If you’ve ever thought about starting your own business or taken a business course then you’ve probably learned something about business planning. Since the start of just about any form of commerce, the business plan has been an essential first step.
However, not so much today – particularly when it comes to being productively self-employed.
While business planning is still relevant, first you must “play business” by testing out your idea. Thanks to the reach of the Internet, technology, social media, cloud-based apps, outsourcing and other 21st century advancements, many new self-employment ventures can be validated before a conceptual business plan is written. This can include anything from dog walking to IT consulting and home inspection services to travel guide.
The benefits to testing out your idea beforehand are many and powerful. This includes:
- Proving to yourself that you can sell what you have to offer
- Validating that someone wants to buy it
- Working out how to deliver upon what you’re offering
- Proving that someone will pay you money for it
- Revealing how profitable it can be (or not)
- Indicating what you’ll have to do over time to maintain and sustain operations
From this viewpoint, you then have a lot more insight into what goes into a business plan. You also have some level of real world experience that will help to make the plan more than just an academic exercise of guesswork. Armed with this new insight, you are now ready to pull together your business plan. In this regard, you’ll be looking at the following essential elements:
The Executive Summary | Write this last. This section provides a short and concise summary of what you’re going to sell, to who, how and why. If you plan to use this document to influence suppliers or investors, this is the part that they will read first. How well it is written often determines whether they’ll read any further and so you want it to be clear, compelling and to the point.
The Body of the Plan | The heart of the business plan is comprised of two main sections: the specific details about the business operation and the financial data. For the business operation, you’ll want to productively address the following:
- Description of the Business
- Market Analysis
- Competition
- Marketing Strategy
- Operations
- Applications & Expected Effect of Loan/Investment
- Development Schedule (Timeline)
For the financial data, include the following:
- Sources and Applications of Start-Up Funding
- Capital Equipment List
- Balance Sheet
- Break-even Analysis
- Income Projections (Profit and Loss Statements)
- Pro-Forma Cash Flow
Lastly, include a section for any and all supporting documents that reinforce the body of your plan. This not only helps to convey to others that you know what you’re doing, but you’ll be convinced as well simply by going to the trouble to purposefully and fully research and validate your representations.
Go forth and prosper!