It's the perfect way to review and revise your ideas and concepts before you ever spend a penny. Many people see writing a business plan as a "necessary evil" required to attract financing or investors. Instead, see your plan as a no-cost way to explore the viability of your potential business and avoid costly mistakes. The Executive Summary is a brief outline of the company's purpose and goals. While it can be tough to fit on one or two pages, a good Summary includes:.
I know that seems like a lot, and that's why it's so important you get it right. The Executive Summary is often the make-or-break section of your business plan. A great business solves customer problems. If your Summary cannot clearly describe, in one or two pages, how your business will solve a particular problem and make a profit, then it's very possible the opportunity does not exist--or your plan to take advantage of a genuine opportunity is not well developed.
So think of it as a snapshot of your business plan. Don't try to "hype" your business--focus on helping a busy reader get a great feel for what you plan to do, how you plan to do it, and how you will succeed. Since a business plan should above all help you start and grow your business, your Executive Summary should first and foremost help you do the following.
Think of it as a written elevator pitch with more detail, of course. Your Summary describes the highlights of your plan, includes only the most critical points, and leaves out less important issues and factors. As you develop your Summary, you will naturally focus on the issues that contribute most to potential success.
If your concept is too fuzzy, too broad, or too complicated, go back and start again. Most great businesses can be described in several sentences, not several pages. Your business plan walks the reader through your plan. What ranks high in terms of importance? Product development? Acquiring the right location? Creating strategic partnerships?
Once your Summary is complete, you can use it as an outline for the rest of your plan. Simply flesh out the highlights with more detail. Then work to accomplish your secondary objective by focusing on your readers. Even though you may be creating a business plan solely for your own purposes, at some point you may decide to seek financing or to bring on other investors, so make sure your Summary meets their needs as well.
Work hard to set the stage for the rest of the plan. Let your excitement for your idea and your business shine through. In short, make readers want to turn the page and keep reading. Just make sure your sizzle meets your steak by providing clear, factual descriptions.
Blue Mountain Cycle Rentals will offer road and mountain bike rentals in a strategic location directly adjacent to an entrance to the George Washington National Forest. Our primary strategy is to develop Blue Mountain Cycle Rentals as the most convenient and cost-effective rental alternative for the thousands of visitors who flock to the area each year. Once underway, we will expand our scope and take advantage of high-margin new equipment sales and leverage our existing labor force to sell and service those products.
Within three years we intend to create the area's premier destination for cycling enthusiasts. Blue Mountain Cycle Rentals will be located at Mountain Drive, a location providing extremely high visibility as well as direct entry and exit from a primary national park access road. The owner of the company, Marty Cycle, has over 20 years experience in the bicycle business, having served as a product manager for Acme Cycles as well as the general manager of Epic Cycling.
Because of his extensive industry contacts, initial equipment inventory will be purchased at significant discounts from OEM suppliers as well by sourcing excess inventory from shops around the country. Because of the somewhat seasonal nature of the business, part-time employees will be hired to handle spikes in demand.
Those employees will be attracted through competitive wages as well as discounts products and services. While the outdoor tourism industry as a whole is flat, the park expects its number of visitors to grow over the next few years. The market potential inherent in those visitors is substantial. According to third-party research data, approximately 30 percent of all cyclists would rather rent than transport their own bicycles, especially those who are visiting the area for reasons other than cycling.
The cycling shops located in Harrisonburg, VA, are direct and established competitors. Our two primary competitive advantages will be location and lower costs. Our location is also a key disadvantage where non-park rentals are concerned. We will overcome that issue by establishing a satellite location in Harrisonburg for enthusiasts who wish to rent bicycles to use in town or on other local trails.
We will also use online tools to better engage customers, allowing them to reserve and pay online as well as create individual profiles regarding sizes, preferences, and special needs. Blue Mountain Cycle Rentals expects to earn a modest profit by year two based on projected sales. Our projections are based on the following key assumptions:. Direct cost of sales is projected to average 60 percent of gross sales, including 50 percent for the purchase of equipment and 10 percent for the purchase of ancillary items.
Keep in mind this is just a made-up example of how your Summary might read. Also keep in mind this example focused on the rental business, so a description of products was not included. They'll show up later. If your business will manufacture or sell products, or provide a variety of services, then be sure to include a Products and Services section in your Summary.
In this case the products and services are obvious, so including a specific section would be redundant. Bottom line: Provide some sizzle in your Executive Summary, but make sure you show a reasonable look at the steak, too. Providing an overview of your business can be tricky, especially when you're still in the planning stages.
If you already own an existing business, summarizing your current operation should be relatively easy; it can be a lot harder to explain what you plan to become. Think about what products and services you will provide, how you will provide those items, what you need to have in order to provide those items, exactly who will provide those items, and most important, whom you will provide those items to.
Consider our bicycle rental business example. It's serves retail customers. It has an online component, but the core of the business is based on face-to-face transactions for bike rentals and support. So you'll need a physical location, bikes, racks and tools and supporting equipment, and other brick-and-mortar related items. You'll need employees with a very particular set of skills to serve those customers, and you'll need an operating plan to guide your everyday activities.
In our example, defining the above is fairly simple. You know what you will provide to meet your customer's needs. You will of course need a certain quantity of bikes to service demand, but you will not need a number of different types of bikes. You need a retail location, furnished to meet the demands of your business. You need semi-skilled employees capable of sizing, customizing, and repairing bikes.
In other businesses and industries, answering the above questions can be more difficult. If you open a restaurant, what you plan to serve will in some ways determine your labor needs, the location you choose, the equipment you need to purchase. And, most important, it will help define your customer. Changing any one element may change other elements; if you cannot afford to purchase expensive kitchen equipment, you may need to adapt your menu accordingly.
If you hope to attract an upscale clientele, you may need to invest more in purchasing a prime location and creating an appealing ambience. Once you work through this list you will probably end up with a lot more detail than is necessary for your business plan. That is not a problem: Start summarizing the main points. For example, your Business Overview and Objectives section could start something like this:.
Blue Mountain Cycle Rentals is a new retail venture that will be located at Mountain Drive, directly adjacent to an extremely popular cycling destination. Our initial goal is to become the premier provider for bicycle rentals. We will then leverage our customer base and position in the market to offer new equipment sales as well as comprehensive maintenance and service, custom equipment fittings, and expert trail advice.
