by Lori Prosio
Writing a business plan can seem like a daunting task. But if you take it step by step, you will find it isn’t really that complicated.
You may ask yourself, “Why do I need a business plan?” Writing a business plan allows you to think more objectively about your product or service. It can give you a more realistic idea of what is required in terms of time, money and resources needed to develop and maintain a successful business. It will help you stay focused on your long-term business goals, and set measurable expectations for business partners, employees or investors.
Here are some key points to consider:
Are you cut out for it? — Before you get started, it’s a good plan to evaluate if you want to be a business owner. Assess the pros and cons, family plans, and whether you truly want to take a risk and manage all the problems and stress that come with owning your own business.
There are many positive aspects of being a business owner, but you should take a long, hard look at all the pros and cons before you put yourself out there.
I would suggest also looking closely at labor and employment laws, insurance requirements, healthcare requirements, and consider other business laws and essentials before you decide to hang out your own shingle.
You should seek counsel from a local business or employers association. It can help you identify all of the things you need to know and consider as a business owner so, at a minimum, you are prepared for the journey you are about to take.
Don’t reinvent the wheel — There is no need to create a business plan from scratch. You can find many templates and software programs that can help guide you. The Small Business Administration is an excellent resource for small and new business owners. It has a template here to help you get started.
You also can do some research on sample business plans and find one that appeals to you as a starting point. As you customize it, realize that most business plans project your required resources, efforts, needs, goals and plans for the next three-to-five years. So be ready to think that far ahead when you sit down to start yours.
Presentation matters — Make sure you use clear and concise language that is easy to understand. Use industry jargon very sparingly. Proofread the document. And while it is important that your business plan be bound, printed and professional in presentation, remember the longest and most graphically appealing business plan isn’t necessarily the best.
The best plans anticipate and answer every question an investor could possibly ask, and clearly paints the picture of your business and demonstrates how and why it will be successful. Your plan should clearly identify resources available and those still needed, document anticipated milestones and measures of success, consider competitive advantages and threats, and provide a road map for where you are now, where you’ll be in three-to-five years, and how you plan to get there.
Do your research — You should spend a significant amount of time researching your customers as well as your competition. You can use secondary research first by accessing free resources online or at your public library, and then supplement any areas with primary research which can be conducted by you or a hired consulting firm.
Make sure you do a thorough analysis of the industry and the current market; you may even find it beneficial to interview a few business owners in related fields to get a better understanding of any potential opportunities or threats.
Identify your niche — What makes you unique? Why would people want to buy from or work with you? Probably one of the biggest mistakes you can make in business is trying to be everything to everyone.
Take some time through research and self-discovery to learn what you are really good at and what you would like to focus on for your business. It will be much easier to manage and market to a smaller group of prospective buyers or customers than try to market to the world at large. This will also help you identify marketing goals, set budgets, determine messages and develop a marketing program to help you brand your business and increase your sales.
Be realistic — Yes, we would all like to quadruple our sales in a three-month period, but is this realistic given your product or service, the market, your time frame and your customer base? Make sure income and expenses are realistic and set achievable goals.
Realize you may not see profits for some time. In fact, you should plan to reinvest any profit you do make back into your business to the extent financially feasible for you.
Don’t let the dust settle — A business plan is never done. You should reference it regularly to monitor your progress and update it frequently to keep you on track. Use it as a guide for where you want to go, how to get there — and to document your accomplishments. It will help you keep your eye on the prize, while making refinements to your business and marketing plans to lead to greater success down the line.
This article originally appeared in the December 14, 2012 edition of the Sacramento Business Journal.