Starting a business is a massive step for anyone to take on. Some people believe that creating a company will be the answer to all their problems. Habitually, they think that no longer having to answer to a "boss," means that things will become much simpler for them. Unfortunately, this is not the case in terms of starting a business. Starting a business requires planning and strategizing. It will take many hours of researching and learning to build a successful business. One of the critical elements of creating a sustainable business is developing a business plan. A business plan will allow the business owner to strategize and plan necessary elements such as the business's marketing strategy, financial forecasts, and the business's form of ownership. Though there are many elements to a successful business plan, this article will cover several of the specifics needed to begin down the right path of business ownership and provide the keys to beginning to develop a successful business plan.
Executive Summary: Who, What, When, and Where
Beginning your business plan by defining the "who," "what," "when," and "where" will allow you to create a solid representation of your business. For this article, we will use the example of a sporting goods store. First, in your business plan, you need to identify your company. For instance, you could name your sporting goods store "Elite Sporting Goods." With this company name, you will want to search and ensure the name you choose has not already been registered in your state. For example, if you visit the Secretary of the State web page in California, you can search all registered business entities to confirm if your name is available. In addition to choosing a name, you will also need to determine whether your name requires a specific designator. The name in California can be listed as ELITE SPORTING GOODS, LLC or ELITE SPORTING GOODS LLC. The comma between the business name and designator is optional.
Once you have determined the "who" of your business, you will want to focus on the "what." What is the mission of your business? What kind of product are you marketing? What are some of your short- and long-term goals? Each of these is a concept that will assist in creating a solid foundation for your business plan. Knowing how to answer these questions will help you as you delve deeper into the business plan process. The three questions that must be answered are as follows:
1. At the beginning of this phase, you will want to create a mission statement. TED talks have become commonplace, and they have a short but straightforward mission statement, "Spread ideas." This is your opportunity to think outside of the box. Maybe you want something that speaks to environmental sustainability or your dedication to charity; either way, a mission statement is a great way to sell yourself in a few sentences or less. Suppose that, the sporting goods store's mission statement might be, "We strive to provide the highest quality sporting goods, while maintaining relationships with the local community and contributing to local community projects."
2. Once you have a mission statement, you can focus on your product. During this early stage, it is not necessary to go into detailed descriptions of the items. A simple message will suffice. For example, Elite Sporting Goods will be a small, locally owned business providing quality sporting goods, generally specific to the current sports season. Here, you have identified your product and even provided slightly more detail regarding the specifics of what you will be marketing.
3. Following the product description, you can give a few short examples of your short- and long-term goals. It is important to remember that short-term goals in terms of a business differ from those we generally adhere to as individuals. A short-term goal is usually completed in 6 months or less in a typical work project or life plan, with long-term goals exceeding 6 months. For businesses; however, a short-term goal can be completed in 1 to 3 years, while a long-term goal is projected to be completed further into the future; for example, 5 to 10 years. One short-term goal could be to earn X amount of revenue within X amount of time, or sell X amount of a specific product before X date. Another short-term goal could be to find a more prominent store location before the third year of being open, or to offer a wider variety of products by finding a more cost-effective manufacturer within 18 months of opening. In terms of long-term goals, you want to focus on the vision. Long-term goals seek to look at the deeper meaning of your business. One long-term business goal could be to have the business grow enough to become publicly traded. It will take years for a business to establish the financials and reputation required to go public; therefore, this would be an excellent example of a long-term goal.
Once you have reviewed the "what" of your business, you can begin to focus on the "when" portion of your business plan. When will your services be available to customers? Here, you want to focus on the actual projected launch date of your business, as well as what hours your business will be open. You may want to set the launch date as 18 months following the completion of your business plan. You may also include that there will be a variety of items as a tradeoff for limited stock at the start of the business. This tradeoff of having limited supply will be worth it because there will be more variety of items; thus, allowing the company to track into the future which items are likely to be more highly sought after than others. This applies to "when" because it will determine when different products will be available to customers. It may be that due to this tradeoff, customers either have to wait until the item is back in stock or perhaps have an option to order the product and have it shipped to the store or to their address. Conclusively, it is essential to address business hours. Will your business be open on the weekends, and will opening times vary? This will be helpful in the future when generating financial reports that require the inclusion of an estimate of capital needed to meet payroll.
