Deborah Kay Swanson
Don’t Panic, it’s Just a Business Plan!
I don’t know about you, but the thought of creating a business plan just scares the bejesus out of me. I’ve written marketing plans for all kinds of projects in my career, but the responsibility of creating a business plan from scratch for your own idea, knowing your funding and success may ride on how well you approach this daunting task, is just overwhelming.
I’m not alone. At a recent SCORE workshop on the subject, of the 20-something people in attendance, only a handful had a grasp of what was involved. Most had very basic questions. One man had gone all the way through producing his new gourmet jerky product, but didn’t know how to price it correctly. That’s a problem that should have been determined at the very beginning. Now he’s in a crunch, not knowing how to compete with much less expensive brands. His jerky is fabulous, but his costs are high, thus requiring him to either reduce the size of his packaging or find a high-end retailer that will be able to sell his jerky at double the competitor’s price. It’s fine to have a niche product, just know that at the beginning so you can prepare.
It’s not at all a glamorous subject. Who wants to talk balance sheets, limited liability companies and sales forecasts? The bank, that’s who. So listen up, the business plan is your friend. After several weeks of evaluating, discussing and rethinking your assumptions about your greatest idea in the world, you just may have to make some very tough decisions. Maybe during the process you’ll find many other opportunities that you didn’t initially conceive, and you may also find roadblocks and issues that you were unaware of. This is all valuable information! Remember, as corny as it sounds, forewarned is forearmed. Ignorance will rarely serve you; it’s anticipation and preparation that sees you through. And will save you time and money down the road.
So here are a few basics. The business plan typically contains the following:
An Executive Summary
It comes first in your plan, but is written LAST - after you’ve done all your homework and know the answers to all the questions that will arise. And it’s two pages or less - a snapshot.
A General Company Description
This may include a mission statement, company goals and objectives, your business philosophy, a description of your industry, your company strengths and core competencies, and the legal form of ownership (sole proprietor, partnership, corporation, limited liability corporation), and why you chose that form.
Products and Services
Describe in depth your products and/or services, what factors give you competitive advantages or disadvantages, and your pricing structure. Put your specs, drawings, brochures, etc., in the appendix).
Marketing Plan
Do some solid market research and document it here. Primary research means gathering your own information, such as surveys (which can often be done online with very inexpensive services like Survey Monkey). Secondary research involves gathering already published information such as industry profiles, trade journals, etc. Then include the economics of your industry, potential of your business, barriers you may face and how you will overcome them. Describe your product from your customer’s point of view, it’s features and benefits. Describe your customers and analyze your competition. Then describe your nice, strategy, distribution channels and sales forecast.
Operational Plan
Here explain the daily operation of the business, its location, equipment, people, processes and surrounding environment. Told you there would be a lot to think about.
Management and organization
Describe who will manage the business on a day-to-day basis; create an organizational chart if more than 10 employees and describe their positions. Also list your professional and advisory support (attorneys, accountants, consultants, etc.).
Personal financial statement
Each owner and major stockholder needs to show their assets and liabilities held outside the business, and personal net worth.
Startup expenses and capitalization
Simply estimate what it’s going to cost to get in business. Know that it’s nearly always more than you think it will be, so make allowances.
Financial Plan
This is where the 12-month profit and loss projection comes in, along with perhaps one for a longer period of time. You’ll need projected cash flow, balance sheet, breakeven calculation.
Appendices
Here’s where your spreadsheets and other documentation are found.
Tired yet? If not, you’re probably meant to go into business! If this seems like more than you’re willing to tackle right now, perhaps you’re still in the serious hobby stage and want to contemplate this some more.
If you’re ready to move forward, fortunately, in this day of the internet, there is much information available to you. At bplans.com, you’ll find a variety of free business plans and templates listed from A to Z. Just pick the one closest to your company, and follow it with whatever adaptations you need to make.
At startupjournal.com, through the Wall Street Journal, you can create an account and create your own business plan online and receive input from experts.
Resources:
Bplans.com
Wall Street Journal: www.startupjournal.com Here you’ll find columns, lists of business for sale or franchise, business plan tools, case studies, and more.
www.SCORELA.org
www.entrepreneur.com
Entrepreneur.com has an eBay Startup Center with tips on how to start and market your business. There are a lot of ins and outs to success on ebay. More about that in another issue.