Before you begin your business, you have to have a business plan. This should be written out so that you can decide what your business will do for others, how you plan to run your business, how much it will cost to start up and maintain your business, how you will market your business to get the most customers and clients and what type of profit you wish to turn. You also need to know how you plan to operate your business. Do you want to operate as a corporation, a limited liability company, a partnership or as a sole proprietor?
Content of your Business Plan
To develop your business plan, you need to ask yourself the following questions that will help formulate the plan. Once you have completed the answers, your business plan will be underway.
- What is the purpose of the business?
- What type of products or services will the business sell?
- Who are the target customers for the business?
- What major suppliers will we use?
- What are the demographics of our customer base?
- Who is our competition?
- What do we do differently than our competition?
- How does the business plan to reach out to target customers?
- How does the business plan to hold onto the target customers and keep them coming back?
- What type of marketing and social media strategy will we use to introduce the business to the public?
- What is our long term marketing strategy?
- How does the business plan to start production?
- How does the business plan to continue production?
- Where will we conduct the business?
- What type of rent will we have to pay for the business premises?
- How long of a lease will we need for our business?
- Do we want a non-compete clause in our lease for our business?
- Is there a potential for growth in the business premises?
Location, Equipment and Vehicles
- What type of equipment do we need to operate our business, including vehicles and plant equipment?
- Are the premises in question zoned for the business that we wish to start or will we have to ask for rezoning from the municipality?
- What type of computer system and software do we need to keep financial records and income reporting?
- What type of computer system can enable us to streamline our operation and allow our business to grow?
Registrations and Permits
- What type of permits will we need to start our business in the desired location and how can we obtain them so that the business can operate, including permits for storage, operations and the premises?
- Are there any patents that need to be registered in order to protect the business?
- What trademark or copyright registrations are needed to protect the business name or logo and how much will this cost?
- How much will it cost to file with the Secretary of State if the business will be a corporation, limited liability company or partnership?
- Will we record the business with the county?
- How and when do we expect to start the business operations?
- What type of management structure will the business entail?
- How soon can the proposed management team be able to start the business?
- What type of staffing will we need and how soon can we expect them to be trained and ready to operate the business?
- Do we need contracts for employment in the state that the business is in or is it an employ at will state?
- What about non disclosure contracts for the employees to sign?
- How and when is the business going to get internal funding to begin operating the business and keep it going?
What is the budget and cash flow situation of the business?
- What type of external funding is available to start up and maintain the business such as loans from outside sources?
- How is the company going to be structured – as a corporation, limited liability company, partnership or sole proprietorship?
- Develop a time frame for each of these sections of the business plan and maintain a schedule to make sure that each section has been covered for both the start up and continuation of your business.
Define your Competitive Advantage
Before you start your business, you need to define your competitive advantage. You have to be able to establish your client or customer base, know the competition in your market and establish a way that you can provide better service and products to your customer base that will exceed that of your competition.
In order to have a competitive edge, it is essential that you know your customers so that you can provide for their needs. Study the demographics of your customer base so that you will be prepared to service them as well as market to them. You have to target your customers and speak on their level in order to gain their trust and maintain their loyalty. Here are some questions you should answer regarding your customer base:
- How old are your customers?
- How much money do they have – what is their income level?
- How quickly do they need your products or services?
- Where are your customers located?
- What is the general education level of your customers?
In order for your business to succeed, you need to have a wide demographic range of customers that will be better serviced by your business and the products and services that you provide that are better than those of the competition. Do not assume anything about your customer base – do a market research study to help you understand how you can better serve your target customer base. In order to find out how you can serve your potential customers, you have to find out the answer to the following questions:
- What types of services or products are being offered by other businesses in the area?
- How are they competing with your business – either directly or indirectly?
- How much are they catering to your potential customers?
- What needs are they not fulfilling that your customers want?
- What will make your business stand apart from the competition?
You Should Continue to Ask Yourself these Questions
You should address all of these questions in your business plan and continue to ask yourself these questions as long as your business is in operation. Too many businesses become stagnant because they fail to notice trends or that the demographics of their customers are changing along with their needs. Once your business has
started operation, be aware of the changing needs of your customers so that you can continue to cater to them. You will have to continue to adjust your business to meet these ever changing and ongoing needs.
If you are planning on capturing a special section of the market, often called a niche market, how successful has your business been? What percentage of customers in this market have you been able to lure to your business and maintain? You can find this out by keeping in contact with your customers and making sure that they are
satisfied. You should also ask them what they expect from your business and what you can do to improve your service. Potential investors will have questions about your business that they will want you to answer in your business plan. Your business plan should be as detailed as possible
to answer any questions that both investors and lenders may ask. Your financial solvency should also be addressed in the business plan. You cannot expect anyone to want to invest in a business that has no plan, no direction and no idea where it is going. If you want anyone to invest or loan money to your
business, you need to establish as much detail as possible in your business plan.
In addition to the plan outlined above, you should include market studies and supporting material to back up your claims about your business and its potential for success. Numbers count when you are seeking money for your business so make sure you have them on paper.
Be sure to update your business plan each year so that you can continue to budget for the next year and remain at the top of your field. Be sure to take any changes in your industry into account and make provisions for such changes in your business plan.
There will be three stages of your business plan – the initial stage will be written for prospective investors and lenders in order for you to secure capital. After that, you will need to draw up another draft including the capital into the plan. The next stage is to create a business plan for your own use that should be updated yearly.
Always have a summary of your business plan on hand in your office and available for reference. Again, you want to be sure that you continue to update your business plan and make any changes that are necessary for the market.