When that entrepreneurial spirit kicks in and you finally decide to try and get your feet wet, the next crucial step you should take is to create your business plan. It is in the business plan where you write in detail WHAT you plan to do and HOW you plan to do it. It must contain the business model, marketing strategies, organizational structure and potential threats and problems that your business may encounter. In this post, we’ll walk you through the essential things your business plan must have.
The business model essentially details how your business will generate its revenues and of course, profits. Will it be through mark-up on the sale of goods, through subscription fees, or through commissions? Let’s have a few examples. Walmart stores nationwide generate revenue through the sale of consumer goods such as groceries and other commodities. Their profit comes from the mark-up which is the difference between selling price to consumers and purchase price from suppliers. On the other hand, brokerage firms such as real estate and stock brokers earn their profits from commissions for every transaction.
The business model is the most crucial part of the business plan, without which, your business will have no direction. So it’s very important that you come up with the business model first before investing your time and hard-earned money.
In this part, you need to highlight the mission and vision of your business and the structure that will enable you to attain these objectives. Will you be a sole proprietorship, a partnership or a corporation? Other administrative requirements and government regulations must also be factored in here.
In the marketing strategy, you need to elaborate how you plan to get your target market, retain them, and compete with other existing businesses. You also need to come up with a distribution strategy – how you intend to get your products to the customer. Some of the common distribution channels are wholesale, retail, direct selling, and networking. The key to success here is to fully understand what your customer needs and be able to provide it to them at the fastest and least costly way possible.
Your operational plan will determine how you will run the business. This includes finding a good location to operate, sourcing the equipment you need, looking for suppliers, and manpower and inventory planning.
Well, you can’t run a business without money right? This is where you identify your financing options and do a breakeven analysis and earnings projections. Basically, the three essential financial statements you need to learn are the balance sheet, cash flow projections, and income statement. When combined, these three will give you an idea if your business can survive the competition. Therefore, a 5-year projection plan is a must-do.
Setting up and running your own business is no walk in the park. Otherwise, everybody would have done it already. However, if you carefully assess the market, understand your customer’s requirements, and dedicate yourself 100%, I’m sure you’ll be on your way to success in no time!