How To Write A Business Plan

Photo credit: Stephen Poff

It is very important to have direction and goals with any project or new business venture. In the past I have found myself launching a great new business idea with no written plan or solid goals. I quickly discovered that while sometimes this approach works out fine, more often than not it either slows the process of success or eliminates it completely.

It is a well-known idea that when you write your goals down your chance for success increases dramatically. I have experienced this time and time again in my own life. Whether it was fitness goals or business goals I realized my success rate was much higher than previous attempts when I developed a plan to meet my objectives. Creating a business plan falls in line with this idea and offers a new business a greater chance of success.

Another reason for having a written plan for your business is to keep you focused on each task at hand. It is easy to get caught up giving all of your time to only one aspect of your business and forgetting about the other components involved. One example of this may be that you spend all of your time perfecting your online presence (website, social networking interaction, etc.) and forget that you need to be pursuing new clients by networking face to face. A business plan offers a map to follow in pursuit of your new venture that helps to keep you moving forward.

The business planning process can seem overwhelming at first. When I first decided to create a business plan I did a huge amount of research and it got very discouraging very fast. I felt even more discouraged when I looked at example business plans and found they were lengthy, detailed and wordy.

There are a few simple things to keep in mind that can make the process seem more manageable. For example, try to avoid over planning or getting caught up in the details, which may cause you to quit before you’ve gotten started. To help avoid over planning, write a business plan that is easy to read and understand. It is important to plan enough to be ready to take action but not necessary to map out every minute detail. You just need a solid plan that will lay the groundwork for you to get started and help keep you excited about your new venture. Keep in mind that this business plan is for you and is intended to increase your chance for success so keep things simple.

The best way to write a business plan that is easy to read and understand is to create your business plan in an outline form. This form makes the plan easier to navigate so you can quickly locate different sections throughout. Use bullet points whenever possible as long wordy paragraphs can be difficult to follow. With an outline structure most people can expect their business plan to be around 3 to 5 pages.

Below is an example business plan in outline format. This was my first draft for a web design company I started.

Before you get started with the business plan there is one more important step to take. Choose your business name. One of the preliminary steps for a business start up is to choose a name to represent your company. Choosing the right name will greatly increase your chance for success. Consider choosing a name that is descriptive of what your business will accomplish. A descriptive name allows others to immediately identify the purpose of your business. For example, if you are a florist living in Austin, TX, you may come up with the name “Austin Flower Designs”. This name helps the consumer quickly recognize your business services.

However, you may also consider choosing a name for it’s memorable qualities. An example of this might be a company named “Four Eyed Monkey“. This is one of my companies and I chose this because the name itself and the logo of a four-eyed monkey are unique and memorable to those I do business with. This is a good reminder that it is important to consider your overall branding strategy when coming up with your business name. Having a memorable logo to go along with your name may help you have a more successful marketing campaign.

Additional considerations when selecting a name:

• Keep your name short. If it is too long it will be hard to remember. Example: The Flower and Small Gifts Shop on the Hill.
• Avoid abbreviations and acronyms. Example: A flower and small gift shop called F.S.G.S., Inc.

Once you have secured a business name it is time to get started writing the business plan. It may work best if you approach each section by writing a list of your ideas for that section. Later you can go back and narrow down some of the ideas and information. It is important at first to get everything you are thinking written down. Let’s get started.

Your Vision

You need to begin by defining what the vision or purpose for your business is. Your vision is very important because it is what guides your business decisions so make it simple, clear and straightforward. The easiest way to do this is by answering the questions, “How am I going to reach my vision?” and “Why do does my business exist?” Once you have defined your purpose and identified how you are going to achieve it try to imagine what the future for your business might be.

Product or Service

Next, identify what your product or service is. It is important to be very clear in this section. If I am starting a web design company I may just put that my service is web design. But what does that mean? This description needs more detail. Instead I may put, e-commerce websites for small businesses, logo design, and online marketing consulting services. You may notice that even some of those could still include more detail but you get the basic idea, be thorough in your description of products and/or services.

