Business planning
Once you have your business idea, you need to develop a business plan. You may revise your plan over time as your company grows, the demand for your product or service changes or new competition enters the marketplace. But without a plan, or a blueprint to follow, it’s hard to build your business and easy to lose sight of what you’re trying to accomplish.
You might think that a business plan needs to be very long and complex. In fact, it’s just the opposite: the simpler the better. Regardless of what your business does, your plan should cover some basic elements. At a minimum, you should plan on addressing these topics:
- The product or service your company will provide and what is different or unique about your product or service compared to those already in the market
- How much you’ll charge customers for your product or service
- How you plan to market your company’s product or service
- Where you’ll get the money to start your company
Financial resources
At the heart of any business plan is capital — the money you’ll need to get the business started and keep it running and growing. Here are some key questions to ask yourself:
- Will you generate enough revenue to cover your expenses and reach your goals? (Revenue is the total money your business has coming from sales of its products or services, and you calculate it by multiplying the number of product or service units you sell times the price per unit.)
- What financial resources of your own do you have to put into the business?
- Will you be able to get outside financing?
If you need to borrow money, one of the first things any lender will want to see is your financial analysis of the business. Your financials must be realistic — and must show in great detail, often on a month-by-month basis, where you expect income to come from and your anticipated monthly expenses. This information, along with a review of your personal credit history, will help a lender analyze the risk of extending a loan to you and assess the likelihood that your business will succeed.
A good resource for help with a business plan can be found at http://www.sba.gov/starting_business/planning/basic.html.
Starting with a franchise
To start a business, you might consider a franchise arrangement. This gives you the right to sell the products and services of an established company, or franchiser, such as a fast food chain. Franchising can be a great opportunity to experience being a business owner while taking advantage of the support, services and training that the franchiser will provide. You need to read the fine print of the franchise agreement carefully to understand the extent of the financial commitment you are making, the restrictions under which you may have to operate and what happens if the business doesn’t succeed.
