Wednesday, November 27, 2013

5 Tips for Starting a Business Plan

5 Tips for Starting a Business Plan


A friend of mine came to me recently, asking if there were some practical advice I could offer him for setting up a business plan. I’m glad that he recognized the value in having some kind of plan before throwing himself in head first. 

The following article discusses five major key points that need to be addressed that any great business plan should contain; whether you are planning a small town hair solon or a major installation of a new industrial complex.

1. First, I suggested he start with a clear vision and meaningful mission statement. What is the purpose for beginning this business? What do they hope to accomplish? A great mission statement should encourage and inspire action; it should really grab your audience’s attention like the first sentence of a great novel.

2. Next, my friend would need to provide a description of their product or service. A vision is all well and good, but it is worthless without a basic description of how they wish to accomplish their goal. Therefore, there must be a basic description for communicating their intentions to their audience (whether it is a potential business partner or an investor). Is it clear what you provide in the eyes of the customer?

3. Third, my friend should figure out how their product or service is different from others in the same industry. Differentiation is going to be one of the key factors in determining the potential success of the business. If you plan on bringing a similar product or service to market, it had better be different in one way or another. Are you improving upon a design? Are you providing a service more efficiently than your competitor, for example? My friend was unable to clearly communicate the answers to these questions yet. However, with some time to sit down and think about it, I’m confident that he’ll be able to come up with something now that he’s aware of the need for differentiation.

For the last two pieces of advice, I asked him to remember a couple acronyms. SWOT and SMART.
 
4. SWOT is a concept that challenges you to look at your businesses through the lens of potential strengths, weaknesses, opportunities, and threats. “Scan the environment for significant opportunities and threats facing the business. Opportunities are positive external options; threats are negative external forces” (Zimmerer, et al., 2008). You should be able to get at least a loose grasp on these four areas and include them in the business plan. It will show potential investors that you really understand your market and are aware of the challenges you may face.

5. SMART is the other important acronym. This has to do with setting goals with your business. Goals are incredibly important. So important, in fact, that I would be pretty concerned if someone approached me with a goalless business plan! Being SMART with your goals means that they are Specific, Measurable, Attainable, Relevant, and Timely. For example, I had a goal for my Peaceful Parenting blog to obtain email subscribers. I made it SMART by stating (on paper) that I wanted to reach X subscribers by X date using X method. This gave me an opportunity to break it down into smaller pieces; and when included in a business plan, investors will see that you are no stranger to fine tuning your goals and creating deadlines for yourself.

I can only imagine that writing your first business plan can be incredibly overwhelming. It doesn’t necessarily have to be. Patrick Hull, a writer for Forbes.com explains, “If your product or service is not overly complex, your plan doesn’t have to be very lengthy. For example, a business plan for a hair salon is not going to look anything like a plan for a biotech research company” (Forbes) (Hull, 2013). They could start with an online search to find sample business plans. There are many that you can use as templates or guides for writing your own; almost in a color by number fashion. This takes the focus away from formatting and knowing what to include and puts it on the actual content of the plan. 

Resources:

Here are a few resources to get you started; all with free templates and sample business plans:
 

Daniel Wagner.

If you found this article useful, please share and let me know what you think!

References:
Hull, P. February 21, 2013. 10 Essential Business Plan Components. Forbes. Retrieved November 27, 2013 from http://www.forbes.com/sites/patrickhull/2013/02/21/10-essential-business-plan-components/
Zimmerer, T.W., Scarborough, N.M. & Wilson, D. (2008). Essentials of entrepreneurship and small business management (5th ed.). Upper Saddle River, NJ: Pearson Education.

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