subject: 10 Things To Do Before Writing Your Business Plan [print this page] Most experts agree that a business plan is an essential part of any business endeavor. A business plan is the basic outline that details a course of action for the enterprise and helps the business develop and maintain revenues. A well constructed plan is the cornerstone of any successful business.
There are a few basic things to consider before writing a business plan, and we have listed the top 10 below. Following these steps will ensure your business has a strong foundation now and going forward into the future.
1. Understand The Business Plan Structure
A complete understanding of how business plans are written is an essential first step for any wannabe entrepreneur. It is important to write the business plan according to general business standards and practices. The SBA provides a free business plan structure that can be adapted to just about any enterprise and can provide you with a general idea of how it should be structured.
2. Determine Legal Structure
Determining the legal structure of the business is one of the most important considerations for any entrepreneur. Whether the business is a sole proprietorship, partnership or a corporation determines not only the structure of the business but also has specific tax implications. Choosing the right legal structure can mean the difference between a successful endeavor and one that is doomed from the start.
3. Understand Cash Flow And Expenses
Understanding the numbers that affect your business is a critical part of the process. This is especially true in the planning stages of the business. The most important numbers to consider during this stage includes start-up costs, amount of funding needed and what is the business's break-even point.
4. Do Marketing Research
Market research is not only important to determine if there is indeed a market for your product, but also to come up with an accurate marketing strategy. Market research is a vital component for any business, whether it's established or not.
5. Understand Your Competition
Understanding your likely competition is another thing to consider before crafting your business plan. Having a thorough knowledge of how your competition markets their products will give you a better understanding of how to market your products.
6. Determine Consumer Benefits
Determining the consumer benefits of your product or service will enable you to come up with a strong advertising campaign. Why does the consumer gain from using your product? What should your customers choose your product over your competition's product? Answering these two questions will enable you to write a more effective and focused business plan.
7. Obtain A Mentor
Obtaining a professional mentor can be a great way to find holes in your business plan. A mentor should be someone who is knowledgeable of your proposed business's industry, and is someone who can provide the entrepreneur with sound advice.
8. Determine Personnel Requirements
Determining what personnel you need to hire and what their duties will be is an important consideration. Not only will it factor into your expense projections, but will also be an area of your operation that is heavily scrutinized by potential investors and financiers.
9. Identify Your Route To Market
Determining the route to your customer base is an important consideration that will determine the success or failure of your business. You should determine if you are bringing your product to market using a single-tier approach or a multi-tier approach. Some popular mainstream routes include internet sales and direct mailing marketing.
10. Research Financing Options
You should determine your financing options before you draw up your business plan. You should have a thorough understanding of loan institutions and how they determine loan eligibility. It is also a good time to find out about any angel investors that may be specific to your industry.
Following the above steps will ensure that your business plan is complete and doesn't contain major flaws. It will also enable you to plot an efficient course for your business.
