With a dismal outlook for secure, high-paying corporate jobs – Gen Yers are starting to feel the entrepreneurial spirit. Thanks to their web-savvy background, many 20 something start ups have the chance to use their creative nature when writing a business plan – enabling them to keep costs down with minimal need for outside investors. But no matter if you’re looking to expand a successful business blog into a consultation firm, or you’re thinking of opening an organic goods store – you will need a business plan.
Sitting down to write the one plan that includes your vision – and the scary reality of years of hard work and minimal pay – is an overwhelming task to say the least. You will need to keep in mind that it can sometimes take up to a few months to prepare, especially if you will be seeking investment money. But in order for the business to function successfully, you will always need a solid framework – even if your venture is self-funded. The key, as with any project, is to break up the task into “baby steps,” and be sure to not stop until you feel your final draft is A plus material.
Before you begin writing your business plan, first ask yourself these four questions:
- What service or product does your business provide and what needs does it fill?
- Who are the potential customers for your product or service and why will they purchase it from you?
- How will you reach your potential customers?
- Where will you get the financial resources to start your business?
Writing The Plan
The four main components to a business plan should include the description of your business, your marketing strategy, your overall finances and plan, and how you plan to manage your business. You will find many of the answers needed for your business plan from the questions posed above. The elements of your business plan will include a cover sheet, statement of purpose, and a table of contents.
Consider this the most important “proposal” of your business life. This plan is your golden ticket to following the entrepreneurial dream – but it has to be informative, succinct, and well put together. Remember, this is your baby, and you’re looking to incite all reviewers to feel compelled to invest. No matter if you’re presenting to family or bankers – which you’ll most likely end up presenting to both – your idea and framework needs to come through crystal clear.
Strong communication skills are also a must when taking your business plan out for review. Quite often, individuals seeking start up funding are not prepared in advance for their discussions and “wing it” – potentially destroying their chances the start up money they were looking for. So it’s important to remember that making a good impression is not just about being enthusiastic and confident in your delivery, bit also about being able to articulate the details of you’re vision and why it would be a good investment.
Many business plan first timers also do not realize that their experience is the knowledge cornerstone to their business plan, and therefore do not document their own expertise relative to the business venture. The old sales adage “fake it till you make it” is often applicable to this situation. This can be done through a resume, examples of previous related work experience, letters of reference, and a list of contacts that can provide verbal reference. Online business networking sources such as Linked in are also a great to show strength and skills through recommendations from co-workers and previous employers.
Finding Financial Help
For most small businesses requiring start up money, a business plan is a required part of the application. Many startup situations require the borrower to invest anywhere from 30 percent to 50 percent of the total capital required into the deal. Also keep in mind that starting in alone, as a personal equity investment, will not only reduce the cost of borrowing, but will also provides some seriousness into the deal indicating a strong commitment on behalf of the borrower.
An important question that goes through any lender’s mind when someone asks them for start up money, is whether or not the person requesting financing has the knowledge, expertise, and support to make the business successful. If a request for small business start up money is logical, and contains well-documented assumptions, it automatically stands out from the pack. Be clear on how you came up with each and every number you represent in your application package, and why you feel they are relevant to your business case.
Fine Eye Your Finances
Many business plan beginners tend to intensively focus on the assets they need to acquire, the space they’re going to lease, the lease hold improvement cost, and other initial expenditure outlays required to get the business up and running. But what tends to be either missed entirely, or underestimated, is the realistic cash flow required to operate the business until such time as the business can sustain itself on a month-to-month basis.
This is an assumption that the business will have an immediate cash flow positive in the first month of operations. This doesn’t happen in most cases. Often the shortfalls are financed by personal credit cards because of the lack of planning for working capital. The borrowers can then end up with major credit card debt, paying high interest rates with potentially no way out. So be realistic, almost overreaching, when establishing the financial portion of your plan. And don’t forget to be flexible with your budgeting if you do receive investment money – you may receive less than anticipated.
Advertising can be very expensive and if you don’t know what you’re doing, and you can burn through all your available cash pretty quickly. So it is a good idea to establish a strong marketing plan starting with identifying who exactly is your target audience.
Gen Yers also know the power of strong brand identity. Consumers are mostly visually driven, especially online, and it is important to have a visual identity that both intrigues and satisfies your target audience. Your brand identity can be your strongest asset when starting out, so remember that every detail counts. The message portrayed about your product or service will set the “essence” of your brand for years to come. So choose your words (and images) carefully!
Be sure to also track your efforts, and document your ongoing Return on Investments (ROIs). This initiative will help you stay within your marketing budget, and avoid spending money on advertising and marketing initiatives that have a low response rate. Don’t be afraid to mix traditional media (flyers, letters, print advertising) with online venues (banner ads, social media) when it comes to promotions.
Another powerful strategy to support your marketing strategy, and strengthen your business plan, is with written orders or letters of interest, or letters of intent to do business with you once you are fully operational. From the financier’s point of view, they want you to be able to clearly articulate what you’re going to do and why it’s supposed to work along with the related costs.
No matter if you’re knee deep in your start up, or eyeing expansion from your cubicle – there is no better time to start writing your business plan than now. Business plans are meant to be structure for operations, but also flexible for change. Putting your goals and ideas on paper will help fuel the fire you’ll need to get your business going.
There is also a reason the entrepreneurial fire burns so hot – you’ll need it! Ask most self-employed people what their work week is like, and they will say “24/7.” Starting your own company (or expanding) will probably be the biggest commitment of your time and money. So the final question you need to ask yourself before starting is “am I ready for this?”
Do you have a successful start up? We are looking for insightful stories from Gen Y entrepreneurs!