A business plan is a written document that summarizes how a business owner intends to organize the business and how it will run and earn a profit so that the business will succeed. It defines the strategy that will be used to establish, operate, and market the venture. The business plan has value because it forces the entrepreneur to engage in the planning process through which she will gain a better understanding of the industry, the business, and the various options available. It is also an essential selling point when looking to obtain loans from banks or individual investors.
Business plans come in many forms. Many are very detailed documents while others are more informal. A typical outline of a business plan follows.
Executive Summary
The executive summary must be impressive because it is the first thing people read in your plan, and we all know the power of a strong first impression. This is where you want to wow people. It is like the coming attraction, or trailer, at the movie theater. You want it to highlight the business idea and make readers want to find out more. While it is at the beginning of the business plan, it is often written last after all of the pieces of the plan have been determined.
Features and Advantages of Your Products or Services
At this point you need to describe what it is you do and how you do it. As a service business, you need to lay out what services you provide and what expertise your business brings to the table. Also, answer the question: What makes your services different from those of other, similar, businesses?
The Market/Industry
Illustrate, briefly, the market your business will be a part of. Be specific and show how and why this is a growing market. Also demonstrate how you fit into this market. It’s hard to prove you belong in an oversaturated market, so do your homework to make sure there is room for you to compete in your city or town. Since a contracting business is dependent on a location, define the industry in the local market.
If need be, find a niche to fill in an otherwise crowded market and explain why you are invaluable. Also make sure you explain your demographic market and discuss your competition, not from a negative approach, but simply by explaining your competitive edge over other similar businesses.
Marketing
Your marketing plan is all about knowing your target audience and explaining how you are going to reach out to them. Before including this in your business plan, do your homework and figure out where potential customers look for such services. For example, if you remodel kitchens and bathrooms, you will market yourself on websites and in magazines that homeowners or builders look at. However, before you can start reaching out to potential customers, you also need to define what services you are selling, at what price(s), and in what location(s). Also discuss your pricing strategy (are you competing with low prices or perhaps providing specialized services to discerning customers who are willing to pay). To simplify, you can use the four Ps of marketing: product, price, place, and promotion.
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Business plans can take several months to prepare. A large percentage of entrepreneurs use outside professional advisors such as accountants or lawyers for help; many also attend business plan seminars.
The census website at http://census.gov is a great place to start searching for demographic data. You can also learn a lot about marketing research by going to the Marketing Research Association at www.marketingresearch.org.
Management and Key Personnel
It’s important when doing a business plan to feature yourself first. After all, you are the person, the entrepreneur, behind the business venture, and it is you who will have to put your neck on the line, answer the hard questions, and take the criticism—as well as the praise and acclaim, should there be some.
Many people invest largely because they believe in the owner and the management team. Provide key information on each person on the team. If you are a one-person operation, explain how you can handle the jobs and from where you will hire subcontractors. Explain your criteria for such hires and compensation. You should also include outside advisors, such as lawyers, accountants, or financial consultants, and describe their backgrounds and input into your business. If you have a management team, or advisory team, briefly describe the background of each member and what makes that person important to your business.
Operations or Production
An Operations or Production section is all about how you do what you do. This can cover a lot of ground in a short section where you include a description of your services; sourcing raw materials, hiring labor, acquiring facilities and equipment; and how you complete and get paid for a project. Also include the overall costs of equipment such as tools, a truck (or several), and both office and mobile communications tools. Then discuss what you will do both on- and off-site and your access to the necessary materials you will need to complete a project. Where will you buy them and store them?
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Mini business plans of five to ten pages have become the popular concise models that may stand on their own for smaller businesses. It’s to your advantage to run long when creating your initial plan (15 to 20 pages) and then narrow it down for presentation purposes.
Many such presentations are made with PowerPoint decks, using 10 to 12 slides to tell your story. This is a great starting point, but you should have at least a more detailed mini-plan available, especially if you are seeking lots of money.
The basic rule for your operations section is to cover all the major areas including labor, materials, facilities, equipment, processes, and payment to illustrate the details that are critical to your business operation.
Finance
Your goal in this section is to explain how your business will work from