Think your creative biz idea packs all the rocket-fueled ingredients necessary for that edge in the market? If your dream business seems to have all the right refinements, then it’s time to take the next step and get your idle idea in motion with a business plan.
A business plan is a written proposal that blueprints the function and goals of your business. It allows you to propose where you see your company in both the present and future, and is critical to:
- Establishing a core plan of action for when your business starts operating.
- Acquiring support and start-up money (if you need it) through loans or investments to get your business on wheels.
The U.S. Small Business Administration estimates that nearly one-third of businesses fail within the first two years. A business plan isn’t a recipe for immediate success, but it is a good way to increase your chances of survival.
Before you start drafting your plan, it’s mandatory that you do your research. You need to know the key factors that will help score you a stand-up business plan:
- WHO is your competition? Know all of their strengths and weaknesses.
- WHAT is your market? Know exactly what market you’re targeting, and forecast the positive side and possible pitfalls.
- WHEN is a good time to enter the market? Know when people are buying or needing products and services (especially if it’s seasonal).
- WHY can you do better than your competition? Know your angle and make it your marketing edge.
- WHERE is your market? Know whether to target local, national, or international with your product or service.
Find a consumer need and fill it with a unique approach. Insomnia Cookies, for example, is a company that offers the convenience factor by providing an alternative to the late-night, greasy snacks most of us wolf down in preparation for exams. Seth Berkowitz began baking cookies to give to his friends, and then started selling them. The business has since grown to 13 locations on college campuses throughout the U.S.
Red Bull, the $2.5 billion international energy drink company, sought to open a market for energy drinks after observing a widespread "energy drink" hype in Asia. With a unique plan, Red Bull quickly grew its own wings and is now energizing people in more than 100 different countries.
There are different types of business plans. As a new business, you will most likely want to start by explaining every step you plan to take on your new business venture. Here’s what you can include:
- THE IDEA: Explain your business structure, the industry at large, your product, and why your business idea will be successful.
- THE PEOPLE: Consider your potential customers and why they will be interested in your business.
- THE MONEY: Discuss how much money you need to start, how much you expect to make (your cash flow), and how much you will need to make to break even.
For more information, check out sba.gov.
Should you need any start-up money, one major use of your completed plan can be in your quest for financing. Investors or lenders will want to know all about your company and why they should lend you their money. Think of your business plan as a form of advertising. It will be used to sell your company (along with lots of help from you, of course).
From management to micromanagement, your business plan can be used in-house to:
- Gauge your company’s progress and projected growth.
- Outline your expenses from the big stuff (staff, office furniture, and computers) down to the nitty-gritty (paperclips, pens, and coffee filters).
- Identify market competition, so that you know which competitors to watch and where to look for newcomers.