Writing a comprehensive business plan is the first step in starting a business. It will serve as a guide to make your entrepreneurial dreams a reality, help you avoid costly mistakes, assist in financial preparations, serve as a resume of sorts for future potential business partners and much more.
The most valuable part of writing a business plan is the education you gain by researching and writing it. While it may be tempting to hire someone to prepare your plan, or to buy an off-the-shelf plan for your type of business, it is in your best interest to do the work yourself to best understand the needs and workings of your company.
Here’s what your business plan should include:
Mission & Vision Statements
A mission statement is a brief description of what you do. It helps you and those working with you to stay focused on what’s important. A vision statement answers the question “What do we want to become?” It provides you direction as you make decisions that will impact the future of your business.
Your business description provides the “who, what, when, where” of your business, including the type of business structure, start date and the location. This is also where you’ll want to list your business type, which you will choose depending on your needs. Business types include:
- Sole Proprietorships are owned by a single person or a married couple. These businesses are inexpensive to form and there are no special reporting requirements. The owner is personally responsible (liable) for all business debts and for federal taxes.
- Limited Liability Companies (LLCs) are very popular. The business has limited legal liability like a corporation, but has fewer governance requirements.
- General Partnerships are like sole proprietorships with more than one owner. Partners share managerial duties, profits and losses, and each is personally responsible (liable) for all business debt.
- Corporations are more complex structures than the others. As with LLCs, corporations have limited legal liability and must complete other tasks such as issuing stock certificates, holding annual meetings and keeping minutes, electing directors, etc. Corporation owners are called “shareholders” or “stockholders.”
- Limited Partnerships (LPs) are not used very often for small businesses, although they are common for real estate ownership. LPs are composed of one or more general partners and one or more limited partners. The general partners manage the entity and share fully in its profits and losses.
A market analysis will help you determine if there is a need in the marketplace for your product or service, who would be most likely to buy your offerings and where your customers are located. Include:
- An analysis of your industry.
- Evidence of demand for your product or service.
- A description of your target market (customer profile).
- Your market size (looking at area demographics and the growth of your industry).
- Your competition and why people would choose your product or service over the competition.
- Estimated sales volume and revenue.
Once you’ve identified your customer, you need to explain how you will get your customers to buy your product or service. Include:
- Your pricing strategy, including the price floor (the price at which you would break even), the price ceiling (the maximum price people would consider paying for your product or service) and your pricing relative to your competition (same, lower, higher).
- Your desired image (in light of your target market) and how to achieve it through advertising, signage, business cards and letterhead, brochures, office/store appearance, your appearance and other means of outreach.
- Your promotion and advertising strategy to reach your target market (such as use of website, social media, yellow pages, news releases, personal network, cold calls, newspaper, radio, television advertising, direct mail, etc.).
- The costs and timing of your marketing activities.
This reflects all the basics of operating your business and includes:
- Your business location. Who owns it? What are the lease terms? What will be required to get it ready with regard to zoning, permitting, construction and tenant improvements?
- Furnishing, fixtures, equipment and supply needs.
- Inventory. What will you inventory in what volumes? Who will your vendors be? How will you store and track the inventory?
- Description of operation, such as the activities from when an order for products/ services is received through its delivery, the cycles for inventory or materials/supplies purchase and other cycles inherent to your business.
- Key players and their operational roles in the business (co-owners, managers, advisors).
- Legal needs, insurance needs and an understanding of your regulatory requirements.
- Recordkeeping and accounting needs (inventory tracking, accounting system, billing method, filing systems, etc.). Who will handle day-to-day accounting? Who will be your business banker? Who will be your business accountant and what services will they provide?
- Consider including a section on emergency preparedness. Unexpected natural and human caused events could damage or destroy your business and its records.
Once you have a basis for the above, other amendments can be added to your business plan, such as funding requests or pertinent information that may be needed by the specific reader of your document. While the task is daunting, there is help to conduct your perfect plan. Visit the SBA.gov for more information.
Source: Business.WA.Gov, SBA