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Detailed Business Plan
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 | Section 1 actually describes your business, |
| Section 2 describes the product or service you will be offering |
| Section 3 identifies the location of your business, and why this location is desirable (if you have a franchise, some franchisors assist in site selection). |
| When describing your business, generally you should explain: |
| What form does your business take? Is it a proprietorship, partnership, corporation? |
| What licenses or permits do you need? |
| Business type: merchandizing, manufacturing or service. |
| Describe what your product or service is |
| Describe any unique aspects of your business, its products or services, and how or why they will appeal to your customers. |
| Is it a new independent business, a takeover, an expansion, a franchise? |
| Describe why your business will be profitable. What are the growth opportunities? Will franchising impact on growth opportunities? |
| When your business will be open (days, hours)? |
| What you have learned about your kind of business from outside sources (trade suppliers, bankers, other franchise owners, franchisor, publications) |
| Explain why you are, or why you want to be, in business |
| Describe your goals and objectives and how you plan to meet them |
Examine your products and services and describe them in terms of a benefit that your customer would derive from the particular product or service. Successful business owners know or at least have an idea of what their customers want or expect from them. This type of anticipation can be helpful in building customer satisfaction and loyalty. And, it certainly is a good strategy for beating the competition or retaining your competitiveness. Describe:
| What you are selling |
| How your product or service will benefit the customer |
| Which products/services are in demand and whether or not there will be a steady flow of cash |
| What is different about the product or service your business is offering |
The location of your business can play a decisive role in its success or failure. Your location should be built around your customers, it should be accessible and it should provide a sense of security. Consider these questions when addressing this section of your business plan:
| What are your location needs? |
| What kind of space will you need? |
| Why is the area desirable? The building desirable? |
| Is it easily accessible? Is public transportation available? Is street lighting adequate? |
| Are market shifts or demographic shifts occurring? |
It may be a good idea to make a checklist of questions you identify when developing your business plan. Categorize your questions and, as you answer each question, remove it from your list.
Back to Beginning of
Detailed Plan
Back to Section 1: Description of Business
To Section 2: Marketing
To Section 3: Financial Management
To Section 4: Management
Marketing plays a vital role in successful business ventures. How well you market you business, along with a few other considerations, will ultimately determine your degree of success or failure. The key element of a successful marketing plan is to know your customers -- their likes, dislikes, expectations. By identifying these factors, you can develop a marketing strategy that will allow you to arouse and fulfill their needs.
Identify your customers by their age, sex, income/educational level and residence. At first, target only those customers who are more likely to purchase your product or service. As your customer base expands, you may need to consider modifying the marketing plan to include other customers.
Your marketing plan should have four sections
| Section 1 describes your Customer and Market |
| Section 2 describes your Competition |
| Section 3 describes your Pricing and Sales Strategy |
| Section 4 describes your Advertising Strategy and Plan |
It is essential to be as specific about your customer as possible. Why would they want to visit your business? What are their expectations when they arrive? You will need to understand and meet those expectations in order to be successful.
To help you identify your customers and market, ask yourself the following questions:
Define your target market(s). Who are your customers? What common problem do they share that you can solve with your product or service? Do they have the disposable income with which to purchase your product or service? Where / how will you find your customers?
| Are your markets growing? steady? declining? |
| Is your market share growing? steady? declining? |
| If a franchise, how is your market segmented? |
| Are your markets large enough to expand? |
| How will you attract, hold, increase your market share? If a franchise, will the franchiser provide assistance in this area? Based on the franchiser's strategy? how will you promote your sales? |
| What pricing strategy have you devised? |
Competition is a way of life. We compete for jobs, promotions, scholarships to institutes of higher learning, in sports-and in almost every aspect of your lives. Nations compete for the consumer in the global marketplace as do individual business owners. It is important to know your competitors.
| Questions like these can help you: |
| Who are your five nearest direct competitors? |
| Who are your indirect competitors? |
| How are their businesses: steady? increasing? decreasing? |
| What have you learned from their operations? from their advertising? |
| What are their strengths and weaknesses? |
| How does their product or service differ from yours? |
Start a file on each of your competitors. Keep manila envelopes of their advertising and promotional materials and their pricing strategy techniques. Review these files periodically, determining when and how often they advertise, sponsor promotions and offer sales. Study the copy used in the advertising and promotional materials, and their sales strategy. For example, is their copy short? descriptive? catchy? or how much do they reduce prices for sales? Using this technique can help you to understand your competitors better and how they operate their businesses.
Your pricing strategy is another marketing technique you can use to improve your overall competitiveness. Get a feel for the pricing strategy your competitors are using. That way you can determine if your prices are in line with competitors in your market area and if they are in line with industry averages.
Some of the pricing strategies are:
| retail cost and pricing | ||||||||
| competitive position | ||||||||
| pricing below competition | ||||||||
| pricing above competition | ||||||||
| price lining | ||||||||
| multiple pricing | ||||||||
| service costs and pricing (for service businesses
only)
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The key to success is to have a well-planned strategy, to establish your policies and to constantly monitor prices and operating costs to ensure profits. Even in a franchise where the franchiser provides operational procedures and materials, it is a good policy to keep abreast of the changes in the marketplace because these changes can affect your competitiveness and profit margins.
