According to the U.S. Small Business Administration, the United States is home to more than 30 million small businesses. In the year ending March 2019, Americans kickstarted some 774,725 new businesses. Considering the inevitable failure of most small entities, you should bolster your chances of success with a business plan.
What Is a Business Plan?
Service-based businesses are easier to start than their product-based counterparts. For starters, they have lower startup costs and can be simpler to operate.
Despite service-based outfits’ barebones, not-so-complex nature, you still need a business plan before starting your own.
A business plan is a formal document that lays the foundation for any business. It establishes procedures for legally incorporating your business, running it, and — if you’re lucky — growing it.
Although the contents of every business plan differs, most include several sections:
Table of Contents and Title Page
For personal use, you can skip this step. However, if you plan on sharing your business plan with anybody whatsoever, include a title page and table of contents. Don’t forget to case this document in a three-ring binder. It’ll keep your papers in good shape and add a touch of professionalism.
On the upper half, include your company’s legal name, its website, the owners’ names and contact information. Throw your logo in there, too, if you’ve got one. The lower half of your title page should house the table of contents.
Corporate documents and commercial-use reading materials often contain executive summaries. This brief write-up of your business plan should inform readers of your company and why it’s poised for success. Avoid using colorful language or making exaggerated claims.
In no longer than three paragraphs, your executive summary should outline the rest of the business plan.
Try to include the following points, too:
- Mission statement
- Services offered
- Your name and formal company title
- Number of employees
- Competitive advantages
If you’re seeking financing, co-owners, or partners, tell readers what you’re looking for and why. Tell them what you’ll provide in return.
Hint: Planning on showing your business plan to multiple parties with different interests? Make multiple executive summaries to suit each of these audiences. Simply switch out the page your executive summary is on whenever introducing your plan to different people, businesses, or organizations.
Your executive summary does, in fact, kind of describe your business. The company description, however, delves into the nitty-gritty details and defining characteristics of your company.
Start your description by briefly explaining your industry. Touch on current and future market trends. If possible, use research to back up this introduction. Don’t worry about research right now if it’s hard to find. You can always return to this later.
In the next paragraph, state when your company was founded, identify its business structure (e.g., LLC, partnership, sole proprietorship), the owners’ names and what benefits they bring to the table.
This section is all about the services your company provides. Detail what types of equipment are used for these services. If you need any inventory to provide services, such as weed-eater string or bug spray, name these products and identify where you buy them.
Point out what types of equipment or products could boost your company’s quality of work. Don’t forget to price your business’s services.
It’s time to describe the market you’ll compete in. As a soon-to-be-started service-based business, you’ll probably only serve customers in your city or county of residence.
Break down this area’s largest competitors. If possible, define the local market’s demographics, size, trends and potential. Use a SWOT analysis — identify strengths, weaknesses, opportunities, and threats — to break down your company’s upsides and downsides.
You should also include a section on positioning. This refers to how you will differentiate your services from competitors’ services. If you’re not already familiar with these competitors’ services, do some market research. It might be as simple as browsing their websites or calling and asking them.
Lastly, go over promotion strategies. This can include social media efforts, advertising, and sales offers.
If you haven’t started a business, feel free to ignore this part. After at least three months of operation, however, it’s time for some financial statements.
An income statement quantifies your company’s revenues, expenses and net income for a period, usually a quarter or year. A balance sheet identifies its assets and liabilities at a certain point in time. The last common financial statement is the cash flow statement. You can worry about the statement of cash flows later — a balance sheet and income statement are absolutely essential.
Tips for Making Your Business Plan
As a beginner entrepreneur, the idea of starting a business is daunting. Even writing out a business plan can seem impossible.
1. Thoroughly Research Your Market
When listing your company’s competitors, don’t skimp on the details. Learning about your competitors isn’t just for your business plan. This step will help you identify these companies’ weaknesses and strengths.
With these weak points and upsides in mind, you can craft a strong foundation to avoid the mistakes your counterparts have — and to capitalize on their good ideas.
2. Formulate a Unique Benefit That Your Company Offers
Although you might not initially be focused on investors, it’s never too early to start thinking about how your business stands apart from your competitors.
Come up with unique selling points that will impress investors, potential partners, and upcoming managers you’re trying to reel in. If possible, think about unique marketing propositions that will set your services apart — as well as how you sell them — from the other guys’.
3. List Essential Facts
Never leave out important facts that make your business look good. These facts could also be about your competitors, your local market, or your equipment.
Making a Business Plan
Making a business plan isn’t easy. If you want to start a business, however, never overlook the power of a business plan. Good luck!