So, after much thought and deliberation you’ve decided to take the plunge and start your own business. But where do you begin? There are so many factors to consider it’s easy to get overwhelmed by the details. That’s where a business plan comes into play. A business plan is a working document that contains many components. It’s purpose is to define your business, target the people you hope to serve, set goals for yourself, and then develop strategies for realizing those goals. A business plan is also a requirement for anyone looking for financial assistance in setting up shop. No bank or other financial lender will give money to any entrepreneurial hopeful without a clear and concise plan of attack. Let’s look at a business plan in detail.
Start with the basics
Like any other proposal, your business plan should project a professional image. It should have a cover page listing your company’s name, address, telephone number, and any other available and pertinent contact information. A table of contents is also recommended, as it proves useful in outlining the sections within at a glance. Don’t forget to number your pages.
An executive summary is simply an overview of what kind of business you’re setting up and what you hope to accomplish. Anyone reading the executive summary should have a very clear idea as to what your reasons are for wanting to start a business and what your goals are in doing so. If you’re cursed with “writer’s block”, you may find it easier to write the executive summary last after you’ve thoroughly explored all of the facets of your business idea in detail.
Unlike the executive summary, a business description provides a much more detailed description of your proposed business idea. Within this section you will want to list your credentials and qualifications, a brief history of the business itself and your reasons why you think it will be a successful undertaking. You should also state your intentions as far as how your business will be structured (i.e. sole proprietorships, partnership, or corporation).
This section will provide the specifics regarding exactly how you will implement your plan of attack. For example, is this a business you intend on running yourself or will you require a hired staff? Will you be manufacturing a product or providing a service? What do you plan on charging your customers? Will you be able to make a profit at your current rate? Do you have a plan for dealing with customer service issue? These are just some of the questions you should be prepared to have answers for in this section.
Market Research and Planning
There are few that would dispute that one of the key aspects to being successful is knowing how to market your business. This will require research. You need to be very clear about not only who your customers will be but also the best way to entice them to do business with you and not someone else. One of the best ways to research successful marketing strategies is to see what other people are doing. Make a habit out of paying attention to different forms of advertising, whether it’s on TV, or radio, or in the newspaper. Ask yourself why certain advertising appeals to you while others don’t. Pay particular attention to those businesses that are similar to yours. Are they using techniques that you may be able t implement in your own business? Once you’ve compiled your research, it’s time to write up an actual plan. This is where you will write up in detail your marketing strategy. Provide detailed information on your customer base, your proposed budget for advertising, your ideas for different methods of advertising, etc. Sometimes it’s helpful to write your marketing plan in a “timeline” fashion, detailing just exactly what you plan to do, how you plan to do it, and when. It should be noted that your marketing plan is almost always a work in progress as ideas get built upon one another or replaced entirely if they prove to be unsuccessful. A well thought out and researched marketing plan will show any potential financial lender that you’re dedicated to making your business a success.
In writing the financial section of your business plan there are four main elements to consider: how much “start-up” money will be needed, where will this money come from, your projected plans for generating revenue and profit, and approximate costs of daily operational costs of your business. When determining costs and expenses here is just a short list of items to remember:
Telephone, fax, and on-line connections
Office rental space; office equipment and supplies
Licenses and permits
Salary for staff
Legal and accounting fees
Also keep in mind tax implications such as how will sales tax affect your budget and keeping track of items that are deducible. Also, obtain a copy of IRS publication 937: “Employer’s Tax Guide”. This supplies information pertaining to when and how much you will be required to pay the IRS. Just remember when it comes to financial costs there is an abundance of information out there and it is only in your best interest to do your homework. A good general rule of thumb, however, is to underestimate your projected revenue and overestimate your projected costs.
Your self-evaluation is the conclusion of your business plan. This should include such information as when you project your business to break even, the amount of money you plan on borrowing, as well as a contingency “plan B” should things not go according to plan.
There are many books and software programs available to help you write a successful business plan. Even if no one else reads it except you. It will still serve as a valuable resource to keep you on track as you embark on your small-business journey.