Step Three: Plan Things
Out
Date Added: June 3rd, 2002
By Chris Stallman
| E-mail
A business
plan is a very useful tool when starting a business. However, a
lot of people skip this step. When I started my first business,
I skipped it. But, looking back, I really wish I would have taken
the time to write one. Luckily, I learned my lesson and I wrote
one for my second business, Stallman
Internet Solutions.
Okay, enough about me...let's focus on your idea
and plans. It's good to have your ideas running freely in your
head but it's also important to put something "solid"
down on paper. When you do this, it's called "writing a
business plan".
What's a business plan
and why should I make one?
As its
name suggests, a business plan is pretty much just a plan for your
business. It takes everything you've thought about in the last
few steps and ties them together into a few-page report. This plan
is basically the outline of what your business is, how you will
make money, how you will market it, and some financial projections.
A business plan has many benefits. If you ever find
yourself in a hard situation, reflect back to your business plan
and you might find an idea that you had forgotten about. It also
helps you find investors. By having a copy of your business plan,
they can evaluate your idea and decide if they want to invest their
money in it. And if you ever change your idea, you can just go back
and make a few changes to the business plan.
What should I include in the
business plan?
Simply put, you should include everything. But I know
that will leave some of you a little puzzled so here are a few common
sections that most business plans include. Granted, you don't
need to include all of these but I encourage you to write down as
many of your ideas as possible. Here are the various sections:
The 30-second pitch
- No matter how complicated your business is, you should be able
to explain to someone what your business does in under thirty seconds.
After all, if you can't explain what you do to an ordinary person,
it'll make running the business very difficult. In this section
of the business plan, right down a short description of what you're
trying to do and make sure it won't take the reader a long time
to go through or leave them confused.
Business Concept - This
is a lot like the previous section but feel free to go into more
detail about what you're doing.
Marketing Information - This
is where you'll explain who you're trying to sell your services
to and give a rough outline of how you expect to do this. Will you
advertise or depend on word of mouth? Will you be involved with
a lot of community-oriented promotions? Include all of your ideas
here.
Competition -
Although you don't want any competition, pretty much every business
faces it. This is where you'll decide who your competition is
and why your business is better than theirs. Do you offer something
unique? Are your prices cheaper?
Financials
- This is the number-crunching part. Figure out how much your product
or service will cost and come up with a rough estimate of how many
people you think will pay for it. Figure out what kind of costs
you will need to get things started and running. Include everything
imaginable from office supplies to postage stamps. And when you're
estimating how much you expect to make, be conservative. If you
think you can make $10,000 in one year, write down $5,000. That
way if you end up making $7,500, you'll still be above your
expectations. This also prevents you from being too optimistic and
spending too much money.
As you're writing all of this down, you'll
likely come up with more ideas than you had when you started. And
if you decide later on that you want to change the business model,
be sure to go back and make some changes to your business plan so
that it stays fresh and up to date. You'll be glad you did this
once things are up and running.
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