Setting Up a Sound Business Plan

Business plans can be one of the most effective tools for the small business owner who is starting, growing and even managing a business. The business plan can have multiple uses and advantages. Provided is a list of important reasons to create a business plan:

  • The business plan is simply a must have for small businesses
  • Helps make important business decisions
  • Offer a reality check
  • Create new ideas
  • Creates a plan of action

Writing an effective business plan is time consuming and enough time and thought should be given to successfully fund, manage and even successfully exit a business. To be successful and taken seriously by investors, your business plan must be clear, concise and must be able to describe what, where, how and why customers will want to buy from you.

Let’s get started by laying out the diagram of a successful business plan.

Executive Summary:

The executive summary will be a summary of the key points of the business plan.

Business Description:

Provide an overview about your business idea, concept/s, products and or services, etc.

Value Proposition

This section outlines what makes your business idea/concept/service novel (better than everyone else’s). This is not about price since you may have difficulty defending this to potential investors.

Industry Analysis

This section will describe what the industry looks like (an overview), trends, what do customers purchase, eat, look like, demographics, etc. The more details you provide the better.

Competition

Who are your competitors? What market share do they have? Even if there is no competition, provide competition that is close to your business.

Marketing Strategies

How will your products and or services go into the market place? You have to think about non-conventional marketing (Note: this is critical) methods that are cheaper than traditional marketing methods (E.g. T.V, radio, print) and have higher impact.

Barriers of Entry

What will stop you from entering the desired market? How will you overcome the barriers of entry? How will you set up your own barriers of entry for other potential entrants into the marketplace?

Distribution Channel

How will your products and or services be entered into the market?

Team Summary

This section often many times is the most important part of the business plan as potential investors want to see who else believes in your idea. Also, potential investors want to see the experience your team possesses in various areas of your business (E.g. technical, business, commercialization, etc.)

SWOT Analysis

SWOT = Strengths / Weaknesses / Opportunities / Threats SWOT deals with the conditions in which your products and or services operate. Strength and Weaknesses are internal (team, company, products/services) Opportunities and Threats are external (market place, trends)

Financial Analysis

All financial aspects of your products and or services.(cash flows, income statements, balance sheet, start up income required). Note: spend plenty of time here. You must be able to justify any assumptions

Critical Success Factors

What needs to be achieved that will enhance your chances of success? Also, insert the possibilities of the chances for success happening.

Exit strategies

Describe how you and you investor, if any, will exit out of the project if you want to and make an excellent return or move on to your new “BIG” idea.

Future Developments

This section describes any future plans for your products and or services.

Appendix

Add any additional information here (Quotes, contracts, statistics, etc.)

There are many different idea and practices in writing a business plan. It does seem like a daunting task but it does not have to be. There are many online resources at your disposal including the U.S. Small Business Administration that will help you to get started or you can use business plan software that will guide you step by step in your endeavor. It will also be good idea to have an accountant help with the financials. It can cost you an up front cost but the benefits outweigh the up front cost accrued. Armed with this information, you are now ready to get started writing your new business plan. Good luck and be prosperous in your new endeavors.