Many individuals have great ideas for businesses but can never get their business off the ground. The reason? No business plan.
This essential document is your blueprint for success, a road map that provides business model details and explains how it will be successful. This plan will be a key factor in obtaining the necessary financing for your growing business as well.
A business plan lays out the goals for your business and how they can be accomplished. Plus, it offers a general analysis of the market and defines a strategy for how your business will be able to thrive in that market.
Here are some key aspects that provide the backbone to a solid business plan:
n Executive summary — The executive summary is Step 1 in any business plan — a well-focused summary of what the business is setting out to accomplish and how it will be done.
An executive summary should begin with an explanation of your idea for a business, what is unique about it and why you feel it will be successful. It also should contain a brief description of the market and explain where the type of business you’re proposing will fit in that market.
The summary should answer the question of why you want to start the business and why you and your management team are capable of succeeding.
n Market analysis — Who is your competition? Who are your potential clients or customers and where will they come from? Are they being underserved by your competition?
This section should define very clearly where the business opportunity is and will help an investor understand the potential risks and gains that one might expect from investing in your company.
Throughout your business plan, be clear and concise. Don’t just state your goals; support them with the “how to” details.
Instead of stating that you hope to move 1,000 widgets a month, explain how you will move those units, who will buy them and what will be gained from the sale.
If you are giving your business plan to possible investors or lenders, they will want to see all the details so they can make an informed decision about whether to fund your business.
n Marketing plan — You don’t need to nail down every last detail, but you should have a general idea of how you will market your company and how much you are willing to commit to marketing.
If you are going to outsource your marketing, it may save precious time and add expertise to the plan by having a trusted marketing firm develop a preliminary marketing plan for you.
Whoever develops the plan, it is critical that you think about your plan from every possible angle. It’s easy to talk about all the great things that your business will accomplish, but make sure to examine the challenges your business will face and, most importantly, how you plan to deal with them.
n Conclusion — You have made your business case, you have analyzed the market, and you have outlined your strategy. Now, your business plan conclusion should be a final summary of how much capital you need to begin the business, where you expect that capital to come from and how long it will be before you can expect to see profits.
If possible, you should have a preliminary conversation with investors or a financial institution prior to putting together your plan. That way, you'll have an idea of your borrowing potential before you dive headfirst into creating your business plan.
Small businesses drive more than 70 percent of the economy today. Developing a solid business plan will help your business succeed well into the future.
Jeff York is president and chief executive officer of CoastHills Federal Credit Union. He has 25 years experience in the financial services industry, 23 with credit unions, and has worked at CoastHills for four years. He can be reached at email@example.com or 733-7600.