|
Business
plan basics
Dear Small Biz Adviser:
I am in need of a business plan. I am
opening a tea/coffee shop and bar, and I have everything but a plan.
Any who-what-where ideas?
Lisa
Dear Lisa:
Good business plans are hard to find.
It isn't a matter of ability, software, available market data or
a lack of business planners. It is a lack of knowledge or desire
on the part of the entrepreneur to diligently devote the time and
resources to insure a quality document.
A business plan is not simply a collection of sheets
of paper with words that you need to qualify for a business loan.
It contains tools designed to:
- Determine, first and foremost, if the venture is
feasible. (Is there definitely a market in which to sell your
products or services and make a profit?)
- Determine the size of your market and how much
revenue you can generate.
- Develop an operational plan that will insure providing
the best of product or service and customer service to your intended
clients. (Don't buy too much equipment or hire too many people.
On the other hand, don't be without the equipment and staff sufficient
to be competitive and profitable.)
- Develop a set of financial projections that serve
as tools to measure if you are meeting sales goals, controlling
expenses and reaching acceptable profit margins.
All of these goals will be met if you conduct thorough
research and are realistic in your projections.
Do not underestimate expenses and do not overestimate
sales simply to make the financial projections look attractive.
Rather, overestimated expenses and underestimated sales equal more
cash on hand and a greater likelihood of profitability.
Business plan basics
Your business plan should include:
- Executive summary: Describes
the nature of your business and gives a brief account of your
products or services, mission, goals, objectives and any financial
goals (borrowing and projected profits).
- Product or service offering: Provides detailed
description of the products or services you provide. Consider
all characteristics, properties, cost to produce and sell, and
any other outstanding issue that would encourage the potential
customer to buy what you offer over that of the competition.
- Market research: Addresses the details of
target customers, target geographic market, pricing
and competition.
- Advertising and promotional strategies:
Deliver the message of who you are and what you offer. Don't spend
time, money or any other valuable resources promoting yourself
where your target client is not found.
- Operational assessment: Addresses the operating
needs to adequately service your market. These include tangible
assets such as office equipment, machinery, staffing, supplies,
product inventory, vehicles, utilities, rent and any other expenses
required to operate the business.
- Financial projections: Represent the most
critical tool to operating the business -- your financial oversight.
Such projections are often the most challenging sections to develop.
They include, at the very least, balance sheets, income and cash
flow statements, ratio analysis, costs of goods sold and break-even
analysis.
Now what do you use to develop a business plan? Assuming
some degree of computer skills, choose from a menu of business planning
software that is easily available online and in software outlets.
Some popular ones are Automate
Your Business Plan, BizPlan
Builder, Planware
and PlanMagic.
You can view some of the sample business plans at these Web sites
to get an idea of what type of information the programs generate.
Alternatively, you could hire a consultant or seek
hands-on assistance at the nearest office of a Small
Business Development Center, a SCORE
chapter or a Women's
Business Center.
This should provide you the basics from which to begin.
Books are written about what I have conveyed in this column, and
there is much more to learn before you design the map to guide a
successful business venture.
I wish you well.
-- Updated: Oct. 18, 2004
|