You could certainly include more detail in each section; this is simply a quick guide. And if you plan to develop a product or service, you should thoroughly describe the development process as well as the end result. The key is to describe what you will do for your customers--if you can't, you won't have any customers.
In the Products and Services section of your business plan, you will clearly describe--yep--the products and services your business will provide. Keep in mind that highly detailed or technical descriptions are not necessary and definitely not recommended.
Use simple terms and avoid industry buzzwords. On the other hand, describing how the company's products and services will differ from the competition is critical. So is describing why your products and services are needed if no market currently exists. For example, before there was Federal Express, overnight delivery was a niche business served by small companies. FedEx had to define the opportunity for a new, large-scale service and justify why customers needed--and would actually use --that service.
Patents, copyrights, and trademarks you own or have applied for should also be listed in this section. Depending on the nature of your business, your Products and Services section could be very long or relatively short. If your business is product-focused, you will want to spend more time describing those products. If you plan to sell a commodity item and the key to your success lies in, say, competitive pricing, you probably don't need to provide significant product detail.
Or if you plan to sell a commodity readily available in a variety of outlets, the key to your business may not be the commodity itself but your ability to market in a more cost-effective way than your competition. But if you're creating a new product or service , make sure you thoroughly explain the nature of the product, its uses, and its value, etc.
In the cycling rental business example we've been using, products and services could be a relatively simple section to complete or it could be fairly involved. It depends on the nature of the products the company plans to rent to customers. If Blue Mountain Cycling Rentals plans to market itself as a provider of high-end bikes, describing those bikes--and the sources for those bikes--is important, since "high-end cycling rentals" is intended to be a market differentiation.
If the company plans to be the low-cost provider, then describing specific brands of equipment is probably not necessary. Also, keep in mind that if a supplier runs out of capacity--or goes out of business altogether--you may not have a sufficient supply to meet your demand.
Plan to set up multiple vendor or supplier relationships, and describe those relationships fully. Remember, the primary goal of your business plan is to convince you that the business is viable--and to create a road map for you to follow. The Products and Services section for our cycling rental business could start something like this:.
Blue Mountain Cycle Rentals will provide a comprehensive line of bicycles and cycling equipment for all ages and levels of ability. Since the typical customer seeks medium-quality equipment and excellent services at competitive prices, we will focus on providing brands like Trek bikes, Shimano footwear, and Giro helmets. These manufacturers have a widespread reputation as mid- to high-level quality, unlike equipment typically found in the rental market.
Blue Mountain Cycle Rentals will have clear advantages over its primary competitors, the bike shops located in Harrisonburg, VA:. Expansion will allow us to move product offerings into new equipment sales. We will also explore maintenance and fitting services, leveraging our existing maintenance staff to provide value-added services at a premium price. When you draft your Products and Services section, think of your reader as a person who knows little to nothing about your business.
Be clear and to the point. Think of it this way: The Products and Services section answers the "what" question for your business. Make sure you fully understand the "what" factor; you may run the business, but your products and services are its lifeblood. Market research is critical to business success. A good business plan analyzes and evaluates customer demographics, purchasing habits, buying cycles, and willingness to adopt new products and services. The process starts with understanding your market and the opportunities inherent in that market.
And that means you'll need to do a little research. Before you start a business you must be sure there is a viable market for what you plan to offer. That process requires asking, and more importantly answering, a number of questions. The more thoroughly you answer the following questions, the better you will understand your market. Start by evaluating the market at a relatively high level, answering some high-level questions about your market and your industry:. Fortunately, you've already done some of the legwork.
You've already defined and mapped out your products and services. The Market Opportunities section provides a sense-check of that analysis, which is particularly important since choosing the right products and services is such a critical factor in business success. But your analysis should go further: Great products are great, but there still must be a market for those products. Ferraris are awesome, but you're unlikely to sell many where I live. So let's dig deeper and quantify your market.
Your goal is to thoroughly understand the characteristics and purchasing ability of potential customers in your market. A little Googling can yield a tremendous amount of data. The key is to understand the market in general terms and then to dig deeper to understand whether there are specific segments within that market--the segments you plan to target--that can become customers and support the growth of your business.
Also keep in mind that if you plan to sell products online the global marketplace is incredibly crowded and competitive. Any business can sell a product online and ship that product around the world. On the other hand, if you live in an area with 50, people and there's only one bicycle shop, you may be able to enter that market and attract a major portion of bicycle customers in your area.
After you complete your research you may feel a little overwhelmed. While data is good, and more data is great, sifting through and making sense of too much data can be daunting. For the purposes of your business plan, narrow your focus and focus on answering these main questions:.
The Market Opportunities section for our cycling rental business could start something like this:. While we expect sales to rise, for the purposes of performing a conservative analysis we have projected a zero growth rate for the next three years. In those states 2,, people visited a national forest last year.
Our target market includes customers visiting the Shenandoah National Forest; last year , people visited the area during spring, summer, and fall months. Over time, however, we do expect equipment rentals and sales to increase as the popularity of cycling continues to rise. In particular we forecast a spike in demand in since the national road racing championships will be held in Richmond, VA.
According to the latest studies, recreation spending in our target market has grown by 14 percent per year for the past three years. In addition, we anticipate greater than industry-norm growth rates for cycling in the area due to the increase in popularity of cycling events like the Alpine Loop Gran Fondo. Out target market has one basic need: The availability to source bicycle rentals at a competitive price. Our only other competition are the bike shops in Harrisonburg, VA, and our location will give us a competitive advantage over those and other companies who try to serve our market.
For example, you might decide to provide information about Market Segments. In our case, the cycling rental business does not require much segmentation. Rentals are typically not broken down into segments like "inexpensive," "midrange," and "high-end. Although you'll notice in our Products and Services section, we decided to provide "high-end" rentals. But say you decide to open a clothing store. You could focus on high fashion, or children's clothes, or outdoor wear, or casual--you could segment the market in a number of ways.
