March 24, 2010

I have received quite a few questions regarding how to get a business up and running. While ideas birth fantastic businesses – at some point every entrepreneur should sit down and put together a roadmap from A to B. This roadmap is a look at where you are and where you want to go in the future. Many people put off this important step because they think it’s only applicable if you need financing or want to pitch venture capitalists. Not the case. A business plan can be a simple endeavor that will prove invaluable as you grow your business.

‘Failure to plan on your part does not constitute an emergency on my part…’ I heard someone say this once and I laughed but it is applicable on so many levels. Anyone that wishes to be successful should put together an action plan. There is not a ‘right’ or ‘wrong’ answer when outlining your goals. However, you will be amazed at the opportunities and ideas that present themselves when you put your business on paper. Here’s a quick guide on how to get started:

a. Define your business concept. Put down key facts that you already know about your industry and the type of business structure you want to pursue. Also, this is a good time to discuss the product or service that you have in mind and why it will be successful.

b. Define the market. Briefly, write down a list of all types of potential customers for your product and/or service. Who are they? What makes them interested in your business? And lastly, who is your competitive set? How can you position your product and/or service to beat them?

c. Define your finances. This will contain your income, cash flow statement, balance sheet and important financial ratios. Not a finance guru? No worries. Start small by forecasting your monthly sales income for the next 6-12 months (be conservative). From there, write down a list of all the monthly expenses you will likely incur for the same time period. Subtract your monthly expenses from your monthly sales and you have your first Income Statement.

The three categories above are then simply broken into six major components:

a. Executive Summary
b. Management Overview
c. Product or Service
d. Marketing
e. Operations
f. Financial Data

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