As we all know by now, the success
rate for small businesses in North America doesn’t exactly offer a strong argument in
the favor of the entrepreneurial spirit. It’s tough going because the
marketplace is tough. It’s hard because in order to really succeed in today’s
world it seems like you have to plaster your company’s logo on as many
websites, bus panels, bumper stickers, T-shirts, and even tattoos as possible
in order to get the message across that you even exist.
However, it can be done. It just
can’t be done without solid planning and the perseverance required to stick to
a good plan and follow through with it. The first and foremost step if you have
no experience in the business world and are looking for a way to get your small
business off the ground, is to come up with the best possible business plan
that you can write up. It is only with a good business plan that you can hope
to attract the eyes (and money) of potential investors, who are always
extra-wary about what they throw their money at and why.
The main thing that is going to
attract an investor – and, in turn, cement the rationale for your business’s
existence – is coming up with a reason why your company simply must exist. Call
it your existential philosophy if you like. If you don’t have a concept that
describes just what your business is going to do and just why it will fit
perfectly into the industry you’ve chosen, then chances are you haven’t flushed
out a very good business plan.
The chances are even greater that
you yourself have not figured out the particulars of your business venture, and
as such, are in no position to offer a business plan to an investor in hopes of
receiving financial backing. Robbie Burns spoke the truth when he said that
“the best laid plans of mice and men often go awry” (loose Gaelic to English
translation), but without laying out the best of plans, a small business owner
can virtually count on everything going disastrously off course.
Determining
you Cash Flow
Depending on what your business is
going to be, there are all sorts of important, helpful things that you can put
into a business plan. If, for instance, you are planning on starting up your
own landscaping business, it would be prudent to incorporate the amount of
mechanical equipment you’ll need in order to get started. You’ll want to
mention how many employees you are going to hire for you venture – full time
and part time – as well as forecasts on how much money you’ll be making in the
business every month so that you can provide meaningful estimates on whether or
not you can afford X number of full time workers. You’ll want to take into
consideration any possible “down time” where you might experience a drop off in
profits – for a landscape business, say, the winter months, where shoveling
snow might be the only gig you get for two months – and how you are going to
arrange layoffs of employees with respect to these estimates. Then you’ll want
to figure out what your monthly expenses are likely to be – for instance, how
much will you be spending on gasoline for your machines, and what happens if
the price of gasoline suddenly goes up? – as well as what write-offs you are
going to take advantage of when it comes time to do the company’s taxes at the
end of the year.
Assessing
the Risks
Assessing risks, as well, is a key
component of a good business plan. If you are opening a coffee shop, you’ll
want to factor in the possibility that your espresso machine could one day have
a nervous breakdown and completely stop the business from functioning normally,
and just how disastrous this is going to be to your “best laid plans.”
The human resources part of your
business plan should cover some of the possible risks as well. For instance, if
you want to start your landscaping business, what kind of compensation are you
going to guarantee to your workers should one of them get injured? Are they
going to be covered by worker’s compensation? How many employees do you think you will need to function
properly and what happens if one of them falls ill and cannot work for an
extended period of time? Is there enough local labor to fill these positions?
In other words, you’ll want to address all the possible “bad scenarios” that
could afflict your business and then come up with genuine solutions to these
problems so that potential investors will not only say “Wow this guy’s got all
his bases covered,” but also “Wow”, this business has a really good chance of
succeeding.
Marketing
Plan for Your Business
Extremely integral to a good
business plan is a solid marketing component. Here you’ll want to forecast for
potential investors the many ways in which you believe you have a good chance
of succeeding as a business in the marketplace.
If you’re opening a coffee shop,
you’ll want to explain just how you are going to handle the challenge of
competing against larger chains, and just why the location you’ve chosen to set
up your store is going to be ideal to attract a regular flow of customers. For
example, when you are asked why you are opening a coffee shop in front of an
old folks home, come up with the answer that you’ll have a steady base of
regulars.
If you are wondering how you are
going to market and advertise your company, explain in your business plan just
why you think printing the name of your company on the paper sleeve that
insulates the coffee cups will be a good solution. Better yet, explain why the
name of your company and its logo are eye-catching and memorable. In short, you
want to impress people but you want to do so with as many statistical
predictions and facts backing you up as possible.
Writing a great business plan won’t
ensure that you get an investor to help you get started, nor will you be sure
to succeed just because your plans are solid. But without one, you’re sunk even
before you’ve sailed.
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