Writing a business plan
The following is provided by the Small Business Administration (SBA). http://www.sba.gov
The objectives are to:
- Help you understand the importance and role of the business plan;
- Describe the components and types of information to include in the business plan; and
- Identify important sources where you can get help in developing a business plan.
Introduction
Any worthwhile endeavor requires planning. Thinking through and writing up a business plan will help you to chart a steady course for your new business.
If you don't know where you are going, you will end up somewhere else.
The business plan is a written document that clearly defines the goals of a business and outlines the methods for achieving them.
It serves as your company's roadmap.
A business plan:
- Acts as the management and financial blueprint for a business start-up and profitable operation of a business venture.
- Explains specifically how a business will function and details how a business will be capitalized, managed, and marketed.
Business Description
In this section of your business plan, you should provide a detailed description of your business.
In describing your business, an excellent question to ask yourself is: "What business am I in?" Describe your products, services, and market. Be sure to include a thorough description of what makes your business unique.
The description of your business should clearly identify goals and objectives. It should clarify why you are, or why you want to be, in business.
Products and Services
In this section of your plan, describe what you intend to sell, what it does, why buying it will benefit the customer, and what makes it unique or special.
Try to describe the benefits of your goods and services from your customer's perspective. Successful business owners endeavor to understand what their customers want or expect from them.
Understanding the customer is most important in winning customer satisfaction and in building profits.
Sales and Marketing
One key to successful selling is to know your customers - their likes, dislikes, needs, and expectations. By identifying these factors, you can develop a marketing strategy that will allow you to understand and fulfill their needs.
Know your competition. Consider their advertising and pricing strategies. If you understand why your competitors succeed, you can better position yourself to compete with them.
Plan your pricing strategy. Whether you price above or below your competition, first establish a policy. Then you can monitor prices and operating costs and adjust to ensure profitability.
Operating Requirements
In this section of your business plan, explain how the business will be managed on a day-to-day basis. Discuss hiring and personnel policies.
Discuss insurance, lease or rent agreements, legal regulations, and other operating requirements of doing business.
Account for any equipment necessary to produce your products or services. Describe the production process and delivery of those products and services.
Financial Management
Sound financial management is one of the best ways for your business to remain profitable and solvent.
To effectively manage your finances, plan a sound, realistic budget by determining the actual amount of money needed to open your business (start-up costs) and the amount needed to keep it open (operating costs).
In this section of your business plan, you need to prepare a sales forecast, cash flow projections, projected income statements, a break-even analysis, and a balance sheet.
Unless you are thoroughly familiar with financial statements, get help in preparing your cash flow and income statements and your balance sheet. Your aim is to understand the financial tools well enough to gain their benefits.
Your accountant can help you to accomplish this goal.
Management Profile
The most important asset your business has is its people.
It is important to identify the skills you need as well as those you possess, for any skills you lack will have to be hired.
This section of your business plan identifies the owners and key employees. It discusses the skills and experience they bring to the business.
Check Your Understanding
Now that you have seen all of the components of the business plan, let's check your understanding. You will be presented with a series of multiple choice questions.
Good luck!
Why is a business plan important?
A. It is required by your bank.
B. It provides direction and focus for the business.
C. It is required to apply for an SBA Guaranteed Loan.
D. It acts as a blueprint for the business.
E. All of the above.
The Business Description section should answer the question:
A. Who is my competition?
B. How will my business be managed?
C. What business am I in?
D. What are my operating expenses?
Becoming aware of the benefits of your goods and/or services from the customer's perspective helps to build:
A. Company description
B. Customer loyalty
C. A good product price
D. Sound financial management
Identifying your customers and their likes, dislikes, and expectations allows you to:
A. Match your competition
B. Operate your business more efficiently
C. Anticipate business expenses
D. Understand and fulfill customers' needs
The following should be discussed in the Operating Requirements section:
A. Insurance, lease or rent agreements and legal regulations
B. A complete description of your products and services
C. Your pricing strategy
D. The owners and key employees and their skills and experience
Financial Statements are very helpful for the new business owner because:
A. They help to employ accountants
B. Sound financial management is one of the best ways to remain solvent
C. They make it possible to better define your product or service
D. They help to determine employee policies
Which section identifies the owners and key employees, then discusses the skills and experience that they bring to the business?
A. Management Profile
B. Operating Requirements
C. Products and Services
D. Business Description
Congratulations!
You have now completed the course on writing a business plan. Remember, if you don't plan where you are going, you will end up somewhere else.