In the fourth quarter of 2011, 1,638 extended mass layoff events involved 266,971 worker separations, according to The United States Department of Labor, Bureau of Labor Statistics. But not every one is sulking at home in their pajamas as they scroll through Monster job postings. Many are following their dreams of starting their own business.
If you are among the many who have lost jobs due to reduction in force and you have always had a passion for running your own business, you will need to create a business plan. In this economy you will need to develop an outstanding business plan, not just in hopes of obtaining financing, but to learn more about the industry in which you are planning to open your business. The success of your business depends on it!
Here are seven important elements to consider when writing your business plan:
Provide a solution with your business. First, you will need to define the need that your business will address. Why will consumers purchase your product or service? According to the U.S. Small Business Administration, ” Creating a niche for your business is essential to success.
Separate your business from the competition. Determine what the market share is for your industry, and then decide what percentage of that market share you will go after and how you will obtain it. Why will consumers buy from you rather than from another company that offers something similar? In what ways will you be different from similar businesses and in what ways will you be the same? This step can be very tricky because people become emotionally invested in their idea and can fail to recognize signs that the industry is saturated, or has experienced declines.
Become an expert on the demographics of your customer. I have asked potential new business owners to define their demographic and have been given the answer, “Everyone!” While having “everyone” purchase from you would be an excellent outcome, it simply is not realistic. While running your business you may want to examine ways to obtain greater market shares, but when writing your business plan you should realistically focus on your primary client. Think of the 80/20 rule: 80 percent of your profit may come from only 20 percent of people in your market area. Define that 20 percent in great detail.
Market to every area of your demographic, using every available method within your marketing budget. When developing your marketing plan, leave no stone unturned. Consider marketing from every possible angle. There is no such thing as too much marketing, as long as you adhere to a realistic marketing plan budget. While in business, you will always consider and track your ROI – Return on Investment, and make the necessary adjustments. For your business plan you will need to research your demographic and learn how to reach that group.
Think like a banker. As a lender, the purpose of making a loan is to collect the principal back along with interest. If the business does not succeed, the lender risks losing their investment along with the potential interest payments. For this reason, you must be thorough in your research. In the financials section of your business plan, provide a three to five year summary and do not forget salaries, including your own! Provide industry growth figures along with substantiated projections. If you will rely on obtaining a loan to start your business, you will want to perfect the financials and demonstrate realistic understanding of how they pertain to your business or you risk being turned down for the loan. Provide realistic projections and demonstrate how you arrived at these numbers. Provide one or two alternate plans to demonstrate your understanding of the sometimes unexpected consumer behaviors.
Define your personnel and provide detailed job descriptions. Will your staff be required to obtain specific licensing or certifications and a schedule of continued education? Will you require and provide specific training? Convey your understanding of the specific needs of the staff you intend to employ, along with the associated costs.
Write a compelling Executive Summary. This page usually appears first on your business plan, but is most often written last. You should succinctly define the purpose of the business. Include your mission statement and a snapshot of the future of your business. Consider this to be your opportunity to sell your idea for a successful business. Avoid making broad or emotional promises. Simply state the facts of your business in a manner that will compel the reader to investigate further by reading the support documents contained within the business plan.
The advantages of writing an excellent business plan may include impressing a lender enough to decide to loan you the money to start your business, but more importantly, you will have done everything you need to do in researching your new business to ensure your success. Take whatever time is necessary up front to create the best business plan and be sure to review it yearly. To your success!
References:
“What’s New.” The U.S. Small Business Administration . Web. 13 Mar. 2012. <http://www.sba.gov>.
“MLS News Releases.” U.S. Bureau of Labor Statistics . U.S. Bureau of Labor Statistics. Web. 13 Mar. 2012. <
