So what is a business plan? We want to
start a business very badly. We have a great idea so we go to our banker
to ask for a loan. One of the very first things your bank will ask is
for your business plan. Oh no! Now what?
In simple terms a business plan is a road map that will guide you through your start up and the first few years of your business. What it is not, is a document that is simply for securing a loan to finance your business!
Creating a business plan may be the most important part of starting up a new business; therefore, consider a professional company for your business's needs. Don't get caught up in the emotions of opening a brand new business or your going to miss some of the most important aspects of getting your business started off on the right foot.
What is a business plan? It is a tool to insure you consider things like
marketing. When I look back to every business I have started I can’t
help to think of one thing that either made them work or fail miserably.
Yes there is one ingredient that can take an average product or service
and make you tremendously successful. Leaving out that ingredient and
it won’t matter very much whether you have the greatest product or
service on the planet, you probably won’t make it!
That ingredient is marketing! Without a good to great marketing plan you
will fail unless you are one of the luckiest few that can just stumble
upon success. A marketing plan is a plan that identifies your customer
and then targets ways to get them through your door! When we consider
“what is a business plan” as it relates to marketing, it is the road map
So let’s take a look at what a business plan is as it relates to marketing and ways to uncover the secrets to producing one of the best marketing strategies there is!
When you think of your product or service you must also think of who is your perspective customer? Who’s going to buy your product or service? Is it someone young, middle aged, or older? Is it someone wealthy or a middle to lower income individual? Is it females or males? Is it conservatives or liberals? Is it a home owner or someone that rents? There are thousands of more examples of who your customer could be, but my point is that when you consider what is a business plan it is a plan to draw your customers through the doors. Then it is the quality of your product or service that must keep them coming back!
What is a business plan? It is a way to distinguish your product from others!
Just so that I can give you some help figuring out where your customers may be so that you can determine how to go about getting them through your doors let’s just say your business is a doughnut shop. You are selling some of the best doughnuts ever made on the face of the earth. Well, maybe that is carrying this example a little too far, but you get the point. Before we go on, is there anything special about your product? In this example we will say that our doughnuts are not your ordinary doughnuts. No they are made with a special one hundred year old receipt that originated in France. Your great great grandfather was a French Pastry Chef! Now that is a sales pitch if I ever heard one! However, the doughnut better taste darn good!
In this example “what is a business plan?” It is to take our product or service and match it up to the best customer and then explain how we will get them through our doors. For this example what kind of person is going to want to stop and purchase a fantastic French pastry doughnut? All kinds of people that have money in their pockets and are on the go! But specifically it will be someone that wants the best of the best and then brags about it! What kind of person is not going to purchase your doughnut? Health conscious people and people who don’t have the money to do so! This product needs to be available in a upper class neighborhood or a place in the city where high income businesses are present.
I great tool for identifying where your target customer is would be the United States Census Report! It will have every county and city that completed the census information form just a few years ago. When you go there you will find exactly what you are looking for. Guess what the best part of it is? It’s free! Well it will cost you your time to do the research, and I know that time is money!
What is a business plan? It is a written description of how you will take your product and market it so that you can make a career of it!
So if were selling a great doughnut we need to cater to the type of person that wants a great doughnut. We also need to have a location that will make it easy to get in and out of our building. The customer we attract will need to make it a regular routine stopping into our business to buy that great doughnut. Now of course we will be selling more than just one kind of doughnut, and most likely we will be selling other items like juices and coffee. However, let’s focus on just our fantastic doughnut for now!
Your business plan is a tool for you to outline exactly how you intend to take your business idea and turn it into a career! The hard part of starting any business is to be realistic. If you are selling doughnuts you need to visit other doughnut shops and see what seems to be working and what isn’t. You need to see what type of customer is coming through their doors. Where are they located? How much are they spending? What products are they purchasing? How’s the service? Do the people serving the customers seem to know the customers by name? How clean is the place? Are there tables and chairs and are people using them? How many different types of doughnuts do they carry? Do they cater or deliver also? What are their hours? Get the point yet? Do your homework, and make sure you visit almost all the doughnut shops in the area you are intending to place your shop. After doing so, is it still a good idea to open up your shop there?
What is a business plan? It will tell the bank exactly who is running your business.
An important element of your business plan is explaining why you should be running a business. In this case what experience do you have not only making a great doughnut, but what experience do you have running a business? Do you understand how to keep the financial books? Do you understand what fixed and variable expenses are? Do you have any idea of how to run and inventory? Do you have any idea of how to work with vendors/suppliers? What are your customer service skills? Have you ever had any responsibility for employees? Do you understand anything about payroll taxes? Do you understand anything about depreciation? There are many more questions that you will need to answer in your business plan.
I found it much easier to take advantage of using a business plan software program. It asked me all the right questions and formatted in the way a bank wants to see it laid out. It forced me to turn over every stone!
What is a business plan? It is a way to explain how you intend to finance the business.
When you are considering all your expenses and what you believe your projected profits will be you better be realistic. First of all the bank will see right through any unreasonable projections. As an example if you are projecting a profit the first or second month into your start up you are just kidding yourself. Based on the averages you will be lucky to make a profit in the first year. A very successful business of mine took almost three years to begin making a very good profit.
Once you understand what is a business plan and that it will take some time, and that time will vary from person to person, do you have the working capital to survive until that profit starts coming in. The bank is going to want to see you investing into the business. They will not take all the risk. When I talk about investing, I am not talking about hard work. I am talking about hard cold cash. In most cases they want it to be your hard cold cash and not you’re parents, uncles, or any other relative. The less you have invested the larger the chance of you walking away before it becomes successful! I know that your committed to this, but using your hard cold cash just shows it!
What is a business plan? It is a true vision of what your business is to become and not a a fabrication of junk numbers!
So as you are asking yourself “What is a Business Plan”, now you know! It is your clear road map to whether you are going to have a good chance or not to be successful. Don’t doctor the numbers to make it appear like your going to make it! If the numbers tell a story of failure, then listen to them and change your business plan to go in a different direction. Maybe it’s the location. Maybe it’s the product. Maybe you’re targeting the wrong customer. Stay with the research until you understand it. Once you understand it you will have gone a long way to becoming successful. Why because you have done the work up front and know exactly what it will take to win!
Thank you for reviewing this article on What is a Business Plan and May God Bless You!