Marketing is the process of interesting potential customers and clients in your products and/or services. The key word in this marketing definition is "process"; marketing involves researching, promoting, selling, and distributing your products or services.
It's a huge topic, which is why there are tomes written on marketing, and why you can take a four-year marketing degree. But essentially marketing involves everything you do to get your potential customers and your product or service together.
The name of the game in marketing is attracting and retaining a growing base of satisfied customers. Creating and implementing a marketing plan will keep your marketing efforts focused and increase your sales.
If you are thinking about starting a small business, you most likely already know what a business plan is and have heard that you need one. But do you truly understand the purpose of a business plan? Does it really matter if you have one for your small business? And how can you create a small business plan that is actually useful? The introduction and tips below will lay the groundwork for creating an effective small business plan for your new business.
Small Business Plans Explained
In it's simplest form, a business plan is a document that outlines the basics about your business, products, and services; the market you are targeting; the goals you have for your business; and how you will achieve those goals.
A business plan is one of several important plans you should have when you are starting a business, the others being a marketing plan and a financial plan. Your business plan should pull all three of these plans together, incorporating elements of your marketing plan and your financial plan into a comprehensive document. Think of your business plan as a map or blueprint that will guide your business from the start-up phase through establishment and eventually business growth.
Why You Really Do Need a Business Plan
There are many reasons why you need a business plan, although these reasons vary by the type of business you are starting and how you intend to use your business plan. But the common thread for all businesses is that a business plan is necessary.
After all, how can you get your business launched and thriving without any type of written plan to help you?
Some of the reasons you need a small business plan that may apply to you include:
A business plan is required if you are going to apply for a bank loan, pitch your business to investors, or bring in a business partner.
You won't truly be able to qualify your business idea without understanding your target market, researching the competition, and conducting a feasibility analysis — all parts of a business plan.
A good small business plan not only outlines where you are and where you want to be, but also helps you identify the specific actions you need to take to get there.
A business plan can provide essential background information on your business, strategy, and culture to employees, including managers and staff, as your business grows.
The financial section of your business plan can be the basis of your business budget and a useful tool for managing cash flow on a monthly basis.
So, you know you need a business plan. The next question to consider is what type of plan is the best fit for your small business.
Traditional Business Plans vs. One-Page Business Plans
There are actually many types of business plans, including start-up plans, internal planning documents, strategic plans, operations plans, and business plans created to focus on growth. Each of these types of business plans have different objectives, but all of these versions generally fall into one of two primary formats — a traditional business plan (also called formal or structured) or a simplified business plan (often called a lean or one-page business plan).
A traditional business plan is what most small business owners think about (and often fear) when they hear the term "business plan." It is usually a long and very formal document that has a vast amount of information and is pretty overwhelming for many new business owners.
A traditional business plan typically includes the following sections:
Executive Summary: A highlight of the most important information in your document (in case this is the only section read before a decision is made).
Company Description: Where you are located, how large the company is, your vision and mission, what you do and what you hope to accomplish.
Products or Services: What you are selling with emphasis on the value you intend to provide your customers or clients.
Market Analysis: A detailed overview of the industry you intend to sell your product or service in, and a summary of your target market and competition.
Marketing Strategy: An outline of where your business fits into the market and how you will price, promote, and sell your product or service.
Management Summary: How your business is structured, who is involved, and how the business is managed.
Financial Analysis: Details for financing your business now, what will be needed for future growth, as well as an estimate of your ongoing operating expenses.
The not-so-great news is that a traditional business plan takes a long time and an immense amount of research to complete. The good news is that not every business needs a traditional business plan. That brings us to the second business plan format — the simple or one-page business plan.
A one-page business plan is a streamlined and brief business plan that you can use as-is or as a starting point for a traditional business plan. While this is a leaner version of the traditional business plan, you will still need to gather information that is specific to your business in order to create a plan that is truly useful for you. Be prepared to answer the following questions as you create your simplified business plan:
Vision: What are you creating? What will your business look like in one year, three years, and five years?
Mission: What is your mission? Why are you starting this business, and what is the purpose?
Objectives: Are your business goals considered SMART goals? How will you measure success in achieving your goals?
Strategies: How are you going to build your business? What will you sell? What is your unique selling proposition (i.e., what makes your business different from the competition)?
Start-up Capital: What is the total amount of start-up capital you will need to launch your business?
Anticipated Expenses: What do you estimate your business's ongoing monthly expenses will be immediately after launch, in three months, in six months, and in one year?
Desired Income: What do you anticipate your business's ongoing monthly income will be immediately after launch, in three months, in six months, and in one year?
