Whether you’re training for a marathon or have a dream of taking your business public, one of the most essential tools to success is writing down your goals. A business plan can help visualize every aspect of making your business successful. It tells you if your business makes sense or is viable. It helps you get financing. It communicates to the rest of your team (assuming you aren’t going it alone) what is expected of them now and in the future.
If you’ve already started your business, but haven’t written a formal business plan, the time to do so is now. Though, much of this advice is focused on entrepreneurs before they start their journey.
With that in mind, let’s take a look at a checklist of the most important aspects of a business plan, those that will help you make the right moves to minimize wasted effort and expenses and maximize your chances for achieving your dreams.
• Explain why you want to start your business (in writing).
• Describe the purpose of your product or service.
• Assemble a mission statement for your business.
• Summarize your short-term, medium-term, and long-term goals.
• Estimate how long you expect to achieve these goals.
• Explain what will happen if these goals are not achieved.
Research Your Market
• Determine the marketplace for your product/service.
• Determine if there is sufficient demand for your product/service.
• Determine the needs and desires of your target customer.
• Discover the most effective advertising being used for similar products/services.
• Determine the strengths and weaknesses of your competitors.
Refine Your Product Design or Service
• Add features that best meet the needs and desires of your target customer.
• Develop suitable optional features.
• Find low-cost ways to create, develop, or purchase product or service .
Develop a Marketing Strategy
• Devise marketing methods that negate your competitors’ strengths and take advantage of their weaknesses.
• Develop several different advertising approaches to be tested.
• Find low-cost ways to advertise and deliver your product.
Design Your Business Structure
• Determine what business entity works best for your business (LLC, S-Corp, sole proprietorship).
• Decide on the authority, responsibilities, and duties of your team.
• Determine share distribution/ownership and any investments in the business.
• What compensation/pay is given to you and your employees/partners?
Layout Starting Expenses
• What purchases and expenses can you defer until after the business begins?
• How else can you minimize startup and operating costs and expenses?
List Startup Requirements
• Determine what legal and insurance requirements you have before starting operations.
• Determine what equipment, supplies, and facilities you should acquire before starting operations.
• What other actions need to be taken before starting?
Prepare Projected Financial Statements
Estimate the following:
• Total startup costs.
• Quarterly sales and cost of sales for the first three years of operation of the business.
• Quarterly operating expenses for the first three years of operation of the business.
• Funds needed to start and sustain your business until it becomes self-sufficient.
Then prepare projected financial statements for three years based on these estimates.
Complete Your Business Plan
• Write down the results of the preceding action steps.
• Review your business plan and make changes as needed.
• Prepare an executive summary for the business plan.
Your business plan has many benefits. It keeps you focused on goals through visualization, and makes sure you are organized and don’t miss opportunities or required actions in operating your business. You can also leverage it to obtain financing, if that’s part of your strategy.
Jason Knapfel manages web content for Horenstein Law Group in Vancouver, WA, a business law firm that helps businesses achieve their goals through a wide range of legal services.
Image credit: CC by plantoo47