By Vishal P. Rao
You have an idea for a business.
You know what you want to sell, who you can sell
it to, and how much you stand to earn from it.
There's just one more thing you need: a business
plan.
Many people dread the idea
of preparing a business plan. They think of them
as complicated, unnecessary documents that exist
only to make it more difficult for them to get
started as an entrepreneur. They are wrong.
Business plans are necessary
because they help you “see” your business.
Instead of just talking in abstract ways about
your “customer base” and your “profit
potential,” it lets you put those things
in writing and in concrete terms. It forces you
to think through every aspect of your business
in advance so down the road you don't realize
you've made a mistake that's cost you your business,
your life's savings, and your job.
Besides all of that, they
are also important tools for getting other people
interested in your business. For one, if you've
taken the time to create a business plan, others
will realize that you are serious about this endeavor
and that it isn't just some pie-in-the-sky dream.
A business plan also shows people that you are
a professional and that you understand what it
takes to start and manage a business. This is
all extremely important, particularly if you need
any type of outside funding, such as loans or
investors.
So while the bad news may
be that you definitely do need a business plan,
the good news is that they don't have to be complicated.
The truth is that your plan only needs to cover
seven main areas and none of these areas are going
to require you to write a full-length novel. These
five sections are the executive summary, the company
overview, the business environment, the company
description, and the action plan. All of those
sections may sound complex, but most of them won't
involve information that you don't already know.
Executive Summary
Even though this section
will technically be first in your business plan,
you should actually write it last because, just
as its name implies, it summarizes the entire
contents of your business plan. Because many readers
never bother to get beyond the executive summary,
you must make sure that it is comprehensive and
well-written.
If that sounds difficult,
it isn't. Just make sure to read through your
entire business plan before you start writing
the executive summary. Make a list of information
that you think is the most important or that would
really stand out to a reader, and be sure to include
all of it in your summary.
Company Overview
This section explains the
guiding force behind your business. It gives them
a chance to see what you have in mind for the
business and how you plan to get there. Generally,
the overview does this by providing a mission
statement, goals, and objectives for your business.
In a nutshell, a mission
statement provides the answers to all of these
questions in less than 50 words: What am I selling?
Who am I selling it to? Why am I selling it? It
doesn't need to be just one sentence, but keep
it as brief as possible.
Goals and objectives, the
other components of the company overview, are
often confused by first time business plan writers.
Remember that goals are things your company wants
to achieve while your objectives are how they
plan to get there.
Business Environment
This section will probably
require you to do some outside research because
it involves information relating to your industry,
your market, and your competition. You need to
take an honest look at the field you are preparing
to enter and pay close attention to its structure,
its trends, and its barriers to new businesses.
Become familiar with the major competitors in
your industry and decide how you will differentiate
yourself from them. Also, get to know your potential
customers and what makes them tick. The more you
know about them, the more likely you will be to
turn them into buyers.
Company Description
At this point in your business
plan, you need to go into detail about your business.
You can't simply define your company in terms
of what you sell, but also in terms of who you
serve, what resources you will use, what types
of employees you are looking for, what type of
distribution method you'll utilize, and more.
All of this factors combine to create your company.
In addition to this, you
should also state your company's UPS (Unique Positioning
Statement). This is a one sentence statement that
explains what sets you apart from all of the competitors.
Action Plan
The last part of your business
plan is this section which outlines the steps
you need to take now in order to make your plan
work. These should also reflect the goals and
objectives that you've outlined in your company
overview.
Besides these primary pieces
of a business plan, you may also need to include
a financial section, particularly if you plan
on using it to get outside funding for your business.
This may take more thought and planning than the
other sections because it will require you to
make some assumptions about your business's revenue
potential. The most important thing is to base
any estimates on realistic expectations, not optimistic
dreams.
You may want to visit the
following websites for some samples to give you
an idea of how things should be formatted and
worded:
http://www.businessplans.org/businessplans.html
http://www.bplans.com/sp/
With some useful models
and this helpful information, you'll be well on
your way to completing your effective and professional
business plan.
Vishal
P. Rao is the editor of Home Based
Business Opportunities
A website dedicated to opportunities, ideas and resources for
starting a home based business. He also runs the Work at Home
Forum - an online community of folks who work at home.
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