The bare bones of a business plan, how to improve your chance of success
So you have decided that you want to start your business. We have all heard how difficult it is to start any business. The high failure rate of small businesses can leave you feeling disheartened.
What can you do to improve your chances of survival? A good place to start is with a business plan.
A well thought out business plan will allow you to clarify your vision for your company, will be an important communication tool, give you the chance to obtain financing and provide you with the basis for sound decision making, thus improving your chances of success.
A business plan is not a static document; it is dynamic in that it must change to reflect changes in the environment you operate in.
Elements of a business plan
1. Executive Summary
This is the most important part of your plan and this you will write last. Once you have written the rest of your plan, you will summarize each section here with its main points.
2. Company Overview
This is a description of your company and why you think it will be successful. Include a mission statement, whom are you targeting and how can your target market benefit from the products and services you are offering.
3. Industry and Competitive Environment
You need to do some research on your industry, your competitors, the geographic area and your target market. Statistics Canada’s website is a great place to start.
Knowing your competitive environment is important. Who and what your competition is doing will help you to identify any unsatisfied needs.
Understanding your target market, the industry you will operate in and where you will locate and why, is crucial.
4. Product and/or Services
Outline the products and services that you will offer your target customers. What is special about your idea, what are the features and benefits? You want your customers to know why they should buy from you, what are you offering that will make them choose you versus a competitor?
5. Marketing Strategies
Now you need to look at your positioning strategy. How are you going to allocate your resources for the various components of your marketing mix; product, price, promotion and place?
A marketing strategy can be expensive for businesses, but here are a few things that you can do to minimize costs: Networking, word-of-month, newsletters and donating your product/services to charitable organizations.
6. Management & Staffing
You want to outline your background and experiences, show how they will help you run a successful business. Do you need to hire staff or use consulting expertise? A professional such as an accountant may be necessary to prepare your financial statements.
7. Legal Considerations
What kind of business do you want to set up, a sole proprietorship, partnership or corporation? There are advantages and disadvantages of each with its own risks and rewards.
Other legal issues you may want to consider are employment agreements and non-disclosure agreements.
8. Financing and Financial Statements
Financing can be difficult to obtain. Your best option may be to seek out family and friends that want to invest in your idea.
After you have researched your market and established clear goals and objectives, you can then decide how to allocate your money. This is where your financial statements come in. Two important statements are your income statement and your cash flow statement. The income statement will tell you how much profit you will earn and your cash flow statement will tell you when you will receive cash from your sales.
Starting your own business can be a very rewarding experience, but know that you will meet many challenges along the way. Although having passion for what you love is a good place to start, success can only be achieved from a well thought out business plan.