Tuesday, August 10, 2010
7 Steps to Make Your Own Business Plan: Part 7 Start Your Small Business Now
Entrepreneur Magazine Philippines shared the steps on making your very own business plan. Isn't that cool? Read on and learn.
Step 1: Name your business.
Most entrepreneurs consider their businesses as their babies; and just like naming babies, choosing a name for your business is not an easy task. It is however a very necessary step in making the business plan. After all, this is the name you will be referring to when you begin piecing your business plan together. The business name, to a great extent, reflects the character of your business, so be very deliberate when choosing a one.
Aside from coming up with the company name, you may also come up with a separate name for your product or service, which could serve as your trademark. Again, be very careful when choosing product names, for very often, this will determine the brand image and brand experience of your product. As the Department of Trade and Industry puts it, a name is "extremely important because it distinguishes your products and services from those of your competitors, and helps to establish your identity in the marketplace."
How do businesses get their names? A lot of Filipino businessmen name their businesses after themselves or their family and friends; some even use wordplay and puns in order to grab people's attention. In choosing names, always remember that the name should describe the nature of your business. You cannot use a name that has already been registered with the DTI or with other government agencies such as the Securities and Exchange Commission, and the Department of Labor and Employment. In addition, the law prohibits naming a business or its products using words that are illegal, scandalous and purely generic, and names and styles used by the government in its governmental functions.
Step 2: State your mission.
Most people have life goals, and so should your business. Although it may be easy to say that your business's mission is simply to make money, putting up a business is in fact more complex than that. In the mission statement, spell out the purpose of your business and its goals, including the product or service concept that you plan to adopt.
Like everything else, keep the business goals and targets realistic, so as not to put off the reader with fantastic fanciful claims. Always keep in mind that a potential investor or lender will base their decisions on your business plan.
Step 3: Introduce the business and its management team.
Make a clear and complete description of the business and how you plan to start and operate it. You need to state the rationale behind the business's establishment. Introduce the people -- the team -- who will run or invest in it. It is however not enough to say who they are -- include a brief look at their background including prior professional and business experience, educational attainment, leadership skills, and personal resources.
You need to convince the reader that your management team is capable of leading the business and steering it toward your goals. State any particular management strategy that you plan to adopt, along with identifiable results of this strategy.
Include in this part of the business plan an overview of the general economic environment in which the business will operate, along with an explanation of how the management team will perform under these conditions. Needless to say, economic indicators will be needed for an accurate depiction of this overview. These data can also be referred to in the other sections of the business plan.
Step 4: Elaborate on your product and marketing plan.
You may have great people and a great concept, but how will you sell and market it? In this part of the business plan, discuss your products or service in detail, and how it would generate revenues for your business. This part will answer questions such as: Does your product have any unique characteristic? How big is its potential market, and how much of that potential market can you attract over a certain period of time? Enumerate your suppliers, their availability and reliability.
Next, describe your market, and provide a detailed description of your potential customers, such as their demographic profile and recent trends in consumption patterns related to your products and services. Write down your sales projections as well, but do not make overly optimistic forecasts. Keep in mind that any perception of economic or political uncertainties are likely to influence consumer decisions, so try to factor in such possibilities.
Step 5: Illustrate your financial strategy.
This is where you will need to focus on the bottom line of any business. This will attract the most interest from your readers -- show the flow of money into and out of the business, coming up with either a profit or loss for a particular period of time. Keep in mind that finance people will be looking at the numbers and analyze your projected performance ratios.
This is the best part of a business plan that is usually daunting to aspiring entrepreneurs; however there is help available. Seek assistance from an accountant or a financial planner in preparing this section of the plan.
If your business has been operating for some time, and you have made a business plan in order to seek additional funding, pay close attention to the cash flow portion of your financial report. The cash flow analysis shows how efficient the management team has been in making use of the cash that goes into the business. Most new businesses tend to end accounting periods with deficits; this is but normal. How this deficit will be turned around is an important point that the business plan should reflect. It may be useful to provide for contingencies for additional cash that can be plugged in by either your investors or your lenders.
Present a detailed budget for your business operations, reflecting all your departments' projected expenditures. The budget is an important guide when trying to raise revenues or when making capital investments. Usually the budget is broken down into monthly expenses to allow management to get a better grip of the business's activities, including problems that may arise from unexpected slumps in sales revenues.
Step 6: Write the executive summary.
A business plan can be a very long document with hundreds of pages, so for the convenience of the reader you need to provide a concise brief of the plan's crucial contents. This section encapsulates your entire business plan for those who don't have time to go over the entire document -- these are often the decision-makers who should be informed about the business. The executive summary is usually written last, after the entire document is completed. The executive summary may appear at the start or at the end of the business plan.
Step 7: Go over the document.
Whenever it is possible, use charts and graphs to illustrate cash flows and projected return on investment.
Continue on Part 8 of Start a Small Business Now: CHECKLIST: BASIC PARTS OF A BUSINESS PLAN.
Rewrite from Entrepreneur Philippines
January – February 2010 issue. All rights reserved.