One of the first things to accomplish in starting up a new business is the preparation of an operating plan. The plan will become your main weapon in guiding you through the briar patch that is business development. Your plan is the tool that will be used to determine profitability and market share, to attain financing and team-building. A business plan must be well crafted and comprehensive.
However, before you start the plan you need to perform a self-analysis. This starts by evaluating your strengths and weaknesses as an owner/manager of a business to determine if you have the requisite mind and skill set.
- Are you self-motivated? Do you have ‘entrepreneur drive’? The success of the new business depends entirely on your mind-set to make your idea (your vision) a reality. This takes a lot of inner strength and self-confidence.
- Are you a people-person? As a business owner/manager you are going to have to develop relationships with many people. Your interpersonal skills are extremely important in managing your new venture.
- Are you a procrastinator? If so, you’ll never succeed. In starting-up your business quick decision making is a constant. A well developed and conceived plan will help but make sure you understand that decision making is critical and in many cases ‘spur-of-the-moment’.
- Do you have the physical capacity to start-up and run a new business? Starting and running a business is a lot of work. In most cases, it’s 12-14 hour days seven days a week so you must be up to the task physically. If not, you are going to need a lot of ‘go’fer’ help but you will still be required to make all of the decisions and do a lot of the work.
- Are you a good organizer? Poor planning is one of the main reasons start-ups fail. So you must ensure you are organized and can prioritize tasks. Additionally, you must have a high tolerance for ambiguity – everything is grey (not black and white).
- Do you have the will to succeed? Starting and running a business can wear you down physically but also emotionally. Many times you will need strong motivation to get you over the ‘down’ periods when things are not going as planned or anticipated.
- How will the business impact your personal life? The process of starting a business and the critical 18-24 month period after opening are stressful and can be hard on family life. Your immediate family should be on-board and supportive of your venture and be made fully aware of the time and financial burden that the new business will demand.
Preparing the Plan
Now that you have decided you have the mind and skill set required to start-up and run a business – it’s time to prepare the PLAN!
The business plan is your bible. It is the guide that is going to make your ‘dream’ come true. It will determine how and where you are going to manage, market, and fund your new venture. To accomplish this we are going to use the 4M Performance model of business accelerators: Management, Marketing, Money, and Momentum. Developing a GOOD business plan takes time, thought, research, and prioritization. It will be constructed like this:
- Introduction (Executive Summary) – A full description of the business and its goals. A financial recap of expected performance. Who you are and others involved in management of the business. Your/others skills and experience. The legal structure. Finally, how the brand will differentiate itself in the marketplace.
- 1st 4M: Marketing – What are the products/services of the business and what is the demand for these products. Where will your business be marketed and how big is that market. How will you advertise your business and the costs involved. Finally, what is the pricing structure to be used to generate the most revenue.
- 2nd 4M: Money – Profit & loss statements for 3-5 years need to be complied. Every expense to be incurred – detailed by fixed and variable categories. Balance sheets for the same periods must be complied. The first year’s pro-forma statements should be in months, all other years – annually. A cash flow analysis for the first year by month and the anticipated return on investment for the first 3-5 years. Explain who will do the accounting and financial recording and statement preparation. Who and how will they be compensated. What, if any, borrowed funds will be used to finance the new venture. What is the source of the funds and what is the payback structure and interest rate.
- 3rd 4M Management – Explain who and how the business will be managed and operated on a daily basis. Discuss personnel, insurance, leases, rents, equipment, and space needs. Explain the supply-chain and logistics of the business. Attach dollar amounts to these that refer back to your financial statements.
- 4th 4M Momentum – In a concluding statement, summarize your goals and objectives and your commitment to the hard process of starting and operating a profitable business.
Share your business plan with several trusted associates or friends. Ask for their honest opinions and keep in mind that your plan is fluid and will change many times as you go through the process. Best of luck.
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We provide our members reliable insights that you can instantly implement for your business success. These include how-to’s, tips, and takeaways based upon the 4Ms of business acceleration: Management, Marketing, Money, Momentum. It’s the information you need to help boost your business to the next level.
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