Action Plan: What are the specific action items and tasks you need to complete now? What are your future milestones? What will need to be accomplished by those milestones in order to meet your objectives?
Once you have answered each of these questions, you will have a working business plan that you can use immediately to start taking action in your business.
Tools to Help You Create a Better Small Business Plan
Creating a business plan will take you undivided time and attention, but there are business planning tools available to help streamline the process, many of them available for free. There are templates available, including a simple business plan template and a traditional business plan template. There are also many business plan tutorials available, including video business planning tutorials.
And let's not forget about all-in-one online tools like the SBA Business Plan Tool and services like RocketLawyer that take away a lot of the time required to format and organize your business plan. As you get started with your small business plan, explore these additional business planning tools to see how you can streamline the process even further.
One mistake many small business owners make is creating a business plan because they are told they need one, and then completely forgetting about it. Once you have business plan created, consider it an internal tool you use on an ongoing basis in your business, updating it as necessary so it remains current. Remember that the most effective small business plans are those that are used as a living document in the business to help guide decisions and keep your business on track.
Step 1: Do Your Research
Most likely you have already identified a business idea, so now it's time to balance it with a little reality. Does your idea have the potential to succeed? You will need to run your business idea through a validation process before you go any further.
In order for a small business to be successful, it must solve a problem, fulfill a need or offer something the market wants.
There are a number of ways you can identify this need, including research, focus groups, and even trial and error. As you explore the market, some of the questions you should answer include:
Is there a need for your anticipated products/services?
Who needs it?
Are there other companies offering similar products/services now?
What is the competition like?
How will your business fit into the market?
Don't forget to ask yourself some questions, too, about starting a business before you take the plunge.
Step 2: Make a Plan
You need a plan in order to make your business idea a reality. A business plan is a blueprint that will guide your business from the start-up phase through establishment and eventually business growth, and it is a must-have for all new businesses.
The good news is that there are different types of business plans for different types of businesses.
If you intend to seek financial support from an investor or financial institution, a traditional business plan is a must. This type of business plan is generally long and thorough and has a common set of sections that investors and banks look for when they are validating your idea.
If you don't anticipate seeking financial support, a simple one-page business plan can give you clarity about what you hope to achieve and how you plan to do it. In fact, you can even create a working business plan on the back of a napkin, and improve it over time. Some kind of plan in writing is always better than nothing.
Step 3: Plan Your Finances
Starting a small business doesn't have to require a lot of money, but it will involve some initial investment as well as the ability to cover ongoing expenses before you are turning a profit. Put together a spreadsheet that estimates the one-time startup costs for your business (licenses and permits, equipment, legal fees, insurance, branding, market research, inventory, trademarking, grand opening events, property leases, etc.), as well as what you anticipate you will need to keep your business running for at least 12 months (rent, utilities, marketing and advertising, production, supplies, travel expenses, employee salaries, your own salary, etc.).
Those numbers combined is the initial investment you will need.
Now that you have a rough number in mind, there are a number of ways you can fund your small business, including:
Small business loans
Small business grants
You can also attempt to get your business off the ground by bootstrapping, using as little capital as necessary to start your business. You may find that a combination of the paths listed above work best. The goal here, though, is to work through the options and create a plan for setting up the capital you need to get your business off the ground.
Step 4: Choose a Business Structure
Your small business can be a sole proprietorship, a partnership, a limited liability company (LLC) or a corporation. The business entity you choose will impact many factors from your business name, to your liability, to how you file your taxes.
You may choose an initial business structure, and then reevaluate and change your structure as your business grows and needs change.
Depending on the complexity of your business, it may be worth investing in a consultation from an attorney or CPA to ensure you are making the right structure choice for your business.
Step 5: Pick and Register Your Business Name
Your business name plays a role in almost every aspect of your business, so you want it to be a good one. Make sure you think through all of the potential implications as you explore your options and choose your business name.
Once you have chosen a name for your business, you will need to check if it's trademarked or currently in use. Then, you will need to register it. A sole proprietor must register their business name with either their state or county clerk. Corporations, LLCs, or limited partnerships typically register their business name when the formation paperwork is filed.
Don't forget to register your domain name once you have selected your business name. Try these options if your ideal domain name is taken.
Step 6: Get Licenses and Permits
Paperwork is a part of the process when you start your own business.
There are a variety of small business licenses and permits that may apply to your situation, depending on the type of business you are starting and where you are located. You will need to research what licenses and permits apply to your business during the start-up process.
Step 7: Choose Your Accounting System
Small businesses run most effectively when there are systems in place. One of the most important systems for a small business is an accounting system.
