The most frequent questions we get at the Small Business Development Center are, “What is a business plan?” and “Do I need a business plan?”
The business plan can be used in many ways over the life of your business. It can provide you with the information you need to make critical decisions such as a “go” or “no-go” decision. It can function as a management tool to describe the way you intend to commit your resources and measure the success of your business. It can be the “selling tool” you use to convince your banker or investors of the worthiness of your ideas and of your business.
The business plan is the “road map” you’ve designed to make informed, strategic choices throughout the life of your business. It also should allow you to be flexible and respond to the changing needs of your market.
Developing a business plan is an intensive process and requires dedication, research and a commitment of time from you. So, let us look at a way to “begin the business plan.” For purposes of clarity and simplicity, concentrate on the following four major areas and the five questions assigned to each area:
I. The Business
• What specific product/service will I offer?
• What experience do I have in this field?
• What skills will I need that I do not have? Where/how will I get these skills?
• Specifically, who will perform what duties?
• Where will I locate my business? Why?
II. The Customers
• Who is my customer? (age, gender, income, occupation, location, etc.)
• Why will my customer buy my product/service?
• How often and in what quantity will my customer buy my product/service?
• How many potential customers are in my market area?
• How far is my customer willing to travel?
III. The Competition
• Who are my major competitors?
• What are their strengths? Weaknesses?
• Are the numbers of competitors growing?
• Have any gone out of business in the past two years? Why?
• Is demand expanding/shrinking? Why?
IV. The Financial Plan
• How will I fund my business? (Personal, loan, other.)
• What are my start up expenses?
• What are my projected sales for the first twelve months?
• What are my projected expenses for the first twelve months?
• What is my projected monthly profit?