What Goes Into a Business Plan

There are several elements that make a business plan successful. Taking the time to put these elements in will not only give you a clear direction to move in with the business, but it will make your consignment shop more successful in the long run.

1. The first part of your business plan is what is called a Profile of Principles. This is where the work experience and background of you, the owner, is outlined. You want to show in your business plan why you are experienced and ready for running a consignment store and that is why you put this at the beginning.

2. Next, you will put in a Statement of Purpose. This is where you state what the consignment store will offer and what type of business you will be running. This only needs to be a few sentences long.

3. After the Statement of Purpose, you need to put in a Market Analysis. This is the point where you address the economy in your area and in the country, and assess the market viability of the consignment store. Some things to include is a location study, an analysis of traffic patterns, what market you are targeting and what your competition is like.

4. How are you going to promote the consignment store? This question is addressed in the Promotional Strategies section. You want to explain everything you will do to bring in business to the consignment store, including all advertising and marketing strategies.

5. The next section is your Operational Plan. In this section, you outline some facts about the store, how it is going to operate, what equipment you need and when it is open.

6. In the Timetables and Schedules section, you need to set a list of goals for your consignment store. These include how long it will take to remodel it before opening, when you will open and how soon after before you start turning a profit.

7. The next section, which is the Potential Pitfalls section, is vitally important. It is here that you address some of the problems that exist with your business. Many new business owners choose not to include this because they worry about driving an investor away. This is not the point of that section. The point of it is to show the pitfalls that exist and to show how you will address them. An investor or bank would rather have an owner who knows the pitfalls and combats them, than one who ignores them.

8. The next three sections deal with the finances. Since your business has not started yet, you will have to estimate how well the business is going to do. Talking to your accountant will help ensure you get accurate results for these financial statements. These statements are:

a. Monthly Estimated Fixed Expenses: How much you will be spending on payroll, utilities, advertising and rent every month.

b. Initial Capital Investment: This is how much money needs to be put up-front to pay start up costs including new signs, advertising and renovations.

c. First Year Projections: This is where you will address what you hope to make in the first year, and how you will make that profit.

A business plan does not have to be perfect, but it does have to show that you have done your research and that you know what you are getting into with a consignment store.

Getting funding can be costly and extremely time consuming. It will most likely be the hardest part of starting your business. Therefore, your business plan must convey your excitement with the promise to succeed at your business venture. You maybe excited about your business idea, but that does not mean others will be as excited as you. Not only will you need to convey you excitement but you will need to make sure you illustrate the profit potential correctly. If no one can see the potential, then the odds of getting funding will be slim to none. When writing the small business – the business plan you will need to make sure your plan stands out amount the rest.

If your plan looks, and reads like a junior executive wrote it than your business plan may get overlooked. Getting your small business plan to break through the minutia. Start off with the benefits – you will want to start off with detailing what you do and how what you do will provide your investors with a sizable profit. Make your projects believable – do not just show figures, explain what will drive growth, how you plan to capture sales and how the two activities coincide. Show detailed knowledge of your market – you will need to demonstrate that you have extensive knowledge of your marketplace.

You will need to show how you plan to progress into the mass market. Introduce you and your team – this seems like a minor detail. However, you need to demonstrate that you and your team have the experience and accomplishments to achieve the profitability goals. Provide financial forecasts – make sure to keep your forecast realistic. You will want to include a breakdown on how you plan to reach your projections. Demonstrate product or services – the power of observation can go a long way in illustrating your products benefits.

Developing a plan does not have to be the kiss of death. If you structure it correctly, it could be your ticket to success.

It may be necessary to have a plan written in a formal, professional style if your aim is to use it to convince bankers or investors to support your idea and you may need to seek help with this. But even if you don’t have anything to prove to anyone your vending business plan will help to confirm the viability of your idea in your own mind.

Keep a copy of your plan on your PC as well as in files or in a binder in case of emergency. Don’t forget about your business plan once you have opened your doors for business. Refer to it regularly to make sure that you are on track to meet targets and don’t be afraid to make changes to where necessary.

Every entrepreneur or business consultant will have different ideas about how a business plan should be structured. Below we offer a sample vending machine business plan which is a basic outline with sections that you may consider including.

