We hear the success stories of people starting a business with that “great idea,” it catches on and they become very successful. A perfect example is Facebook. Started in 2004 by Mark Zuckerberg and a few of his college roommates, today it’s become one of the most successful online social network services around.
Did Mark Zuckerberg have a business plan? Probably not, but once again this was a case where it came from an idea, and then snowballed into something bigger and greater. The lack of planning can also create challenges, and once again this also ties into the real story behind Facebook relayed in the 2010 movie, “The Social Network.”
The Need for the Business Plan
Getting back to reality, when starting a business it’s critical to have a plan set up and this where the business plan is a need. The business plan serves two purposes – it’s a roadmap to plan, start and grow a business, as well as a necessity if you, as the business owner, has plans to get any additional business funding.
What Should Be Included in a Business Plan?
The business plan includes two key areas – the Narrative and then the Financial sections. The Narrative provides key things about the business. Sections that you need to include:
- Description of the company
- Market analysis
- Competitive Analysis
- Marketing and Sales Strategy
- Operating Plan
- Legal Issues – if you have intellectual property involved; also include an agreement with any partners
- Risks and Risk Mitigation
- Exit Strategy
In the Financial section, there are key things that need to be addressed, usually in the form of spreadsheets.
- Monthly cash flow projections – first year must be done month by month
- Cash flow projections for years 2 and 3 of the business can be done annually
- Include notes to the cash flow projections
- Include a Source/Use statement
- Proforma Balance Sheet and Income Statement for three years
- Breakeven analysis (Fixed Costs/unit selling cost – Variable Costs)
Resources for Help
Yes, software programs specifically for writing a business plan are out there, but at a cost. Some can range anywhere from $75 to $100 and up. You then have the software to use in the future, but what are other options?
Taking a look at some of the sample business plans that these software programs have is one option, of course. But a few more ideas? Find a good outline to go by. Also another option is a program that Fifth Third Bank created, titled their “SmallBizU” eLearning University. Fifth Third Bank worked with the Indiana Small Business Development Center (ISBDC) together on this, and this special online learning tool offers three different products for entrepreneurs to use. It’s at no cost to clients who work with the different ISBDCs across the state of Indiana, by the way.
Another option might be to check into www.sba.gov as well.
In today’s business world there is no longer a “one size fits all” strategy for successful marketing to grow sales and gain loyal clients. People tend NOT to focus on marketing strategies, unfortunately. But this is critical if you not only want to open a business but STAY in business. Create your target market, focusing on the demographics, age groups and income levels first. Then also consider how your target market likes to make purchases and use these in your marketing plan portion as well along with the specific tactics you will be using, including social media avenues. Although marketing is just one area of the Narrative part of the business plan, it’s an important one.
Brainstorm on your ideas, take notes and then tackle the business plan. Think about the most successful businesses you admire, what their “roadmap” was and then incorporate those into your plan as well.
We might not all have that Mark Zuckerberg idea that accidentally turns into a history making business success story, but with the right business idea, planning, and creating a good business model with the right target audience? You can be successful launching a business and this is where the Business Plan can be “make or break” segment.