WHY WRITE A BUSINESS PLAN?
Your business plan is the tool that forces you to think through every aspect of your new business.
It’s also a communication tool that you can use to show:
- Bankers – if you plan to take out a loan.
- Potential investors and venture capitalists – if you want to attract outside funding.
- Building owners – if you intend to rent space.
- Suppliers – if you intend to produce custom products.
- Potential customers, particularly if you’re interested in becoming a supplier to their business.
It should be a living document first prepared prior to opening your business that’s used as a tool to help you focus, organize your thoughts, and make certain you’ve thought through every aspect of the business before you launch.
It should be updated anytime there’s a change in the business and at least annually. The process of reviewing and updating your business plan on an annual basis is an exercise as effective as hiring a business consultant. It causes you to review the goals you set the previous year and either celebrate your success or analyze why you didn’t meet your goals.
COMPONENTS OF A TRADITIONAL BUSINESS PLAN
- Executive Summary: A one-page summary of everything contained in your business plan. (Since it is a summary, it’s not unusual to write it last.)
- Product or Service: This section describes the product or service you’ll be offering.
- Professional Bios: When you start your business it may only contain your bio; however, as your business grows and you add people, you’ll also include bios of the management team.
- Competitive Analysis: This is an analysis of the top competitors in the market, a comparison of their products and services to yours, and how you will mitigate the risks to your business.
- Marketing: This is the business marketing plan, how you plan to let the world know about your business, and how you plan to obtain customers and clients.
- Operations: This includes how you will go about setting up the business and how it will be operated.
- Financial Information: This includes the start-up costs, recurring costs, cost to produce the product or deliver the service, and projected sales volume.
WHERE TO START:
Most of us intuitively know we need a business plan and have a fairly good idea of the components that need to be included but we haven’t yet written one because we don’t know where to start.
I’ve found the best place to start is by describing the product or service you want to offer and for whom.
EXAMPLE 1: A Virtual Florist and Gift Basket service that operates only during the holidays. For each holiday where flowers and/or flower arrangements are traditional gifts (Valentine’s Day, Mother’s Day, Thanksgiving, Christmas), I plan to design and produce a limited set of arrangements and gift baskets that will be shown in a brochure. Prior to the holiday I’ll take the brochure around to my friends and local businesses and take orders. I’ll purchase only what I need for the orders I take and deliver the products on the designated day.
EXAMPLE 2: A Divorce Recovery Course: Although there are books and support groups on Divorce Recovery, everyone recovers at a different rate, people are often reticent to seek help in their community, and much of the work needs to take place individually. This online course offers virtual support with a coach for support.
EXAMPLE 3: A Low-Cost Business Start-Up Course: An online course that walks prospective entrepreneurs through every step required for a business start-up and the skills they need to master to be successful.
Leah Ward-Lee is a management consultant and business writer based in Dallas, Texas and the author of $1,000 Start-Ups. Her next book, The Executive’s Toolbox, will be released soon.