Costs

Defining your costs and profit is one of the most important aspects of a business plan. To find these, three things need to be considered: What costs will I incur to provide my product or service? What will I charge my clients or customers? What will my profit be? These are very important questions because they let you know what to charge customers, help you set your budget and sales goals and determine overall profitability.

The best way to begin analyzing your costs is to write down all the expenses you think you will incur with your product or service. The cost of producing a product or service may vary from one cost to a number of different costs that when added together provide your total cost for that product or service.

Once your costs have been determined you can use this amount as a base to define what you will charge the customer for your product or service.  You may then determine your profit margin by subtracting your costs from the cost to your customer but keep in mind there may be additional costs to consider before you calculate your overall profit. For example, your services may require hiring a support staff, which will add additional costs you must take into account.

Staff and Wages

Hiring employees can make a new business start up more complex, financially and otherwise, but it may be necessary to assure that your business operates smoothly. Before hiring employees there are a few things that should be considered. To begin, don’t hire employees just because you don’t want to do the work. Starting any business is hard work and you have to be ready for that. You must decide whether you really need an employee before you take on that responsibility. In the long run, it may be easier for you to do the work at hand then to hire another employee.

While hiring employees may make your perceived workload easier, you must consider the added emotional responsibility as well. You must manage employees and meet their requested needs. If an employee is having trouble at home, you may become a part of dealing with those problems. You also have to consider that there are added expenses to having employees like wages, insurance, and the need for office space to have a place for the employees to work.

I am in no way saying that employees are bad but try to be realistic about the added responsibility that comes with hiring people.

One alternative to consider is hiring contracted workers or freelancers. In most cases when you hire a contracted worker they can work from their home and act as a separate business or individual. This means that you are not responsible for their taxes, insurance, etc. Another added bonus is that contracted workers in many cases work harder because they want to keep working for you as opposed to an employee who may find it easier to slack off here and there.

If hiring others is unnecessary then just fly solo for now. It is be much easier to hire people out of need than to let someone go when there is no work for them to do.

Budget

You must have a solid financial plan if your business is going to be successful. One of the biggest assets to your financial plan is a budget. In this part of your business plan you need to make a budget for your first year of business. In this section you will need to refer back to the cost section of your business plan. Your budget allows you to organize all of your projected expenses and projected income into one place that is easy to follow and utilize.

Your budget will consist of the following:

• All operating expenses such as office space, Internet service, and phone line
• Equipment and capital expenditures
• Wages for support staff
• Expected sales
• Projected income from all sources

It is very important that you include every expense and source of income you can think of. Remember this business plan is for you so don’t leave something out of your budget because it makes it look less attractive. Include everything because if you want your business to be successful you have to be honest with yourself.

Competition

Having competition is a good thing. When there is competition it means that there is a need. As much as you may like to be the only one out there doing what ever it is you do, most likely that’s never going to be the case. Competition gives you the opportunity to do a better job than someone else, it keeps you on your feet and prevents you from being lazy.

Since there is competition out there you need to know everything you can about it. You will need to research what the competition is offering and how they are marketing it. This will help to assure that your product or service is better than your competitor’s.

It may feel like you are wasting time doing research when all you want to do is get started with your business but finding out about your competition will give you a better chance at success. Make it fun. Think of yourself as an undercover spy trying to discover the inner workings of your competition. Call your competitor and find out what their prices are and request they send you their product brochure or any other materials they may have. The more information you have the easier it will be for you to successfully compete.

Writing a business plan will take you some time but it will pay off in the end, I promise. Just remember that even though you have a plan and all your goals are written down none of it means anything if you don’t take action. Take action. When you run into roadblocks, and you will trust me, push through them and keep going. Persistence will pay off in the end.

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