Tell almost any would-be entrepreneur that he or she must first create a written business plan if they hope to succeed and you'll see instant fear in their eyes. Typical responses include, "What's that?" or "I wouldn't know where to start," even "That's a waste of time." Yet without putting in the time and effort to create such a plan, rarely will a new business succeed.
The basic business plan suggested here can serve as your personal road map to success as well as something to share with potential lenders or investors.
How formal should a basic, workable business plan be? Formality – endless words – contributes very little. Simplicity is much better.
The three-part plan I'm about to explain covers the following:
• Your product or service.
• Your marketing plan.
• Financial projections for three years.
Because it is basic, the plan calls for you to limit to two typewritten pages the amount of relevant information you provide for each of the topics you're expected to describe. That will produce a workable business plan of about two dozen pages. Simple enough, right?
In the product or service section, you want to fully describe each of the following:
• Your product or service.
• How you tested and refined that product or service.
• The costs to produce and deliver that product or service.
• What each customer will actually receive, from whom, when and how.
In the marketing plan section, you'll want to fully explain each of the following:
• The people or companies you've determined will buy what you hope to sell.
• How many such people or companies exist and where they're concentrated.
• How you'll sell them: Online, retail, through distributors or using sales reps.
The final section – financial projections – is a bit harder because it requires careful projections, not just estimates. The three key items in this section include:
• Your company's balance sheet, a statement of its financial status – what it's projected to owe (liabilities) and own (assets) – throughout this three-year period.
• An income statement, often called a profit & loss statement, that shows revenues (income) and expenses from business operations, plus any resulting net profit or loss during the three-year period.
• A cash-flow statement explaining how your business will obtain its funds – and how it plans to spend them – during those three years.
Creating these financials is where entrepreneurs must put on their thinking caps because without accurate projections of how much money you'll need, what it will be used for and how much you can honestly expect will come back in sales, there's little chance you can create a successful business.
When you've completed and checked your plan's spelling and numbers, you'll have to add a two-page cover document titled "An Executive Summary." They will be the first two pages of your plan. Page one will include that title, the words "A Basic Business Plan for (Your Company Name)" plus the date the plan was completed. Page two will again include your company name, plus pertinent information such as the location of your company, why and how it was created, its potential profitability, along with who and what the driving force is behind it.
At that point what is the value of this basic business plan? It's most important value is as your guide, your plan, your road map to use in managing your business – and as a document against which to compare and record what you thought would happen with what actually happens over time. Can this basic written business plan be used to entice potential lenders or investors? Certainly, but its primary function is to help you guide and grow your business.
• An award-winning marketing professional and Certified Business Communicator, Phil Grisolia is also the author of an enlightening new ebook "Shut Up And Listen! – 10 Easy Steps Guaranteed to Help You Communicate Better!" available for just 99 cents wherever ebooks are sold. Visit Phil's website at www.PhilGrisolia.com. If you have a business-related question you would like Phil to answer, email it to PhilsDesk@PhilGrisolia.com, then watch for his answer in a future column.