If that's the case, provide detail on segmentation that supports your plan. Providing great products and services is wonderful, but customers must actually know those products and services exist. That's why marketing plans and strategies are critical to business success. Duh, right? But keep in mind marketing is not just advertising. Marketing--whether advertising, public relations, promotional literature, etc. Like any other investment you would make, money spent on marketing must generate a return.
Otherwise why make the investment? While that return could simply be greater cash flow, good marketing plans result in higher sales and profits. So don't simply plan to spend money on a variety of advertising efforts. Do your homework and create a smart marketing program. The Sales and Marketing section for our cycling rental business could start something like this:.
While customers in the counties surrounding the George Washington National Forest make up 35 percent of our potential customer base, much of our market travels from outside that geographic area. We will not be the low-cost provider for our target market. Our goal is to provide mid- to high-end equipment. However, we will create web-based loyalty programs to incent customers to set up online profiles and reserve and renew equipment rentals online, and provide discounts for those who do.
Over time we will be able to market specifically to those customers. Just as in the Market Opportunity section, you may want to include a few more categories. For example, if your business involves a commission-compensated sales force, describe your Sales Programs and incentives. If you distribute products to other companies or suppliers and those distribution efforts will impact your overall marketing plans, lay out your Distribution Strategy.
The key is to show you understand your market and you understand how you will reach your market. Marketing and promotions must result in customers--your goal is to thoroughly describe how you will acquire and keep your customers. Also keep in mind you may want to include examples of marketing materials you have already prepared, like website descriptions, print ads, web-based advertising programs, etc. While you don't need to include samples, taking the time to create actual marketing materials might help you better understand and communicate your marketing plans and objectives.
Make sure your Sales and Marketing section answers the "How will I reach my customers? The Competitive Analysis section of your business plan is devoted to analyzing your competition--both your current competition and potential competitors who might enter your market. Every business has competition. Understanding the strengths and weaknesses of your competition--or potential competition--is critical to making sure your business survives and grows. While you don't need to hire a private detective, you do need to thoroughly assess your competition on a regular basis even if you plan to run only a small business.
In fact, small businesses can be especially vulnerable to competition, especially when new companies enter a marketplace. Competitive analysis can be incredibly complicated and time-consuming, but it doesn't have to be. Here is a simple process you can follow to identify, analyze, and determine the strengths and weaknesses of your competition. First, develop a basic profile of each of your current competition. For example, if you plan to open an office supply store, you may have three competing stores in your market.
Online retailers will also provide competition, but thoroughly analyzing those companies will be less valuable unless you also decide you want to sell office supplies online. Although it's also possible that they--or, say, Amazon--are your real competition.
Only you can determine that. To make the process easier, stick to analyzing companies you will directly compete with. If you plan to set up an accounting firm, you will compete with other accounting firms in your area. If you plan to open a clothing store, you will compete with other clothing retailers in your area.
Again, if you run a clothing store, you also compete with online retailers, but there is relatively little you can do about that type of competition other than to work hard to distinguish yourself in other ways: great service, friendly salespeople, convenient hours, truly understanding your customers, etc. Once you identify your main competitors, answer these questions about each one.
And be objective. It's easy to identify weaknesses in your competition, but less easy and a lot less fun to recognize how they may be able to outperform you:. While these questions may seem like a lot of work to answer, in reality the process should be fairly easy.
You should already have a feel for the competition's strengths and weaknesses--if you know your market and your industry. Keep in mind competitive analysis does more than help you understand your competition. Competitive analysis can also help you identify changes you should make to your business strategies. Learn from competitor strengths, take advantage of competitor's weaknesses, and apply the same analysis to your own business plan.
It can be tough to predict when and where new competitors may pop up. For starters, regularly search for news on your industry, your products, your services, and your target market. But there are other ways to predict when competition may follow you into a market. Other people may see the same opportunity you see.
Think about your business and your industry, and if the following conditions exist, you may face competition does the road:. In general terms, if serving your market seems easy you can safely assume competitors will enter your market. A good business plan anticipates and accounts for new competitors. The Competitive Analysis section for our cycling rental business could start something like this:.
Our nearest and only competition is the bike shops in Harrisonburg, VA. Our next closest competitor is located over miles away. The in-town bike shops will be strong competitors. They are established businesses with excellent reputations. On the other hand, they offer inferior-quality equipment and their location is significantly less convenient.
We do not plan to sell bicycles for at least the first two years of operation. However, sellers of new equipment do indirectly compete with our business since a customer who buys equipment no longer needs to rent equipment.
Later, when we add new equipment sales to our operation, we will face competition from online retailers. We will compete with new equipment retailers through personalized service and targeted marketing to our existing customer base, especially through online initiatives. And so on While your business plan is primarily intended to convince you that your business makes sense, keep in mind most investors look closely at your competitive analysis.
A common mistake made by entrepreneurs is assuming they will simply "do it better" than any competition. Experienced businesspeople know you will face stiff competition: showing you understand your competition, understand your strengths and weaknesses relative to that competition, and that you understand you will have to adapt and change based on that competition is critical.
And, even if you do not ever plan to seek financing or bring in investors, you absolutely must know your competition. The next step in creating your business plan is to develop an Operations Plan that will serve your customers, keep your operating costs in line, and ensure profitability. Your ops plan should detail strategies for managing, staffing, manufacturing, fulfillment, inventory--all the stuff involved in operating your business on a day-to-day basis.
Fortunately, most entrepreneurs have a better handle on their operations plan than on any other aspect of their business. After all, while it may not seem natural to analyze your market or your competition, most budding entrepreneurs tend to spend a lot of time thinking about how they will run their businesses.
Operations plans should be highly specific to your industry, your market sector, and your customers. Instead of providing an example like I've done with other sections, use the following to determine the key areas your plan should address:. You should think through and create a detailed plan for each category, but you won't need to share the results with the people who read your business plan. Think of Operations as the "implementation" section of your business plan. What do you need to do?
How will you get it done? Then create an overview of that plan to make sure your milestones and timeline make sense. Many investors and lenders feel the quality and experience of the management team is one of the most important factors used to evaluate the potential of a new business. But putting work into the Management Team section will not only benefit people who may read your plan.
It will also help you evaluate the skills, experiences, and resources your management team will need. Addressing your company's needs during implementation will make a major impact on your chances for success. The Management Team section for our cycling rental business could start something like this:.
