The biggest mistake any manufacturer can make with a business plan is not to have one. Even if you’re not seeking a loan or outside investors, a well-developed business plan is — or should be — a guide to the future. It will tell you where you’re going and how you’ll get there, as well as pointing out the sights you should see along the way.
Start with the basics
Any business plan should begin with goals, responsibilities and deadlines, and end with practical implementation and review strategies. For manufacturers, a business plan should cover several key points, including product details, marketing and sales capabilities, customer characteristics, market position, and where your facility is located in relation to potential customers.
In addition, a manufacturer’s business plan should explain the equipment you use now and whether you’ll buy additional equipment in the near future. The latter is particularly important if you’re anticipating a new product launch.
In that case, your plan should articulate how you’ll move the product from concept to market. Some points to address include:
Strategy. Who will do the work? How will you decide whether to outsource some components?
Quality. Will you seek ISO certification? Who will be responsible for internal compliance and quality control?
Assembly. How will the product move through your factory? Where are bottlenecks likely to occur?
Parts. How will new parts be incorporated into your existing processes? How will you address differences in part numbers among vendors and between you and your vendors?
Capital expenditures. Will a product require new machining or additional operators? What about maintenance and changeovers, utilities, and operator training?
And, of course, you’ll need to include projected profit and loss accounts, balance sheets, and cash flow forecasts whether you’re anticipating a major product development effort or not.
Get some help
Typically, a business plan isn’t something you can produce by yourself. You’ll need to collaborate with your senior management team to determine your objectives, mission and keys to success. You’ll also do well to encourage input from middle managers and line workers to help verify that your ideas are workable and that you haven’t overlooked potentially significant pitfalls.
Preparing a business plan forces you to be realistic. If your plant produces 100 gizmos per day, for example, you can’t base a business plan on 200 per day unless you have concrete strategies to boost production.
Also, a formal business plan clearly identifies future goals, which helps you focus on what’s required to meet them. If you’re planning to introduce more sophisticated technology to your shop floor in two years, you may want to start researching vendors and equipment during the next six months.
Know what’s coming
A solid business plan means you have considered every aspect of your business and that you know how you’ll handle failure as well as success. It isn’t a one-time thing. You should spend a few hours every month or two to update it as circumstances require. Doing so can save you a great deal of time and money — it may even save your business.