HOW SUCCESSFUL BUSINESS PLAN FOR STARTUP
BUSINESS
The business
plan consists of a narrative and several financial worksheets. The
narrative template is the body of the business plan. It contains more than 150 questions divided into several sections.
Work through the sections in any order that you like, except for
the Executive
Summary, which should be done last. Skip any questions that do not apply
to your type of business. When
you are finished writing your first draft, you’ll have a collection of small essays on the various topics of the
business plan. Then you’ll want to
edit them into a smooth
flowing narrative.
The real value of creating a business plan is
not in having the finished product
in hand; rather, the value lies in
the process of researching and
thinking about your business in a
systematic way. The act of planning
helps you to think things through
thoroughly,
study and research if you are not sure of the facts, and look at your ideas
critically. It takes time now, but avoids costly, perhaps disastrous, mistakes later.
This business
plan is a generic model suitable for
all types of businesses. However,
you should modify it to suit your
particular circumstances. Before you
begin, review the section titled Refining
the Plan, found at the end. It
suggests emphasizing certain areas
depending upon your type of business (manufacturing, retail, service, etc.). It also has tips for fine‐tuning your plan to make an effective presentation to investors
or bankers. If this is why you’re creating your
plan, pay particular attention to your
writing style. You will be judged by the quality and appearance of your work as well as by your ideas.
It typically
takes several weeks to
complete a good plan. Most of that time is spent in research and
re‐thinking your ideas and assumptions.
But then, that’s the value of the
process. So make time to do the job properly. Those who do never regret the effort. And
finally, be sure to keep detailed notes on your
sources of information and on the assumptions underlying your financial data.
If you need assistance with your business plan, contact the SCORE
office in your area to set up a business counseling appointment with a SCORE volunteer or send your plan
for review to a SCORE
counselor at www.score.org. Call 1‐800‐634‐0245
to get the contact information for the
SCORE office closest to you.
Executive Summary
Write this section
last.
We suggest that you make
it two pages or fewer.
Include everything that you
would cover in a five‐minute interview.
Explain the fundamentals
of the proposed business: What will your
product be? Who will your customers be? Who are the owners? What do you think the
future holds for your business and
your industry?
Make it enthusiastic, professional, complete, and concise.
If applying for a loan, state clearly how much you want, precisely
how you are going to use it, and how the money will make your business more
profitable, thereby ensuring repayment.
General Company Description
What business will you be in? What
will you do?
Mission Statement: Many companies have a brief
mission statement, usually in 30
words or fewer, explaining their
reason for being and their guiding principles. If you want to draft a mission statement,
this is a good place to put it in the
plan, followed by:
Company Goals and Objectives: Goals are destinations—where you want your business to be. Objectives are progress markers along the way to goal achievement. For example, a goal might be to have a healthy, successful company that is a
leader in customer
service and that has a loyal customer following. Objectives might be
annual sales targets and some specific measures
of customer satisfaction.
Business Philosophy:
What
is important to you in business?
To
whom will you market your products? (State it briefly here you will do
a more thorough explanation in the Marketing Plan section).
Describe your
industry. Is it a growth industry?
What changes do you foresee in the industry, short term and long term?
How will your company be poised to take advantage of them?
Describe your
most important company strengths and core competencies.
What factors will make the company succeed?
What do you think your major
competitive strengths will be? What background experience, skills, and
strengths do you personally bring to
this new venture?
Legal form of ownership: Sole proprietor,
Partnership, Corporation, Limited liability
corporation (LLC)? Why have you selected this form?
Products and Services
Describe in depth your products or services (technical specifications, drawings,
photos, sales brochures, and other bulky items belong in Appendices).
What factors will give you competitive advantages or disadvantages? Examples include level of quality or
unique or proprietary features.
What are the pricing, fee, or leasing
structures of your products or
services?
Marketing Plan
Market research - Why?
No matter how good your product and your service,
the venture cannot succeed
without effective marketing. And this begins with careful, systematic research.
It is very dangerous to assume that you already know about your intended market. You need to do market research to make sure you’re
on track. Use the business planning
process as your opportunity to uncover data and to question your marketing efforts. Your time
will be well spent.
Market research - How?
There are two kinds of market research: primary and secondary.
Secondary research means using published
information such as industry
profiles, trade journals, newspapers, magazines,
census data, and demographic profiles. This type of information is
available in public libraries, industry associations, chambers of commerce, from vendors who sell to your industry, and from government
agencies.
Start with your
local library. Most librarians are
pleased to guide you through their
business data collection. You will be
amazed at what is there. There are
more online sources than you could possibly use. Your chamber
of commerce has good
information on the local area. Trade associations and trade publications often have excellent industry‐specific
data.
Primary research means gathering your own data. For example, you could do your own traffic count at
a proposed location, use the yellow
pages to identify competitors, and
do surveys or focus‐group
interviews to learn about consumer preferences. Professional market research
can be very costly, but there are many books that show small business
owners how to do effective research themselves.
In your marketing plan, be as specific as
possible; give statistics, numbers, and sources.
The marketing plan will be the basis,
later on, of the all‐important sales projection.
Economics
Facts about your industry:
·
What
is the total size of your
market?
·
What
percent share of the market will you have?
(This is important only if you think you will be a major factor in the market.)
·Current demand in target market.
·Trends in target market growth trends, trends in consumer preferences,
and trends in product development.
·Growth potential and opportunity
for a business of your size.
·What barriers to entry do you face in entering this market with your new company? Some typical barriers are:
a) High capital costs
b) High production costs
c) High marketing costs
d) Consumer acceptance and brand recognition
e) Training and skills
f) Unique technology and patents
g) Unions
h) Shipping costs
i)
Tariff
barriers and quotas
•
And
of course, how will you overcome the
barriers?
•
How
could the following affect your company?
a) Change in technology
b) Change in government regulations
c) Change in the economy
d) Change in your industry
Product
In the Products and Services section,
you described your products and services as you see them. Now describe them
from your customers’ point of
view.
Features and Benefits
List all of your major products
or services. For each product or service:
• Describe the
most important features. What is
special about it?
• Describe the
benefits. That is, what will the product do for the customer?
Note the difference between features and
benefits, and think about them. For example, a house that gives shelter and
lasts a long time is made with certain materials and to a certain
design; those are its features. Its benefits include pride of
ownership, financial security, providing for
the family, and inclusion in
a neighborhood. You build features into your product so
that you can sell the benefits.
What after‐sale services will you give? Some examples are delivery, warranty, service
contracts, support, follow‐up,
and refund policy.
Customers
Identify your
targeted customers, their characteristics,
and their geographic locations, otherwise known as their demographics.
The description
will be completely different
depending on whether you plan
to sell to other businesses or
directly to consumers. If you sell a consumer product, but sell it through a channel of distributors, wholesalers, and retailers, you must
carefully analyze both the end consumer
and the middleman businesses to which you sell.
You may have more than one customer group.
Identify the most important groups. Then, for each customer group, construct what is called a demographic profile:
• Age
• Gender
• Income
level
• Social class and occupation
• Education
• Other (specific to your industry)
• Other (specific to your industry)
For business customers,
the demographic factors might be:
• Industry (or
portion of an industry)
• Location
• Size of firm
• Quality, technology, and price
preferences
• Other (specific to your industry)
• Other (specific to your industry)
It
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