into play. We’ll start with a friendly reminder of the importance of making them SMART. Which means making them:
- S - specific
- M - measurable
- A - actionable
- R - realistic
- T - time-frame
At this point, you’re probably wondering what’s the difference between a goal and objective? One way to categorize them are that goals tend to lean towards being more qualitative, while objectives almost always tend to be more quantitative. Goals usually revolve around achieving big picture business intentions centred around market position, customer service, growth, and company culture among other key things. Objectives on the other hand focus more on practical, day-in day-out metrics that revolve around revenue, number of customers, and product-related metrics.
Lastly, let’s define the context around timelines for an entrepreneurial venture. Short-term mean the next 9-12 months, while long-term typically should refer to the next 1-5 years.
This is where you hammer home the point that you not only know what you’re doing and where you’re going, but that you’ve got the right mix of talent and experience to actually make it all happen. For this section you can highlight key members from your management team as well as their salaries (which might just be you for the time being) as well as listing your advisors or board members, in addition to any external professional service providers who may be consulting with like lawyers or accountants. Another thing you might consider listing are the positions you’ll be looking to hire in the near-term future.