Planning your Business

So you have a business idea, GREAT! It’s time to get an overview of what you need to know and get the fundamentals of the business you want. This will lead up to the creation of your business plan.

Ultimately, you need a business plan, even if you don’t need to borrow money. A business plan is essential in keeping you focused on the big picture while taking care of the day to day necessities of your business.

Business plans can be as detailed and lengthy as some books, or can be as short and to the point as just a few lines on a napkin. It all truly depends on what you need the business plan to accomplish.

Below are a few points that a good business plan should include.

What structure is your business going to take? There are various business structures that your business can form under. Each one has different legal and tax laws governing it.

Everything from a Sole Proprietorship to a large corporation has different requirements and tax filing statuses. Research this carefully to find the right business structure for you.

What is your market? To whom is your product or service going to be sold to? On what scale are you going to sell this service? It’s important to understand who your customer is and where you’re going to find these customers.

Is there sufficient demand for your product or service? Customers are the lifeblood of your business. Without a good understanding of your market you have no idea whether your business is thriving or dying. Ensure that your product/service is going to have a healthy market before doing anything else.

Is there a reliable supply of your product? This is less important if you are in the service industry, but if you sell goods it’s important to know that you will have a continuous and reliable supply of product for your business to sell.

Who are your competitors? It’s also important to understand whom your will be competing against for your customers’ dollars. Understanding what your competitors are doing in the market can also give you an advantage. Learn from their mistakes, and their successes. How can you improve what they are already doing well?

By serving your customers in ways your competitors are not, it gives your business a unique selling position. Keeping an eye on your competition may also give you insights as to the health of your industry.

What skills are you bringing to the business? A detailed list of the attributes that you and your fellow partners/employees/advisors have and use in your business are important.

For example, if your strengths are in sales and customer service, and not in accounting, it would be best to hire a bookkeeper. When forming a business it’s always best to have a legal advisor, or attorney to help with the details and to smooth out any future legal matters they can foresee, that you haven’t yet considered.

How much money will you need to start up? Unfortunately, all businesses have some up front expenses. (e.g. Business licensing, equipment, pre-ordered product, advertising etc.) Will you be providing for your own business with personal assets? Do you need to seek financing through other sources? It’s important to research and understand where the money to start your business will come from and to properly plan to make sure you have enough.

What are your expenses? All business’ cost money. Everything from electric bills and property leasing to product purchasing and employee payroll, all businesses have some “overhead”. It’s the cost of doing business. It’s important to know how much it will cost you to run your business until a profit is generated.

What laws govern your industry? Depending on the type of business you choose and your location, there can be laws that govern the registration and regulation of that industry. Research carefully to make sure that you are within legal guidelines before you open up shop. Again, this is where an attorney would be helpful.

Will insurance and bonding be important? Different businesses have different insurance needs. In fact, the government requires various industries to carry insurance. It’s important to research your industry and fully understand your liability and legal expectations.

So after you’ve researched and recorded these issues, you’ll be ready to start writing your business plan. For more information on business plans and business related topics, please see our Resources page.