Developing a Business Plan
All planning strategies mentioned in this article are from the Self-Employment Workshop taught at LDS employment resource and self-reliance centers.
Every business owner needs a way to organize and present information about how he or she intends to develop, grow, and manage his or her business. A business plan is the perfect tool. When well-crafted, a plan will catch the attention of potential investors and customers while encouraging them to support the business. When seen this way, a business plan becomes the foundation for any successful business.
A business plan can be constructed by building upon four essential cornerstones:
- Business Idea
- Market Analysis
- Marketing Strategy
- Financial Analysis
The Business Idea section sells the business’s vision and briefly outlines how that vision will be accomplished. A basic idea can be expanded into a plan by including three key elements:
- Business Summary – A simple description of the business, the need for its product or service, its intended audience, and its competitive advantage. When shared with others, it shouldn’t take longer than 30 seconds.
- Keys to Success – A series of short statements that describe the value the business promises to deliver to its potential customers.
- Management and Staff Summary – Short statements that draw attention to the personal strengths of the people who will be part of running the business.
Before taking on the risks of a business, it is important for business owners to know general market conditions, where the new business will fit inside a particular industry, who their customers will be, and who will be the competition.
Sources for this information can be found through:
- Local chambers of commerce
- Networking contacts
- Online resources
- Competitor businesses
Once market and industry information is obtained, and customer and competitor profiles have been developed, the marketing strategy is written next. A good strategy should include these four P’s:
- What specific Product or service does the business offer?
- What Pricing structure will be used?
- Where your business will be located (Place)?
- What will be done to Promote the business?
A marketing strategy is about determining a proper balance between each of these elements. If the business will be more successful in a high traffic area, then location has more importance. If the competition is high, better advertising and pricing could help.
This is the section of the business plan for exact numbers and business costs. If a business is selling a lot of product but still losing money in the long run, the business will fail. Based on the previous information collected, the business owner can provide a fairly accurate estimate of the business’s costs and what will affect them. The following suggestions will also help:
- Start-Up Costs – All businesses need some starting capital (money invested in the business) to deal with initial costs. These are the items that are one-time purchases.
- Monthly Expenses – These are the ongoing costs like inventory, utilities, and insurance. Also included in this section is a breakeven point analysis (what the business needs to make to cover costs and show a profit). These numbers can help determine start-up costs and financing options.
- Financing Options – These are the possible sources for the capital to start a business.
- Sales Forecasts – This is an estimate on how much product the business will need to sell to cover expenses, and what can reasonably be sold based on the market research conducted earlier.