Your accounting system is necessary in order to create and manage your budget, set your rates and prices, conduct business with others, and file your taxes. You can set up your accounting system yourself, or hire an accountant to take away some of the guesswork. If you decide to get started on your own, make sure you consider these questions that are vital when choosing accounting software.
Step 8: Set Up Your Business Location
Setting up your place of business is important for the operation of your business, whether you will have a home office, a shared or private office space, or a retail location.
You will need to think about your location, equipment, and overall setup, and make sure your business location works for the type of business you will be doing. You will also need to consider if it makes more sense to buy or lease your commercial space.
Step 9: Get Your Team Ready
If you will be hiring employees, now is the time to start the process. Make sure you take the time to outline the positions you need to fill, and the job responsibilities that are part of each position. The Small Business Administration has an excellent guide to hiring your first employee that is useful for new small business owners.
If you are not hiring employees, but instead outsourcing work to independent contractors, now is the time to work with an attorney to get your independent contractor agreement in place and start your search.
Lastly, if you are a true solopreneur hitting the small business road alone, you may not need employees or contractors, but you will still need your own support team. This team can be comprised of a mentor, small business coach, or even your family, and serves as your go-to resource for advice, motivation and reassurance when the road gets bumpy.
Step 10: Promote Your Small Business
Once your business is up and running, you need to start attracting clients and customers. You'll want to start with the basics by writing a unique selling proposition (USP) and creating a marketing plan. Then, explore as many small business marketing ideas as possible so you can decide how to promote your business most effectively.
Once you have completed these business start-up activities, you will have all of the most important bases covered. Keep in mind that success doesn't happen overnight. But use the plan you've created to consistently work on your business, and you will increase your chances of success.
1. Control Over Your Schedule
Being in charge of your day is one of the biggest benefits of working from home. You can set and customize your work hours to meet the needs of your life. Do you wish you could take a power nap in the middle of the day? You can as a home business owner. Do you do your best work late at night? You can schedule your work time then.
However, this freedom can also bring with it distracting temptations and the risk of procrastinating on work-related tasks. You'll want to make sure you have the right entrepreneurial traits and a good daily organizational plan to handle this new responsibility.
2. More Time for Personal Pursuits
If you feel like your job is taking up too much time, having a home business could be the solution. Having a flexible schedule means you can make time for your kids and family, if you have them, or pursue other personal interests. If you want to homeschool while running your business, you can.
However, achieving work/life balance does take some planning and time management. In some cases, you may still need to arrange for child care.
3. Make Money Doing Something You Love
One of the best aspects of starting a home business is being able to turn a hobby or a passion into income. In fact, you're more likely to achieve success if you focus on pursuing your passion for profits when starting a home business.
4. No More Commuting
Working outside the home not only takes a lot of time, especially if you have a long commute, but also job-related travel expenses. Americans spend an average of $386 per month on gas. Cutting down on a daily commute would put some of that money back in your pocket. Other expenses many don't consider are tolls, wear and tear on the car, and more frequent tune-ups.
5. Control Over Income
Many people choose not to start a business because they worry about making a consistent, livable income. While the potential ebb and flow nature of running a home business is something you need to consider, the reality is that a home business can allow you to earn what you're worth.
As a home business owner, you set your own income goals, as well as your own product or service prices. As long as you do the work that needs to be done, such as drumming up new customers and marketing your business, you're likely to make a profit.
6. Tax Benefits
A big perk of working for yourself is the tax advantages not given to employees. You can write off equipment, supplies, services, and even a portion of your home or car if it's appropriate.
Further, when you have a home business, you can deduct your expenses first and pay taxes on net income. With that said, it's important to learn about home business deductions to ensure you're following proper tax laws. Ideally, you should consult a tax expert.
7. Control Over Your Work Attire
No more blazers and dress pants. No more ties or pantyhose. You can wear whatever you want in your home office. If you're most comfortable and inspired in your fluffy bathrobe, you can wear it every day if you want.
8. No Boss
A home business is ideal for someone who doesn't like to be told what to do. You can do the work in the way you feel is best. Further, home business owners don't have to feel guilty for showing up late (unless of course, it's to an appointment). There's no having to ask for time off or calling in sick. There's no one looking over your shoulder to make sure you're working.
9. More Opportunity for Growth
Too often, employees end up feeling stuck in their jobs. In a home business, even if your day-to-day tasks are relatively similar, there are so many opportunities to mix things up more. You can work from a different location. You can change your schedule or the order of the tasks you have to do.
Starting a business in and of itself requires learning new things.To stay competitive, you'll want to continue study and keep abreast of current trends in your industry or small business management. In essence, you design your day and what you do, which allows you to expand and grow your skills and your business.
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