Archive for May, 2011
How to Prepare a Business Plan
If you’re about to start a business (or approach a financial institution for funding to expand your existing business), then you must have a business plan. Your plan allows you to set your goals, assess your strengths and address your weaknesses.
You wouldn’t set out on a journey not knowing where you were going, yet many people establish a business with no real concept of what they want to achieve or how they’ll achieve it.
The outline below shows what you need to include in your business plan; use it to gather the appropriate information so that you get your business off to the best start.
EXECUTIVE SUMMARY
Quote (about your vision for the business)
What already exists
The niche — as you see it and benefits your business will bring
Type of business proposed — benefits you will bring to the market niche
Overall financial goals — anticipated sales and profits
Funds required to start up business
BUSINESS PROFILE
Business name
Principals
Description of business:
o what it aims to do
o its target market
Vision — ultimate goals
Mission — value, service you’ll offer
Competitive advantage you have — e.g. flexibility, able to draw on wide base of talents, connections in the industry etc.
SWOT analysis [Strengths Weaknesses Opportunities Threats](Be honest with these, but only put in threats, weaknesses that you know you can meet and overcome successfully)
Objectives:
o at the end of the first 12 months of operation
o after 12 months
PRODUCT AND MARKET ANALYSIS
Product / Service — description of what you’re offering
Features
Benefits
Price structure
Industry description and outlook
Market demand — percentage of market you think you can capture; competition share you think you can take etc.
OPERATING PLAN
Resource requirements:
o what you need in order to operate
o what this will cost
List items and specify prices (tables etc)
MANAGEMENT PLAN
Manning levels:
o details of staff required
o training needed
Experience of managers and their skills
MARKETING PLAN
Divide this into:
Internal – how you’ll win repeat customers and referrals
External – how you’ll get new customers
Impact – how you’ll target specific groups
Detail how you’ll go about targeting and selling to each group e.g.
Service levels
Vouchers
Hand-outs
Music
Decor
Entertainment
Special add-ons
Etc.
Publicity and direct approaches you’ll make (specify targets e.g. music schools etc)
Promotion (e.g. freebies, discounts, buy one get one free, every 6th something free, charity performances, openings etc)
The actual product / service you’re selling
FINANCIAL PLAN
Details:
o Projected sales
o Projected costs
o Projected profits
Give SPECIFIC details e.g. break down into gross profits, overheads, net profits etc.
ACTION PLAN
Use table to show:
o Activities to be carried out
o When these will be done
o Who will do each
Give a chronological sequence of action to show how you plan to start and develop the business.
Provide plenty of graphs (use different styles), tables, facts and figures.
Get info from Bureau of Statistics on demography, socio-economic groups, age etc etc.
Have AN appendix and include any extra details (for example: newspaper cuttings about bands bemoaning the fact that they can’t get their CDs cut etc)
7 Important Steps For Preparing a Business Plan
One of the most pivotal aspects of starting a new business is preparing a business plan, yet the importance of it is very often mistakenly overlooked, especially by a home business newbie. A business plan format comprises of seven main sections, which is used to spot loopholes in the planning process and to showcase a company’s money-making potential in order to lure investors to it.
The first of the seven essential steps in preparing a business plan starts with an executive summary, which is basically about what you, as a home business owner, want and desire. This is the statement of purpose for your business so keep it short and do not beat around the bush. The best way is to keep it within half a page to one page long. Next is the business description of your small home based business opportunity. A home business owner should start by briefly describing the industry, including any new developments which will benefit or negatively affect your business.
In this section, you should describe your home business venture and explain how you will profit from it. This should include information on the legal form and structure of your business, as well as setting a marketing plan including advertising and promotions. The third portion of the seven steps to write a business plan is to assess the market environment for your business. This includes defining your market, projecting market share, positioning your business, determining pricing, creating a promotion plan and also making a financial projection. All the data which you garner from research will help you to determine if the profit projection for your business will be a positive one.
The fourth step in this process is to perform a competitive analysis which is used to determine your competitors’ strengths and weaknesses. When you analyze your competitors in the same market, then you will be able to exploit their weaknesses within your product development cycle and also utilize marketing plan examples which will give you a unique advantage. You will also need to create a design and development plan for your home business venture which will give investors information on the product’s design, and also monitor the product’s development within the production, marketing and organizational context.
Another crucial step is to prepare an operations and management plan in order to detail how the business operates on a daily basis. The organizational structure of your business is important as it forms the platform from which operating costs can be estimated. For instance, you will need to determine labor costs, overhead expenses, costs of goods sold and also determine the amount of money you require to continue your operations. The last step in this process is relating to financial statements, consisting of income statement, cash flow statement and of course the balance sheet. You should always include these information at the back of the business plan.
Hopefully these steps will guide home business owners on how to create a business plan. You should remember not to be too optimistic when stating your sales and profit projections. Most importantly, when you are preparing a business plan, you should be flexible and able to accommodate changes in the industry.