Now more than ever starting a new business may be the right move to make. Just make sure to create a comprehensive business plan in advance to increase your chance of success!
Starting a new business is definitely not for the faint of heart – it requires passion, resources, skill, patience, and perhaps even some good luck along the way. Let’s not forget…most new businesses fail. In fact, according to the Bureau of Labor Statistics, about 20% fail in their first year while 50% fail on or before their fifth year. So before you roll up your sleeves and get going, you probably want to make sure to put your best foot forward, and that includes getting organized and creating a business plan to serve as a blueprint for the company’s founders and management team to follow.
The plan will function as an overall road map for successfully launching a new venture, big or small, outlining and organizing the new enterprise’s goals along with the expected costs associated with its operation. It should include, among other things, the entity’s primary objectives, key milestones, strategy points, target markets, tasks, metrics, sales projections, anticipated costs (both fixed and incremental), and expected profits over time. The plan is typically provided to prospective investors, bankers, partners, and other colleagues to garner funding and other forms of assistance.
Creating a plan also provides clarity on what may be required to achieve success while serving as a reminder of these necessities along the way. It will undoubtedly help you stay committed and on track throughout the process. It also provides an opportunity to research probable competitors, existing market conditions, and potential hazards that may be encountered along the way.
Breaking Down the Plan into Manageable Sections
For assistance with creating a plan, check out the Small Business Administration’s business plan guide. Additionally, most experts recommend that a plan include the following sections, at a minimum:
- An executive summary of the business. This section should be succinct so as to grab and retain the reader’s attention. Keep it clear and simple. Include a quick statement explaining what makes your business unique. Angel investors and venture capitalists generally gravitate towards ideas that are new and solve a problem that no other business has yet to successfully address. Novelty is one of your greatest assets when starting a new business and seeking the support of others.
- A description of the business’ products and services. This section should describe what products and/or services it intends to provide to its prospective customer base and how this provision will generally be made by the business. Overly technical descriptions are not necessary and in fact, not recommended. Best to use simple, accessible language and wherever possible, demonstrate how the products and/or services will differ from that of the competition.
- Timelines. This section should include anticipated time frames for each stage of growth for the new venture. Provide a rational explanation for each phase and be sure to include information describing how and under what circumstances each one may be extended and for approximately how long.
- Market analysis. This section should provide thorough and substantiated research on the business’ industry, market, and primary competitors (current and future). The accuracy of all data should be confirmed using reliable sources – include citations wherever applicable.
- Corporate organization and management. This section should include biographies of those who will be managing the organization, along with a description of the roles that they will be playing at the new venture. This section should also include a description of the corporate structure that will be established (i.e., limited liability company, corporation, state of organization, etc.).
- Sales and Marketing. This section should describe how the business will be marketed and how the products or services will be promoted to the prospective consumer base. Ideally, the marketing plan is an aggressive one, covering some of the following topics:
- Introducing new products and/or services over time
- Improving upon pre-existing products and services
- Entering new territories and extending the consumer base over time
- Achieving synergies with other businesses through the use of joint ventures, cross-marketing arrangements, and promotional events
- Promulgating an effective public relations strategy
- Creating and exploiting bundling plans (i.e., cross-selling products or services for a discount)
- Entering into long-term contracts with desirable customers
- Establishing a strong online presence through the use of social media
- Creating an effective supply chain strategy
- Financial Information. This section should delineate the anticipated costs associated with starting and operating the business (preferably for the first five years). Balance sheets should be provided wherever applicable. Financial projections should be supported by objective facts – otherwise, they are mere fantasy that will cost the new venture its credibility with prospective investors.
- Funding request. This section should outline how much financing is being requested over the first five years and, ideally, what form it should take (i.e., equity, debt, etc.). This section should also outline how the business intends to compensate and/or repay its investors, including applicable time frames. It may be necessary to attach a draft stock option plan.
A well-drafted business plan plays an essential role in launching a successful and profitable new venture. It will help you organize your thoughts, dispense of impractical or useless ideas, and hone your strategy to achieve maximum success in the marketplace. You can create one by using relatively inexpensive applications such as Google Docs, Google Slides, and Microsoft PowerPoint, all of which provide excellent templates for entrepreneurs just starting out. The options are limitless. Take your time, get it right, and trust me, you’ll be thankful later. And no matter what format you choose to follow, don’t forget to communicate why you care so much about your new venture, as this is what creates a strong emotional connection with your audience, greatly increasing the odds that they will back you and your new business as you develop and grow over time.
Jennifer Paley is a Los Angeles based attorney and legal writer from New York, New York. Jennifer is a graduate of Harvard College (with a degree in Economics) and New York University School of Law (where she concentrated on intellectual property law). As a lawyer, Ms. Paley focuses on e-commerce, entertainment, technology, and privacy. She enjoys hiking, hot yoga, and travel in her free time. You can learn more about her at: https://www.paleylegal.com and https://jenniferpaleylegalwriting.blogspot.com/.