You want to start a business but don’t have a business plan? Shame on you!
If you are a small business owner, you’ll inevitably face several situations where you are grilled under hot lights about your business plan.
For instance, when you apply for a business loan, when you are convincing investors that your book business is the next Google, or even if you are planning to sell off your company.
A solid business plan not only helps you get the best deal in any of the aforementioned situations, it also plays a key role in charting out a roadmap for your success.
If you are convinced you need a plan or already realized it and tooled around the internet looking for someone that’s already done the work, you’ve probably found a mountain of templates ranging from extremely simple ones (which are of no use to anyone) to the most complex ones that only a Wharton MBA could understand.
How about making your own plan? If that sounds delicious, then keep reading. We’ll blaze through 7 easy steps to follow for creating a killer business plan.
The first step in writing a business plan is to identify your target audience and the purpose of the business plan.
If you are preparing a business plan for your internal consumption, you may want to have a conservative approach in estimating the profits and growth.
|This business plan layout gives you the essential tools you need to write a great business plan for your new venture.|
On the other hand, if you are developing a business plan for the bank or the investors, you may want to showcase the best case scenario for your business, and then use your business negotiation skills to strike the best deal.
Don’t misinterpret this as lying to get more money; you are merely projecting a best case.
Regardless of the audience and purpose of your business plan, it is important to have this aspect clearly laid out.
You need to have details on your product or service offering, the target market, your competitors, the market share you expect to win and the price that you would be charging for your product.
This is an often neglected part of a business plan, but very essential for the health of your business. You need to identify all the cost elements - both one-time expenses (capital expenses) and running expenses (current expenses).
These include various heads such as your infrastructure, your website design costs, rent and utilities in the case of a brick and mortar book store, employee salary costs, storage costs, basic office supplies, and marketing costs.
You need to clearly mention in your business plan, why your idea is unique. This does not mean that your product should be the only one in the market.
It could be the way you handle customers, your pricing or maybe even your packaging that you choose to focus on.
The uniqueness of your idea should be compelling enough to differentiate it from similar offerings from competitors and give a reason for your customers to prefer your product over others.
This is what makes your idea feasible and if you do not have something unique about your business, then it is time to rethink and redesign your entire business model.
This is also what’s going to make the idea attractive to the banks (in the case of loans) or other investors. Realistically, there are hundreds of vendors out there with an online used book store. Really think about what it going to make you special & rise above the rest.
Every business idea will have its share of risks. It is important to identify them upfront in your business plan and have steps in place to mitigate the risk.
You need to devote a section of your b-plan to potential risks of your business model and the ways in which you have addressed them.
While it is easy to draw up cash flow projections for the next ten years, it is often a good idea not to venture that far, especially if your business is in a rapidly changing environment.
Not to say that book selling is rapidly changing but with the push toward electronic media, you need to make sure that you aren’t projecting too far into a changing landscape.
Earlier, business plans used to compulsorily have futuristic projections. Today, however, it is a better idea to draw up your cash flow and P&L statements for a couple of years and then have a general plan and direction on where your business will go in future.
Keeping this flexibility in your business plan will enable you to quickly make use of opportunities that arise in the market and also adapt well with the rapid changes in the industry landscape.
This is especially important when you are creating a business plan for potential investors. You will have to clearly lay out a plan by which a PE can exit your business within a specified time frame and with a good ROI.
If you are presenting your business plan to the bank, you will have to show how your cash flow positions are robust enough to service the debt in a prompt manner.
Once you have developed a business plan, it is important to make a short one page summary of it, which you can hand out to prospective investors to pique their interest.
You must also develop an elevator pitch, which is nothing but a short five minute summary of your business plan which you can talk about and which covers the key elements listed above.
If you found any of the above useful or have experience with developing your own business plan and how it’s helped facilitate growth, please drop a few comments below!
Nicolas D’Alleva is the owner of two businesses and has extensive experience writing and pitching business plans. His first venture was Specialty Answering Service, a US based telephone answering service and call center service. Shortly thereafter, he formed Spotted Frog, a search engine optimization and marketing company for local businesses in and around Philadelphia.
For more information about Mr. D’Alleva, please click on the links provided.
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