Business plan

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BUSINESS PLANS,… Step by Step

Step 1: Choosing Your Business

How do you choose what type of business to go into? In order for it to be a successful

business however, you must find what is missing in the marketplace. Many parents

need sporadic child-care but it is difficult to find because most child care is part of a

program. Playtime opened up to meet this need where stay at home mothers as well a

working mothers who might need flexible child care can take advantage of per hour

rates. While the rates are higher parents see it as a deal because it’s available when

they need it without long-term commitments. There are many examples like this but

you must look at your environment with eyes that are open to the changes occurring all

around you and find the gaps that need filling. Use those gaps to help refine your

business concept and your chance of success grows.

Introduction:

The introduction is a brief synopsis of what your business is and why it

will be successful. This is not your executive summary, so it shouldn’t

focus on all aspects of the business plan. Figure out the reason there is a

need for your business and focus on why it will be successful. This

section doesn’t focus on that but it is of utmost importance.

The reason that entrepreneurs start and succeed in business is because

they find a need and fill it. In the process of starting and operating a

successful business they may create jobs or innovations or simply add to

the tax revenue of their community. But, their first obligation and thought

process is not about how they are benefitting the community-that is a

byproduct of making their business a success. Banks don’t give financing

because they think you will create jobs, but that is a subset of being

successful because your product/service is desired by the marketplace.

Benefits to the Community:

1. Describe the jobs that will be created by your business, how your business will

help other local businesses, and any additional information.

2. Describe how providing needed goods or services will improve the community

and its standard of living.

3. State how your business can develop new technical, management, or leadership

skills; offer attractive wages; and provide other types of individual growth.

Step 2: Completing Company and Industry Analysis

Form of Business Ownership:

1. What is the legal form of your business? Is your business a sole proprietorship, a

partnership, or a corporation?

2. Describe any necessary licenses or permits that are required for your business

and your plans for obtaining them.

3. Will your business be an independent business, a takeover of an existing

business, an expansion of an existing business, or a franchise? If you are dealing

with an existing business, how did your company get to the point where it is

today?

About the Company:

1. If you are dealing with an existing business, how did your company get to the

point where it is today?

2. What does your business do, and how does it satisfy customers' needs? How did

you choose and develop the company's products/services, and how are they

unique? Learn to perfect your "elevator speech." (If you were stuck in an

elevator with a potential high value investor or customer, could you tell them

what your business is and why this person wants to be involved with it during

the 1-2 minutes an elevator ride takes?

Industry Analysis:

Show that you understand the industry and the environmental factors that are affecting

it. Trade associations, publications, and anything else that show you know where to go

for information and support is valuable. It is also important that you be able to put their

business into context of the industry that they are operating in.

1. In which industry does your business operate, and what are the industry-wide

trends?

2. Who are your competitors?

3. Have any other businesses recently entered or exited the industry? Why did they

leave?

4. How will the business be profitable, and what are the growth opportunities i.e. E-

tailing?

Step 3: Establishing the Organizational Structure for Your

Business: Manufacturing and Operations Plan

Location and Space Requirements, Equipment, Labor Force & Inventory

Control

1. Where is the planned location?

2. Discuss the location's proximity to customers and suppliers.

3. Will you rent, lease, or purchase the facility? The equipment?

4. Discuss the local labor pool. Is there a sufficient quantity of skilled people to

meet the business's needs? Do you know:

a. Local unemployment rate

b. Type of skills employees need to posses

c. Colleges, Universities, trade and tech schools that produce students with

those skills.

5. How will you control quality, inventory, and production? Who are your potential

subcontractors and suppliers? (For instance, will your inventory system be

computerized and how will you maintain consistency and quality of your

service?)

Step 4: Determining Your Human Resource Requirements

Your experience and education, as related to their business, must be highlighted and

expanded upon. The lender or investor wants to know why you are likely to make this

business a success.

Management Team:

1. Who are the key members of your business team, and how is the team balanced

in terms of skills?

2. What other professionals will assist the management team?

Labor Requirement

1. How many full-time and part-time employees are required?

2. What must be their job qualifications?

3. Will you have written job descriptions?

4. What will be the pay packages of your employees, and how do they compare

with the current rates in your region and industry?

Step 5: Creating a Marketing Plan

Defining your target market should be about pinpointing who it is that is likely to

purchase your product/service. New businesses do not have the money to reach

everyone therefore, even though the product/service may be appealing to a broad

range of people it is important to identify who it is that is most likely to purchase it.

You may want to identify a primary, secondary and tertiary market.

Target Market:

1. What are your target markets, and what common identifiable needs can the

business satisfy?

2. What are the current needs of each target market? Describe the target market in

terms of demographic, geographic, psychographic, and product usage

characteristics.

a. Use geographic, demographic, psychographic segmentation.

b. Fill in as much of the specifics for your target market based on secondary

sources. For primary sources it is helpful to observe the competition to

see what type of customers frequent their business.

c. Identifiable needs: What is your competitive advantage? What makes

your business special; the competitive matrix will help you discover that.

3. What are the competitive, legal, political, economic, technological, and socio-

cultural factors affecting your marketing efforts?

Marketing Objectives

1. Describe your pricing objectives.

2. Describe your distribution plans. How will your product/service get to your

customer?

3. Describe your advertising and promotion efforts.

Step 6: Preparing Your Financial Plan

Startup and Operating Needs

1. How much money do you have, and how much money do you need to open your

business (start-up budget)?

2. How much money is needed to keep the business open (operating budget)?

Prepare a realistic budget.

3. What sources of funding do you anticipate?

Financial Statements:

1. Prepare an income statement by month for the first year of operation, and by

quarter for the second and third years.

2. How many units of your products or service will have to be sold to cover your

costs?

3. Reinforce your final projections by comparing them with industry averages for

your chosen industry.

Step 7: Choosing an Exit Strategy

It is important for the investors to know what the potential of the business is and what

type of return on investment they can expect. This is also a good way to work in

strategic planning. It may not be appropriate to discuss exit strategy because that may

not be the ultimate goal, but long-term planning and goals are important for students

to consider.

1. How do you plan to get yourself (and your money) out of the business?

2. Do you intend to grow the business to the point of an initial public offering (IPO),

or do you intend to sell the business?