Elements of a Business Plan

A business plan is something a business owner must have, not only for funding or investor purposes, but also for him or herself. A business plan will give you direction and guidance along the way. In order for all other business operations, including marketing, sales, the preparation of income statements and budgets to flow and make sense, a business plan must exist. Proper business decisions can be made with a solid business plan in place. A business plan is the source from which all business activities flow.

Missions and VisionsA mission statement is key. Within one short paragraph you ought to be able to identify your business’ function. The vision(s) will explain your underlying personal hopes for accomplishing the mission.

A sample mission for a tailoring business might be: To provide the best in alterations for the larger professional man or woman who has neither the time nor the money to purchase tailored items.

The vision might be: To assist the larger man or woman in looking as presentable, professional, and fashionable as their smaller friends, with the comfort typically not associated with “big and tall” clothing.

A good business plan, regardless of the type of business you are in, includes the business’ main goals, purpose (mission), and several analyses.

SWOT TeamThe first analysis is the SWOT (strengths, weaknesses, opportunities and threats) analysis. Identify why you feel you will get business, and what stands in your way in terms of competition, unlearned skills, and the environment. By environment, I am referring to laws such as zoning, taxation, or safety guidelines.

Sales ForecastYou know what your goals are. Now, tell people how you will sell your product or service. Prepare an estimate of the sales you feel you will have. If you are an expert in the field, consider your knowledge. Otherwise, obtain information from competitors if possible, or those you know. If you want to know how many toothbrushes you will sell, ask people who buy them. Ask them how often and what types they purchase. Befriend a storeowner who deals with products similar to yours. Organizations such as the Chamber of Commerce or Small Business Association (SBA) enable you to network. Obtain the average sales information over a certain period of time. Write in the understanding that your new business will not be as successful within the first year. Another typical method of forecasting sales is to conduct customer surveys.

The Money: Financial Analysis with Projected Income Statement SampleProvide an estimate of your income and expenses with as much detail as necessary without going overboard. In income, include your gross earnings. Under expenses,

include rent, utility payments, taxes, cost of materials, salaries, insurance, or membership fees.

Break-EvenAnother analysis that is necessary is the break-even analysis. This is conducted via research, including Internet research, surveys, and mailings. Identify the point at which you need to make enough to break even, considering your income but also your expenses. This will be difficult if your business is new and you have no precedent, but do your homework and use best guesses.

How Will You Get the Word Out? Marketing Analysis: Marketing planYou have identified your competition. Now you must state exactly why they are your competitors. What do other businesses have that you do not? Can you get in line with them? Is your product or service better? If so, how? What do you do differently, and what are your offerings exactly? Will you manufacture toothpaste like thousands of other companies, and if so, what is special about yours? What will make customers flock to the stores to buy your toothpaste?

Create a brand for your company. A brand is a name with which at some point hopefully customers will identify, like Xerox and Crest.

Other vital points in the business plan include:

FinancingAre you self-financing, receiving grants or loans, or monies from investors? That should be mentioned briefly, as well as whether you seek financing. Financial institutions may wish to see your business plan.

Operational (Procedural)How will your business get the product or service out the door? Include a brief statement.

PricingExplain briefly what your pricing structure will be.

VendorsIf you will be utilizing outside contractors, mention who and why, and how frequently.

ResumeBusiness picture. Identify the key players and their experience, background and education.

When It’s All Over, It StartsAfter the plan is completed, someone on the outside looking in should review it. Select someone with some experience but also someone will be unafraid to be candid. You may be able to network with someone with SCORE (Service Corps Of Retired Executives) or a local group that assists new business start-ups.

Your success depends on how all business goals (for every department or key area) are connected with the business plan and mission, and how often a review of the business plans is performed. A new business should review its plan monthly or quarterly. Make necessary modifications. Any employees should be made aware of the plan and their part in it. Hopefully they will buy into the goals. Tie their performance appraisals in with your business plan’s goals.

You should also invest time in preparing separate marketing, sales, and operational plans if your business details require more explanation than offered in the main plan.