Tips that will help up-and-coming entrepreneurs write a business plan
So you've decided to take the plunge. You have a fantastic business idea you think will succeed, you're excited about being your own boss, and you're ready to turn your visions into reality. Congratulations—but don’t pop open that bottle of champagne just yet. In the world of entrepreneurship, a great business idea is just the tip of the iceberg.
Turning your dream into reality
Coming up with a business idea is easy; it's the planning that follows that can be difficult. In order to open a successful business, you must first spend time and money creating a comprehensive business plan. This detailed road map should include a vision statement or business profile, staffing requirements and business contacts, a cash flow and financing assessment, a marketing and expansion plan, as well as a Plan B in case something unexpected happens.
Without a detailed, well-researched business plan, you’ll have little luck with your business pitch, which is where you try to convince loan officers, investors, suppliers, potential clients, or future employees your idea is worth their time, money, or active involvement. A business plan is essential when it comes to establishing your company's credibility and achieving future success.
Parts of a business plan
The vision statement or business profile
This is where you define your business, including its objectives and what you intend to market. Will your business be product- or service-based? If your company is product-based, will you be selling one product or an array of products? Where will they be designed, manufactured, and packaged? If your company is service-based, what type of service(s) will you provide?
You should also describe your target market and customer base in this portion of the business plan. Ask yourself whether you'll sell your product or service to individuals, businesses, or both. Figure out how your product or service will benefit your client base and explain this fully.
We also highly recommend including a brief analysis of the growth trends in your chosen line of business. Try consulting trade magazines or other industry sources to determine whether the market for your product or service is increasing. This information will help you set realistic sales and expansion targets both now and in the future.
Staffing requirements and business contacts
In this section of the business plan, you must specify who will be employed at your company and what their qualifications will be. Even if you are the only employee, you must detail the qualifications (both educational and experiential) that make you the right person to succeed in your chosen field.
Also list any relevant business contacts you have previously established that will help your business succeed. Explain in detail how these associates will help you establish a successful business. If you plan to hire professionals such as lawyers, accountants, or financial advisors to assist you, list their names as well.
Cash flow and financing
It is very important to list your expenses, and the strategies you will use to handle them, in your business plan. Begin at the beginning, with the expenses you will incur during the start-up phase of your business. Do you have the proper zoning, insurance, and licensing agreements? Where will your business be located? Will you pay rent or purchase a facility? Incorporating each of these factors into your budget will help you get a better handle on your financial situation.
Next, you must explain your accounting system. Decide what type of software program you will use to budget your expenses and how you'll protect your inventory against waste, fraud, theft, or carelessness. Designate the level of authority each staff member will have in this regard.
Last but not least, include a projected income statement based on the initial target mark-up percentage of your service or product in your business plan. What are your estimated sales, costs, and capital requirements? Will you secure a bank loan or a personal loan from friends or family? Will you mortgage your property to pay for your initial start-up costs? Answer each of these questions in detail in your business plan. Unless you have a solid financial plan, no banker or businessperson will be willing to invest in your company.
Marketing and expansion plans
As with your company's financial plans, marketing plans must be addressed in detail for both the short and long term. Decide on a marketing and advertising budget and research who your target audience will be. Explore different advertising options, such as radio spots, television commercials, a blog, newspaper ads, and direct mail flyers. Who will write and design the ads? Assess the market for your particular product or service. Is it in high demand? Where and with whom? It is important to devise a plan that will allow you to market effectively to your target audience.
A very important marketing tool in this day and age is, of course, a website. Honestly assess if you have the ability to design an effective, user-friendly website; if you’re not up to the challenge, explain who will create and manage your company’s online presence. Detail the features the website will have, including security and, of course, the budget for the project.
Moreover, include a brief assessment of your competition in your business plan. What products or services do your competitors offer? Make sure your product or service will be able to compete with these established brands. In your view, do your competitors have certain weaknesses? If so, how do you intend to capitalize on them? Remember to be specific.
Finally, design a realistic expansion plan to confirm your company's long-term viability. At what point after your business has been established do you intend to increase its scope? Specify particular sales targets you intend to meet before your company is ready to grow. Outline how you intend to increase your company's business, e.g., increased advertising, more aggressive recruitment, marketing in different countries, etc.
Every company needs to have backup plans due to the inevitable risk of failed sales targets, market slumps, or other unforeseeable events. If such an event occurs, how will you handle it? Will you downsize your staff, cut expenses, or reduce advertising? Planning ahead for these unfavorable circumstances will prevent you from having to scramble down the road and prepare you for hard times.
Stick to your plan
Writing a business plan may seem like an overwhelming task at first, but remember this plan will be an invaluable resource during your business start-up. Your business plan will also come in handy when shopping around for potential investors, financing opportunities, and partnerships. Are you worried your business plan is lacking a vital component? Submit a copy to our business editors for a thorough review.
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