Before you do anything else, you need to have a concrete plan in place in order for your business to get off to a strong start. A good, thorough business plan gives your venture direction and purpose, and it helps guide your decisions as the owner. Your business plan is also what you show to lenders, investors, vendors, employees, customers and potential partners in order to secure the growth of your company. Failing to map out your business’ future could spell out failure for you in the present. Here’s how to get started on creating your business plan.
- Do your research. Gather the tools and resources you need to start your business plan, such as books and/or software programs. Seek help from your local Small Business Development Center or SBA, and consider signing up for courses at a nearby college or university. You can also hire a consultant to help you, but they might cost you a pretty penny: A good consultant can charge up to $300 an hour, and the price tag for a full business plan can run anywhere from $5,000 to $10,000. So if you find that you do need the services of a consultant, try to use them sparingly.
- Back up your ideas with numbers. A business plan isn’t just about your creative vision; it’s also very much about giving solid, measurable financial facts about your business. Without those financials, your business plan is worthless. If you want to recruit the help of lenders, investors and the like, your calculations will need to be as accurate and clear-cut as possible. A good approach to take is to first write down your concepts and visions, and then translate them into dollar amounts. For example, if you’re planning to advertise frequently, figure out how, where and how often you want to advertise, and then find out how much it would cost you. You can then plug that number into your advertising costs.
- Be realistic with your projections. You want to neither overestimate nor underestimate your revenue and expenses. For better-looking estimates, you should narrow your focus onto a smaller, more realistic target market and calculate your revenue and expenses based on that market. Start off by identifying potential customers, then start shaving off the excess: Remove those who don’t need or can’t afford what you’re selling, whom you can’t effectively reach with marketing, who aren’t ready to buy your product, etc.
- Include all the necessary projections. These include monthly cash-flow projections for your first year, a three-year profit and loss projection, and a projected balance sheet. Calculate the point at which your revenue and expenses will break even and when your sales will begin to cover your costs. Double-check the validity of your numbers by researching the financial ratios that are specific to your industry and making sure yours are realistic. If your projected profits are significantly higher than the industry standard, you may want to go back and revise your calculations.
- Be conscientious about marketing. Think about the goals you want to accomplish in your business. Then conduct a market analysis by identifying your target market, researching your competition and evaluating market trends. Based on your findings, create a marketing strategy, which should include information on how you plan to approach sales, promotions, advertising, public relations, customer service, networking, community building and more. Make a plan for implementing that strategy, and set benchmarks to gauge whether or not your plans came to fruition.