Starting Small Part 2

Starts small 2
Writing your business plan
1.Create a business plan. A business plan
helps to define what you think you need to
launch your business, large or small. It
summarizes the sense of your business in a single
document. It also creates a map for investors,
bankers, and other interested parties to use when
determining how they can best help you and to
help them decide whether or not your business is
viable. Your business plan should consist of the
elements outlined in the steps below.
2.Write your business description. Describe
your business more specifically, and how it
fits into the market in general. If you are a
corporation, LLC, or sole proprietorship, state
that, and why you chose to go that route. Describe
your product, its big features, and why people will
want it. Answer the following questions:
Who are potential customers? Once you
understand who they are and what they want,
come up with a marketing strategy.
What price are they willing to pay for your
product or service?
Who are your competitors? Do a competitive
analysis to identify key competitors. Find out
who is doing something similar to what you
are planning, and how have they been
successful. Just as important is to find the
failures, and what made their venture fall
apart.

3.Write an operational plan. This will describe
how you will produce or deliver your product
or service and all costs.
How will you create your product? Is it a
service that you are offering, or if it's more
complex—software, a physical product like a
toy or a toaster—how will it get built? Define
the process, from sourcing raw materials to
assembly to completion, packaging,
warehousing, and shipping. Will you need
additional people? Will there be unions
involved? All of these things must be taken
into account.
Who will lead, and who will follow? Define
your organisation, from the receptionist up to
the CEO, and what part each plays in both
function and financials. Knowing your
organisational structure will better help you
plan your operating costs, and fine-tune how
much capital you will need to function
effectively.
Getting feedback. Friends and family make
great resources for asking questions and
getting feedback––don't hesitate to use them
as your sounding board.
Needing to increase the size of your premises.
This happens more often than expected. Once
the stock starts piling up, you may find it ends
up in your living room, bedroom and the
garden shed. Think rental of storage premises
if needed.

4.Write the marketing plan. Your operational
plan describes how you will produce your
product, and your marketing plan describes how
you will sell your product. When you create your
marketing plan, try to answer the question of how
you will make your product known to potential
customers.
You will want to include the type of marketing
you will use. For example, will you use radio
ads, social media, promotions, billboards,
attend networking events, or all of the above?
You will also want to define your marketing
message. In other words, what will you say to
convince customers to choose your product?
Here, you want to focus on your Unique
Selling Point (also known as USP). This is the
unique advantage your product has to solve
your customers problem. For example, you
may be lower cost, faster, or higher quality
than your peers.

5.Come up with a pricing model. Start by
checking out your competitors. Know how
much are they selling a similar product for. Can
you add something to it (add value) to make yours
different and hence make it a more enticing price?
Competition isn't just about the goods or
services themselves. It is also about your
social and environmental credibility.
Consumers are increasingly conscious of the
need to show that your business is concerned
with labour conditions and isn't damaging the
environment. Certification endorsements from
reputable organisations, such as labels and
stars, can reassure customers that your
product or service is more aligned with their
values than one lacking the certification.

6.Cover the financials. The financial
statements translate your marketing and
operational plans into numbers --- profits and
cash flow. They identify how much money you will
need and how much you might make. Since this is
the most dynamic part of your plan, and perhaps
the most important for long-term stability, you
should update this monthly for the first year,
quarterly for the second year, and then annually
after that.
Cover your start-up costs. How are you going
to finance your business initially? The bank,
venture capitalists, angel investors, Small
Business Administration (SBA), your own
savings: these are all viable options. When you
start a business, be realistic. You will probably
not roll out of the gate making 100 percent of
whatever you project, so you need to have
enough ready reserve to fund things until you
are really up and running. One of the surest
roads to failure is under-capitalization.
What price do you intend to sell your product
or service for? How much will it cost you to
produce? Work out a rough estimate for net
profit—factoring in fixed costs like rent,
energy, employees, etc.
7.Come up with an executive summary. The
first part of a business plan is the executive
summary. Once you've developed the other parts,
describe the overall business concept, how it will
be monetized, how much funding you will need,
where it stands currently, including its legal
standing, people involved and a brief history, and
anything else that makes your business look like a
winning proposition.
Build your product or develop your service.
Once you have the business all planned,
financed, and have your basic level of staffing, get
going. Whether that's sitting down with the
engineers and getting the software coded and
tested, or getting materials sourced and shipped
to your fabrication room (aka "garage"), or
purchasing in bulk and marking up the price, the
building process is the time during which you
prepare for market. During this time, you may
discover things such as:
Needing to tweak the ideas. Perhaps the
product needs to be a different colour, texture
or size. Maybe your services need to be
broader, narrower or more detailed. This is
the time to attend to anything that crops up
during your testing and development phases.
You'll know innately when something needs
tweaking to make it better or to make it less
like a competitor's stale offerings.
Part 3 coming soon.