Building a business is like building a house. You need to do it one step at a time. When you build a house, you don’t start with the roof, do you? You don’t even start with the foundation. You start with a plan. Where do you want to build? How big will the house be? Will you expand it after a few years? These are issues you have to think about BEFORE you start to build the house. Once you have the right plan, then you can build the proper foundation for your dream house.
If you want to build your dream business, then you need to start with a good plan too. While most people think a business plan is just something you show to potential investors or lending institutions, the real value to the business owner is in the process of creating the plan itself. Creating a business plan will force you to analyze every aspect of your proposed business before you jump to the really cool product or service that inspired you to start the business in the first place. After all, your house could have the greatest home theater ever created, but if you didn’t plan the electrical system correctly, then you’ll never enjoy the benefits of what you’ve built. The business plan will require you to research your product, the market, and your competitors to see what it takes to be successful. It will also require you to evaluate your own strengths and weaknesses; a critical analysis that most people avoid doing.
Every good business plan should include at a minimum the following:
- Description of the company, including your mission statement, goals and objectives, and company philosophy;
- Description of the products and services you will offer;
- Marketing plan, including an analysis of your competition and how you will set yourself apart (this is probably the single most important part of the plan);
- Operational plan of how you will actually run the business on a daily basis;
- Management and organizational chart of who will run your business;
- Personal financial statement of each owner to show to potential lenders;
- Start-up budget with itemized expenses and capital requirements;
- Financial plan with yearly projected profit and loss statements showing expected income, expenses and cash flow.
If this sounds like a big job, it is. Creating the first draft of your business plan should take several weeks of hard work. Once you’ve created your draft, take it to your professional advisers. Each plan contains numerous legal, financial and tax issues. An experienced business attorney and accountant will be able to spot potential problems for you so that you can revise the plan accordingly. All of this hard work will pay off in the end. As a wise man once said, “Failing to plan is a plan for failure.”
For a free half hour consultation to learn more about business planning, contact Attorney Chris Ratté.
NOTICE: The information and articles posted on this website are for informational purposes only and are not intended as legal advice. Contact me to discuss your particular situation or consult a licensed attorney in your state.
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