Writing a Business Plan – Part 3

 This is Part 3 in a 4 part series on writing a business plan.

Products and Services

In this section, you will explain what you will be offering in terms of products and/or services. You will also want to explain what gives you an advantage over other companies. Finally, you will want to explain your pricing structure.

Marketing Plan

The marketing plan has seven subsections. They include

·         Financial Research

·         Product/Service Research

·         Customer Base Research

·         Competition Research

·         Niche Research

·         Strategy Plan

·         Sales Forecast

1. Financial Research

This section deals with the financial facts concerning your business. In order to determine if your company can succeed in the marketplace, you have to understand the marketplace. This subsection should answer such questions as:

What is the population in the area you will be serving?

How many people in the market area have need of your service?

Is it possible for your business to grow in this market? You can show this by showing the growth of the area or the current growth of the market or both.

What “barriers to entry” would keep you from entering the marketplace?

You will also explain how changes in the economic environment could affect your business.

2. Product/Service Research

In this section, your research concerns what your potential customers will see in your product/service and what benefits they will derive from using your products/services.

Also list what after-sale services you will give.

3. Customer Base Research

Demographics include who your customers are, where your customers live, and what they are like.

For each group, you need to create a demographic profile. Depending upon your “perfect” client, the demographics will change. This profile can consist of:

• Age
• Sex
• Location
• Income
• Marital Status
• Home Ownership
• Etc

4. Competition Research

This subsection helps you identify other companies that compete with you and in what way.

You will also want to list indirect competitors, or those companies whose businesses have services that overlap yours.

Finally, you will want to compare your services with those of your competition.

5. Niche Research

It is not possible to market to everyone, nor would you want to. Some clients are simply not good for your business. Therefore, after looking at all the different client possibilities, write a short, one paragraph definition of your niche market.

6. Strategic Plan

First, you will need to know how you plan to promote your service to your niche.

What sort of advertising will you do? How often? Why?

What low cost paid advertising will you use?

What no cost promotions will you use to get the word out?

What type of graphics will you need for your strategic plan?

Explain your system for keeping up with your clients.

What is the cost associated with your promotional strategy? How much will you need when the company starts and how much for ongoing promotional costs?

How will you set your prices? Are your prices competitive? Are your customers likely to shop price or quality?

Explain why your business works well from home and does not need a storefront.

7. Sales Forecast

A sales forecast is all about the numbers. It is a month-to-month projection of your expenses versus your income. When you make this projection, it should be based on:

• Your historical sales
• Your marketing strategies
• Your market research
• Industry data

Writing a Business Plan: Part 2

Part 1 of this series explained why you would want a business plan. Parts 2 to 4 will help you understand the different sections needed in a plan and what types of things you need to write in them.

Front Cover

The front cover should contain a title with the name of your company and the words “Business Plan.”

Beneath the title you need to include your business name, your name, other owner’s names, address, phone number, fax, and email.

Executive Summary

An executive summary is a short one to two page synopsis of the entire plan. It is easier to write this section last so that you know exactly what is in the rest of the report.

Think of the executive summary the way you would think of a resume. A resume lists all your accomplishments and your skills to show potential employers what you have to offer. The executive summary will explain to potential lenders or partners what your company is doing, has done, and has the potential to do. This is your way of getting the best of the best across to the reader so that they decide to read on.

Some questions you will want to answer in the executive summary include:

• What is your business
• Who are your customers?
• Who are you and why do you think you will make a good at what you do?
• What do you think the future holds for your business and your industry?

 The summary should state the amount needed, what the money will be used for, and how the money will help your business.

General Overview of Your Company

This section will describe your company. You will need to explain exactly what you will do. This section has many subheadings including:

1. Legal Formation of Your Company
2. Company Mission Statement
3. Business Approach
4. Industry at a Glance
5. Your Company’s Strengths
6. Goals

1. Legal Formation of Your Company:

How is your company organized? The answer can be one of the following:

• Sole proprietor
• Partnership
• Corporation
• Limited Liability Corporation (LLC)

 Be sure to explain why you chose this form of organization for your company.

2. Company Mission Statement: A mission statement explains what principles will guide you in your business dealings. Mission statements are best kept to approximately 30 words.

3. Business Approach:

This section helps you explain your approach to your work.

4. The Industry at a Glance: 

Those lending you money or considering a partnership will want to understand the industry. This section allows you to tell them about the growth, future changes, and your ability to capitalize on these changes.

5. Your Company’s Strengths

• What will make your business successful?
• Considering your competition, what strengths make you stand out?
• What do you bring to the table personally? Do you have a particular skill set or experience that will make this business succeed?

 6. Goals: In this section, you are going to describe your goals and how you will know if you are achieving them. 

Go ahead and start writing your business plan today. Watch for Parts 3 and 4 of this series.

Writing a Business Plan - Part 1

This is the first in a series of learning how to write a business plan. However, many people do not understand the need for a business plan, saying that they already have a business going, why have a plan? Let me tell you seven great reasons:

1. Let Your Managers Know What You are Doing: A business plan can help you set specific objectives, letting you and your managers track and follow up on the outcomes. With a business plan, you know what you want to have happen and you know if you got what you wanted.

2. Determining If You Need New Space: Renting or buying space is an expensive endeavor. A business plan will help you determine if your space is too big or too small, or if it would be worth your while to buy rather than to rent.

3. Hiring As an Option: Salaries are a fixed cost that you need to consider in your bottom line. With a business plan, you can determine how many employees you need, whether you need them full or part time, and what positions you need them to fill.

4. Buying New Equipment: A business plan helps you “see” into the future. Do you need new equipment to grow your business? How do you know unless you have a plan for your growth?

5. Gain Business Alliances: Rarely does a business work without needing some kind of support. Perhaps a printer or a shipper. No matter what your needs, having a business plan will help you as you form business alliances. With a plan, these other companies will know who you are, what you do, how you plan to do it, and what their part will be in this plan.

6. Keep Team Members Apprised: In addition to having alliances, you will also likely have team members such as attorneys, accountants, and consultants. A business plan will help them know where you are and where you want to go so that they can provide advice to help you achieve your goals.

7. Seek Loans: When you seek to get a loan from a bank or an investor, they will want to see your plan. They want to know how you will proceed and what course they can expect. No one wants to lend money to an unknown entity.

Now that you have an understanding of why you want a business plan, it is time to write it. Parts 2 to 4 will explain the different sections of a business plan and what you need to include in each.