The next step you should do is working on a detailed plan for your business. This process is called business planning. There is no single business plan that could fit all businesses. That’s why you have to write down your own plan according to the situation or type of your target business.
There are four parts of a business plan:
1. Marketing plan
2. Technical plan
3. Organizational plan
4. Financial plan
So how do you write a business plan?
1. This is the first part of the business plan. You will state here who you are, your business objectives and when do you intend to reach these objectives.
2. You’ll also express how did you come up with the business idea and how do you expect to grow the business.
3. Give a detailed explanation on what the product is or the service offered, its use and what way it will be used.
This is the part of the business plan where you compare your product with other products in the market that is considered a competition. Write down the positive and negative aspect of your product.
4. Explain your target customers. What is their demographics? Will you be selling at grocery stores, in ladies boutique or bookstores? If you will be selling to the public, you need to group your potential customers according to age, gender, education, income etc. Study how the information can help you with your business. Example, if your target market is kids ages 3-10, where is the best place to put up the business? What kind of promotion or advertising will you use? How much is the price?
5. Know your competition. Do not be scared if you have competitions. Instead, this should push you to make your product and business better. All you need is to study your competition.
a. What kind of business can be your possible competition? Who are they?
b. What are the capabilities of your competition? What are their assets? How much do they sell?
c. Who among your competitions are generating huge income? How much are their profit? Who are the one’s losing? How much is the loss?
d. What is their strategy when it comes to pricing, quality of product or service, warranty being given to customers, packaging, way of marketing and selling, advertising their products, reputation of their business and inventory?
6. State the price of your product. In pricing, you have to include the cost in creating the product and its distribution. You have to consider the price that is affordable for the many and the price that will give the best profit.
7. Explain how you intend to sell your product. It’s not sufficient enough to declare a price for your product, you also have to plan the following:
a. How will you promote or advertise your product?
b. Do you need agents to help you sell? Will you be putting up an outlet?
c. How will your distribution works to reach your target customers?
d. What are the opinions of your customer regarding your product? How can you improve the image of your product?
8. Know the materials you need and where to get these. Include only the materials that have something to do with your product. Do not include office equipment. State each material, how many and the supplier.
9. Figure out the equipment needed in producing your product. State and explain the process. You can illustrate the process by creating a diagram.
10. Identify your workers. You should include yourself here. If your business is
being put up as corporation, list down the names and addresses of each member of the board of directors. If your business is put up as partnership, list down the names and addresses of each of your partners.
11. Figure out the needed workers and employees. Know the skills and positions needed to run the business smoothly. List down each position. In each of them, state how many you need and the rightful salary and benefits.
12. Identify your needs financially. How much capital do you need to start your business? Work on an estimate. Divide this into three: fixed capital, working capital and pre-operating capital.
Fixed capital is usually put into one time use for the business like a building, appliances and equipments.
The capital for the actual business operation or working capital is for the everyday need of the business like employee’s salary, electricity bill, water, telephone etc. Work on the estimate for 6 months or more of operation. In other words, put aside a working capital until such time that your business starts earning and can run on its own.
13. Create a budget. Divide the budget into three: marketing, production, administrative expenses.
Included in the marketing budget is the expenses in selling, distribution and storage; discounts that could be given to customers; and promotion and advertisement of your product.
Production budget includes fund for buying certain materials and components of product and salary for workers and corresponding benefits. Also include here the manufacturing overhead costs – expenses for maintenance of machines and equipments, salary for production supervisor and foreman, and the consumed water and electricity, gas and fuel used in production.
The administrative expenses are the expenses involving administration or management, salary for office employees, legal expenses and accounting. Preparation of budget should be done every month on its first year of operation and every 3 months for its second and third year.
Let’s say you have done everything at this point. You are now ready to implement your plans. It’s high time to pull together your capital, register your business, look for the right location, buy the needed supplies, hire and train employees at start the operation.
Keep in mind that a plan is not permanent, things change. Be open to other alternatives in case something unexpected happens. In other words, be ready to redirect your plans if needed.