Writing a business plan is necessary for anyone going into business. It is the best way to help you understand your business and what your needs from the business are. It will help you plan, run, and re-act to the day-to-day decisions that you will have to make. It will also help you stay on track financially so you can make a decent profit!
Writing a business plan is necessary for anyone going into business. It is the best way to help you understand your business and what your needs from the business are. It will help you plan, run, and re-act to the day-to-day decisions that you will have to make.
Q. Why do I have to write a business plan?
A. Your business plan is a road map for YOU to tell you how your business will perform for you. Can the business support you? Do you have enough money to operate or grow? (Believe it or not, according to the Government, most small businesses that file for bankruptcy are profitable at the time of the filing. They've just run out of money [cash flow] to allow the business to keep on running). YOU need this plan to help you become successful. Plus, if you must borrow money to establish or grow your business, any lender or investor will require you to have one.
Q. It looks complicated and scary. Is it?
A. Looks can be deceiving. Does it take some work? Yes. Will it take a lot of thought about YOUR business? Yes, that's what it is supposed to do. It's much easier and better to work a plan out now instead of waiting for a crisis to occur, when it may be too late. YOU CAN DO IT, part by part, a piece at a time. When you finish the parts, you'll be surprised at what you've accomplished, how easily it came together, and how much more you will understand the business that is going to be YOUR partner.
Q. Does my business plan have to be neat and clean?
A. Absolutely. This plan is a reflection on you, your idea, and your vision. If you are dealing with the lending community, this is the only way they have to judge your business. If you can't sell your idea to them, then how are you going to sell it to your customers? Always put your best foot forward. Making your business plan look crisp and snappy is a way to look successful and enlist the help of those who can fund your business and its' growth.
The Business Plan Outline: Using this outline, you can prepare your business plan, step-by-step, piece-by-piece. Remember, our goal here is to look at each part as a small step in completing your business plan. Don't let it overwhelm you. If you are having trouble with one part, just move to another. The parts are generally small; so you can make progress by completing each small section, soon you will see it all start to pull together.
Statement of Purpose Executive Summary Table of Contents The Business: Description of the Business Location and hours of the Business Products and Services Marketing Analysis/Competition Marketing Plan Management Personnel
Financial data: Sources and Uses of Funds Pro-Forma Income Projections (profit and loss statement) Pro-Forma Cash Flow Projections Break-even Analysis Financial Assumptions Supporting Documents - Resumes, tax returns, personal financial statements, letters of intent or reference, copies of leases, contracts, or other legal documents, and anything else that is relevant to the plan.
These are the parts of the business plan. Each piece is different. You'll find that it's like painting a portrait. As each piece is finished, you'll see a clearer picture of your business.
Writing It Up: The following are explanations of some of the different sections of the Business Plan. These are guidelines that can help you. If you get stuck on one area, then stop and move to another area and come back later. Once you start, you'll see your business start to take shape on paper.
Executive Summary: This is your most important section of the business plan. It should be written last because you'll be pulling the best of information from the other sections to create highlights of your plan. This is the only section where you'll be able to share your vision of the business, tell why you're the person or team to implement the plan, and why you will be successful. If your executive summary doesn't capture the attention of your reader, he or she may never read the nuts and bolts of the rest of your plan. Try not to go over two pages unless you have some extraordinary information that needs to be shown.
Description of the Business: This section describes your business and the industry you're in. It should include:
1. The current status of the business (start-up, existing and acquisitions), the business structure (sole-proprietor, partnership, limited liability company corporation) and the ownership structure (Are you the only owner? If not, list all owners and their percentage of ownership in the business.)
2.Location and hours of the business Where is your business located and what hours will you be open? If location is important to the business, explain the advantages and the benefits of the location (foot traffic; closeness to highways.)
3.Products and Services Tell the reader about the products and services that your business provides. The reader should be able to easily understand your business. Tell which of your products are most profitable and which have special or unique features.
Marketing Analysis and Competition: This section is one of the most important. You must demonstrate that you are knowledgeable not only about your business but also the industry in general.
1. Describe the industry and any trends in the industry. You will need to research this info in trade publications, on the Internet, or from your personal experience.
2. Discuss your target customers. Who are they? Who will be most likely to buy from you?
3. What is the size of your market area and how many potential customers do you think are in it?
4. Identify your competitors, explain why you are better or how you are different, and tell why you think their customers will do business with you.
Marketing Plan: Now that you've identified your market, you need to explain how you can get these customers to buy from you. Write ideas of how you will reach these customers. Will you use advertising brochures that you send to them (direct mail)? Will you use radio, telemarketing, newspapers, e-commerce, or something else? How much will it cost? How many customers you think you will be able to reach? Are there special customers (niche markets) that you're looking to reach? Will this advertising reach them?
Management and Personnel: A business is only as strong as the people running it. You need to show who will be running the business, their qualifications (background and experience), and their responsibilities. Include the resumes of owners and key personnel. If you have other employees, list their responsibilities and cost to you. You will also want to include those professionals who will be helping you. Attorneys, Accountants, Counselors, etc. are people that you should identify as part of your team.
Next Month in Part II we will focus on the Financial data.