Quitting your day job to start your own business is a scary endeavor for even the bravest of souls. Before telling your boss to take a hike, you may want to have a solid business plan that evaluatesrisk managementvs. future goals in order to ensure you’re really making the right move. All too often a gung ho entrepreneur with walk into a new adventure blindly, without considering the potential risks involved. Don’t let this be you.
There are key elements that every business plan requires (or at least, every good one). There are tens of thousands of businesses starting every day. Unfortunately, the majority of those fail. Chances are these said businesses missed one or more crucial parts during the planning phases.
Here’s a brief outline of the different aspects you should incorporate into your plan:
This should actually be the last thing you complete, but it will be the first thing potential lenders see. Like the name says, it’s aone to two page summary of your plans. Use this to draw in a reader enough to make him/her continue to the rest of the plan. The idea here is to get the reader excited about the potential success of your venture – so don’t bore them to death. Use a clear, easy to understand writing style. Don’t think that you have to impress them with fancy industry-specific language, this will just confuse them.
In this section you will want to provide a brief description of your business. Your reader should know the answer to the following questions by the time they are through:
1. What is the name of the business?
2. Is this a corporation, sole proprietorship, or partnership?
3. Who are the owners of said business?
4. How long has this been in the works?
Explanation of Products/Services
You are going to want this to be addressed in simple terms with a clear painted picture of what you will provide. You should be able to answer what you will be selling, the benefits of your service, and the pricing.
This section should provide your reader with a target market, current conditions within the prospective industry, a brief analysis of competitors within your market, and your plans to promote your business. This is another section designed to get the reader excited about the potential success of your venture. Think it through and share your marketing strategy as clearly and colorfully as possible.
Industry and Competition
Here you will want to have a detailed explanation of the status of your current industry along with how you plan on entering the industry. Make sure to acknowledge the positives and negatives of this type of business. One word of warning. When you get to the competitive analysis DO NOT say that there is NO OTHER company doing what you are doing. While there may not be another company just like yours, your audience IS currently meeting their needs somehow. Talk about that and talk about how you will set yourself apart and how you will get them to choose YOU.
Use this space to define how you plan on reaching your target market through PR,promotions, and advertising. Be as detailed as possible without sounding entirely too redundant.
Ownership and Management
Here you will want to provide the key members of your team. This should include the legal structure of your business.
1. Where is the ideal location to reach your desired demographic?
2. How important is location?
3. What types of special permits will you need for your location?
This is a tricky area, as risks are hard to predict. Try to define areas where you think your business has the highest risks involved and potential solutions for these problems. This is more of a constant and systematic process that will require regular analysis and updating.
How much will you needto get you started Include rent or lease payments, utilities, and your salary for at least the first year. Also include the salary of any of your staff for at least 6 months.
All of these areas need to go into as much detail as possible without creating an overwhelming effect. You want your readers or potential lenders to have a clear picture of what you are trying to do. Over or under explaining your plans will either leave them underwhelmed or confused. Try to avoid being too technical, keep your plans in simple terms that the average Joe can understand.