How to Create a Business Plan
So you want to start a business. Congrats on taking the plunge. But before you jump in and make your first sale, you need to lay down some building blocks. The first of these is a business plan.
Think of a business plan as a blueprint for how you’re going to start, run, and then grow your business. It’s a place to take a good hard look at what it’s going to take to build a successful enterprise — everything from an analysis of your competition to how you’re going to fund your growth.
When it comes to creating a business plan, there’s not necessarily a one-size-fits-all approach. So if you’re new to this, it might be worth taking a class on how to write a business plan (you’re sure to find one at your local community college, or even online) or consulting with an advisor.
But there are a few key sections that business plans generally include. And in terms of length most business plans weigh in at between 15 to 25 pages. They also include graphs and charts where appropriate. To give you some structure as you create your business plan, here’s a rundown of the sections to include:
An executive summary
The executive summary is like a top-line description of your business and how you’re going to accomplish your goals. Because it’s what people often read first, you want to make a good first impression. All the points you make in subsequent sections bubble up to your executive summary, so it may be a good idea to write this last, after you have your other ducks in a row.
This is like your elevator pitch. If a stranger asked you to describe your business on the spot, what would you say? Here, you might also include where you see the most potential for your business, and why.
What’s the market you’re entering? Coffee in Austin? Fitness studios in Syracuse? In this section, describe the current landscape of the market and identify your target market. What are the weaknesses or voids, and how will your business fill them? For example, the fact that there are currently no spin classes in your city, coupled with the skyrocketing national popularity of this form of exercise, indicates there will be demand. Because this section should be chock-full of data and analysis, it requires some research.
Take an eagle-eyed look at your competitors in the space. What are they doing well, and where are they falling short? To use the same spin studio example, perhaps there’s a popular kickboxing class you’ll be competing with for clients. Walk through how you’re going to differentiate yourself from the competition. Perhaps it’s through offering early morning classes or more competitive rates. If you don’t currently have competition, detail how you’re going to stay ahead of the pack should other businesses enter the fray.
Service and product line
This section details exactly what type of service or product you’re offering. Be sure to include any copyrights, as well as research and any associated development that might be required to offer your product or service.
Operations and management plan
Here, you need to present a clear picture of how you’re going to get up and running and then manage day-to-day operations. Do you need to work with suppliers to stock your inventory? Do you need to bring on employees to manage the front desk? Detail all those things here, and how you’re going to manage them.
Break out the calculator and open your spreadsheets, it’s time for the money talk. In this section, present an analysis of all the capital you need to start, run, and grow your business. You’ll also determine profitiablity and declare your financial projections. First, account for start up costs like real estate, equipment, and your employees. Detail any capital you might already have. Once you have a good understanding of the costs you’ll endure, conduct a break even analysis to determine when your company will become profitable. This will be important to show external stakeholders or potential investors.
Once you have a handle on your costs and profitability, it’s time to seek and secure funding.
Deciding how you’re going to go about financing your business is something you should take seriously. You can go a traditional route and apply for a small business loan from a bank. You can borrow from family or friends. You can accept a Square Capital offer (read about what we look for when deciding to extend Square Capital offers here). But with any route you choose, make sure you understand what’s involved with each and how you’ll pay it back.
Additional training and resources
It’s rare that you have all the skills you need to start and run a business — especially if you’re doing this for the first time. You may have the skill set and certifications necessary to cut hair, for example, but might be shooting in the dark when it comes to running the day-to-day financials of your business. Do an audit of all the skills you need, and where you have gaps, seek additional training. There are a bounty of online courses on just about every aspect of running a business, as well as affordable classes at places like community colleges. Here’s where you may also seek out mentors, or even ask fellow small business owners how they got up to speed. Detail how you’re going to make sure all aspects of your business run smoothly in this section.
Once you have your business plan in place, you’re off to the races. And you’ll have thought through all the things that will help make your business a success.
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