Chapter 3 Create a Business Plan
Note: These notes are for USA based companies, you may need to check the local requirements for your business.
The next step is to write up a detailed Business Plan. It should cover the first five years of your business and how you envision it to progress and develop during that time. You will also need to include your market research, your financial forecasts that display your overheads, your and estimated income and profit margins. You should also discuss branding and marketing strategies in your plan.
Write a Business Plan
Your business plan is a roadmap of where the business will be in the next few years. You don’t have to write a business plan, but it is helpful. Also, if you ever want a business loan, then a lender will want to see the plan. A thorough business plan should contain:
· Business Description.
In this section, identify your business’ purpose. For example, you might be dedicated to bringing massage therapy to rural Wisconsin. Also summarize your products and services.
· Market Analysis
Describe your industry: its size and health, and any trends. Also identify your target market. Create a typical consumer profile in terms of location, age, gender, income, and education.
· Competitive Assessment
Identify businesses you will compete with, whether local or global. Critically analyze them and explain their weaknesses and strengths.
· Marketing Plan
Go into greater detail about your products or services. Identify any problems you need to address. As part of your marketing plan, discuss the costs of providing your service or product and build a pricing strategy around those costs. Finally, discuss your promotion efforts, which can include paid advertising or social media.
· Operating Plan
List who will manage the business (other than yourself) and identify what resources you need to run your business.
· Financial Plan
Create current financial statements and estimate your income, cash flows, and balance sheet for the next two to four years. If you need financing, then calculate the amount you need and the type (e.g., a small business loan).
· Hire Professional Help
Small businesses benefit from professional help at various points. You should start early to find experienced professionals, such as:
A business lawyer can answer legal questions you have and advise you about how to hire employees the right way. If you need to negotiate a contract, then a lawyer is helpful.
An accountant helps at tax time, but they can also help you draft your business plan and offer advice about when it’s time to transition your sole proprietorship to an LLC or other form.
A bookkeeper records your daily business transactions. You can use software at first, but your business might grow large enough that you need to hire someone.
Depending on how you plan to operate your business, you may require certain supplies, machinery, equipment, and staff.
If you have a physical store, then there are several elements connected with your decision. Some examples are:
1. What Equipment Do You Need?
Depending on the business, the equipment required will be obvious. For example, a retail store will need shelving, counters, Signs, Baskets, Cash Registers etc. Again, if you are a specific store then what you need will be implied by the business. We should always keep the requirements you must have in mind. Starting out, you may not have the funds available to purchase all you need. Getting a business loan can be exceedingly difficult (see Chapter 4).
2. What costs are involved?
- Refurbishment costs
- Purchase costs–Including agents’ fees, mortgage fees
- Equipment costs
- Installation costs
- Advertising costs
- Ancillary costs.
I suggest you set up a spreadsheet of costs and if your budget does not stretch to cover them all you can do some “What If?” calculations to see how to meet your budget.
3. Negotiating a contract with suppliers
Now you know what equipment you need and what funds you have available, you can now approach suppliers of the equipment you need.
Most suppliers have standard prices for their products, but rarely are these the ones you pay. The supplier is always open to negotiations on the total cost of any package. Speak to them and see how willing they are to get a sale. Make sure you have researched other suppliers first, so you know what prices are typical. Then use your research to find the supplier who best meets your need. Don’t expect too much the first time, if you re-order then the supplier is much more likely to give you some discount.
4. How long are the delivery times?
As part of your negotiations with the supplier will be delivery times. With any supplier they will have their lead times and if it does not meet your requirements, you need to make sure that they can deliver when you want. You also need a guarantee of delivery times with some penalty if they do not meet the dates. If you cannot get an acceptable delivery schedule, then you will have to go to another supplier who can deliver when you want. You don’t really want to do this because you must start negotiating again and wasting time, so be sure that you can get the job done within your timescale before going somewhere else.
5. Who does the installation, you or supplier?
Another aspect of your negotiating will be the installation. If your equipment is difficult or time consuming to install, then you will have to get the supplier to do it or recommend someone who can. Most suppliers will have contacts in your area who know the equipment and can install it correctly. Don’t use some “cowboy” who charges less but doesn’t know the equipment or how to install it properly.
Many suppliers will void any warranty if it is not installed correctly, so you could lose a lot of money by not doing things correctly.
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