Q: I know I need to put together a business plan--at least that's what I keep hearing. Where do I start?
A: Just knowing you need to write a business plan puts you a step ahead of many other business owners. A business plan can help convey your business idea to potential investors, attract new employees or bring in new business. Even if you don't need one for these purposes, it always helps to have something in writing. If you've got a new business idea, writing a plan can help you find out just how feasible it is. And even if your resources are coming from your own pocket or from family or friends, a business plan will allow you to track where those resources are going and gauge your progress throughout your life as a business owner.
So what is a business plan exactly? Basically it's a written description of the future of your business--what you plan to do and how. Try to stick mainly to facts, projections and realistic expectations. The size and content of your business plan can vary greatly depending on the nature of your business and the purpose of your plan. It doesn't have to be long and complex--in fact, it's best to just capture the essentials: what your business will do and why and how it will succeed. But here are six elements that should appear in just about every good business plan:
2. Your strategy: Choose a strategy to guide your future business decisions, and explain how you'll use this strategy. Will you try to offer your product or service at the lowest price? Differentiate yourself from your competitors? Fill a particular niche?
3. Your products and services: Describe your product or service and its competitive advantage--whatever makes it different from and better than the competition's.
4. Your market: Decide what customers you'll be aiming for, then try to understand what they buy now and why so that you can plan ways to attract them to buy your product or service.
5. Your background: Describe yourself, key employees and anyone who's working with you as well as any experiences you've had that particularly qualify you to run your business.
6. Your financing needs: Assess how much you will spend in starting and growing your business and how much you will make. Then--especially if you are writing your plan to get investors--explain how much money you need and what you need it for.
Writing a business plan can seem intimidating. Focus on these six areas, however, and with some work, you can create a business plan that will help you start and grow your business wisely.