Starting A Business Needs A Great Business Plan
If the future economy is based on the growth of small business, then you just might want to dip your feet into the world of entrepreneurship. Many young college graduates see their future in starting their own companies and developing their own rewarding careers. So if you are one of those aspiring small business owners, what do you have to do to create a great business plan. Don’t want to plan? That’s not an option if you want to go to your local financial institution to get funds. So let’s help you develop a killer business plan.
First, let’s get organized by doing some homework by identifying the following basics.
- What product or service am I going to sell?
- Who is going to buy it?
- What makes my product/service different than all the others out there?
- Can I test my product/service on my friends and family to get their feedback?
- Roughly how much money do I need to get started?
Ok, now you’ve got those things out of the way, let’s go to the business plan itself. Here are the nine important parts of a killer plan.
1. Executive Summary
Don’t let that word ‘executive’ scare you, it’s just a summary of what your business is about. Sometimes it is easiest to leave this to the end.
2. Business Description
This is where you put in a brief mission statement (purpose of the company) for example:
“ABC Company was formed in 2009 as an off shoot of university research that shows that companies have difficulties with standard testing of “soft skills”. ABC company has developed software that solves this problem. The software can be adapted for any organization whether academic, public sector or private corporations. This software, according to our analysis is unique in the HR software solutions marketplace.”
3. Market Analysis
- Why is the product/service needed in the marketplace?
- Shows the market research of who would buy.
- Examines the strength and weaknesses of the competition.
- Includes a go- to-market strategy and how this strategy will help win market share over its competitors. (Is the product cheaper, better, different distribution method etc. from its competition?)
4. Design and Development Plan
- Describes the product/service in detail with the benefits to the users.
- Explains the timeline to get product designed and to the market.
- Realistic 3 yr. sales forecast (good, better, best).
5. Operations Plan
- Explains the business structure of the Company, what kind of facility is required to house the Company, based on the sales summary.
- Details the team hierarchy and job functions for the day to day operations.
6. Financial Factors
These are summarized in the written plan, but are outlined in detail in the attached financial documents. The bank or financial institution will spend a lot of time reviewing the financial statements, to make sure they make sense. The financial statements must support the written plan and sound logical.
The financial documents should consist of:
- Opening Balance Sheet
- Operating Statement (monthly for year 1, yearly projections for years 2 & 3)
- Cash Flow Statement (monthly for year 1, yearly projections for years 2 & 3)
7. Supporting Douments
- Legal documents
- Building Permits
- Patents and Trademarks
- Resumes of principal owners
- License or franchise agreements
8. Review Plan
- Read for spelling and grammatical errors
- Check spreadsheets for accuracy and check the numbers tie to the written plan
- Fill in the executive summary
9. Put The Plan Into Action
- Year 1 review your plan to your actual numbers on a monthly basis. Your numbers are the story of your business, make sure you review on an ongoing basis and adjust your business according to the story that is unfolding.
- Don’t be afraid to adjust your plan, it’s a living, breathing document and you may need to pivot your original plans if you see a better direction for your business.
SurePayroll has done a great job of putting a Business Plan Infographic together explaining the critical steps for a killer business plan.
XL Consulting Group provides business and strategy planning services. If you need help with your business plan, please contact us for a complimentary assessment to see how we can collaborate with you.