Editor's note: This article is excerpted from Rule's Book of Business Plans for Startups , from Entrepreneur Press
For a startup business, creating a business plan is like creating a game plan in sports. You need to scout out all the information to create a winning strategy for the game. While business plans for existing companies may have a special focus, such as setting overall goals, reviewing specific operations, evaluating new products, assessing new technology in the industry, or some other specific purpose, the business plan for a startup company is the blueprint for its formation, its operation, and its success. A business plan exposes a new company's strengths and weaknesses. It reveals ways to capitalize on the strengths and minimize the weaknesses, uncovers every facet of the business that can be developed, and points to the best method for that development. It provides a structure for the company's pursuit of the winner's trophy.
Even though creating a business plan takes time, thought and effort, and may seem like an impediment to getting on with opening or growing your new business, it is imperative in today's competitive business climate for you to have all relative information available and evaluated before opening your doors. With a thoughtfully prepared business plan you will enter the business world prepared, ready to run your business and ready to compete.
Although researching and writing your business plan may seem like a monumental task, with preparation it can be quite painless. As you go through the process, you will develop your knowledge and understanding of your business, improve your chances of success, and diminish your risks of failure as a startup owner.
Prior to writing your business plan, there are several issues you must resolve. It is beyond the scope of this text to cover all of these in depth; however, a basic checklist with a few recommended reference books is provided, so you can explore some of the subjects more thoroughly. As an entrepreneur of a startup company:
- Are you prepared to operate a business?
- Have you already decided upon your product(s) or service(s)?
- Have you investigated other types of businesses? Have you explored the broad economic business sectors: manufacturing, wholesale, retail, service ...? Have you considered other industries within the sector of your choice? Have you thought about what types of businesses are strongest now and for the future?
- Have you checked out franchises? To check out the possibilities and benefits of becoming a franchise outlet owner or franchisor, read Erwin Keup's Franchise Bible and my books, No Money Down: Financing for Franchising and The Franchise Redbook.
- Do you have a location in mind? Have you researched the principles of site selection: physical site needs (address, neighborhood, interior lot, corner lot), cost effectiveness, interior space, exterior space, visibility, traffic volume (which side of the street and times of the day), and accessibility? Are you familiar with the advantages and disadvantages of types of sites, such as freestanding buildings, storefronts, regional malls, and many others? Are you familiar with the principles of lease negotiation? See Luigi Salvaneschi's Location, Location, Location.
- Have you located the necessary business consultants--accountant, attorney, banker, and others? One resource is The Small Business Insider's Guide to Bankers by Suzanne Caplan and Thomas M. Nunnally.
- Do you know your financial position, your credit rating, your investment costs? The author's No Money Down: Financing for Franchising covers these topics in detail for any business, not only franchising.
Before going forward, it is assumed you have done the basic homework for each of the elements above and that:
- You are ready to go into business
- You have your basic business concept
- You have decided on your basic product(s) or service(s)
- You have your location and facility
- You have a business accountant and attorney
- You understand your financial position and your investment costs
While you may have already explored the following business concepts during your startup stage, you will be reconsidering and reevaluating these as you develop your business plan:
- Business objectives
- Mission statement
- Keys to success
- Industry analysis
- Market analysis
- Competitor analysis
- Marketing plan
- Organizational structure
- Financial pro formas
- Break-even analysis
- Financial requirement
Don't be concerned if you aren't familiar with all of these concepts. Writing a business plan for your new business is a straightforward process that you can move through step by step to completion. The whole process can be accomplished in two to four weeks, depending on your business.