How to write a business plan
Launching a new business can be a challenge, even for professionals who’ve done it before. Having a solid business plan is a key first step.
“A lot of entrepreneurs start with a great idea and a lot of passion,” says Kathryn Adair, MA, an instructor in the entrepreneurship program at the University of Phoenix Utah Campus. “But they didn’t run the numbers first, and that can lead to chaos and failure.”
A smart business plan starts with a market analysis, says Adair, president of Adair and Mersereau, a Utah-based consulting firm. Questions you should ask, she says, include: Who are your customers? How big is the market? and Who is your competition? “A good market analysis will answer those questions and provide your framework for moving forward,” she emphasizes.
The analysis should describe where your initial customers will come from — workers and residents from the neighborhood, for example — as well as the location of your business: Is it primarily residential? Are you in a business complex?
You’ll need an executive summary that covers basic information about the business: the type of product or service it provides, the current state of the particular industry it’s in and your company’s plans. This is also where you’ll sum up your professional experience and link that to why you think your business will succeed.
Next is a more detailed description of the product or service you’re offering. “Be specific and descriptive,” Adair stresses. “Disneyland claims to be selling happiness, but they are really selling seats on amusement park rides. Focus on the reality of your product and not the concept.” She suggests outlining how your product will be used, how often and how it might benefit consumers.
Once you’ve defined your product, consider your marketing strategy. Explain in detail how you will present your product or service to potential clients. Some issues to consider, Adair notes, are whether you’ll develop a website, use social media or rely on print ads in local publications to get the word out about your business.
A description of the organization behind your company is a must, she adds, because investors and bankers will want to know how your company is set up and who will run it. “Document your company’s organization so that potential backers will be confident in your team and can see that others are already invested in your long-term plan,” she says.
Substantiating your startup finances and short- and long-term sales projections are other good ideas, according to Adair. Include fixed and variable costs and when you anticipate turning a profit.
She also recommends checking the website of SCORE, a not-for-profit mentoring service for small-business owners. “They have some really great templates and business plans that offer good guidelines to entrepreneurs,” she points out.
Above all, Adair says, do your homework. “Research, research, research your industry,” she stresses. “Read up on similar businesses in and out of your area, search the Internet, spend time talking to others in the same field. The last thing you want to do is get out there and make the same mistakes that have already been made by others.”