Everyday, thousands of people are taking that leap of faith and starting their own business. However, many of these businesses are doomed to failure right from the start because the time was not taken from the beginning to develop a detailed business plan.

No matter what business you are in, if you don’t have a written business plan, you are not in business! If you are considering starting a real estate investing or any other business, the first thing you should do is to put together a properly developed business plan that will be your blueprint to success and your guide for the future.

Although most people intuitively know they need to develop a good business plan, they still fail to do so. Many are so anxious to begin building their business that they simply don’t take the time to think everything through. However, planning before you start a business will not only provide the proposed business with direction, but will help determine if you really want to start the business in the first place. It forces you to look to the future and to see what impact the business will have on your lifestyle and financial well-being.

A simple start-up plan for a new business should include, as a minimum, these basic items:

• A basic summary of the business
• The business mission statement
• An outline of the keys to success
• A detailed market analysis
• A break-even analysis with a projected time line
• An estimate of required funding
• Any skills required
• An analysis of the skills of all those involved

This simple plan is very good for deciding whether the business is even worth pursuing and if the owners have the needed funding and skills to get the business off the ground. If you find that the business is not worth pursuing, maybe because of the lack of a viable market, it may be best to find another business idea or, at a minimum, greatly modify the current business model.

If it is discovered that the owner(s) don’t have the proper funding or basic skills to start the business, then it becomes evident that additional sources of funding need to be identified and/or people brought in with the required skill sets. It is much better to identify these problems before you open for business, rather than scrambling to save the business from failure as the problems appear down the road!

Assuming the simple business plan indicates that the business is financially viable and that the owner(s) either has the needed skills or has team members who possess the needed skills, then it is time to make a critical decision. The owner needs to take a hard look at the business model and its time and financial requirements, and then decide if they have a strong enough desire to make the business a success and stick with it for the long haul.

Getting a new business up and running will most likely require far more effort and time than can be imagined. This is not bad because any worthwhile venture will require dedicated and consistent effort, but one needs to be willing and committed to dedicate that extra time and effort. Longer hours will cut into family and leisure time. Are you willing to give up all your spare time, including nights and weekends, to get the business going? Do you have the flexibility to make yourself available in this way? If you are still working 9 to 5, are you willing to take on another job of starting your own business? This second job may take as much or more time than your full-time job. Are you up to the task?

What Is a Business Plan?

A business plan can have different purposes and many benefits. It will:
• Provide you, the owner/entrepreneur, with a detailed description of your short- and long-term goals for the business
• Provide you with a road map detailing how to reach those goals
• Provide detailed strategies, time lines, and check points for achieving those goals on a daily basis
• Help you focus on key points and money-making activities
• Help you prepare to deal with problems and bumps in the road
• Help you prepare to take advantage of future opportunities
• Help you allocate financial resources
• Help you allocate personnel resources
• Give details about the skills of your management team and workforce
• Help you attract talented people to your team
• Help you obtain the needed funding for your business
• Provide details showing cash needs during various phases of growth
• Provide projections of income and cash flow
• Help you prepare for future growth and grow your business in a controlled fashion
• Allow you to get feedback from your Mentors before you start your business. This can save you countless hours of time

Key Elements in a Business Plan

A normal business plan (and one that follows the advice of business experts and the Small Business Administration guidelines) includes a standard set of elements. Outlines and formats can vary, but generally, a plan will include components such as descriptions of the company, product, or service; the market; forecasts; management team; and financial analysis. A simple business plan outline will include these basic elements:

1. Cover page
2. Table of contents
3. Executive summary
4. Company description
5. Product or service definition
6. Market analysis
7. Strategy and implementation methods
8. Web plan summary
9. Management team highlights and experience
10. Financial analysis details and cash flow projections
11. Appendix with all supporting documents

Planning Your Business Plan

The first thing you need to do is to clearly define your business goals – both long-term and short-term. Discuss why you are getting into the business and what you want to accomplish in the first year, second year, third year, etc. Remember that these goals are not cast in concrete. A business plan is a dynamic document – it is a work in progress and should be reviewed and updated as the business grows and goals change.

Next, develop a clear business model. How will your business accomplish the goals you have set? Clearly define your product or service and what makes it stand out from the crowd.

Then refine your market research. Spend time to understand the market. Who is your target audience? Who are your competitors? What are the competitors doing to acquire business? Will you take business away from your competitors or is there enough untapped business that you just need to start advertising? Is there enough profit in this business to make it worthwhile? Brainstorm with other business associates to make sure you completely understand the market and its specific dynamics.

