YOUR BUSINESS PLAN – WHY
Reasons for writing a business plan include:
- Support a loan application
- Raise equity funding
- Define and fix objectives and programs to achieve those objectives
- Create regular business review and course correction
- Define a new business
- Define agreements between partners
- Set a value on a business for sale or legal purposes
- Evaluate a new product line, promotion, or expansion
YOUR BUSINESS PLAN
Do You Need One?
If you are not going for funding, you won’t necessarily be asked for one; HOWEVER, you are well-advised to either write one yourself
or have a professional help you, because having a properly-written business plan will help you launch your business, know what to
bear in mind, and provide a road map to success:
- If you are launching your business on your own budget – and it can be a shoestring – you don’t need to do a formal business plan.
- You should definitely look at all the elements though, because it makes you sit down and define your company, your target markets, your objectives, your competition, and your niche, among other things
YOUR BUSINESS PLAN – ELEMENTS
Generally, business plans include:
- Executive Summary–features the highlights of your plan and sells your idea in two pages or less. – Your “elevator pitch”
- Company Summary–a factual description of your company, ownership, and history.
- Products (or Services or both)–describes your products and/or services and how they stand out from competitive
products and services. - Market Analysis-provides a summary of your typical customers, competitive landscape, market size, and expected
market growth. - Strategy and Implementation-describes how you will sell your product, how you will put your plan into action, and
establishes milestones. - Management Summary-provides background on the management team, their experiences, and key accomplishments.
- Financial Plan-contains key financials including sales, cash flow, and profits.
YOUR EXECUTIVE SUMMARY
- Features the highlights of your plan and sells your idea in two pages or less. – Your “elevator pitch”
- Imagine you get into an elevator on the main floor of an office building with someone you know to be a high-rolling Venture Capitalist. You see he has pushed the 24th floor, so you push 25 and now you have about 30-60 seconds (depending on the elevator) to describe your business….
- General rule of thumb – cover points in the same order as the Business Plan itself: your company description; your products, your market; your strategy; your management team; and some financial information (NUMBERS!).
YOUR COMPANY SUMMARY
- Company Summary–a factual description of your company, ownership, and history.
- We will go into this more in Session 2 with how to register your company
- In a nutshell, this section of the Business Plan is to give a potential investor information about what size company they are looking at.
- Of course you are going to present your company in the best possible light, but keep it factual! ☺
YOUR PRODUCTS & SERVICES
- Products (or Services or both)–describes your products and/or services and how they stand out from competitive products and services.
- Remember, products can be a lot more lucrative than services, based on the real-world fact that there are only so many hours in the day that you can bill for!
- In your business plan you will need a detailed explanation of all your products and services and what DIFFERENTIATES them from other similar products on the market.
MARKET ANALYSIS
Market Analysis-provides a summary of your typical customers, competitive landscape, market size, and expected market growth.
- Research your market!
- Who are your customers and how many of them are there?
- Who is your competition? Remember to focus on your niche here!
- Do a SWOT Analysis
- Strengths
- Weaknesses
- Opportunities
- Threats
STRATEGY & IMPLEMENTATION
- Strategy and Implementation-describes how you will sell your product, how you will put your plan into action, and establishes milestones.
- A Marketing Plan will be a big part of this section.
- You will need to demonstrate that you have a plan on how to get your product or service to the marketplace
- Production (costs)
- Advertising
- Website
- Shipping
- Customer Service
- All the “nuts and bolts” of business operations
MANAGEMENT SUMMARY
- Management Summary-provides background on the management team, their experiences, and key accomplishments.
- If it’s just you, then you should have a really detailed bio here!
- I have actually seen a business plan with one person on it.
- Remember – YOU ARE AN EXPERT!
- All of your other transferable skills can be mentioned here – even if your ‘day-job’ is unrelated, it is likely that you have learned skills that benefit you in your own business
- It helps if you can get some associates in on it as consultants to round out this section.
FINANCIAL PLAN
- Financial Plan-contains key financials including sales, cash flow, and profits.
- A potential investor is interested in the bottom line: how much money will this company earn in profits
- Business plans generally include an Excel spreadsheet with costs, profits, and projections and are almost never accurate – they are projections!
- Sometimes reality exceeds the original financial projections – unless you are very much financiallyinclined, you may want to have an expert, or at least someone with experience in this, compile your financial section
- If you are not going for investors or grants, this is still helpful for you to use as a benchmark as your business progresses. It’s always nice to beat your projections!
FINDING A BUSINESS MODEL FOR YOUR HOBBY
- No psychology here – You know it is hard to run a business – it’s not always fun, and you don’t get employee percs, but your want to do this anyway!
- Next is a worksheet to help you brainstorm your new business
- Write down your hobby at the top and please take a few minutes to fill it out. You will want to do this more in-depth when you have some time to sit down and take some time with it, but let’s do a quick first-pass right now.
QUESTIONS TO ASK YOURSELF WHEN TURNING YOUR HOBBY INTO A BUSINESS
- HOBBY TO PRODUCT/SERVICE -HOW CAN YOU CONVERT YOUR HOBBY TO PRODUCTS AND SERVICES (REMEMBER – PRODUCTS ARE MORE LUCRATIVE THAN SERVICES!) – IN ONE SENTENCE, WHAT IS YOUR PRODUCT/SERVICE & WHAT DOES IT DO?
- SOLVING CUSTOMER PROBLEM – WHAT PROBLEM DOES YOUR PRODUCT/SERVICE SOLVE FOR THE CUSTOMER PRODUCT DIFFERENTIATION – WHAT IS DIFFERENT/BETTER ABOUT YOUR PRODUCT OR SERVICE COMPARED TO THE COMPETITION
- YOUR BUSINESS NICHE – IS THERE A SPECIFIC SEGMENT OF THE MARKET WHERE YOU THINK YOU COULD DOMINATE
- YOUR TARGET DEMOGRAPHIC -WHO ARE YOUR POTENTIAL CUSTOMERS
- REACHING YOUR CUSTOMERS – WHERE ARE THEY? HOW DO THEY SEARCH? TRADESHOWS? TRADE MAGAZINES?
- YOUR BUSINESS PLAN – DO YOU NEED ONE?
- SWOT – can you think of Strengths, Weaknesses, Opportunities & Threats your business will encounter in the market
EXERCISE:
Write down your list of products & services as though you were writing a promotional brochure or web page – and see what you come up with! Try determining your pricing by comparing your competitors. Remember to mention what is different, better, special about YOUR products & services.