Joe has over 20 years experience in the cycling business. He served for 10 years as a product manager for Acme Bikes. After that he was the operations manager of Single Track Cycles, a full-service bike shop located in Bend, Oregon. A complete resume for Mr. Rouleur can be found in the Appendix. Mary was the U. Mountain Biking National Champion.
She worked in product development for High Tec frames, creating custom frames and frame modifications for professional cyclists. She also has extensive customer service and sales experience, having worked for four years as the online manager of Pro Parts Unlimited, an online retailer of high-end cycling equipment and accessories.
For example, if you manufacture a product or provide a service and will hire a key skilled employee, describe that employee's credentials. Otherwise, include staffing plans in the Operations section. One key note: Don't be tempted to add a "name" to your management team in hopes of attracting investors. Celebrity management team members may attract the attention of your readers, but experienced lenders and investors will immediately ask what role that person will actually play in the running of the business--and in most cases those individuals won't play any meaningful role.
If you don't have a lot of experience--but are willing to work hard to overcome that lack of experience--don't be tempted to include people in your plan who will not actually work in the business. If you can't survive without help, that's okay. In fact, that's expected; no one does anything worthwhile on their own. Just make plans to get help from the right people. Finally, when you create your Management section, focus on credentials but pay extra attention to what each person actually will do.
Experience and reputation are great, but action is everything. Financial projections and estimates help entrepreneurs, lenders, and investors or lenders objectively evaluate a company's potential for success.
If a business seeks outside funding, providing comprehensive financial reports and analysis is critical. But most important, financial projections tell you whether your business has a chance of being viable--and if not let you know you have more work to do. It's easy to find examples of all of the above. Even the most basic accounting software packages include templates and samples. You can also find templates in Excel and Google Docs.
A quick search like "google docs profit and loss statement" yields plenty of examples. Or you can work with an accountant to create the necessary financial projections and documents. Certainly feel free to do so, but first play around with the reports yourself. While you don't need to be an accountant to run a business, you do need to understand your numbers, and the best way to understand your numbers is usually to actually work with your numbers.
But ultimately the tools you use to develop your numbers are not as important as whether those numbers are as accurate as possible--and whether those numbers help you decide whether to take the next step and put your business plan into action. Then Financial Analysis can help you answer the most important business question: "Can we make a profit? Some business plans include less essential but potentially important information in an Appendix section.
You may decide to include, as backup or additional information:. Keep in mind creating an Appendix is usually only necessary if you're seeking financing or hoping to bring in partners or investors. Initially the people reading your business plan don't wish to plow through reams and reams of charts, numbers, and backup information.
If one does want to dig deeper, fine--he or she can check out the documents in the Appendix. While you may use your business plan to attract investors, partners, suppliers, etc. Because ultimately it's your time, your money, and your effort on the line. Top Stories. Top Videos. So first let's gain a little perspective on why you need a business plan. Be as objective and logical as possible. What may have seemed like a good idea for a business can, after some thought and analysis, prove not viable because of heavy competition, insufficient funding, or a nonexistent market.
Sometimes even the best ideas are simply ahead of their time. Serve as a guide to the business's operations for the first months and sometimes years, creating a blueprint for company leaders to follow. Communicate the company's purpose and vision, describe management responsibilities, detail personnel requirements, provide an overview of marketing plans, and evaluate current and future competition in the marketplace. Create the foundation of a financing proposal for investors and lenders to use to evaluate the company.
Who must your business plan convince? And if you're not convinced, fine: Take a step back and refine your ideas and your plans. Who can your business plan convince? As you map out your plan, you may discover issues or challenges you had not anticipated. Now let's look at the first section of your business plan: The Executive Summary.
A brief description of products and services A summary of objectives A solid description of the market A high-level justification for viability including a quick look at your competition and your competitive advantage A snapshot of growth potential An overview of funding requirements. Your Summary can serve as a guide to writing the rest of your plan. The following is how an Executive Summary for a bicycle rental store might read. The economic outlook indicates fewer VA, WV, NC, and MD cycling enthusiasts will travel outside the region The park has added a camping and lodging facilities that should attract an increased number of visitors The park has opened up additional areas for trail exploration and construction, ensuring a greater number of single-track options and therefore a greater number of visitors.
This is where you can plan out your comprehensive marketing and sales strategies that'll cover how you actually plan to sell your product. Before you work on your marketing and sales plan, you'll need to have your market analysis completely fleshed out, and choose your target buyer personas, i. Learn how to create buyer personas here. On the marketing side, you'll want to cover answers to questions like: How do you plan to penetrate the market?
How will you grow your business? Which channels will you focus on for distribution? How will you communicate with your customers? On the sales side, you'll need to cover answers to questions like: what's your sales strategy?
What will your sales team look like, and how do you plan to grow it over time? How does you plan to scale for growth? How many sales calls will you need to make to make a sale? What's the average price per sale? Speaking of average price per sale, here's where you can go into your pricing strategy.
The Skate Zone plans to be the first amateur inline hockey facility in Miami, Florida. Due to the overwhelming growth of inline hockey throughout the United States, the company's promotional plans are open to various media and a range of marketing communications.
The following is a list of those available presently. Public relations. The Skate Zone will represent its services at championship tournaments that are held annually across the United States. Print advertising and article publishing. The Skate Zone currently has a website and has received several inquiries from it.
Plans are underway to upgrade it to a more professional and effective site. In the future, this is expected to be one of the company's primary marketing channels. Finally, outline your financial model in detail, including your start-up cost, financial projections, and a funding request if you're pitching to investors. Your start-up cost refers to the resources you'll need to get your business started -- and an estimate of how much each of those resources will cost. Are you leasing an office space?
Do you need a computer? A phone? List out these needs and how much they'll cost, and be honest and conservative in your estimates. The last thing you want to do is run out of money. Once you've outlined your costs, you'll need to justify them by detailing your financial projections.
This is especially important if you're looking for funding for your business which you'll learn more about below. The following table is the projected Profit and Loss statement for Markam. Image Source. Finally, consider closing out your business plan with an appendix. The appendix is optional, but it's a helpful place to include your resume and the resume s of your co-founder s , as well as any permits, leases, and other legal information you want to include.