Define in detail all of the business strategies you will be using to claim your market share and meet your goals and how you are going to implement those strategies. Spectacular strategies and stellar planning documents are just words on paper unless you assign responsibilities with dates and budgets, follow up with those assigned tasks, and track the results. Implementation is where your plans become reality.

Determine who is going to be on your business and management team and what skills and abilities they bring to the table. A detailed list of the tasks that need to be performed will help you to see if you have enough manpower to do the job. Depending on your budget, you may need to scale back your goals or timetables if you find there is simply too much work for your starting team.

Last, but certainly not least, is the financial part of your business plan. If you are going to use your business plan to obtain funding, you need to make sure your financial section is detailed. The appendix can be used to house supporting data so that your financial section doesn’t appear cluttered, thus making it easier to follow. Use bar charts and pie charts to illustrate the numbers.

At a minimum, your financial section should contain a cash flow analysis. This is one of the most important parts of your entire plan. You should also have sales forecasts, profit and loss statements, projected business ratios, and market analysis tables. This is an area in which you may need the help of a financial consultant to make sure your numbers and charts are easy to follow and mathematically correct. Your financial professional may have suggestions for other projections and charts needed for your particular business situation.

Once you have done all your research and have all your data assembled, it is time to write the first draft of your formal business plan.

Business Plan Element Details

The order of the elements in your business plan can be different than suggested here, but your standard plan should include all of the suggested elements and others as needed for your particular business. The order in which you write the elements will also vary from the order you have them in your presentation. For example, although the executive summary comes first (after the cover page and table of contents), you will actually write it last, since it is a summary of the whole document.

1. Cover page – Make it attractive, but simple, and include the name of your company, contact information, and title of the business plan.
2. Table of contents – List each section and subsection with page numbers so reviewers can find what they want easily. Also, detail what is in the appendix, including page numbers for various charts, data, etc.
3. Executive summary – Write this section last. Try to keep it to one page, or two if absolutely necessary. This is a critical section of your business plan. Get it right or your target readers and potential investors will not read the rest of your business plan. Your first paragraph should include your business name and location, what product or service you sell, and the purpose of the plan. In following paragraphs, include the highlights of your business plan: business objectives, mission statement, projected sales, projected cash flow, projected profits, keys to success, and any other information that you don’t want your readers to miss.
4. Company description – Describe business legal structure, company ownership, history (for ongoing companies), start-up plans (for new companies), company location/facilities, etc.
5. Product or service definition – Describe your company’s products and/or service focusing on customer benefits. Also include a competitive comparison, sales literature, special technology, future products and services, etc.
6. Market analysis – Who are your customers and how will you find them? Identify the size of the current market, customer’s needs, market trends and growth, distribution analysis, your main competitors, and their major strengths and weaknesses, etc.
7. Strategy and implementation methods – Describe how your strategies and implementation will give you a competitive advantage in the marketplace. Define the specific assignments for your team members with dates, budgets, and tracking criteria. Detail your overall marketing strategy outlining various marketing and sales programs. Define your pricing strategy. If you don’t have a lot of expertise in marketing, you will probably want to consult with a marketing specialist.
8. Web plan summary – In today’s market, if you are not online, you will become invisible to a lot of potential customers. Get a website up and running now! Describe your site in your business plan and provide your web address.
9. Management team highlights and experience – Detail your organization (if you have one) and point out the strengths and experience of each member of your team. If you are the only member of your company (which is the way a lot of small businesses start), outline the contacts you have on your team and list all of the resources you have at your fingertips. Talk about plans to add key personnel as your company grows.
10. Financial analysis details and cash flow projections – Include a complete analysis of your cash flow and profit forecasts. Other financial data should include basic financial assumptions, a break-even analysis, and business ratios. If you are hoping to get a loan from a bank, ask them what they will need to see and provide that in your plan.
11. Appendix with all supporting documents – You can put lots of supporting data in the appendix. Just make sure it is easy to find. The first page of the appendix can be a separate table of contents just for the appendix.

Developing a great business plan is critical to success of anyone starting any business. Get the help you need to produce an aesthetically pleasing, accurate, and easy-to-read plan. You can get special help from retired executives in your area. Go to:

www.score.org

to see if SCORE has an office in your area. If not, lots of help is available from SCORE via the Internet and over the phone.

You can also get help from the Small Business Association (SBA) by visiting:

www.sba.gov

The SBA even has an online training for writing a business plan at:

http://appl.sba.gov/training/sbabp/index.htm

Good luck with your business plan. It just may be the most important thing you work on this year!