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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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