Starting Your Business Plan
by Jeff Beckley
Published on this site: June 17th, 2005 - See
more articles from this month...
You have always wanted to be your own boss. You are tired
of the mindless meeting and the office politics. You've come
up with a great idea for a new business that your friends
say "can't miss." So, what's stopping you from leaving
your job to start your own company.
Like most budding entrepreneurs, you probably realize that you
need a plan. If you seek financing through a bank or an investor,
they require you to have a business plan. Even if you will fund
your new venture with your own money, you would be ill-advised to
proceed without some form of a plan.
But you have never written a business plan and you have no
idea where to start. You've come to the right place. I will
cover my recommended approach for starting your plan.
Business Concept
Your business concept is a brief description of the products and
services you will be offering. It should answer these three questions:
- What products and services does my company offer?
- What needs of the target market (intended customer) will your
products and services satisfy?
- What competitive advantages will your products and services
have?
Write a draft of your business concept with these three questions
in mind. Don't fuss over writing a perfect business concept at this
point. You will probably make several revisions to your concept
in the course of preparing your plan. The goal here should be to
get your concept into written form.
Exit Strategy
It may seem counterintuitive to start your plan by devising your
exit strategy. But presumably, your company will be a going concern
you expect it to continue beyond your retirement from the company.
Therefore, you should write your plan with an exit strategy in mind.
Examples:
- Selling a portion or all of the company
- Passing the company to a family member
- Passing the company to your employees
- Selling shares of the company in the public markets
Choose your exit strategy carefully; it has tax and financing implications
and will affect other important decisions, such as choosing the
right legal form of organization for your company.
Market Research
Before you launch into writing your business plan, you need
to gather data on your company's industry, market, and competition.
Start by identifying your company's industry. I suggest using
the http://www.census.gov/epcd/naics02/North
American Industry Classification System (NAICS)</a>
to determine your industry. This will help you more clearly
define your industry. The NAICS code will also save you time
gathering research information.
Once you have determined your industry, you are ready to begin
gathering data on your industry and your market. Some of the main
questions to consider include:
- What the industry trends?
- Who is your competition?
- What market segments are being underserved?
- Who should you include in your target market?
- What impact will technology, legislation, and seasonality have
on this industry and market?
You should conclude your market research by evaluating your competition.
Performing a competitive analysis simply means comparing your products
and services to those of your competitors. Doing this will help
you align your strengths with the opportunities in the target market.
A competitive analysis should help you answer questions such as
these:
- How are your products and services superior to your competitors'?
- How are your products and services inferior to your competitors'?
- Why will customers abandon your competitors to buy from you?
- How can you reach new consumers (those being served neither
by you nor your competitors)?
SWOT Analysis
The SWOT Analysis is a straightforward assessment of internal factors
(Strengths and Weaknesses) and external factors (Opportunities
and Threats) that could affect your business. Your SWOT analysis
should help you answer question such as:
- What special skills does your company possess?
- Do any of your products or services have unique features that
make them more attractive to customers?
- Do you have a superior location?
- What crucial skills does your company lack?
- In what ways are your products or services inferior to your
competitors'?
- Are there any emerging technologies that could benefit your
industry?
- Are any markets in your industry underserved?
- Are there any opportunities to form key partnerships with suppliers,
buyers or competitors?
- How easily can new competitors emerge?
- What is the threat of a large competitor moving into your target
market?
- How tightly regulated is your industry?
- Do economic cycles severely affect your industry or target
market?
Keep in mind, this is not an exhaustive list of questions to consider
for your SWOT analysis. However, it should stimulate other questions
that lead you to identify more strengths, weaknesses, opportunities,
and threats.
Once you have completed your SWOT analysis, you are ready to begin
writing your business plan.
Preparing to write your business plan is no small task. Putting
your concept in writing, gathering research, and analyzing the data
can be intimidating.
But the preparation can be worth the effort. It will help you refine
your business concept. It will prevent you from making some costly
mistakes. It will force you to think about your company more objectively
and strategically. Most importantly, the preparation will increase
your chances of writing a successful business plan.
Jeff Beckley is the managing partner of http://www.beckleycpa.com
and is President of http://www.marketeight.com,
a leading provider of business plan products including FinancialPlanMaster
and BPlanMaster. ncluding his 15 years experience as a newspaper
executive, he has extensive experience in a variety of business
disciplines including sales, marketing, distribution, call centers
and finance. Jeff's Contact Email: mailto:[email protected]
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