As we approach the New Year, many of our members begin to think about starting a new business or are working to take their existing business to a new level. As a matter of fact, I have had three conversations this week with people who are contemplating starting a new business. For most individuals the idea of writing a business plan seems intimidating or just a waste of time. I recommend a business plan because I see it as a key factor in the failure or success of a business. Often as a small-business owner you are focused on the day- to-day running of the business and don’t take the time to develop strategic goals. I would recommend always starting your business with a strong business plan and revisiting the plan as often as you are able. What is a business plan? Think of a business as a blueprint for your business and the future. What are your goals for the business for the next year and beyond? There are usually seven components to a strong business plan:
- Executive Summary
A snapshot of your business including identification of your target market.
- Company Overview
Your location, list of owners and types of products or services you offer.
- Market Analysis
Define your industry and who your competitors will be. Explain how you will differentiate yourself in the market.
How is your business structured and who will manage different aspects of the business? Define the management team’s credentials and backgrounds.
Provide or project three years of business revenue, expenses and profits. This is especially important if you are looking for a loan. The projection numbers should support the ability of your business to payback the loan.
Explain how your business fits into the market and what need it is fulfilling for businesses or consumers.
Explain how you will promote your business and the pricing model you will use to take the products and services to market.
Why have business plans?
Invariably you, as business owner, will get bogged down in the day-to-day running of your business which will make it difficult to find time to do strategic planning. With a well-written plan in place you can measure your results easily against your plans and projections and make the needed adjustments to ensure growth going forward. A business plan can also tell you when the optimal time is to borrow to fund growth and what terms you might need to make the plan work.
How can I make a business plan?
You can create your own business plan by researching and purchasing the best creation software for your industry. You may also opt to commission a consultant to help you create a business plan. Be sure to get a referral from professionals you trust like, your accountant, and speak to other businesses the consultant has helped.
First Commonwealth is here to help you grow your business. When you have your business plan done and are ready to start a banking relationship for your business, come into one of First Commonwealth’s branches.