Getting Started

Writing a Business Plan

Writing a Business Plan

October 17, 2007|By CYNTHIA PERINI

"What's the plan?"

"What do you plan to do?"

"How do you plan to do it?"

These are questions we often ask in our daily lives. But to a business or major project, they are often the difference between success and failure, between flourishing and floundering.

We plan our vacations, our holidays, our retirement, but do we actually sit down and think about how we do it and whether we can do it more effectively? There are basic components of planning that drive success.

The key to any effective plan is a clearly defined mission. The mission is a defined as "a purpose for which one was born" and is a gauge by which to measure success. As you develop your goals and action plan, you should consistently refer to the mission to ensure the activities and steps you are taking are consistent with your mission. Often in life we can get distracted and pursue activities that may feel good or be fun, but if they aren't consistent with our ultimate mission, we may be wasting valuable time and/or resources.


Once the mission or what we wish to accomplish is defined, we need to look at all the things that may affect our ability to be successful. We need to look at our strengths as well as weaknesses. This is where we ask ourselves what we do well and what are potential areas for problems.

For businesses, we need to look at opportunities and threats to our mission in every way imaginable. Some of these are often environmental or economic issues beyond our control, but it is important that we recognize their ability to impact the results of our efforts. Or the opportunity may be as simple as a time in our lives when it is OK for us to take a risk and do something that we never felt safe pursuing before.

If we are beginning or operating a business, threats may be challenges such as the existence of a store chain that provides similar products or services that may compete with our mission. Opportunities may be the chance to provide a new product or service in an area where people have a great need or desire. These may come about because of a change in a neighborhood or development of a road. In business, it is said there are three factors that strongly influence success - "location, location, location." Though this is an exaggeration, it is also an important message to think through, depending on the type of business or service you will provide. Some businesses are destinations where people are willing to travel. Others depend on the impulse of someone passing their doors and stopping to make a purchase, or frequenting a store because of its convenience to their daily travels.

Now, before you set your goals, you need to take the time to do a financial analysis of your business. If it is an existing business, you need to look at the financial statements. Are you profitable doing business as you currently operate? Are there expenses you may be able to cut out or reduce without negatively impacting your business? Is there money you can afford to spend that will provide greater income than you currently enjoy? If you hire more staff, how long will it take for you to see income go up faster than the cost of having this person on payroll?

If it is a new business, this part is a little more complicated as you must anticipate all your expenses. Many start-up businesses underestimate the dollars and cents required to open their doors and operate.

Do you need a business license and what will it cost? Where are you going to operate your business? Do you purchase or rent space? What are your estimates for the monthly costs of utilities? What does it cost to have utilities hooked up in the beginning? What furniture, fixtures and equipment do you need? What will they cost? What supplies do you need and what do you estimate they will cost over the course of a year? What products are you offering? What do the products cost? And are there other sources for the products?

These questions are just the beginning. If you are going to employ others, you need to be evaluating the cost of providing benefits as well as wages. It is important to take the time to fully estimate all of these items and more, and then to set aside some dollars for a "contingency fund" for all the little things that may not come to mind initially.

Once you have looked at all these factors and analyzed where you stand with your business or project, you are in a much better position to begin to move forward and formulate a plan of action. You want to determine realistic goals for you and your business. Set goals one to three years ahead. Look for opportunities to capitalize on your strengths and the opportunities provided in the market for your product or service. These goals should be realistic, yet they need to encourage you to stretch your capabilities. As you develop these goals, you should also be considering the resources you have available to ensure you follow through to reach these goals. These include time, money, personnel, etc.

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