Company Summary: Location, Management, and Products
The next step within the business plan involves location, management, and products. During this phase, you will further specify the individual needs of your company. First, it is necessary to decide on a location and facility for your business. Since the example is a sporting goods store, we will want to find a zoned site for commercial business so that we can acquire a retail store. Since the company will have various products, the facility chosen will need to be large enough to have room for these different items. It may be helpful to check out similar retail stores to see how large their facilities are and compare them to what this business is trying to achieve.
Once you have determined where you will set up your business (even if you do not have a specific lease yet, but have a general idea), you can determine your management structure. It is essential to understand that as a limited liability corporation, the business can have employees. Setting up a management structure beforehand will assist in what will come later as employees are hired and the store is required to run. Let’s assume the owner may be at the top of the flow chart, followed by team managers, followed by floor supervisors, followed by customer service agents. Perhaps some of these will initially not be needed or can be combined, but writing them out will allow you to get an idea of how many employees may be required and research into the potential salaries and whether the business can stay afloat while maintaining the provision of livable wages.
Preceding the management structure results in an in-depth look into your products. Here you will want to check out manufacturers and distributors to determine the best prices. Since the sporting goods idea is to sell high-quality products, the cost of manufacturing and distributing products will likely be higher. At this stage, you can determine which products will be sold, how much inventory will be on hand, whether customers have the option to order and receive items (perhaps this is something that can be set up with the distributor). You can take many avenues here, but what is important is that you cover all aspects of your product in depth.
Understanding both the industry and the market analysis will be vital to creating a successful business plan. Completing a strength, weakness, opportunity and threat analysis will assist with understanding the market and industry analyses, which requires that you investigate information regarding both your business type and the market you will be entering. You will want to know how many other sporting goods stores are already open in the area and what their specialties are for the sporting goods store. You can also research the labor statistics to see how much these types of businesses earn on average annually and the annual average wages paid to individuals who work for a sporting goods store.
The market analysis is helpful in that it allows you to pinpoint exactly who you are targeting your products to. It could be that you have multiple target options. For Elite Sporting Goods, target markets will fluctuate depending on the sports season. If it is football season, then sporting goods related to football will be more prominent and readily available. Marketing will be geared to those individuals, perhaps males aged 25 to 55. By specifying a target market, your business could better succeed in a niche instead of attempting to compete with larger companies that can provide a larger number of products all at once. You can refine your target market to make you a more formidable competitor.
The next phase, conducting a SWOT analysis, is pivotal when initiating a business plan. Creating a SWOT analysis requires you to list your internal strengths and weaknesses. Additionally, you should also list your external opportunities and threats. An example of a business's strength would be that the owner managed a sporting goods store for 10 years previously. A weakness that could be listed might be that the owner is unfamiliar with labor law on hiring employees. An example of an opportunity for the business could be that a local sporting goods store closed recently. Finally, a threat could be the opposite: a new sporting goods store just newly opened locally. As you can see from the examples given, the list can become extensive quickly. The SWOT analysis will help the business gain a synopsis of how to capitalize on their strengths and methods to strengthen their weakness and face threats head-on or avoid threats when the risk is too high.
Overall, creating a successful business plan requires many moving parts. It is easy to get overwhelmed, thinking there are too many steps, and it could never be completed. Fortunately, if broken down into sections, it is possible to begin an effective business plan that will assist in achieving the launch of a successful business. The executive and company summaries offer much-needed details regarding the company and a brief overview of the products. Additionally, the business will be able to plan its mission statement and goals. The company summary focuses on where the office will be located, how the management structure will be set up, and which products will be sold. Finally, the market and industry analysis and SWOT analysis allow a business to pinpoint a target audience, review the competition, and understand its weaknesses. Though this article only covers the first stages of beginning to create a successful business plan, there is much more to be discovered. Following the aforementioned concepts would be a look at the 4 P's, "Product," "Place," "Promotion," "Price." As a result, the business would focus on its marketing strategy and create a sales forecast and a financial forecast. These steps can be researched to better understand the finalization of building a successful business plan.
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