Now that you are ready to start a business, you will need a good solid business plan. The business plan serves two functions. First, it gives you something solid to show to potential investors or banks that may be willing to give you a loan. Second, it gives you a way to measure your business and whether or not the business is meeting short- and long-term goals. It also gives you a basic path to follow as a business plan requires you to determine what your resources are and how you will utilize them. The business plan is an in-depth document that requires time and effort, but it is essential to starting a business. The business plan can change and be updated as the business grows or shrinks, but it will give you a starting point and something to refer to in order to guide the business and the people that the business deals with.
The first page of a business plan ought to be a cover page including the business name and contact information as well as your contact name and information. This way the person reading the plan will not have to flip through many pages of the plan in order to find out who to contact. The cover page ought to be followed by a table of contents. Business plans have many sections and are very detailed. A person who is considering investing in a company needs to be able to quickly access the section he or she needs. Additionally, consider use a header or footer to number the pages. Each and every section does not need to be listed in the table of contents. For example, a mission statement can be considered to be part of the Business Description. However, you want to be sure that the major sections are listed in the table of contents. Each section ought to be titled, and there ought to be subsections as appropriate.
The first section of the business plan is going to be a summary of the business. This can be called the Executive Summary. This section sums up the business plan. It is usually about a page long and ought to capture the high points of the plan. It should tell your bank or your investors a concise and accurate description of your business, your plan, and your finances. While this section is the first section of the document, it will actually be the last section you write because it will be a summary of the business plan.
The next portion of the business plan will be the Business Description. This will include Mission Statement and the Vision Statement. The Mission Statement and the Vision are really up to the company. The mission statement should describe the company’s goals and ideals in just a few sentences. The Vision Statement should be what inspires you and your employees. The Vision Statement can describe how the company will reach its mission and can also expand on the Mission Statement.
Next is the Products and Services section. The Products and Services section will be of great help to you because it will help refine your business. It is very easy to get caught up in wanting to sell additional products and services related to your main products and services, but small businesses cannot do everything all at once. Describe your products and services, why your services will benefit the customers, and the prices that you will charge. Also include a breakdown of your charges. Include hourly charges if applicable, purchase price and selling price of your product, and what portion of the profits will be for the company and what will be for the employee doing the work. For example, if you buy a product and mark it up twenty percent, designate how much goes to the employee making the sale, for example five percent, and how much returns to the company as profit, for example fifteen percent. This will allow investors and banks to see something solid.
The next section is Current Trends and Situations. This portion requires research and outside information. This is where you will describe the overall market as well as your specific market and where your company fits in. Include solid facts and figures as well as what barriers you might have to overcome in order to succeed. You need to look at projected growth rates for your business’s industry overall as well as at a local level. You need to have this to show your investors and banks that there is a market for your business and also that you have done your research. Additionally, you need to include the current situation of your company. A startup company might not have much to say other than there is significant interest in it, but an existing company needs to explain whether it has steady business, whether it has experienced growth, or whether it has hit some sort of snag in the business world. This will let the banks and investors see where you fit into the current market.
The Competitive Analysis is the next portion and it is a more refined look at the market. This is where you will look at who your direct and indirect competitors. This is often called a SWOT analysis, or Strengths, Weaknesses, Opportunities, and Threats. The SWOT analysis begins by stating opportunities and threats created by competitors. It can include anything such as competitors’ target audience, public relations, recalls, size, popularity, or anything else that gives them a leg up (strength) or that creates an opportunity for you. Many business plans use charts for this particular section as it is often easiest just to make a list of the opportunities and threats associated with each company that is a competitor. The Strengths and Weaknesses section is a place for you to express where you might have an area of concern or that could use improvement, and the factors that will make your business succeed. These all need to be internal strengths and weaknesses and can include anything from location to availability of your products. Finally, include a paragraph or two addressing what strategies you have to address each of the SWOT sections. This will be your strategy for making your business stronger and taking advantage of any opportunities.