How you advertise and promote your goods and services may make or break your business. Having a good product or service and not advertising and promoting it is like not having a business at all. Many business owners operate under the mistaken concept that the business will promote itself, and channel money that should be used for advertising and promotions to other areas of the business. Advertising and promotions, however, are the lifeline of a business and should be treated as such.
Devise a plan that uses advertising and networking as a means to promote your business. Develop short, descriptive copy (text material) that clearly identifies your goods or services, its location and price. Use catchy phrases to arouse the interest of your readers, listeners or viewers. In the case of a franchise, the franchiser will provide advertising and promotional materials as part of the franchise package, you may need approval to use any materials that you and your staff develop. Whether or not this is the case, as a courtesy, allow the franchiser the opportunity to review, comment on and, if required, approve these materials before using them. Make sure the advertisements you create are consistent with the image the franchiser is trying to project.
Remember the more care and attention you devote to your marketing program, the more successful your business will be.
Consider all of the available media to use for advertising and how you will best use them:
| television |
| newspapers |
| radio |
| world wide web |
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| signs, flyers, posters |
| letterhead, business cards, etc. |
Use testimonials if appropriate to demonstrate how others have benefited by your product or service.
If you are an expert, then conduct seminars and workshops in your market area.
Back to beginning of
Detailed Plan
Back to Section 1:Description of Business
Back to Beginning of Section 2: Marketing
To Section 3: Financial Management Plan
To Section 4: Management Plan
Sound financial management is one of the best ways for your business to remain profitable and solvent. How well you manage the finances of your business is the cornerstone of every successful business venture. Each year thousands of potentially successful businesses fail because of poor financial management. As a business owner, you will need to identify and implement policies that will lead to and ensure that you will meet your financial obligations.
To effectively manage your finances, plan a sound, realistic budget by determining the actual amount of money needed to open your business (start-up costs) and the amount needed to keep it open (operating costs).
A financial management plan should examine the following components
| Section 1 lists and describes your start-up expenses |
| Section 2 lists and describes your operating costs |
| Section 3 contains your financial statements |
| Section 4 describes systems you will use |
The first step to building a sound financial plan is to devise a start-up budget. Your start-up budget will usually include such one-time-only costs as major equipment, utility deposits, down payments, etc.
The start-up budget should allow for these expenses.
| personnel (costs prior to opening) |
| legal/professional fees |
| occupancy |
| licenses/permits |
| equipment |
| insurance |
| supplies |
| advertising/promotions |
| salaries/wages |
| accounting |
| income |
| utilities |
| payroll expenses |
An operating budget is prepared when you are actually ready to open for business. The operating budget will reflect your priorities in terms of how your spend your money, the expenses you will incur and how you will meet those expenses (income). Your operating budget also should include money to cover the first three to six months of operation. It should allow for the following expenses.
| personnel |
| insurance |
| rent |
| depreciation |
| loan payments |
| advertising/promotions |
| legal/accounting |
| miscellaneous expenses |
| supplies |
| payroll expenses |
| salaries/wages |
| utilities |
| dues/subscriptions/fees |
| taxes |
| repairs/maintenance |
The financial statements to include in this section are
| any loan applications you've filed |
| a capital equipment and supply list |
| balance sheet, breakeven analysis |
| pro-forma income projections (profit and loss statement) |
| pro-forma cash flow |
The income statement and cash flow projections should include a three-year summary, detailed by month for the first year, and detailed by quarter for the second and third years.
Your plan should include an explanation of all projections. Unless you are thoroughly familiar with financial statements, get help in preparing your cash flow and income statements and your balance sheet. Your aim is not to become a financial wizard, but to understand the financial tools well enough to gain their benefits. Your accountant or financial advisor can help you accomplish this goal.
The accounting system and the inventory control system that you will be using is generally addressed in this section of the business plan also.
If a franchise, the franchisor may stipulate in the franchise contract the type of accounting and inventory systems you may use. If this is the case, he or she should have a system already intact and you will be required to adopt this system.
Whether you develop the accounting and inventory systems yourself, have an outside financial advisor develop the systems or the franchisor provides these systems, you will need to acquire a thorough understanding of each segment and how it operates. Your financial advisor can assist you in developing this section of your business plan.
Back to beginning of
Detailed Plan
Back to Section 1:Description of Business
Back to Section 2: Marketing
Back to beginning of Section 3: Financial Management
To Section 4: Management Plan
The management plan describes in general terms the management team, the processes and tools used by the business, and personnel.
| Section 1 describes your management team |
| Section 2 describes your processes and tools |
| Section 3 describes your personnel |
List your management team, what role they will play in your business, and their credentials. Include resumes of the senior managers in the appendix.
Describe the major processes used by your business and the tools associated with these processes. Questions to consider: · Is the process efficient and effective? · Do I have all of the tools necessary to keep costs low? · What training is planned for personnel on the processes and tools?
Describe how you intend to staff your business and the types of personnel you will need. Identify any specialty skills that may be difficult to find but are critical to your business.
Back to beginning of
Detail Plan
Back to Section 1: Description of Business
Back to Section 2: Marketing
Back to Section 3: Financial Management
Back to beginning of Section 4: Management
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