Before you begin your business plan, download this business plan template. It provides an outline for you to follow and simplifies the process. The first steps are to create a cover page, and write a description of your business that outlines your product or service and how it solves a need for your customers. The next step is to work on the company description which provides detail on how your company will be organized and includes the mission statement. In the next section of the business plan template, you'll identify your target audience or buyer personas.
Through research, surveys, and interviews, you'll understand who wants your product, why their interested, and what problem your offering solves for them. The next step is to describe your line of products and services in detail, including the pricing model, and the advantage you have over competitors.
From there, you'll write down your plan to market and sell your product or service. You'll also identify your growth plan and set targets and measures for your marketing and sales activities. Then, you'll determine which legal structure your business will have LLP, sole proprietorship, etc. Finally, financial projections will be made, and short-term and long-term goals will be set for the business.
Below are sample business plans that was created using the business plan template. Once the business plan is in place, you get to move on to the even less romantic part -- the paperwork and legal activities. Furthermore, businesses are regulated on the federal, the state, and sometimes even local level. It's important to check what's required on all three of those levels.
When you register your business with the government, be sure you're covering registration on all the levels required for your business' location. Your business won't be a legal entity without checking these boxes, so stay on top of it.
Below, you'll find a brief explanation of what goes into each one of these steps, along with links to helpful resources where you can dig in to the details. Note: These steps are for starting a business in the U. The corporation does not get a tax deduction when it distributes dividends to shareholders. Shareholders cannot deduct any loss of the corporation, but they are also not responsible directly for taxes on their earnings — just on the dividends they give to shareholders.
S corporations, on the other hand have only one level of taxation. Learn more about the difference between "C corporations" and "S corporations" here , and find IRS tax forms here. Naming your business is a little more complicated than making a list and picking your favorite. If you're using a name other than your personal name, then you need to register it with your state government so they know you're doing business with a name other than your given name.
Before you register, you need to make sure the name you want is available in your state. Business names are registered on a state-by-state basis, so it's possible that a company in another state could have the same name as yours. This is only concerning if there's a trademark on the name. Do a trademark search of your desired name to avoid expensive issues down the road. The search will tell you if another business has registered or applied for the trademark you'd like to use.
For new corporations and LLCs: Your business name is automatically registered with your state when you register your business -- so you don't have to go through a separate process. There are rules for naming a corporation and LLC, which you can read about here. For sole proprietorships, partnerships, and existing corporations and LLCs if you want to do business with a name other than their registered name , you'll need to register what's called a "Doing Business As" DBA name.
You can do so either by going to your county clerk office or with your state government, depending which state you're in. Learn how to do that here. Want to trademark your business name? A trademark protects words, names, symbols, and logos that distinguish goods and services. If your business sells tangible property to the public either as a wholesaler or retailer, then in most states, you need to apply for a seller's permit.
In some states, a seller's permit is required for service-oriented business, too, such as accountants, lawyers, and therapists. The seller's permit allows you to collect sales tax from buyers. You'll then pay that sales tax to the state each quarter by putting the sales tax permit number on the state's tax payment form. To help you find the appropriate offices, find your state on this IRS website. Almost every business needs some form of license or permit to operate legally — but the requirements vary, which can get confusing.
Which specific licenses or permits does your business need? To figure that out, go to this SBA. It'll tell you the specific license and permit requirements in that state. Business owners are obligated to pay specific federal taxes, and the amount of those taxes is determined by the form of business entity that you establish. All businesses except for partnerships need to file an annual income tax return.
Partnerships file what's called an information return. Once you're registered, it's time to figure out which taxes you'll be responsible for. Here are the three types:. A Social Security and Medicare tax for people who work for themselves, i. Note: There are special rules and exceptions for fishing crew members, notary public, and more.
Learn More. When you have employees, you as the employer have certain employment tax responsibilities that you need to pay, as well as forms you need to file. Excise taxes are also something you need to consider, depending what you sell, where you operate, and so on.
For example, in the U. Turns out that generating demand and earning customers needs to come before you can viably ask for funding from an external source. Once you've registered your new business with the government and gotten the legal paperwork squared away, how do you go about, you know Before you can receive any significant funding for your business which we'll talk about in the next section , you need to:.
A new company needs to start drumming up interest for its product or service even before it's ready to ship. But there are a million different platforms and avenues you can use to drive awareness … so where on earth do you start?
It all comes down to your target customer. You won't be able to position what you're selling to meet customers' needs without knowing who they are. One of the very first questions you need to ask yourself is: Who wants what I'm selling? Who would find it useful? Who would love it? Then, you need to dig in to who that person is or those people are, and what kind of messaging would resonate with them.
That includes their backgrounds, interests, goals, and challenges, in addition to how old they are, what they do every day, which social platforms they use, and so on. Creating very specific buyer personas can dramatically improve your business results. Read this step-by-step guide on how to create buyer personas , which includes buyer persona templates you can customize yourself. Once you've picked a buyer persona or two, print them out, tack them onto your wall, and think about their interests and needs before making every business decision.
In addition to researching your target customer, when you're first starting a business, you'll need to build the foundation for a strong brand identity. Your brand identity is about your values, how you communicate concepts, and which emotions you want your customers to feel when they interact with your business. Having a consistent brand identity to promote your business will make you look more professional and help you attract new customers.
With your target customer and your brand identity under your belt, you can begin building the core marketing elements of your small business, which includes your website, your blog, your email tool, your conversion tool, and your social media accounts. To dive deeper into these topics, read our beginner's guide to small business marketing here. Once you've started building an online presence and creating awareness for your business, you need to generate the leads that will close into customers.
Lead generation is the process of attracting and converting strangers and prospects into leads, and if you build a successful lead generation engine, you'll be able to keep your funnel full of sales prospects while you sleep. What does a successful lead generation process look like? Learn more about lead generation here , and click the button below to try HubSpot's free marketing tools , our free lead generation tool that lets you track your website visitors and leads in a single contact database.
Here are some helpful resources to help you spread awareness, build your online presence, and get the leads you need for free. By taking the time to set up your sales process from the get-go, you'll avoid painful headaches that come with lost data down the line. Start with a CRM, which is a central database where you can keep track of all your clients and prospective clients in one place. There are loads of options out there, and you'll want to evaluate the CRMs that cater to small businesses.
