Planning helps put you on the right track to avoid potential problems.
written by Harriet Cohen
Business plans may seem scary and daunting to entrepreneurs just starting out, but they needn't be. They are merely a guide or map to help you formulate your purpose and the desired outcomes.
If you enjoy old movies, you may remember the old Judy Garland, Mickey Rooney movies where somebody says, "Hey! We have a barn; let's put on a show!"
Next thing you saw was a full-fledged production with costumes and orchestration. Business plans are the behind-the-scenes transition from the barn to the show or--another way to look at it--would you go on a month-long vacation without planning it? That's why it's a business plan.
In this article I'll describe the outline of a basic plan, which is all you need unless you are going to seek funding. This type of plan helps you clarify your reason for going into business, your purpose, your product, your market and your desired revenue. Most important, it helps you identify areas where you may need assistance and it enables you to think through the process before you start, which can save you money and problems.
There are four key sections in a business plan. This article will explain and offer examples for each one.
- The mission. This section is the key element in your plan. It explains the purpose for starting your business--and no, being rich is not a good purpose, though that can be a byproduct of fulfilling your mission.
In this section, you state what problems your business solves and why you should be the one to do it, including your credentials. It also includes your values and beliefs. The mission portion of my business plan talks about the importance of having a good foundation when starting a business and how I help others achieve that foundation.
Your mission can be several paragraphs long. Really think about all aspects of why you are going into business. Be clear about the benefits you bring to your clients or customers. There's a difference between benefits and features. Features are nice to have, but benefits fill a need. They are based on Maslow's hierarchy of needs, proposed by Abraham Maslow in 1943. They range from survival needs to self-actualization.
Think about commercials you have seen. Benefits save you time or money, but they also make you feel good about yourself and your choices. Benefits address a pain, a fear or concern and help alleviate it; prescription drugs are one example. A terrific commercial that addresses the issue of feeling good about a purchase is the Cadillac ad that asks, "When you turn your car on, does it return the favor?" See how benefits work?
The last part of the mission should express your values, referring to what is important to you. Southwest Airlines values customer service and considers its employees its customers. One of my values is giving the best resources and services to help a business bridge the gap from where it is to where it wants to be.
I also include credibility and integrity in my mission statement; you need to decide what you value. It could be the customer, providing value for the product, giving great service, whatever is important to you and your company. Some of my clients value health and are in the food industry, some value "green" and make sure they are not harming the earth.
When people ask you what you do, your 30-second elevator speech will be drawn from your mission. Mine says I'm a business fertilizer because I help businesses grow and flourish, teaching the basic foundation skills whether a business is starting, maintaining or growing, from business strategic and marketing plans to hiring the best staff and retaining them as well as developing staff so the business can focus on the business it's in.
- Vision. This is the beginning of the strategic initiative that will keep you focused and directed. Where do you see this business in five to 10 years? Will it be licensed or franchised? Will it have a huge staff? How much revenue? How many customers or clients? Imagine your success. This part is only a paragraph and changes--unlike the mission, which remains relatively static--because here we look at direction and desire for what you want to be.
- Target market. This is one of the most crucial sections in the plan. I hate to burst your bubble, but not everyone is going to love your product or service. You have to decide whom your business is directly meant for: ages, gender, economic factors--all of it. Who is the best audience for your product or service? Why would that audience want it? What will it do for them that other, similar products and services don't do? Is yours less expensive? Does it have more options or services?
Once you narrow your target, you'll have to decide how your audience will get its information about your product or service. This enables you to focus your marketing campaign directly on the people or companies that want and need you. This method also saves money because you aren't advertising in a medium your market doesn't use. In today's market, social media such as LinkedIn, Twitter and Facebook are ways to reach larger audiences for free.
- Financials. Relax; it isn't that scary. This is where you decide what you need to start the business. Not all types of businesses need the same amount of capital. However, though service businesses such as coaching and consulting don't need as much startup money, you'll still need six months' worth of money in the bank to cover expenses until clients begin to roll in. Think seriously about what you have, what you might need and how much it will cost.
Will this be a brick-and-mortar business, a home business or a completely online operation? What resources do you have and what do you need? Think about everything--down to the smallest item. Yes, you will probably forget a few things. Make a list of what you have and what you need to purchase. You don't necessarily have to buy new items--check Craigslist, eBay or even consignment stores. For basic business resources, check with friends. Ask what they use and what they can share. Prioritize what you absolutely must have to start and what you can wait to acquire.
Now estimate how much you will make in sales the first year. Be realistic. Ideally, your revenue will be the same or a little higher than your expenses. Make sure you pay yourself; after all, you are your own employee.
Congratulations, you've done it. You now have a basic business plan. I wish you great success in your endeavors.
Harriet Cohen is founder and president of Training Solutions, a consulting firm that helps individuals and organizations achieve their business goals.
Retrieved on 22nd October 2009 from http://www.womenentrepreneur.com/2009/08/create-a-business-plan-in-4-easy-steps.html
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