Development of a
Business Plan
Every
business owner needs a way to organize and present information about how he or
she intends to develop, grow, and manage his or her business. A business plan
is the perfect tool. When well-crafted, a plan will catch the attention of
potential investors and customers while encouraging them to support the business.
When seen this way, a business plan becomes the foundation for any successful
business.
Why Write a Business Plan?
- The process of putting
a business plan together forces the person preparing the plan to look at
the business in an objective and critical manner.
- It helps to focus
ideas and serves as a feasibility study of the business's chances for
success and growth.
- The finished report
serves as an operational tool to define the company's present status and
future possibilities.
- It can help you manage
the business and prepare you for success.
- It is a strong communication tool for your business. It defines your purpose, your competition, your management and personnel. The process of constructing a business plan can be a strong reality check.
- The finished business plan provides the
basis for your financing proposal.
Business
Idea
•
The Business
Idea section sells the business’s vision and briefly outlines how that
vision will be accomplished.
•
A basic idea can
be expanded into a plan by including three key elements:
Business
Summary – A simple description
of the business, the need for its product or service, its intended audience,
and its competitive advantage.
Keys
to Success – A series of short
statements that describe the value the business promises to deliver to its
potential customers.
Management
and Staff Summary – Short
statements that draw attention to the personal strengths of the people who will
be part of running the business.
Market
Analysis
•
Before taking on
the risks of a business, it is important for business owners to know general
market conditions, where the new business will fit inside a particular
industry, who their customers will be, and who will be the competition.
Marketing
Strategy
•
Analyze your
competitors' marketing strategies to learn how they reach the market. If their
strategy is working, consider adopting a similar plan. If there is room for
improvement -- work on creating an innovative plan that will position your
product or service in the minds of your potential customers.
•
A good strategy
should include these four P’s:
What
specific Product or service does the business offer?
What Pricing
structure will be used?
Where
your business will be located (Place)?
What
will be done to Promote the business?
•
The most
effective marketing strategies typically integrate multiple mediums or
promotional strategies to reach the market. The following are some promotional
options to consider.
•
TV, Radio, Print,
Direct mail, Public relations, One-on-one sales
Financial
Analysis
If
a business is selling a lot of product but still losing money in the long run,
the business will fail. Based on the previous information collected, the
business owner can provide a fairly accurate estimate of the business’s costs
and what will affect them.
•
Start-Up Costs – All businesses need some starting capital
(money invested in the business) to deal with initial costs. These are the
items that are one-time purchases.
•
Monthly
Expenses – These are the ongoing
costs like inventory, utilities, and insurance. Also included in this section
is a breakeven point analysis (what the business needs to make to cover costs
and show a profit).
•
Financing
Options – These are the possible
sources for the capital to start a business.
•
Sales
Forecasts – This is an estimate
on how much product the business will need to sell to cover expenses, and what
can reasonably be sold based on the market research conducted earlier.