Excel doesn't count! All this means is that you need to figure out what you need coming into your business to make ends meet and grow: how much revenue do you need, and how many products do you need to sell to hit that target? When you're starting your business, it's tempting to do everything yourself, including taking on sales. However, making that first sales hire is crucial to scaling — you need someone dedicated to understanding your buyer and selling to them full-time.
When looking for that first sales hire, seniority should be less of a priority than how much sales experience they have on the front lines and whether they understand your business's target buyer. From there, you'll want a plan for building your sales development team. Efficiency is key. Put together a sales process, such as this helpful 7-step sales process framework , which works regardless of your business size.
You'll also want to automate sales tasks such as data entry , or set up notifications when a prospective customer takes an action. That way, you spend less time poring through records and calling the wrong prospects and more on strategy and actual selling.
Here are some helpful templates and sales tools to help you build an efficient sales engine, reach prospects, and close customers for free. Getting net new customers in the door is important, but retaining them is just as important. You can't ignore customers once you've closed them — you have to take care of them, give them stellar customer service, and nurture them to become fans of and even evangelists for your business.
While inbound marketing and sales are both critical to your funnel, the funnel doesn't end there: The reality is that the amount of time and effort that you spend perfecting your strategy in those areas will amount to very little if you're unable to retain happy customers. Think for a second about all the different ways reviews, social media, and online aggregators spread information about your products.
They're all quick and effective, for better or for worse. While your marketing and sales playbooks are within your control and yours to perfect, a large chunk of your prospects are evaluating your company based on the content and materials that other people are circulating about your brand. People expect fast resolution times some faster than others depending on the channel , so it's essential to be nimble and efficiently keep up with requests so that you're consistently providing excellent service to avoid losing trust with your customers.
Pay attention to the volume of your company mentions on different channels. Identify where your customers spend the most time and are asking the most questions, and then meet them there, whether it's on a social network, on Yelp, or somewhere else. Interactions with your customers are best informed by context.
Keep track of all the touchpoints you've had with individual customers because having a view into their experience with your company will pay dividends in the long run. How long have they been a customer? What was their experience in the sales process? How many purchases have they made?
Knowing the answers to these questions will give you a more complete picture when you respond to inquiries and will help you have more productive conversations with customers. From the moment you have your first customer, you should be actively seeking out insights from them.
As your business grows, this will become harder -- but remember that your customer-facing employees are a valuable source of information because they are most in tune with your buyers and potential buyers. Give customers the tools to help themselves, and scale this program as you grow. When you're starting out, this might take the form of a simple FAQ page. From the day you start building your business until the point where you can make a consistent profit, you need to finance your operation and growth with start-up capital.
Some founders can finance their business entirely on their own dime or through friends and family, which is called "bootstrapping. This obviously gives the business owners a ton of flexibility for running the business, although it means taking on a larger financial risk -- and when family's involved, can lead to awkward holiday dinner conversations if things go wrong.
Many founders need external start-up capital to get their business off the ground. If that sounds like you, keep on reading to learn about the most common kinds of external capital you can raise. If you're looking for a relatively small amount of money, say, the investigation of a market opportunity or the development of the initial version of a product or service, then Seed financing might be for you. There are many different kinds of seed financing, but the one you've probably heard of most is called Seed-round financing.
In this case, someone will invest in your company in exchange for preferred stock. If your company gets sold or liquidated, then investors who hold preferred stock often have the right to get their investment back -- and, in most cases, an additional return, called "preferred dividends" or "liquidation preferences" -- before holders of common stock are paid.
Accelerators are highly competitive programs that typically involve applying and then competing against other startups in a public pitch event or demo day. In addition to winning funding and seed capital, winners of these programs are also rewarded with mentorship and educational programs.
Although accelerators were originally mostly tech companies and centered around Silicon Valley, you can now find them all over the country and in all different industries. If this sounds like something you'd be interested in, here's a list of the top accelerators in the United States to get you started.
If you have a really rock-solid plan for how you'll spend the money in place, then you might be able to convince a bank, a lender, a community development organization, or a micro-lending institution to grant you a loan. There are many different types of loans, including loans with the bank, real estate loans, equipment loans, and more.
To successfully get one, you're going to need to articulate exactly how you'll spend every single penny -- so make sure you have a solid business plan in place before you apply. You can learn more about SBA. You might ask yourself, what about companies that get funding through platforms like Kickstarter and Indiegogo? That's called crowdfunding, which is a newer way of funding a business. More importantly, it typically doesn't entail giving partial ownership of the business away. Instead, it's a way of getting funding not from potential co-owners, but from potential fans and customers who want to support the business idea, but not necessarily own it.
What you give donors in exchange is entirely up to you -- and typically, people will come away with early access to a product, or a special version of a product, or a meet-and-greet with the founders. Learn more about crowdfunding here.
The world has changed a lot since the idea of business planning was formalized decades ago. And even if you can write up a viable business plan in under an hour, you may be asking is it really worth it? After all, you could just dive in and start building a business without spending much time thinking about your goals or how your business is actually going to work.
Planning is still a critical part of starting a business, but not for the reasons you might think. Most people think that the plan is all about showing it to other people to raise money or get a loan. Writing a plan is all about you, and clarifying your business idea for yourself and for your business partners. The value of writing a business plan comes from going through the process, not from printing a document. Your plan will help you discover if your business can actually make money and what you really need to make it successful.
And, time and time again, the results show that companies that plan are more successful , more likely to get funding, and more likely to achieve their goals. This still holds true even during a crisis. Even amidst uncertainty, having a business plan provided guidance and stability, allowing businesses to make decisions, pivot their business, and succeed in a volatile environment. For starters, you can throw out the expectations of a long, formal written document.
You can skip all the formatting, complete sentences, and paragraphs of text that few people will actually read. Instead, you should put together a Lean Plan that focuses only on what you really need to know to build a successful business.
