The Business Plan - a Frame for the Future
Many would-be entrepreneurs shudder at the prospect of putting together a business plan, but the task need not be daunting. Start with an outline and fill in the blanks as you learn more about the process. Keep in mind that your plan should be only as big as necessary for your firm to run smoothly. In fact, the outline alone may suffice, particularly if you are not submitting the document to potential investors.
Before getting started, many seasoned entrepreneurs like to calculate a break-even analysis to predict future viability in their respective fields. In a nutshell, this is a formula based on the relationship between revenues, fixed costs, variable costs and profit. The analysis can show you how much money you must bring in to stay solvent.
Another preliminary tool is a feasibility plan, a basic document that features a summary, mission statement, market analysis and required success factors. It also might include an initial cost analysis addressing pricing and potential expenses. A feasibility study is yet another vehicle to help you determine whether starting a business can work for you.
Agencies such as the Small Business Administration (www.sba.gov) and SCORE, the Service Corp of Retired Executives (www.score.org), will help you calculate your break-even point, put together a feasibility plan and provide detailed information on developing a solid business plan.
Another helpful resource is the Small Business Development Center, a nonprofit program providing management support to prospective and current small-firm owners, with branch locations across the United States. Visit www.asbdc-us.org to access a center close to you.
Most experts outline 10 key components for a basic business plan. While there are varying opinions as to their order, it is customary to see an Executive Summary a concise overview of the entire plan -- listed first after the Table of Contents, though this will be easier to write after completing the other sections. Key components include:
- Cover sheet
- Table of contents
- Executive summary
- Company description
- Product or service description
- Market analysis
- Strategy and implementation
- Time table
- Management team
- Financial analysis
Main components can include additional sub-categories, too, but the depth and breadth of these depends on your particular business model. Other traditional elements are tables and charts with a cash flow chart in the Financial Analysis section; profit and loss statements; sales forecasts and balance sheets.
Projected Business Ratios and Market Analysis tables likewise are customary. To illustrate the numbers in these sections, use bar charts and pie charts.
An abundance of business planning software is available on today’s market, some programs costing less than $100. Designed to help strategize, sort and calculate related financial data, these products also generate high quality tables and charts with just a few keystrokes. Plenty of free information is available on the Internet as well, but choose this material wisely.
Plan Your Work and Work Your Plan
Once you’ve written your business plan, it’s time to prioritize goals and get organized. While the two actions ideally go hand-in-hand, fledgling owners often neglect to allocate time to the process of goal setting. Here are some steps to facilitate the process:
- Start by recording overall business or long-term goals on a spreadsheet. They won’t change often, but you will be referring to them frequently.
- As you write goals, make sure they are what you really want and do not conflict with each other. Set the bar high enough to grow your business.
- Make sure your goals are specific, measurable, attainable, relevant and timely. They must be easily identified, quantified and understood or you won’t know when you reach them.
- Set monthly, weekly and daily objectives, recording your progress as you go.
- Dedicate an hour each month to establishing important tasks to achieve in that period. Devote 15 minutes per week for weekly goals and 10 minutes per day for daily tasks. Add priority levels and completion dates next to each goal. Setting aside just a few minutes in this way greatly enhances your ability to manage small- to large-scale business operations.
- Do not share or discuss goals with negative individuals. They get in the way of progress.
- Regularly ask yourself, “Does this decision take me closer to or further from my goal?”
Growing a start-up venture takes commitment and systematic planning. To get your business off the ground and thriving, educate yourself. The more you learn about your industry, competitors, finances and time management, the greater your chances of success.