The Marketing Plan is going to be the next portion that you will need to address. Many businesses create a separate Marketing Plan to be included in the Business Plan because Marketing is very in-depth and will take up a good portion of the Business Plan. The Marketing Plan is essential to give you a way to market your company. The Marketing Plan is important to your bank and investors because they want to see how you plan to make your company grow. Additionally, the Marketing Plan will give you something to show to either your marketing employee, or a marketing company that you might want to hire to ensure that they understand your marketing goals and your current situation. A standalone marketing plan will include The Executive Summary, Current Trends and Situations, and the Competitive Analysis. However, since you are writing a business plan there is no need to duplicate the information.
The Marketing Plan, as part of your business plan, will have a performance review, marketing objectives, marketing strategy. The performance review will simply explain how the company has done so far if it is already in business. If a company has not yet done any business, it is okay to omit this subsection. It is very important to note growth and sales in this section so that anyone reading it can see progress. Marketing Objectives are simply the results you wish to see from the marketing. These objectives need to be measurable. This is going to be things such as a certain percentage of increase in sales or revenue. It also includes things such as doing a certain amount or type of marketing. All objectives need to be laid out within certain timeframes, and need to include short-term-within one year, and long-term-longer than one year. At the end of the timeframe, you need to assess whether you have reached the marketing goals or not.
Marketing Strategy is going to explain how you will meet your marketing goals. These strategies can be listed as bulleted points in order to highlight each strategy. The strategy should include how much you will designate for marketing and what advertising tools are available and which ones you will use. Be sure to mention why you believe that the specific advertising tools will reach your potential customers. For example, you might list that you want to run a radio commercial. Include which station you would run the ad on and also how that would reach your specific customer. If the radio ad is currently too costly, list it anyway, but make it a long-term goal. The point of this section is to show that you are going to aggressively market your business in order to get a profitable return.
The Contingency Plan is the next section that you will write. The Contingency Plan is going to discuss what will happen if things do not occur as planned. This can be from contracting with someone, selling your business, taking out a loan, reducing your finances, or even marketing more aggressively. The banks and investors want to know how you will keep your business running. How will you ensure that they will not lose money by investing in your business? The Contingency Plan is not planning for total failure, but rather it is planning actions you will take if you do not meet your goals.
Once you have written all of the above sections you will only have a little bit left to do. Create a section titled Company Information or Operations, whichever you prefer. This is where you will list the kind of company you are, how your company is organized, and key personnel. Key Personnel would be a board, owner and co-owner, and/or company president. If you are a small business consisting of a few people, your company organization section will not be very long, but if you are a larger company with departments or even sister companies, you will want to include this how your company is organized.
Finally, you will need to create a financial statement. If your company already exists, you will need to include a balance sheet as well as something that shows your sales over the last year. If you are a company that has not yet done business, you need to at least include a balance sheet. Your balance sheet, however, should show what funds your company has as well as where they are allotted to go, such as facilities, inventory, rent, etc. You might also consider a cash-flow projection. You would need to realistically estimate the amount of business that you will receive as well as the amount of cash you will have going out. It is also advisable to check with your bank or investor to see what other financial information they need prior to meeting with them.
Finally, create an Appendix if necessary. This would be the place to cite any resources from your research as well as place any charts of growth or decline for you industry or your business. Charts are not necessary, but they are pretty and easy to read.
Creating a business plan is sometimes tedious. It is very tempting to skip sections or omit information. However, you need to be sure that you have the information essential to your business. Business plans are not all exactly the same and need to reflect your business and not someone else’s. The plan will reflect your goals to people now and also in the futures as your business grows. Remember, the plan can be changed and updated as is needed by your company. It is not a binding contract. It is a roadmap to your dream.
For more information and help see the following
Standard and Poor’s
Bureau of Economic Analysis
Bureau of Labor Statistics
Tools, How to, and Support:
Small Business Administration
CBS Interactive Business Network