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SearchGetting started in a new business requires a lot of work, not the least of which
is planning. Although many business owners claim to little or no formal
planning, even the most intuitive of them have some idea of what they’re trying
to accomplish and how they hope to do it. However all successful entrepreneurs
know that planning is essential to success.
No amount of hard work can
turn a bad idea into a profitable one: The health food store in the meat and
potatoes neighborhood and the child care center in a retirement community are
probably doomed from the beginning.
Planning forces you to think ahead.
Before you rush in to supply a product, you need to be sure that a market
exists. You must also try to foresee some of the problems that might arise and
figure out how you will deal with them.
One of the first steps you should
take toward starting a new business is to develop a business plan, a written
document that summarizes and entrepreneur’s proposed business venture,
communicates the company’s goals, highlights how they plan to achieve those
goals, and shows how consumers will benefit from the company’s products or
services.
Preparing a business plan serves two important functions:
First, it guides the company operations and outlines a strategy for turning an
idea into a reality. And second, it helps persuade lenders and investors to
finance your business.
Although a business plan has a simple and
straightforward purpose, it still requires a great deal of thought. For example
before you open your doors, you have to make important decisions about
personnel, marketing, facilities, suppliers, and distribution. A written
business plan forces you to think about those issues and develop programs that
will help you succeed.
If you are starting out on a small scale and using
you own money, you business plan may be relatively informal. But at a minimum,
you should describe the basic concept of the business and outline its specific
goals, objectives and resource requirements.
A formal plan, suitable for
use with banks or investors, should cover these points:
- Summary
In
one or two pages, summarize your business concept. Describe your product or
service and its market potential. Highlight some things about your company and
its owners that will distinguish it from its competition. Summarize your
financial projections and the amount of money investors can expect to make on
their investment. Be sure to indicate how much money you will need and for what
purpose.
- Mission and Objectives
Explain the purpose of your business
and what you hope to accomplish.
- Company and Industry
Give full
background information on the origins and structure of your venture and the
characteristics of its industry
- Products or Services
Give a complete
but concise description of your product or service, focusing on its unique
attributes. Explain how customers will benefit from using your product or
service, instead of those of your competitors.
- Market and
Competition
Provide data that will persuade the investor that you understand
your target market and can achieve your sales goals. Be sure to identify the
strengths and weaknesses of your competitors.
- Management
Summarize
the background and qualifications of the principle, directors, and key
management personnel in your company. Include resumes in the appendix.
-
Marketing Strategy
Provide projections of sales and marketing share and
outline a strategy for identifying and contacting customers, setting prices,
providing customer services, advertising, and so forth. Whenever possible,
include evidence of customer acceptance, such as advance product
orders.
- Design and Development Plans
If your product requires design
or development, describe the nature and extent of what needs to be done,
including costs and possible problems.
- Operations Plan
Provide
information on the facilities, equipment and labor needed.
- Overall
Schedule
Forecast development of the company in terms of completion dates for
major aspects of the business plan.
- Critical Risks and
Problems
Identify all negative factors and discuss them honestly.
-
Financial Projections and Requirements
Include a detailed budget of start-up
and operating costs, as well as projections for income, expenses, and cash flow
for the first 3 years of business. Identify the company’s financial needs and
potential sources.
- Exit Strategy
Explain how investors will be able
to cash out or sell their investment, such as through a public stock offering,
sale of the company, or a buyback of the investor’s interest. When covering
these points, keep in mind that your audience wants short, concise information –
not lengthy volumes – and realistic projections for growth.
For more
information on starting a business and writing up a business plan, check out the
Small Business Administration Website at http://sba.gov
Keep in mind
that sometimes the greatest service a business plan can provide an entrepreneur
is the realization that the concept just won’t work. Discovering this on paper
can save you tons of time and money.
About the Author
Tanner Larsson is a veteran entrepreneur and the publisher of the award
winning Work At Home Success Newsletter. Subscribe to his newsletter and recieve
4 EXCLUSIVE Bonuses valued at
$276. http://www.work-at-home-resource-center.com
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