Why you need a business plan (and why it doesn't have to be complicated)
You are starting a business. There is one piece of advice that you will see everywhere: “create A BUSINESS PLAN - use our template.” And then you find that the template is 15 pages long and asks for lots and lots of intricate and detailed information. Where do you start?
A business plan is truly the most important document every business owner needs, but it really doesn’t need to be complicated, even if you are going out for funding. My favourite bank manager told me that all he wants to know is the purpose of the business, the target market and especially the cash flow projections. We like to add Product Offering, and Timing and Operations also.
Why is having a business plan important? Working through your business plan turns your ideas into a tangible, practical business process. Planning helps you check the viability of your idea, think about the market that you hope to reach, think about the risks involved, and to take a hard look at your need for financing. Here are a few key elements to include in your business plan.
The Summary
The summary starts with a snapshot of the purpose of your business. This is the part of the business plan that your reader will go to first - and even if they do not read the rest of the plan they should come away with a clear view of what your business is about. Talk about the major features that will help you stand out—tire rotation in 30 minutes or less, house cleaning by drone, or maybe a Christmas tree decorating service. Include your value proposition - the statement outlining the benefit of your product or service to your customer. Keep the summary simple and brief.
Your Target Market
Who is your customer? What makes your business stand out? How does your business differ from your competitors? There is typically a lot of room in most marketplaces for businesses that differentiate themselves. However - you do need to know who else is in your marketplace. Research other companies so that you can find ways to make yourself stand out. The target market section is a good place to talk about your unique features or service offerings, and how your business will be placed in your market in relation to your competitors.
Then include a sentence about how you are going to reach your target market. Are you selling on Amazon? How are you advertising to reach your customers? If your business is brick and mortar, do you have a good location?
Your Product or Service Offering
This section is where you’ll go into more detail about what you’re going to do. If you’re going to be using drones to clean people’s houses, describe how that will work. Explore why customers would be interested in this type of service, and how you are different from other companies in the same industry. This is also a good place to describe potential challenges or risks involved with your idea, and how you’ll manage them. Will you need office space, a warehouse, equipment or company vehicles? Include those details here.
The Money
A clearly laid out plan of how you will make money is the most important section. It’s important for you to know what costs are required to get your business off the ground, and any financing or loans you’ll require.
You absolutely need a cash flow projectionthat estimates how much you’ll earn each year for the next five years, and that subtracts projected expenses during that time, as well as a practical plan to pay your suppliers and your taxes on time. Estimate low on your income and high on your expenses to ensure you have enough cash flow at all times during your business year.
Timing and Operations
Planning out timing and operations always leads to insights into how and when you will get your business up and running. List what needs to be done, when it needs to be done, and who is responsible for doing it. Don’t forget to include solutions for some of the risks that might happen. Be realistic about your timelines as things often take longer to do than you may anticipate.
Planning is Key to Success
We all know that starting a business is exciting and we all want to just jump in with both feet. With proper planning and keeping the plan simple, you can set up your new enterprise for long term success. A well thought out Business Plan can be the magical difference to your long-term success.
Ready to take the business world by storm? Guildstreet is here to help get you set up. Contact our team today!