Formulating a Business Plan

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Formulating a Business Plan

OVERALL IDEA

  • What will be your primary product or service?
  • Who is your target audience?
  • Who are the owners?
  • What are the finer details of the industry?
  • What is the market size?

 

Company Description

  • What does your company do?

 

  • What industry are you joining?
    • These are the types of questions to answer in the company description section of your business plan. Start the company description with a mission statement.
    • Define the company’s goals and culture. You don’t have to include a mission statement, but if you do, this is the place for it.

 

  • Company Goals
    • Goals, both short and long term, should be included here. This shows others what you are hoping to accomplish over a particular period of time.
    • For example, you may have a short term goal of obtaining 20 percent market share.

  • Business Philosophy
    • What is most important to your business?
    • What is your philosophy for achieving success?
    • You need to clarify your philosophy, as it gives others a clear idea of the direction you are taking the company.

 

  • Industry Description
    • What is the history of the industry?
    • Is it growing?
    • Who are the primary competitors?
    • How will you position the company to overcome the competition?
    • It is imperative to show your knowledge of the industry you are joining.

 

  • Company Strengths-This section is a place to discuss what sets your company apart from others. Answer questions such as:
    • What are the strengths of the company?
    • What are the strengths of the owners?
    • What background experience and knowledge do you bring to the company?
    • How will the strengths fit in with the market?

  • Legal Form -This should include one of the following:
    • Sole proprietor
    • Partnership
    • Corporation
    • Limited liability corporation (LLC)

 

PRODUCTS AND SERVICES

  • Technical specifications
  • Illustrations
  • Photos

 

Marketing and sales material

Market research Include information on why the products and/or services are better than what is already on the market. This can include factors such as quality, price, and unique features. Other information for this section includes:

  • Pricing structure
  • Fees
  • Competitive advantages and disadvantages
  • Product comparison

 

MARKETING PLAN

Below are five factors to include in your marketing plan:

  1. Market Research
    1. Primary research
    2. Secondary research
  1. Economics – Focus on these points:
    1. Market size
    2. Current demand within target market
    3. Primary competitors, including market share
    4. Growth potential
    5. Barriers to entry
  1. Customers
  1. Age
  2. Gender
  3. Location
  4. Income
  5. Occupation
  6. Education
  7. Any other details specific to your industry
  1. Competition
    1. Answer these two primary questions
      1. What products and/or services will provide competition?
      2. Which companies will provide competition?
  1. When answering these questions, be as specific as possible:
    1. List product and service types.
    2. List major competitors, including names and addresses.
  1. Strategy
    1. Promotions
    2. Advertising
    3. Budget
    4. Marketing methods at different stages of the company: start-up, growth, etc.

OPERATIONAL PLAN

This is an opportunity to discuss the day to day operation of the business, including employees, processes, location, equipment, and other related details.

Your operational plan should focus on these details:

  • Production: how and where products and/or services are produced.
  • Location: the type of building, amount of space required, and if all employees will work on site.
  • Legalities: permits, zoning, licensing, industry regulations, insurance coverage, trademarks, patents, and copyrights.
  • Personnel: number of employees, type of employees, existing staff, pay structure, employee responsibilities, and the use of contractors/freelancers.
  • Inventory: type of inventory, cost of inventory, rate of turnover, and lead time for ordering.
  • Suppliers: list of key suppliers, including type, responsibilities, pricing, and history.

 

MANAGEMENT TEAM

This section should address all details associated with the management team, such as:

  • The responsibilities of each member of the management team.
  • The experience and knowledge of each person.
  • The plan if one or more member of the management team leaves the company.

 

If the company has multiple members of the management team, create an organizational chart explaining the responsibility of each person. You can also list supporting individuals, which can include:

  • Board of directors
  • Advisory board
  • Accountant
  • Legal team
  • Insurance agent
  • Banker
  • Mentors
  • Consultants


FINANCIAL PLAN

The financial plan should include the following:

  • 12-month profit and loss projection
  • Five-year profit and loss projection
  • Cash flow projection
  • Projected balance sheet
  • Break even calculation

 

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