When building a business, many people think it starts simply with an idea. While they are not wrong, building a business and becoming an entrepreneur forces you to internalize and self reflect on various hard-hitting questions that encompasses what you are trying to accomplish and the various steps to get to your end goal. Hence comes the business plan.
So what is a business plan? A business plan is inherently strategic. It is meant for the company to formalize a comprehensive report that discusses the company’s vision, goals, team members, finances, projected finances, marketing plans, expenses, and other various factors that will impact the business from its present-day status to its future-day position. Having a holistic view, especially one that breaks down the appropriate steps in a specific timeframe, allows you to tactically plan for what the next few weeks, months, or year should look like from today.
By having a business plan, you will be able to begin strategically planning financially and effectively of what you need to do to make your business tangible. For many founders or CEOs, business plans are used to help with investments. Various partners who are interested in investing in a business first likes to review a business plan to see where the company stands and where it will be in the future. Furthermore, a business plan provides you with a better understanding for management and expenses. Remember, building a business is a costly venture. To make sure that you are creating a strong sound plan, an end goal needs to be in mind. Yes, making money is of course the mentality that every entrepreneur has, but the real questions is how much money and when you will make it. Make sure you are playing in the realms of reality. You do not want to shoot for a projection that is not attainable. This can only hurt rather than motivate your business in the long run.
So how do you make a comprehensively sound business plan? A simple as it is, making a business plan needs to attain all of the necessary factors that outline your business and its future goals. Below I have outlined the five main categories you need to include in your business plan:
Executive / Business Description
For this section, it is best that you provide an overall summary of your business. Provide a short description of the company, the company’s history, and the industry you are looking to jump into. When describing the industry, discuss the present outlook as well as future possibilities that you see your company can assist to. Make sure you provide information of the various markets and competitors in the field. Having this idea mentioned can provide you and your investors with the future affects or strategies you need to make to compete in such a field. Lastly, make sure you introduce yourself. Provide a short description of who you are, your academic and professional background, and what brought you into the field.
Vision and Goals
Once introductions are in order, you want to outline your overall vision and goals for your company. The best way to do this is by breaking this down in three ways: 1. Vision Statement, 2. Short Term Goals, 3. Long Term Goals
- Vision Statement
- This is the mental picture of what an organization wants to achieve over time. Try thinking of this as your overarching goal of where you want your company to be 5, 20 years from now. Provide guidance and inspiration as to what your organization is focusing on in achieving as well the message of why you want to achieve that goal
- Short-Term Goals
- Short-term goals are goals that you set for your company and yourself. Think of these goals as weekly or monthly goals; goals that can be accomplished in a timely fashion. These goals are great to have because they break down the manageable aspect of your business such as sales goals, project goals, etc.
- Long-Term Goals
- Very similar to the vision. Long-term goals are vital for a successful business. These are goals you are looking to accomplish in the future, preferably within a year time. Begin thinking 12 months for this concept and where you see your company.
Outline Your Finances
Remember, to become an entrepreneur, it starts with your investment. Starting a business requires some money. If you are looking to accomplish your goals and objectives, you need to begin thinking on the financial mentality of how much you are spending, how much you are making, and how much you are netting. Having a deeper understanding of the overall funds will allow you to see the strengths and weaknesses of your business. The biggest mistake many startups make is that they spend too much money on unnecessary items. Make sure that if you are buying specific office supplies or inventory that they will be utilized or sold to maintain profit. Additionally, try and create an emergency fund, just in case you find your company slipping on specific days. This will give you time to strategize future plans and pay future debts. If you are still unsure about what you need to know about finances, ask yourself these questions:
- How much money do you control?
- How much money was invested in your company?
- What are your expenses on a daily, weekly, monthly, yearly basis?
- What are your sales? How many customers do you take in on a daily, weekly, monthly, yearly basis?
- What is your net profit? Have you reached your goal? If not, what can you do to cut cost / increase revenue?
For a new business, you want to outline various marketing and branding strategies you will implement so that you can attain more customers. The stronger your marketing is, the stronger your business will be. Think about the stages of your overall brand whether or not the audience will welcome it. If you think there are problems, try and strategize on how to improve your brand for the public. Additionally, begin planning online tactics. This is something that can be done at a fair price to get the word out for your business.
For the benefit of your company and your investors, you want to create financial and lifestyle decisions that can reason how you will succeed at your short-term and long-term goals. There is really not wrong answer to these questions. Make sure you are thinking step-by-step of how effectively and efficiently your company should move when using funding or producing / advertising its products. Ask yourself the following questions:
- What will you use for the X amount of investment?
- When will business turn into a profit?
- When will investors begin to see a return in their money?
- What are the projected times you will see an increase in revenue?
- What are the chances the business will fail? What will you do when this happens?
- How many people will you be working with? What will they do? How will this help your business?
- Where will you be located? What will the hours look like?