It’s very difficult to get where you want to go if you don’t have a plan in mind. A business plan helps you formalize your goals and makes it easy to check on your progress as the business grows, as well as ensures that you have something to show to banks or potential investors to prove that you know what you’re doing.
A business without a business plan is not going to get very far. While it is certainly possible to reach success without one, a business plan is helpful in reaching your goals in a timely manner. It is also mandatory if you intend to go after outside financing, such as a bank loan or angel investors.
The simplest form of a business plan is simply a list of ideas you have. This may be enough to keep you on track yourself, but if you want to attract investors, you’ll need something more involved. It’s also a good idea to go a bit more in depth for yourself, as well. The more detail you record, the easier it is to reach your business goals.
A few things to keep in mind before starting:
- Be conservative when considering how much money you need to operate.
- Keep it simple; some detail is good, planning for every possible catastrophe is a waste of time.
- Plan your first year in detail.
- Include the what, why, where, and how you will market your business.
Your Mission Statement
Every business plan should begin with a mission statement. This, quite simply, should give your reasons for starting the business. What is your purpose? Write this down and keep it in mind as you work on the remainder of the plan.
The mission statement should set the tone for your business, so consider carefully what to write. How can you sum up the reason for your business in just a sentence or two? This is usually fairly short, but informative.
What are you bringing to the table? While you already know which skills you possess, it’s important to include this in your business plan if you are using it to get a loan or entice investors.
If you are lacking in a vital skill, such as marketing, be sure to have a plan for this. Will you hire a marketing consultant? Learn the skill required? Make sure this is clear in the plan.
The Business Profile
This is possibly the most important part when convincing people to invest in your business. You will need to include the following in this section of your plan:
- Your target market
- Business goals
- Analysis of the industry
- Steps you will take to reach your goals
Be specific in this part of your plan. Your goals are what will drive the business, so it’s best to give as much information as possible about them.
Make sure you take the time to learn as much as possible about your target market. What ages are you aiming for? What are their interests and hobbies? Do they have much disposable income? Why and where will they buy your product? These are just a few of the questions you should answer in your plan.
Cash Flow Assessment
In this section, you should have your first year planned out. Include how much money you will need to start out, with detailed expenses. You should also cover your anticipated cash flow for the first 12 months. While you can touch on financial goals up to 5 years, there’s no need to go into detail for these.
To figure out your cash flow, you will need to look at what you are selling, services or products, and set your prices. Work out how much you could reasonably make in a month. Take into account your marketing efforts and word of mouth, as your business grows.
When you’re creating your business plan, you might find it helpful to look at sample plans to get a better feel for how yours should look. It doesn’t necessarily have to be a 50 page volume: even two or three pages can be enough if you have all the information down. The length will also depend on whether you are showing it to someone else or merely working up the numbers for your own use.
Throughout the year, take a look back over your plan and compare your expectations to where you really are. This can help you shift your focus, if necessary, to get back on track. Since it can be easy to lose sight of your goals when you are faced with the daily task of running your business, having a plan can be handy. Simply refer to it whenever you need to be reminded of where you’re going. It’s a good idea to check it at least twice a year and make changes as your business shifts.