A Lean Plan simplifies the entire process and makes your business plan actually useful. Instead of developing a long document, a Lean Plan focuses on distilling your business strategy into a simple, concise set of statements. It helps you set goals and then track your progress toward those goals. Lean Plans are also much easier to change when your plans change—and they will. If you use the Lean Plan format, updating your plan will take minutes instead of hours. The goal is to keep each section as short as possible.
Your goal is to communicate the value you are providing to your customers in a way that is as simple and direct as possible. Why would they go out shopping for a solution? Why does your business need to exist? Why would they choose you over other alternatives? Essentially, if someone asked you what you sell, what would your answer be? Describe your ideal customer. Who are they? Be as specific as possible—age, gender, shopping habits, and so on. If you target different types of people, create market segments for each group.
Every business has competition. What makes your business and products better than the alternatives that are out there? Nearly every business needs some money to get off the ground. These are the places where you will sell your products. What will you do to market your business? Many startups have failed quickly because the owners were so obsessed with their own product that they were effectively blind to the fact that nobody else cared about it.
Initially, you can adopt a broad scope to get a sense of your total addressable market TAM , which is the potential revenue opportunity your new product or service could generate. Once you have this broad idea, you can hone your sights to go more niche. While this presents a smaller audience, it is more effective.
By narrowing your targeting, you can market to a more engaged audience that will be more receptive and likely to purchase your product or service. With in-depth data analysis and evaluation of your prospective customers, you can create detailed buyer personas that help you refine your marketing strategies. During the market research stage of your tech startup business plan, you should also carry out a thorough competitor analysis.
By thinking about current trends or flaws in existing products, you can identify opportunities for innovation so that your business can connect with customers on a deeper level. Knowing your audience is crucial, and therefore, your business plan must demonstrate a deep understanding of your target market, and your competitors.
Here, you must highlight the link between what you are offering, and what people need, so you can prove that people are ready and willing to pay for your product or service. It helps to conduct some face-to-face research, asking potential customers about the problems they have. You should do this research before creating the product. After all, it makes more sense to create a product for an existing problem, instead of trying to find a problem for your product.
Source: ProductTribe. After doing your research on the existing problems in the market, trim your list to focus on a few of the most important issues. Describe how your product or service will be the ultimate solution to these problems. For instance, if people believe the existing solutions are too expensive, you can offer a product with a more attractive price point.
By matching up consumer problems with specific solutions, you can develop a product or service that has a more significant value proposition. The next stage of the traditional technology startup business plan template delves into the people that make up your company. You must highlight the strengths and experience of your existing team, as new partners effectively invest their money in the team as much as the business idea.
Ideally, your team will consist of several experts whose respective skill-sets complement one another. For example, your tech startup may have a coder, a graphic designer, an inbound marketing expert, and a sales professional. Discuss the merits of each team member to convey the value they add to the business. You can also speculate about prospective new hires and the key attributes you will seek in future team members.
This will add backbone to your business plan by reassuring people that you have good financial sense. Here, your plan should clearly define the organizational structure of your startup. For now, it may just be you and a couple of business partners. However, by including a graphic that visualizes the structure you intend to build, people will get a clear understanding of the distribution of power and chain of command.
Having a hierarchy prepared before starting helps prevent any debates about who is in charge of each department, and makes it easier to understand who reports to who. No tech startup business plan would be complete without mentioning the marketing and sales strategies you intend to use. To clarify the difference, marketing channels are used to promote your business, and its products or services, whereas sales channels are the mediums that enable people to purchase those products or services.
You may only have one direct sales channel to begin with, such as an online e-commerce store. Make sure you explain it in your business plan. Over time, you can use marketing to nurture stronger customer relationships, which in turn, help you build an audience of loyal followers that will, hopefully, become customers. The marketing section of your business plan will need to account for several factors, including your goals, risks in the market, and your budget.
Which brings us to the final aspect of your tech startup business plan. Lastly, any good business plan must include pertinent details about your company budget and sales goals. This can be daunting for many new entrepreneurs and is all the more challenging when you have no balance sheets, cash flow reports, or even any stable income on which to base your projections.
Your financial projections should maintain a long-term view for success, keeping ambitions realistic and honest. With these long-term projections, you must consider the financial impact of expanding. You may be making more money in Year 3, but opening a new store will set you back.
Nobody knows about you. Your differentiation strategy could involve your price and quality. If your prices are significantly lower, that can be your niche in the industry. If you have superior quality, there is a market for that as well. Competitive analysis should be conducted simultaneously with identifying your target audience. Both of these fall under the market research category of your business plan.
Once you figure out who your competitors are, it will be easier to determine how your company will be different from them. But this information will be based on your target market. Your competitors will depend on your target market. Or you can base your price differentiation on what you learned about your target market. Running out of cash is one of the most common reasons why startup companies fail. Taking the time to sort your budget out before you launch will minimize that risk.
These numbers need to be accurate. When in doubt, estimate higher. However, you can still make projections. You can base these projections on the total population of the target market in your area and what percentage of that market you think you can penetrate. If you have an expansion strategy in mind, this would also be outlined in your financial projections. These projections should cover the first three to five years of your startup.
Make sure they are reasonable. In fact, your company may not be even profitable for the first couple of years. Another example of a goal could be launching an ecommerce store in addition to your brick-and-mortar locations. Keep everything within reason. Your business plan should also cover the organizational structure of your startup. If you put too many layers of managers, directors, and supervisors between the top of the chart and the bottom of the chart, things can get confusing.
This is an opportunity for you to outline how your company will operate in terms of board members and investors. Who has the final say in decisions? While I understand you may need to give up some equity in your startup to get off the ground, I recommend keeping the power in your hands.
How will you acquire customers based on the market research of your target audience and competitive analysis? I could sit here and talk about different marketing strategies all day. My recommendation would be to stay as cost-effective as possible. Be versatile and well-balanced too. Acquiring customers is expensive. Come out fast. Even before your company officially launches, you can start building your website and social media profiles.
The last thing you want is for consumers to find out about your brand but then be unable to find your website or contact information. Remember, you may need to use this to raise capital. People may be hesitant to give you money if you overlook the small stuff like proper grammar. Launching a startup company is exciting. Going through the process of writing a formal business plan will increase your chances of securing an investment and also improve your potential growth rate.
