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Every business needs a business plan. A business plan gives you guidance and a road map for your future. Without a business plan, you have no way to succeed. Think of it like this: a business plan ties your vision to reality and “grounds you.” Without a plan, you’ll have a grand vision to achieve great things with no actual action steps to achieve that greatness.
To create a strong plan, you need several components:
An Executive Summary
An executive summary details the business name, the location, and a basic outline of the products and services you offer. It will also outline the purpose of your company. This is sometimes written last, but it’s actually best to write the purpose first. Your business purpose is what will drive everything else. It’s the most important statement you can make.
For example, Steve Jobs focused Apple’s purpose on creating the best personal computers in the world. Google’s purpose is “To organize the world’s information and make it universally accessible and useful.” When Henry Ford created his famous motor company, his purpose for it was “To democratize the automobile.” These companies all became some of the most successful companies in the world. Without an exception, every successful company in history has had one thing in common: a purpose. The more clear and defined the purpose, the more successful the company has been.
A Company Description
Your company’s description details the history of your business, the legal status of it (i.e. sole proprietorship or corporation, and your start-up plans. You can even include start up capital like how much money you’ve invested vs how much you’ve obtained from outside sources.
Product or Service Offerings
You should at least outline your product and service offerings. Ideally, you’ll go into as much detail about these offerings as you can. Since your products and services are how you’ll make money, it’s a good idea to really to flesh out what it is you do as a company. For example, if you’re running a nightclub or bar, then you’d want to describe your company’s location, what the venue has to offer, the types of drinks you sell, any music or live bands you’ll be hosting, and what the atmosphere is going to be like in your establishment. Will you hire bartenders that make specialty drinks? Will they be trained to make anything “from scratch?” Are you planning on opening more of a brewery/bar that will sell microbrews? What kind of menu will you offer? Will you offer discounts? Will you offer any special promotions? All of this should be detailed in your “products and services” section.
You want to include a market analysis in your business plan. The market analysis focuses on your target market and how you will serve them. Outline who your market is, including any geographically significant details if necessary, and explain who is most likely to use your products or services. For example, a nightclub might appeal mostly to 20-30 year old individuals who attend college. A microbrewery might appeal more to middle-aged folks. A winery might appeal to a highly educated crowd that is also wealthy (or financially well off, at least enough to purchase your wine by the case). Don’t forget to include any seasonal challenges you might face as well as best times of the year for sales and why.
Business Management Structure
Outline who runs the company and who all of the key employees are. Include names of corporate officers as well as human resources personnel that are instrumental to the operation of your company. Also include a reason as to why these people are important.
Company Goals For Marketing and Sales
This is where you will outline your marketing and sales strategy. Since every business is different, every sales strategy will depend on your market. Seniors need to be approached differently than college students. Let your market drive your marketing. You should outline how much you plan to spend, what types of marketing you plan on using, a detailed analysis of your sales team and processes as well as the expected length of your sales cycle.
Projected earnings is where most investors and business owners get excited. With your marketing and sales process all laid out, you should be able to project where your sales will go. Write down what you think will happen over the next three months, six, months, and year. Make loose projections for up to three years. Don’t worry too much about specific details for any projections beyond 12 months.
A good business plan should also be integrated with your company’s accounting and bookkeeping. This will help keep you on track and verify your projections. If you see a negative trend developing, a divergence between your company’s books and your business plan projections, you can spot it quickly and make necessary adjustments to your plan. Keep in mind that, regardless of what the plan says, you must always check it against what is actually happening in your company.
Guest post contributed by Charles Ronson. Charles is a freelance business writer. He has extensive experience in consulting with small to medium sized businesses. His articles appear on various small business blogs. Find out more about Wonga Business.