How to write a small business plan? A business plan helps to define what you think you need
to launch your business, large or small. It summarizes the sense of your
business in a single document. It also creates a map for investors, bankers,
and other interested parties to use when determining how they can help you for
their best and to help them decide whether or not your business is physically
possible. Your business plan should consist of the basics outlined in the steps
below.
Write down your business description.
Describe your business more uniquely, and how it fits
into the market in general. If you are a corporation, LLC, or sole
proprietorship, state that, and why you chose to go that route. Describe your
product, its big features, and why people will want it. Answer the subsequent
questions. Who are potential customers? Once you understand
who they are and what they want, come up with a marketing strategy. What price are they willing to pay for your
product or service? Why would they
pay for your product or service over your competitor's? Who are your
competitors? Do a competitive analysis to identify key competitors. Find
out who is doing something similar to what you are planning, and how have they
been successful. Just as important is to find the failures, and what made their
venture fall apart.
Write an operational plan.
This
will describe how you will produce or deliver your product or service and all
costs. How will you create your product? Is it a service that
you are offering, or if it's more complex- software, a physical product like a
toy or a toaster — how will it get
built? Define the process, from sourcing raw materials to assembly to
completion, packaging, warehousing, and shipping. Will you need additional
people? Will there be unions involved? All of these things must be taken into
account. Who will lead, and who will
follow? Define your organization, from the receptionist up to the CEO, and
what part each plays in both function and financials. Knowing your
organizational structure will better help you plan your operating costs, and
fine-tune how much capital you will need to function effectively. Getting feedback. Friends and family
make great resources for asking questions and getting feedback––don't hesitate
to use them as your sounding board. Need
to increase the size of your premises. This happens more often than
expected. Once the stock starts piling up, you may find it ends up in your
living room, bedroom and the garden shed. Think rental of storage premises if
needed.
Write the marketing plan.
Your
operational plan describes how you will produce your
product, and your
marketing plan describes how you will sell your product. When you create your
marketing plan, try to answer the question of “how” you will make your product known to potential
customers. First how you will use the type of
marketing. For example, will you use
radio ads, social media, promotions, billboards, attend networking events, or
all of the above? Second you will
also want to define your marketing message. In other words, what will you say
to convince customers to choose your product? Here, you want to focus on your
Unique Selling Point (also known as USP). This is the unique advantage your
product has to solve your customer’s problem. For example, you may be lower cost, faster, or higher quality than
your peers.
Come
up with a price Model
Start by checking out your competitors. Know how much they
are selling a similar product for. Can you add something to it (add value) to
make yours different and hence make it a more enticing price? Competition isn't just about the goods or services themselves. It is also
about your social and environmental credibility. Consumers are increasingly
conscious of the need to show that your business is concerned with labor
conditions and isn't damaging the environment. Certification endorsements from
reputable organizations, such as labels and stars, can reassure customers that
your product or service is more aligned with their values than one lacking the
certification.
Cover the financials
The
financial statements translate your marketing and operational plans into
numbers, profits and cash flow. They identify how much money you will need and
how much you might make. Since this is the most dynamic part of your plan, and
perhaps the most important for long-term stability, you should update this
monthly for the first year, quarterly for the second year, and then annually
after that. Cover your
startup costs. How are you going to
finance your business initially? The bank, venture capitalists, angel
investors, Small Business Administration (SBA), your own savings: these are all
viable options. When you start a business, be realistic. You will probably not
roll out of the gate making 100 percent of whatever you project, so you need to
have enough ready reserve to fund things until you are really up and running.
One of the surest roads to failure is under-capitalization. What price do you intend to sell your
product or service for? How much will it cost you to produce? Work out a
rough estimate for net profit—factoring in fixed costs like rent, energy,
employees, etc.
Come
up with an executive summary
The first part of a business plan is the executive
summary. Once you've developed the other parts, describe the overall business
concept, how it will be monetized, how much funding you will need, where it
stands currently, including its legal standing, people involved and a brief
history, and anything else that makes your business look like a winning
proposition.
Build your product or develop your service
Once
you have the business all planned, financed, and have your basic level of staffing,
get going. Whether that's sitting down with the engineers and getting the
software coded and tested, or getting materials sourced and shipped to your
fabrication room (aka "garage"), or purchasing in bulk and marking up
the price, the building process is the time during which you prepare for
market. During this time, you may discover things such as: Needing to tweak the
ideas. Perhaps the product needs to be a different color, texture or size.
Maybe your services need to be broader, narrower or more detailed. This is the
time to attend to anything that crops up during your testing and development
phases. You'll know innately when something needs tweaking to make it better or
to make it less like a competitor's stale offerings.
In the next post we will cover “how to manage your small
business finance”.