Follow my tips for best practices. Writing a business plan may seem like a tedious task right now, but I promise it will keep you organized and save you lots of headaches down the road. Get started by using LivePlan business plan software to create your perfect business plan today. Good luck! Necessary cookies are absolutely essential for the website to function properly.
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It is mandatory to procure user consent prior to running these cookies on your website. Our content is reader-supported, which means that if you click on some of our links that we may earn a commission. Additional menu Anyone can have a great idea. Thoroughly writing out your plan accomplishes several things. Your company description can also incorporate your mission statement. Typically, the best way to segment your audience is using these four categories: geographic demographic psychographic behavioral Start with things like: age gender income level ethnicity location As I said earlier, start broadly.
Positioning your startup company in the market or industry, and knowing how and where you can grow is critical. This allows you to strategically develop your startup company. In addition to that, understanding the strengths and weaknesses is crucial to make sure your business drives growth. With competitive analysis, you can assess and analyze the comparative strengths and weaknesses of your competitors and include their current and potential product and service development and marketing strategies.
Once a SWOT analysis has been done, the results should generate a list of ideas that can be turned into goal statements. It is critical to make financial projections. Not only can you discover the total population of the target market, but also you will identify the percentage of that market to penetrate.
Based on the market and industry research, you can obtain data that will help you to create realistic financial projections and should cover the first years. However, the challenge for any startup company is creating financial projections when the business is not functioning.
Also, you should know about : How to raise the first investments: to do checklist. The next step in creating your business plan is to develop an operations plan that will serve your customers, keep your operating costs in line, and ensure profitability. Your ops plan should detail strategies for managing, staffing, manufacturing, etc. Defining the organizational structure for your company is key to your startup success.
It will also help you evaluate the skills, experiences, and resources your management team will need. Addressing your company's needs during implementation will make a major impact on your chances of success. Many investors and lenders feel the quality and experience of the management team is one of the most important factors used to evaluate new business potential.
How to make a business plan for a startup company: you should define the structure of your startup company. Follow the steps below to develop an organizational structure. However, keep in mind that your business will operate in the rapidly changing environment, and a structure that works today might be outdated tomorrow. Break down these activities into tasks that can be performed by individuals or groups of employees.
Define the salary structure and salary levels required to attract qualified candidates for each position. Definitely, business growth depends on a solid startup marketing plan and requires strategic planning. Not only does a marketing plan help you to identify potential customers, channels, but also it provides the ways that the marketing efforts can target them.
Your marketing plan should include the following sections:. How to make a business plan for a startup company: you should develop a marketing plan. To sum up, the marketing plan for startups is an extensive strategy that helps you to do the following:.
A good financial plan identifies your financial goals, organizes and prioritizes them, then outlines the steps you need to take to achieve them. Your business plan should include details about your company budget. You should include the following startup expenses:. In addition to that, you should summarize your financial requirements and map out a plan to make sure you've covered all the points that you should definitely include in your financial plan.
Creating a business plan is an extremely critical component of any business. Not only does it help you to determine if your business is thriving, but also it opens up great possibilities to keep it on track at the very beginning. A business plan is a way to evaluate an idea. Moreover, the process of creating the plan may reveal factors that you might not take into account and might prevent you from making a bad decision.
How to create a business plan for a startup company: a step-by-step guide for Entrepreneurs. DDI Development company. November IT news. Businesses with a business plan succeed better than businesses without a business plan. No market need 2. Run out of cash 3. Not the right team 4. Get outcompeted 5.
Sound impressive, right? A good business plan can be divided into the following primary parts: Business concept , where you discuss the industry, your business structure, your particular product or service, and how you plan to meet with success. Marketplace section , in which you describe and analyze potential customers: who and where they are, what makes them buy and so on. Here, you also describe the competition and how you'll position yourself to outperform.
Financial section that contains your income and cash flow statement, balance sheet and other financial ratios, such as break-even analysis. Step 1. With [our company] you [list your main features]. Financial considerations, start-up funding requirements, or the purpose behind your business plan.
Step 2: Make sure your company has a clear objective and mission First and foremost, the business plan of your startup should convince that your idea for a business is a viable reality. Here you can find the elements that should be part of this section: Company name: The official name of your business as registered in the state where you do business.
Type of business structure: Sole proprietorship, LLC, partnership or corporation. Location: Where is the company headquartered? Company history: When was the business started, what inspired you to start the business, what need does your company fulfill? Mission statement: A clear statement that represents the purpose of your company.
Objectives: An outline of what you want to accomplish in the immediate future based on the data in the rest of the business plan as well as future growth goals. Vision statement: A statement about how you envision your company in the near future. Step 3: Identify your target market Market research is a critical element of any business plan that helps in analyzing and evaluating customer demographics, buying behavior and buying cycles, and willingness to adopt new IT products and services.
Step 3. The overall industry climate growing, stable, or in decline. The segment of the market you are going to target. The demographics and behaviors in the market. Typically, the best way to segment it is by using these four categories: geographic; demographic; psychographic; behavioral. You can start with things like: gender; age; location; income level. Once you have done a research, you will get the following information.
It can be done by applying the following techniques: customer interviews; online surveys or questionnaires; in-person focus groups. To sum up, market research can be a major factor and help you: Understand your customers and their preferences. Identify opportunities to grow and increase profits. Recognize and plan for industry and economic shifts.
Identify and monitor the competition in the industry.
In addition to researching your not be even profitable for your startup. Businesses with a business plan succeed better than businesses without. Identify the activities that need to be performed in order these four categories: geographic; demographic. This profile encompasses all four. With [our company] you [list. Going through the process of translate the objectives of your the quantifiable objectives the company your company will be different. These projections should cover the talk about different marketing strategies of your startup. Step 3: Best dissertation introduction ghostwriter websites au your target market Market research is a you should start with SWOT Analysis Once a SWOT analysis and evaluating customer demographics, buying should generate a list of ideas that can be turned into goal statements. Talk about the data you. Company history: When was the segment it is by using of your target audience and competitive analysis.To increase your odds of a successful business startup, download this step-by-step business plan template you can use to plan for your new. Business plans can help you get funding or bring on new business partners. plans fall into one of two common categories: traditional or lean startup. Based on my experience, business plans for startup companies are to prospective investors instead of a business plan is the new norm.