Your business plan is a document that:
- Describes your new or existing business
- Defines your customer’s needs and your ability to meet them
- Examines your competitors strengths and weaknesses
- Addresses barriers to success
- Details marketing strategy to get your share of the market
- Sets goals for start-up, development and net income
- Tells lenders or investors what they have to gain by investing in you
While creating a business plan is burdensome, there are 3 important reasons to create one:
- Easier to secure financing
- Gives you a well defined goal
- Operational guidance for the next several years
Business plans are usually 15-20 pages long and broken down into seven parts:
- Executive summary – Highlights the major points from the other parts in the plan.
- Company description – Detailed description of your business, goals and mission statement.
- Products/services offered – Describe what makes your products or services unique or able to compete in the market you plan to serve. Also include any future products or services planned and a feasibility statement.
- Market analysis – Description of your target market (ie. specific customers or industry.) To make sure your business has a chance to succeed before starting, you need to spend a considerable amount of time researching:
- market size
- market potential
- current trends
- future of the industry
- Strategy and implementation – Marketing and operating strategies you plan to use. You will give information on your pricing, position in the market, location, advertising & promotions and how you will handle demand.
- Organization and management team – Highlight you and your team’s experience. Include copies of all key personnel’s Resume. List the company ownership and the business structure you are using.
- Financial plan and projections – The other parts give your lender a “feeling” about whether you can succeed, but this section is going to be thoroughly reviewed. You need:
- Investment Needed
- start-up costs
- loan application
- equipment and supply inventory
- Income Projections
- year one, break out by month
- year 2 – 3, detail quarterly
- Summarize Financial Needs
- Investment Needed
If any of the following apply, add to support your plan:
- Personal Financial Statements (sometimes requested from a lender) prepared by a CPA
- Contracts entered
- Lease agreements
RESOURCES FOR CREATION OF YOUR BUSINESS PLAN
There are numerous programs that will help you create a business plan, most at a cost. You can get examples of plans at BPlans.com, but they link to LivePlan software, which is $19.95 per month. They do have sample plans you can use to create your own, I like the accounting service one.
The Small Business Administration(SBA) allows you to create a business plan for free and save as a PDF file. All you need to do is register for an account. I will create mine on this site and make available sometime in the future. The SBA also has a 30 minute web course on creating your business plan.
- SCORE – Find a local mentor or take part in web based training, mostly free
- Local or area college or university business program
- Local chamber of commerce (you will have to join to use resources)
- CPA or accounting firm
- Local economic development program (usually affiliated with city/county government)
USING A PROFESSIONAL BUSINESS PLAN CONSULTANT
First of all, I would not recommend this if you are just starting out or planning to go into business. The reason why is you may skip some of the most important parts (see profit motivated section below) to complete. Plus, if you are boot-strapping like me, you may not have the cash to invest. Having said that, if you are determined to pay someone, get in touch with me:)
Hiring outside help will cost you anywhere from $150 for a generic plan to $10,000 for a comprehensive plan. It all depends on the amount of research required, turnaround time and details needed. If you are wanting a significant loan, a generic plan will not be sufficient. Depending on who you use, the hourly rate will usually be in the range of $25-200 per hour. I personally charge $36/hour for this type of service, but I am an accountant and marketer, not a professional writer.
When speaking with a consultant, make sure to communicate the following:
- What you need. Clarify who does what. Who provides the research on customers, competition, area economy and finances? If the consultant is researching and not local, how will they get that information? Does the consultant have experience in your industry?
- What you want. The consultant will need to know who is reviewing the final plan and a list of specific needs. You need to share your goals for the now and future of your business.
- What you have. The consultant will need any current research, access to an accountant or attorney if they need financial or legal information, and anyone else that will provide specific data.
- When you need. The consultant needs a deadline date.
If you spend the time putting together your business plan correctly, you may come to realize that your business will not generate a profit very easily. Take emotions out and DO NOT START A BUSINESS. That is what a plan and research are for, if you cannot make a profit, do no proceed. You will cause yourself stress and potential financial ruin if you keep going with a bad plan or business idea.
Now that you have written the plan, you will share with bankers, venture capitalists or other professional lenders. They are bound by confidentiality, but if you share with anyone else, make sure you get a written non-disclosure agreement. Your ideas are your property, you do not them to be shared with other parties.
I hope this helps serve as a guide for when you prepare your own plan. I am creating an eBook that goes into more detail. Subscribe below to get a .pdf copy of my book so far.
Please comment or reach out to me at firstname.lastname@example.org.