In the previous installment of this article series, we covered the basic steps involved in selecting an entity structure. With your business structure in place, it is time to start committing your operational plans to paper and outlining how you expect your business to function. This is best explored and documented using a business plan.
Creating a business plan will not only help new entrepreneurs face the realities of the challenges to come, but it will also serve as an important reference document for relationships with vendors, directors and potential investors (including banks).
A solid business plan consists of 6 parts: an Executive Summary, a Company Description, a Product/Service Overview, a Market Analysis, a Sales/Marketing Overview, and Financial Projections.
The Executive Summary is a simple snapshot of the business plan itself, and includes corporate objectives, mission statements, company and product/service highlights and future growth/direction. These will define a high-level, quick reference as to why you are in business, what you aim to accomplish, how you will accomplish those goals, and when you plan to achieve/reach specific operational milestones.
After the Executive Summary, you’ll want to include the Company Description. This is a much more detailed overview of how you plan to bring your products/services to the marketplace, and lists specific clients/customers and the specific needs that you will provide to them. We also recommend it include a SWOT analysis (a structured planning method that evaluates Strengths, Weaknesses, Opportunities and Threats to your proposed venture). A SWOT Analysis methodically outlines the objective of the business and the positive and negative internal and external aspects that will affect that objective.
Next, your Product/Service Overview should include a thorough description of your products/services including benefits, ability to meet consumer needs, unique advantages and development stages. It should also include details on further research and development activities and the proposed life cycle of the product (as it applies). Finally, you’ll want to note any specific intellectual property that your organization is planning to or has filed related to copyrights and/or patents.
One of the most critical sections, the Market Analysis will include any research that you or engaged third-party organizations have completed. It should also contain detailed information regarding competitors and market conditions (current state, future projections, etc.).
Building on your Market Analysis, the Marketing and Sales section will describe how you plan to attack the market, gain market share and capitalize on corporate strengths. It should contain your strategy for market penetration and growth, information on any potential distribution channels, a communication strategy for reaching customers and a breakdown of your sales team and activities.
Once you’ve completed the aforementioned sections, you’ll want to prepare and include realistic but optimistic financial projections that quantify the expected results of your business. While the Market Analysis is probably most important to individual entrepreneurs, the Financial Projections are most important to potential investors.
There are several additional sections and pieces of information that can be included in a business plan, but these basics should be a good start. If you have questions or need help developing your own business plan (specifically relating to producing favorable financial projections), don’t hesitate to contact Lescault and Walderman at 866-496-2042.