We all have these pieces of brilliance that come to us in regards to business ideas. They are great. The majority of us have no idea how to put that idea on file to give it a fighting chance to exist. What is a business plan, why do you need it, and why listen to me? A business plan is a document explaining a business’s future objectives and strategies for achieving them. The formula on record allows you to utilize it to get outside funding (investors).
You’ll increase your awareness of your industry. You’ll have specific financial goals and create an overall focus. You’ll listen to me because I’ve started three companies myself and worked as a consultant for multiple fortune 500 companies but enough about me. I’m going to walk you through this thing step by step.
First, you choose your Industry and Name. The name should be something catchy or clever. You want someone to be able to remember your business after seeing it or hearing it once. That is the goal. Your industry should be something you have expertise in or possess an extreme passion for it. At times, money can be the passion but, that can be fleeting and, your desire to continue will follow.
Next, you’ll want to mention any funds you are seeking from potential investors. This section is an animal in itself. I’ll follow up next week with tips and info about just this piece. You proceed by entering your business’s date of formation and if it is in operation. This information assists both investors and banks with deciding to invest or offer credit to your business. Legal structure will follow. (Sole-Proprietorship, Partnership, C-Corp, S-Corp, LLC, Non-Profit)
Your business objectives follow. Here you explain what your company will do, what it will offer, who are the customers, and what sets or will set the business apart from the competition. An example would be “See-Thru Windows sells state of the art triple-pane windows. We service the southeast region of the United States with offices in North Carolina, South Carolina, Alabama, Georgia, and 3 in Florida. We are unique because our windows block 100% of harmful UV rays. Our triple-pane windows can hold a 20 degree +/- compared to the outdoor temperature. Our glass is shatterproof. Our casings are metal. We keep the cost to the customer down by manufacturing our products.” Adding your slogan, if you have one, at the end would be cool.
Industry analysis is next. Here you describe your relevant market size. “Relevant Market Size” is the annual revenue your company could obtain if it owned a 100 percent market share. You get this number by multiplying the number of customers who might be interested in purchasing your products or services each year by the monetary amount these customers might be willing to spend, on an annual basis, on your products or services. Using the See-Thru Windows company as an example, it would be $1,250,000,000. One hundred thousand potential customers multiplied by an average job of $12,500. Your target customers are next. Target customers can be general or detailed. It can include Age, Gender, Marital Status, Occupation, Education, Hobbies/Activities, Income, Location, Family size, Language, Values/Beliefs/Religion, Business size. You get the picture.
The Marketing section follows. The Marketing section includes two parts. The Products/Services Pricing and the Promotions/Advertising plan sections. There is a decent possibility you haven’t made it this far in your head. That is the perk of creating a document. Get the brain working and come up with the answers. Your pricing will require you to create a spreadsheet. Yes, another file but, this is only for you. You need to know your cost. The cost will tell you what to charge.
If you sell a product, you’ll want the mark up to be three times or more than your cost. If that sounds ridiculous, the clothes you are wearing have an average mark up of 5 times the price to make it. Yes, the $100 outfit costs $20 or less to create. That is how business works. Your advertising plan should cater to the audience you stated was your target. Marketing dollars are spent efficiently with a specific audience. Don’t attempt to wing this part. You’ll flush your entire budget down the toilet without proper knowledge and a plan.
The final part of your business plan will be your team. If your team is you, then this will be pretty simple. Here you will list your team, each person’s role, and a bit about them. Keep it about business. Why are they assets to the company? It is interesting they play instruments but that isn’t important. As the Chief Financial Officer, why are they qualified?
In closing, this document will place you and your business on a launching pad. This document is what is missing from 99.9% of all business ideas coming to our heads. A plan. On Paper with goals and a method to achieve them. Give yourself and your brainchild the opportunity to flourish. Do this and create a better picture than the one in your head. Give yourself the chance to create something that would have otherwise died before it lived as the previous ideas did. The action should but doesn’t have to follow the completion of the document. The difference from the past is you have a living document to improve upon until the day you decide planning is over. Don’t wait too long.
Food for thought…You do the Dishes.
