How to Write a Business Plan
Creating a business plan will help you achieve your entrepreneurial goals. A clear
and compelling business plan provides you with a guide for building a successful
enterprise focused on achieving your personal and financial goals. It can also help
persuade others, including banks, to invest in what you are creating.
Do Your Research
Analyze the potential markets for your business.
Consider which segment of the local (and⁄or international) population will be
seeking to use your products or services. This needs to be more than mere guesswork
and involves doing accurate and intelligent research. You need to analyze secondary
research collected by outside observers, as well as getting primary research that you
collect yourself, with your own methods and observations. Consider the following areas of inquiry:
• Is there a viable market for the product or service you want to sell?
• How old are your potential customers?
• What do they do for a living?
• Is your product or service attractive to a particular ethnic or economic population?
• Will only wealthy people be able to afford it?
• Does your ideal customer live in a certain type of neighborhood or area?
Establish the size of your potential market.
It's important to be as specific as possible in regard to your market and your product.
If you want to start a soap business, for example, you may believe that every dirty
body needs your product, but you can't start with the entire world as your initial market.
Even if you've developed such a universally needed item as soap, you need to identify a
smaller, more targeted customer group first, such as children under eight who might like
bubblegum scented bubble bath, or soap made for mechanics. From there, you can analyze
demographic information more specifically:
• How many car mechanics are in need of soap in any given community?
• How many children in the United States are currently under the age of eight?
• How much soap will they use in a month or a year?
• How many other soap manufacturers already have a share of the market?
• How big are your potential competitors?
Identify your company's initial needs.
What will you require to get started? Whether you want to buy an existing company with
300 employees or start your own by adding an extra phone line to your home office desk, you
need to make a list of the materials you'll need. Some may be tangible, such as five hundred
file folders and a large cabinet in which to store them all. Other requirements may be intangible,
such as time to create a product design or to do market research on potential customers.
Prepare product samples.
If you're going to build a better mousetrap, you may have constructed a prototype out of
used toothpaste tubes and bent paperclips at home, but you'll need a sturdier, more attractive
model to show potential investors. What exactly will your mousetrap look like? What materials
will you need? Do you require money for research and development to improve on your original
toothpaste tube and paper clip construction? Do you need to hire an engineer to draw up
accurate manufacturing designs? Should you patent your invention? Will you need to investigate
federal safety standards for mousetraps?
Research possible locations for your business.
Call a real estate broker and look at actual retail spaces in the neighborhood where you'd
like to open your business. Make a chart of the most expensive and least expensive sites by
location and square footage. Then estimate how much space you require and how much money
you'll need to allow for rent.