Starting with a General Description of Your Business
The first step is to write a general description of your business. This exercise helps you to gather your vision and focus many other aspects of your startup plan.
Type of Business
Describe the type of business you are starting, whether it’s retail, manufacturing, industry, construction, or any other type of service. Describe what the company will produce or sell.
Legal Organization
Discuss how the company will be organized. Businesses are legal entities that separate commercial responsibility from personal responsibility. A Limited Liability Company (LLC) is another way to separate business interests from personal ones. Other forms include sole proprietorship, partnership, S corporations, and C corporations. The structure you choose will have legal and tax implications, so be sure to research and choose wisely. You may want to speak to an accountant while figuring out what form your company will take.
Business Location
Describe the facility you will use for your business, including the address and information about the area. Include square footage and the layout of the business if available. If your company is in your home, describe the space you will use. Discuss whether this location will be purchased or leased, and the terms of purchase or lease.
Licenses and Permits
Include information about local regulations that pertain to your business, as well as the licenses and permits you have obtained or need to obtain.
Management and Employees
Describe the owners and management of the company, along with the expected number and types of employees who will work in the company. This will be a very brief description; you will prepare a more detailed management plan in the following sections.
Specific Plan for Your Products or Services
Include:
- A general description of each product
- The pricing structure for that product and whether you will have different prices for different markets
- Whether you will produce this product or buy it wholesale to resell to your customers
If you are offering services, describe these services in detail, including:
- A general description of each type of service and how it will be performed
- The pricing for the different services you will offer
Creating a Marketing Plan
Describe your target market. This description should include:
- A description of the “ideal” customer for this person or his company in terms of characteristics, attitudes, and buying behaviors. This description should be as complete as possible.
- Discussion of information about the “population” you will be selling to, in terms of numbers and demographic characteristics (attributes) such as age, sex, education level, income level, and other important information.
- A description of the buying behaviors of your target market
Describing Competition for Your Products or Services
Describe the competition for your products or services within your target market, including:
- The number of competitors
- The characteristics of your top three competitors
- The unique points of difference between you and your competitors
- The ways you will emphasize the differences between your products/services and your competitors’ products/services, in terms of delivery, customer service, product differentiation, or other attributes
Designing a Marketing Strategy for the Company
The next step is to create a strategy for marketing and promoting your company’s products or services to this market. Here are some elements to include in this marketing and promotional plan:
- The top three methods you will initially use to inform your target market about the existence of your products and services
- Types of paid advertising you will use to promote your products and services
- The ways you will leverage publicity to promote your products and services
- Personal selling techniques you will use to promote your products and services
- Types of materials (brochures, flyers, website) you will use to promote your new products and services
Along with your marketing and promotional strategies, you will also need to create a budget for all these activities for the first three years of your business.
Essential Financial Data to Start a Business
The most important step in the process of creating a business plan is to prepare your financial documents. This will be the most time-consuming and effort-intensive part. Below is the information you need to include in your financial plan:
Startup Cost Schedule
This financial statement should include all equipment, supplies, and other items you will need to purchase to get started, along with fees, licenses, deposits, initial consulting expenses, and costs to establish your business structure.
Financial Sheet
Initial Balance Sheet
You will need to prepare an initial balance sheet for the startup showing assets, liabilities, and owner’s equity as of the start date.
Monthly Budget for the First Year
Include a detailed statement (sometimes called a “cash flow statement”) showing month-by-month sales and collections, along with all monthly business expenses.
Actual Income Projections
You will need to prepare a projected income statement (P&L) for the first three years of operations, showing revenues and expenses along with pre-tax income, tax liability, and after-tax income for each of those years.
Break-Even Analysis
If you are selling products, you must prepare a break-even analysis showing the point at which you expect to make a profit from product sales.
Sources and Uses of Funds
Many lenders require you to include this statement, which details all your financial needs for the business, along with your personal investment in the business and expected funding from your lender or private investor.
Personal Financial Information
If you are presenting your business plan to a lender or investor, you will also be asked to provide personal financial information. Preparing this information to include in your business plan will help build trust with these individuals. Here’s what you need to bring for all owners for the past three years:
- Tax returns for the last three years
- A recent credit report showing credit scores
- Personal financial statement – you can use the SBA personal financial statement form as a guide
- Resume
Creating a Management Plan
Describe the management of your business, including:
Owners and Managers
Describe the backgrounds and qualifications of the individuals who will own the company and make high-level decisions. This may include a board of directors if you are incorporating.
Managers and Staff
Describe the key management positions you will need; if you have any of these key positions filled, discuss the qualifications of the individuals who will occupy them. Include an organizational chart showing the top positions and the types of employees who will work in your organization.
Business Advisors
Include information about your key business advisors, including consultants, your accountant or financial advisor, attorney, insurance agent, and banker. If you have not identified some of these individuals, discuss the qualifications you will look for to fill these roles.
Creating an Operational Plan
Develop a plan for your business operations, including:
Daily Operations
Describe how your company will operate on a daily basis. What production process will you use? What will you do to market and sell your products and services? What are your operating hours?
Financial and Accounting Operations
Describe how accounting, billing, collections, and other financial processes will take place.
Computers and Technology
Include a discussion of the computer and technology systems in your business. Will you be managing a website? If so, who will maintain it? What computer hardware and software will you use? What will your phone system look like? What office equipment will you need?
Creating an Executive Summary
The final step in preparing your business plan is to create an executive summary. This document summarizes the information in the business plan and is placed at the beginning of the document.
Your executive summary is important! It may be the only part of your business plan that the lender sees, so make it excellent.
The executive summary should capture your reader’s interest and provide essential information about the business. Specifically, the executive summary aims to summarize your financial needs to start the business or acquire it. Here are the points to focus on in the executive summary:
- Company information, including the name of the company, when it was established or purchased, when it will open for business, its location, and the legal structure of the organization.
- A one-sentence description of the company’s products and services.
- Several sentences discussing the purpose of the business, its vision, and other information of interest to your reader regarding the business.
- A general description of your target market, your competitive position, and the unique differences between you and your competitors.
- A discussion of your financing needs specifically, including your personal investment in the business, start-up/acquisition funding, and operational capital needs during the start-up.
- A discussion
- Your personal investment in the business and your expectations about when the company will become profitable or reach the break-even point.
Read, Review, and Revise
Now that you have completed writing your startup business plan, there is another important task. Read, review, and revise. Ensure that your business plan is 100% perfect.
Source: https://www.thebalancemoney.com/create-a-startup-business-plan-in-easy-steps-397548
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