Making and writing a business plan, marketing your business, and finding starting capital is an extremely hard and time consuming process, but these are all important steps that every business owner must go through to establish a business. Even a person with no experience in any of these activities can set up and operate a successful business.
The key to owning and operating a successful company is having a well thought out business plan. In general, a plan for your business can be quickly described as a written description of how a company plans to make its money.
A good plan should start by including a list and descriptions of the business' expected costs. This typically includes line items such as rent, supplies, labor, and inventory. A good business owner will spend a lot of time carefully researching the current and future costs of each of the items on this list. Generally speaking, the more research that goes into each aspect of a business plan means that the plan is more likely to accurately reflect what will actually happen once the company starts operation.
Next, a potential business owner should list the expected price points of all of the merchandise, goods, and services that will be offered by the company. After this, list any prices that are currently charged by similar businesses for their merchandise or services. The idea behind this is to show that the proposed company's prices are in line with their competition. It is also important to show the reasons behind any price differences.
While charging prices that are higher than the competition can reduce sales, this may be mitigated in cases where the business offers services that increase the value of their product. For example, an upscale restaurant can justify their higher prices by offering a better atmosphere, location, and customer service than a mid-scale restaurant serving cheaper food would.
Finally, it is critical to include projected profit margins into the business plan. In addition, many strong business plans include a list of scenarios or stress tests along with a plan on how the business will overcome these obstacles. For example, a business plan may include a projected scenario in which sales fall by twenty percent. Solutions could include laying-off staff and cutting store hours and / or reducing inventory.
After the business plan has been written, the process of error checking and troubleshooting can take months. In fact, many potential business owners will change their plan multiple times in the course of establishing funding and actually setting up shop. As the process of starting a business moves forward, many business owners will rewrite their plan to include updated pricing for both their expenses and merchandise.
Since the business plan is the way that many potential investors will learn about the business, it is important to keep the tone of the plan positive. Some potential business owners even write several different drafts of their plan to present to potential investors; customizing each plan to speak to the area of knowledge or expertise that the investor understands best.