Writing a business plan may sound simple enough, but it actually takes several dire and crucial steps. According to entrepreneur Darrell Zahorsky, the following steps are all essential in comprising a plan for one’s business: 1. “Audience & Funding Type: When writing a business plan, you must determine who will be reading it. This decision will shape the business plan. Do you plan to go for debt or equity financing? Each form of funding for your business has pros and cons. For instance, the venture capital market can be very time consuming and competitive.
Do you have the time to write the business plan for investor funding and to network within the community? Writing a business plan for investors is 15-30 pages with in-depth analysis and full details of facts and figures to support assumptions of the market. Writing a business plan for the bank is 10-15 pages and focused with the bank’s concern with risk. A venture plan presents the upside and potential return on investments, whereas a bank plan reduces the risks and sells the ability to repay the loan. ” You must also “Determine the purpose of your business.
Identify it on paper and go into as much detail as you can at this point. For instance, are you providing a service to the community? Perhaps you are selling a product. Write down what you want the focus to be”, says Jennifer Metz. 2. Business Plan Outline: Zahorsky identifies the next step as follows: “A business plan outline is the second most important starting point once you’ve pre-determined your audience. The business plan outline should be prepared before the actual research and writing of the business plan.
” During this step, it is also pertinent for one to decide: “Who is your target consumer? Will it be men or women? Old or young? Individuals or businesses and corporations? Local consumers or long distance consumers? ” 3. Research & Information Collection: In this step, Zahorsky says “Once you have made the decision of the type of funding your business requires, it is time for the research. Business plan research covers several areas: -Insight from your experience working and observing the industry you will enter. This data will have to be backed but by the next two sources.
-Published information from library, Internet, and paid database services will provide information on the market growth, overall industry perspective, and customer profiles. -Field research covers interviews with customers, suppliers, competitors, and industry experts. This provides the real insight behind all the published facts. ” “Decide how to market to your target consumer. Will you use the Internet? Newspapers? Maybe you will make packets to deliver to local businesses and corporations in an effort to gain their business.
You will need a clear understanding at this step of the purpose of your business and your target consumer. For instance, you will most likely not need to place a newspaper ad if you are providing corporate services, and you will probably not need a business packet if you are advertising to the general public. ” 4. Collection Files: Mertz identifies this step as the point when one should decide the following: “Where will your business be based out of? Will you work from home, or do you need a location?
Obviously if you are running a store, you will need a store front. Location is key so start researching now how much rents are in your desired location. You would want a high traffic, or easily accessible area for a store. Perhaps you are just selling stuff online, in which case you don’t need a store, but either enough space in your home if you have inventory or a storage unit. If you are a service provider, you may or may not need a location outside of your home. These are all questions you need to answer to define your business structure.
” Zahorsky adds: “The easiest way to go about collecting all your experiences, interviews, and research is to create files for each section of the business plan. These files can be: paper-based, computer files or set-up using business planning software. As you start the research and collection phase of planning, fill your files with notes and printouts. ” 5. General Industry Overview: At the fifth step, one should: “Begin the research process with an overview of the industry; uncovering industry and association reports.
By having a general understanding of the industry, you will avoid embarrassment in contacting experts with basic questions. Begin the field research once you have a good grasp of the industry fundamentals and need answers to the hard-to-find information. ” This step is also the time where one would answer the following questions: “What kind of tangible items will you need to get your business started? Do you need inventory? You will most likely need an assortment of office supplies no matter what your business.
Items such as a computer, printer, and fax machine are all typical office needs in today’s society. Do you need equipment? This is a good time to research what you may need in the way of equipment for your business. Make a detailed list so you can easily research costs for each. ” 6. Analysis: “Once the bulk of the data has been collected, the process of analysis begins. Look at building a competitive profile, contingency plan, risk assessment, etc. ” This is the point in the business plan where one should: “Create a chart to calculate costs.
This is the step you perform all the research and write down the costs of everything in the above steps. Don’t just guess, but do some actual research. This will include making telephone calls and doing internet searches as well. Creating a list will give you a good idea of what finances you will require in order to get started. Once you have that number calculated, add an additional 10% for incidentals. ” 7. Financials: “Start the financials when you have found some average industry ratios for your business. Work closely with your accountant to develop realistic projections.
Being overly optimistic will raise eyebrows with your investors or banker. ” says Zahorsky. Mertz adds: “Draft your “Action Step” list. At this step, while looking over the first 6 steps, create your “Action Step” list, or your “To Do” list. This will and should be extensive. There are many things to do when starting a business. Once you have completed all seven steps, you are ready to move on. You may want to consider hiring a professional business plan writer, or at the very least, you may want to take a class in business plan writing.
Other things to consider are consulting an attorney to answer your legal questions. Do you need a license? Should you incorporate? You should also visit an accountant who specializes in small businesses. He or she can give you great financial advice before you get started so you are aware of all the financial aspects and repercussions of starting a business. ” 8. Executive Summary: The following tips from Zahorsky should be utilized in this step: “Save the first section for last. When you have thoroughly, completed all sections of the business plan, write the summary.
Highlight the key points and include the return on investment or loan payback requirements”. 9. Review & Editing: “Remember, you only have one shot at making a good impression. A well-written business plan that opens doors and wins the money is a plan that has been revised and reviewed. Do not forget this important step. Ask others for feedback. Make certain to edit, proofread, proofread, and proofread. Business planning is not easy but by following these critical steps to writing a business plan, you will ensure your business has a chance at funding and success in the future. ”