Create a business plan
It all starts with an idea followed by steps to make that idea into a money making machine. It takes more than just an idea to build a successful business. It is important to answer some of the very basic questions such as are you the right person to do this business ? will buyers prefer you over your competitors ? how are you going to tell others about your idea ? so on and so forth.
A business plan will help you make your idea into a successful business. A business plan is the first document your investors and other interested personals will see. Some of the most important sections in a business plan are listed below.
High Level or Executive Summary
Talk about what are you going to sell, where & to whom ? You will be explaining more about your business in a short and concise manner. You can talk about business goals both short term and long term. It is nice to include some planned financial forecast for the immediate quarter with some high level overview about your funding source.
When you walk into a room full of potential investors or prospective buyers then you have few minutes to address everyone about what you are going to offer. You need a solid introduction with a perfect motivational story. You need something that justifies what you are doing and something that helps everyone relate yourself with what you are offering. An example of motivational story with justification can be that you are a mother yourself who is offering homemade organic nappies for newborn babies. Do not plan for this summary to go over 250 words. You must be able to communicate this within 2 minutes.
Talk about why you are more than qualified for running this business. Do you have prior experience in doing this type of business ? Did you attend any specialized trainings to equip yourself with the adequate knowledge ? If yes then share the certificates. If more than one person is involved then you need to provide a Curriculum Vitae for each person. If there are relevant hobbies then listing them can substitute your candidacy.
Selling products or offering a service
What are you selling ? Are you going to sell only Nappy or are you also going to provide nappy laundry service ? A business can do both sell a product and offer service around the selling product. There may be different variant of the same product which may need further explanation. In some special cases you may not start selling products or services right away. Explain in case if there are such exceptions.
Who is going to buy you product or service ? Have you already sold anything similar in your business ? Are your buyers customers or other businesses ? Who is your typical customer and where do you find them usually ? Why do your customers buy from you ? Are there any pre orders already ? You will need to think from a customer point of view and describe what they are looking for from your business.
What is the time of research done ? Was is based on a similar established business ? What was the sample size ? Did you already do some test trade or sell something to a small group of people to learn the product reception ? How big is the market ? Where do you place yourself in the scope of this market?
Where are you going to get your customers ? What is the type of campaign that best works for conversion ? How long will you run the marketing campaign? Are there any specific season where you expect sales to go higher ? Is the marketing seasonal ? What types of tradeshows and exhibitions are available for your product display ? A satisfied customer is the best marketer for any product.
You must perform a SWOT analysis. You need to find your USP (Unique Selling Point), something that makes your business stand apart from your competition.
- Strengths are why you will be successful
- Weaknesses are why you will NOT be successful
- Opportunities are factors you can take advantage of in order to be successful
- Threat are factors you need to mitigate or avoid in order to be successful
Opportunity and Treat are factors that are equally existing for yourself and your competition.
Operations and logistics
You will be describing about your day to day operation in your business and its complete supply chain dependencies. This will involve mentioning about procurement, production, delivery, payments, etc. In some case based on the product and services you are selling you may have legal requirements and insurance. You will also have to involve a section to describe about your management and staff allocation.
Cost and pricing strategy
You must sell your products and services in a sustainable manner. The selling cost must cover the operations cost and help generate profit. Profit is sanity and revenue is vanity. You can have a business with a lots of revenue but if you do not generate profit then you will not be sustainable. Having a perfect cost and pricing strategy will help you run successful business.
You need to know how much you need to start buying things, pay your employees, pay your bills , etc. Knowing how much you need by when with a due date helps organizing funds ready for disbursement.
Sales and cost forecast
Sales forecast says how much sales are you expecting. Cost forecast says how much you need to buy in order to make the amount of sales your already forecasted. Since this is a forecast you will have to clearly mention the assumptions you have made to determine this forecast.
Personal survival budget
This is the amount of money you will need to live on. This is the amount you want to pay for your personal dwelling, bills, food, transport, family expenses, etc. Depending on situations this can include payment towards saving plans or premiums toward loan amounts, etc.
Cash flow forecast
This is the amount you expect to come into your business account and the amount you expect to go out of your business account. This will include paying taxes and insurance. You need to determine what are the types of payment. Are these payment fixed or variable. Are these payment periodic or random.
This table explains a detailed break down of the cash flow amount. This table will also clearly map the assumptions applicable against the break down of the cash flow amount. This table also explains what is included for the cost and how was the cost worked out.
Back up plan
The business plan must not only have a plan to succeed but also must have a plan when you fail. Only less than 5 in 100 startups are successful and hence there is a significant chance to fail. A business plan is only complete with a perfect back up plan.