Wednesday, August 28, 2013

The Business Plan

If you are thinking about turning your hobby into a business then you need a business plan. Some may think that this is only needed if you want to get outside funding but that's not true. A business plan is the road map for your business. It helps you to determine everything from if the business will be viable to who your ideal client will be to where you should advertise. It may be the single most important document that your business will ever have.

Writing a business plan can seem daunting but it doesn't have to be. The purpose of the plan is to help you define your business. Start with an outline or simple plan like this one by Caroline Cummings.
A business plan can be done on one page, and should merely have brief descriptions for each of the following 10 categories. Channel Twitter in that each section should not contain more than 140 characters:
  1. A one-sentence description about your business. (Value Proposition)
  2. The “problem” your product is responding to by being in the market. (Market Need)
  3. A description of your products (photos are always appreciated). (Your Solution)
  4. Who else in the market is doing similar things and why your products are better?(Competition)
  5. Who buys your products (or will buy your products)? (Target Market)
  6. How much does it cost you to produce one of your products? How much do your products cost, how many of them will you sell this year, and how will I make a profit?(Financials: Budgeting & Forecasting)
  7. How do (or will) you market your products? (Sales Channels & Marketing Activities)
  8. What are your business achievements? What are you working toward? (Milestones)
  9. Who are you, and why are you the right person to lead your venture? (Management Team)
  10. Optional: How much money you need to launch or grow your business, and what specifically will you use the funds for in your business? (Funding Needs & Use of Funds)
Source: How to Write a Creative Business Plan in Under an Hour.

Caroline's 140 character rule will force you to determine what your business is really about. For some this may be all you need to put together. For others this will be the outline for the final plan. Even if you don't think you want funding now you may change your mind down the road and this will allow you to easily add more details to the plan in order to present it to a bank or lender for consideration.

Your plan is what you you will refer to when your considering expanding, adding new products or making any significant changes to your business. Whenever I help any business the first thing I want to know is what does your business plan say? Because most of your answers will be there.