A business plan is your roadmap to business success. It is a simple document, but the process to developing it, is well worth the effort. Once you put your entrepreneurial dreams on paper, describing what you want to do and how you plan to do it, you will actually see how you can make your dream happen. By making that leap from your brain to paper (or your computer), you are forced to look at the details of what it is going to take to launch your new enterprise. You will probably get into some unfamiliar territory, but your discoveries will make you smarter and save you money. One thing to keep in mind is that you use your business plan to run your business. It is a living document that should be updated every two to three months to make sure your business is on the right track.
Elements of a business plan
There is a basic format that will help you create a logical plan that will cover the essential elements you need to include in your business plan. They are the following:
• Cover Page
• Executive Summary
• Business Description
• Market Analysis
• Marketing Plan
• Operations Plan
• The Management Team
• Intellectual Property Strategy
• Revenue Models/Cash Flow Projections
Starting your plan
It can be very hard starting a business if you don’t know whether there is really a market opportunity. The marketing analysis and marketing plan sections of a business plan are one of the hardest sections, and you should tackle these first. Why? If only a few folks are interested in buying what you are selling, you might need to rethink your idea. There are many hobbyists out there who think they are running businesses; don’t be one of them. Make sure you understand what going on in your industry. Then define who you are, your niche, your target client, and your secret sauce to get your marketing plan together. All the other sections will be much easier once you carefully define what business you are in.
Start with basic research
How big is your industry? How many businesses currently do what you want to do or something similar? How close are they to your geographical location? Do a Google search for your city and industry such as “Houston and florists” to see your online and offline competition. If you are an internet based business, figure out what your keywords are, using tools such as Wordtracker.com or Overture.com. Then do a Google search to see how many potential competitors you have world-wide. Once you identify three to five competitors; check their websites for pricing information. Be sure to check their social media footprints and try to track where they advertise and how they reach their customers. At this point, you are testing whether your idea is viable and whether you have a competitive edge that will separate you from the crowd. Identifying competitors is a good thing that means there is a buying customer out there. You also need to figure out if there are enough customers to keep your company running over the long-term. This basic research is the look-before-you leap approach to going into business. A little time spent up front, making sure there is a paying customer, will save a lot of grief later.
A new enterprise can be a sinkhole for money if you haven’t worked out a budget. Many businesses are surprised by how underfunded they are and that they do not have enough money to keep things going. It is so important to have resources to cover the basics – utilities, insurance, advertising, equipment, inventory, licenses, professional services (accounting & legal), etc., so you can concentrate on building your customer base. Common budget busters include unplanned expenses like rework, equipment breakdowns, hiring extra workers when you underestimate a job and rush fees if you run out of inventory. In these cases, if these events are not managed within the framework of your business plan, they may lead to failure down the line. Always build in some contingency for a best case/worst case outcome for your business budget. Spend the time up front on learning to create a current and projected budget. Know where every dollar comes from and where it goes. For more detail and insight, read my book “Become Your Own Boss in 12 Months,” and pay special attention to Chapter 10 – Every Business Needs A Plan.
Creating a business plan not only gives you a tangible roadmap, but also allows you to share your dream with potential lenders and investors. The primary lesson from creating one is that it forces you to take a critical look at your dream. Hopefully, your answer to “How am I going to do this?” gives you foresight to turn your entrepreneurial dream into a big success.
Melinda F. Emerson, known as SmallBizLady is one of America’s leading small business experts. As a seasoned entrepreneur, professional speaker, and small business coach, she develops audio, video and written content to fulfill her mission to end small business failure. As CEO of Quintessence Multimedia, Melinda educates entrepreneurs and Fortune 500 companies on subjects including small business start-up, business development and social media marketing. Forbes Magazine named her #1 woman for entrepreneurs to follow on Twitter. She hosts #SmallBizChat Wednesdays on Twitter 8-9pm ET for emerging entrepreneurs. She also publishes a resource blog http://www.succeedasyourownboss.com Melinda is also bestseller author of Become Your Own Boss in 12 months; A Month-by-Month Guide to a Business That Works.