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Creating A Business Plan

Okay, you have an idea of what you'd like to do. Now you have to ask yourself, "How am I going to accomplish this? What's my 'game plan?'"

You need to take some time to get a "big picture" view of things. How much time are you going to spend on this? Who can you sell it to? How much does it cost to get started? Do you need special licenses? Training? Equipment? Help? Who's going to do the bookkeeping?

These are just a few of the things you need to ask yourself before you begin. Lots of people like to "jump right in," going straight for the fun stuff. Big mistake. You can get yourself into all kinds of trouble by ignoring the activities you don't like to do.

Once you get an aerial view of your business, you'll know what needs to be done and can go from there. If you hate bookkeeping, for example, you know you'll have to pay someone to do that for you. If you have no clue how to market, you know you'll have to spend some time learning this aspect of your business.

Plan your work and work your plan. You'll save yourself time, money, energy, and frustration.

It's called, amazingly enough, a business plan. Don't be put off by the title. A business plan basically directs you to begin with the end in mind. If you don't know where you're going or how to get there, you may soon find yourself in some sticky situations.

Creating a business plan will not only organize your thoughts, it will become a necessary tool should you need to seek funding. If you'll be working a few hours a week from a spare room, a business plan may take only a few minutes to compose and a few hours to execute.

If you're planning on doing something that requires special licensing or training, for example, it may take a few hours to compose and a few days to execute.

But if you have visions of a building, equipment, employees, etc., dancing through your head, you may need days or weeks to gather all the details and weeks or months to execute the plan. The best way to assess this is by writing it down.

Again, either open a new word processing document or pull out a blank sheet of paper. Think about both what you'll need to get started, what you'll need a year from now, and where you want to be in five years as you answer the following general questions.

These answers will facilitate in your business plan preparation:

Product/Service

  • What is the product or service that you intend to sell?

  • Who is your market?
  • Who is your competition?
  • How easily can you produce this product or service?

Your Skills

  • What are your qualifications in this field?

  • Do you have prior business experience?

Time

  • How much time do you intend to spend on this venture?

  • Are you looking at something you can do in your spare time, a few hours a week, or are you planning to make this your new full time occupation?
  • Do you have ample living expenses set aside to accomplish this?
  • Or, are you going to start in your spare time until you can make it your full time occupation?

Place

  • Is this something you'll be doing out of your home, or will you need a store front?

  • How much square footage will you need?
  • Are you going to lease space, or will you need to build?
  • What kind of alterations will the space require to meet your needs?
  • Will you be hiring professionals, or will you do it yourself?
  • Or, do you plan to start from your home in your spare time, anticipating you'll need a store front later?

Paperwork

  • What legal entity (sole proprietor, partnership, corporation, etc.*) do you plan to assume?

  • Who will be setting up your books?
  • What insurance will you need?
  • Are there any zoning laws?
  • Do you need a general business license?
  • Do you need special licenses (to serve food or alcohol, run a day care, chauffeur, etc.)?
  • Will you require a business checking account?
  • Do you need a line of credit to help with cash flow?
  • Do you need a merchant account to accept credit cards*?

Employees

  • Will this be a one-person show, or will you need to hire people to get the ball rolling?

  • How much have you budgeted for salary and other payroll expenses?
  • What kind of benefits (health insurance, retirement, etc.) will you need for yourself, or if hiring others, to attract qualified applicants?

Professional Services

  • What professional services will you need at the beginning?Lawyer, accountant, consultant, advertising?

  • What services will you require on an on-going basis?

Utilities

  • What utilities will you need? Water, sewer, gas, electric, phone, Internet service provider?

  • Will they require security deposits or installation fees?
  • What is your anticipated monthly consumption?

Monthly Services

  • In addition to utilities, what other monthly expenses do you anticipate? Trash removal, housekeeping, landscaping? Bank fees?

Equipment

  • What equipment will you need to get started? The kitchen table and a phone?

  • Complete office setups for one or more people?
  • Specialty items, such as racks for displaying wares, kitchen appliances and tables (for a restaurant), or trucks and cranes (for landscaping or construction business)?
  • Will you be buying new or used equipment?

Supplies

  • What kind of basic supplies will you need? Pencil, paper, and a box of business cards?

  • Office supplies (adding machine tape, copy paper, laser printer toner, coffee) for one or more people?
  • Shampoo, color, perm rods (for a hairdresser), dressing gowns, medical supplies (for a doctor/dentist)?
  • How often will you need to replace them?

Inventory

  • Will you require a starting inventory? Are you selling electronic "How To" articles from your web site, or rubies and diamonds from your jewelry store?

  • What will you need to get started?
  • Are your vendors reliable?

Marketing

  • How do you plan promote your business? Are you counting on your business card, a yellow page ad, and word of mouth to bring in clients, or do you plan to launch a complete media campaign (newspaper space, radio/television time)?

  • Are you going to have a web page?
  • Are you going to handle everything yourself, or do you plan to hire an advertising firm?
  • What's your on-going marketing plan?

Money

Based on your answers from above, how much money will you need?

If you're looking at a spare time activity from your home, you may just need a few hundred bucks you can pull from savings or put on a credit card. If you're planning to buy a franchise or open a restaurant, you're going to need substantially more.

Be specific when planning, so you'll know exactly what you'll need. Always build in a small buffer for things you haven't thought about.

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Do all these questions frighten you? Don't let them. A thorough evaluation up front will save you lots of indigestion later. Position yourself for success.

Now you've got some raw data for your business plan. Depending on your proposed activity, you may have all the answers you need or you may need to undertake an extensive fact-finding quest. Once you've gathered your data, you're ready to begin work on your business plan.

Since there are many good books and software packages on business plans (your word processing or accounting software may have come with a business plan module), I won't tackle the subject here. If you need a quick start, you can pick up a copy of Business Plan Pro by Palo Alto Software at http://www.niftybusinessideas.com/r/bizplan .

If your business will require extensive market analysis or if this step is threatening to make you break out in hives, I would encourage you to engage a local business consultant or contact the business school at your local college or university for help with this process.

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