Value in a Business Plan
A new business should always invest in a solid business plan while an existing business should update their business plan every few years to capture new opportunities that surface as the economy shifts and trends change.
Before you form your new business officially by filing paperwork with the state or local government, take some time to create a business plan. A comprehensive business plan holds high-level of value for more than simply asking for funding. When you take time to create your business plan for your new company, your mind will be forced to answer tough questions as you reflect back to your original thought process. This process will help you identify any missed opportunities that should be captured in your plan.
The purpose of this exercise is to create a comprehensive business plan. The end product will be more than putting down the name of your business, where you will be located, and who will run the business. Many scaled-down plans run far short of being helpful. From this point forward, think of your business as being on-going forever. You, at some time in the future will not be able to continue with the business operations; therefore, your plan must be written in a way to allow a successor to lead your business using your plan as the only guide.
The first area of your business plan to review is the type of legal structure that you want to form. Your choices are: A corporation, a partnership, or a sole proprietorship. The best protection will come from forming a corporation. The top three reasons are: you have the ability to protect your personal finance, you have the ability to work towards creating a strong brand with logo's protected by trademarks, and lastly, if you have partners, any one person can sell their shares if they decide to no-longer retain any ownership rights to the corporation.
Next, you will want to gather information about each of the owners that will be running the business. You are looking at their education, professional experience, and any previous businesses that they held ownership of in the past. You will want to build-up why each of the owners are a good fit together. In addition, what business operations will they be responsible for.
As you move forward, your plan must capture the "how" you are going to make money. Are you manufacturing a product? Will you sell a service? Will you match a product with a service? What are your price points? For example, what does it cost you to make your product or complete the services that you sell? How much are you looking to charge for your product or service? What is your margin? Do you have any upsells that help create extra profit for your business? You will want to spend a great deal of time in this section. Your business will need to be setup to mimic your inputs from here.
From here, your next area of importance is going to be your sales and marketing efforts. How are you going to market your product / service? How much will it cost you to run a campaign? Do you currently have funding for a years worth of marketing? What is your plan to market your business for the next five years? What salesforce will you have in place? For example, will you hire inside sales reps or outside sales reps? Perhaps your business should consider having a mix of inside and outside reps.
Now the fun begins. It is time to discuss your competition. Who are your competitors? Where are they located? How are they selling their products / services? What pricing are they offering? How does your company stand against your top three competitors? You will need to perform a SWOT analysis. Your results will be included in this section, including how you are strategizing to capture market share from the competition.
Once you complete your business plan, it is time to hire a professional to review your ideas. There will always be room for improvement. Once your business is up and running, you will need to assess your business strategy yearly. Keep in mind that the economy, the laws, and your competitors are always changing. Furthermore, in order to continue to hold relevance in the market you will need to stay current with trends; which means, what consumers are willing to spend their income on purchasing, and how they purchase.
Your new business should be a very exciting time for you. Congratulations on the decision to become your own boss. Firstly, create your business plan, or, hire a professional to create a plan for you. Follow your business plan - do not lose sight of your goals. And remember, each year you will want to prepare for the future by speaking with a consultant to help you strategize.