Cover and Contents Page

Start of with a cover page with a heading to let people know what the report is about, who the author is and when it was written. This should be followed immediately by a table of contents so that readers can easily find their way around the report.

Executive Summary

Summarize the other sections of your business plan. Present some detailed information on the opportunities that you see in the market and summarize what it is that you intend to do with your business to capitalize on these opportunities. Try to entice readers into reading the whole report.

Background

Offer the reader some background information on yourself and your reasons for starting a vending business. Provide details of any relevant experience or competitive advantages that you have.

You can also include a vending industry background showing national industry data as well as information about the local industry that you plan on entering.

Mission Statement

A mission statement is usually a phrase or a couple of short sentences that summarises what your business is all about, what it does and how well it does it. It is a good way to remember the basic goals or philosophy of your company. A good mission statement could mention something about the standard of your products and service or how you strive to be better than your competitors.

Goals and Objectives

State the goals that you wish to achieve in the short and medium terms. Goals could include placing a certain number a vending machines or reaching a certain income level per machine.

Startup Requirements

Set out a list of vending machine business startup costs and calculate the total amount of capital that will be needed for the company to get started. Report on some of the funding options that are available to the owners.

In this section of the report you can also mention some of the other things that must happen in order for the business to commence trading legally and professionally. Mention the processes and the fees involved with applying for licenses, permits and other paperwork under the laws of the region where the business will be operating.

Ownership and Management Structure

Note who the founders of the company are and note the particular ownership interest that each has in the business. For those who will be active in the management of the business it is important to outline what role they will play and their responsibilities.

Will the business be registered as a sole proprietorship, a partnership or a corporation?

Business Operations

This section of a business plan should outline the details of how you plan on running your vending business. Include information on where your business will be based, administration, any plans that you have to hire employees and how your business will run on a day to day basis.

Include details on your vending machines, maintenance, products, distributors, route planning and how you will record and manage sales data.

Try to come up with solid reasons why are choosing a certain vending machine, product line or system. Wherever possible include some supporting evidence from research that you have done.

Market Analysis

Using data from your market research you can report on the current state of your target market and identify opportunities. Here you can include demographic data as well as information that you have gathered from surveys and other investigations.

Marketing Plan

Outline a strategy for creating a brand that will meet market needs. Based on the market opportunities that you see, set out a strategy for meeting these needs in terms of locations, vending machines, the product lines that you will stock and your pricing.

Provide details on how you plan on getting new locations, arranging appointments with ‘decision makers’ and selling your services to them. Your marketing could mostly be done by approaching decision makers directly or you could rely on advertising to generate some enquiries.

Also outline your plan for marketing directly to your customers or end users. These could include promotions on the machine front or how you or your staff will build relationships with customers when you visit the premises.

You should also mention how you plan on maintaining vending accounts and customer satisfaction in the long term.

Competitive Analysis

Provide information on the competition in your target area and examine their strengths and weaknesses. Look at ways of delivering products and service that are distinctly different from what competitors are offering. Get ideas from them about what is working well and what isn’t. Look for a competitive edge.

Don’t forget to also mention indirect competitors such as convenience stores, in house cafeterias or food vans.

Financial Planning

Use a spreadsheet program to set out forecasts of cash flows in and out of your vending business over a hypothetical two year time period. If you have done your research you should be able to anticipate monthly income and expenses going forward. You will thus be able to determine future levels of profitability and a break even point.

Run a variety of different scenarios that consider a conservative growth rate, an expected growth rate and an optimistic growth rate. Things don’t always happen like you expect so it is important that you plan for a variety of scenarios.

Appendix

Lastly, you should attach an appendix to the report that includes any reference letters, documents, charts, diagrams or supporting material that have been referred to in the contents of your business plan.

There are many sample vending machine business plans and templates available online for free if you look around.

Business Planning Fundamentals

If you aren’t looking for investors or funding, consider writing up an informal business plan and modifying it as you go. When you first start out, you will need to do some planning to evaluate whether you have a solid business ideal that will become profitable in the near future. Some of the questions to ask include:

Is there a market for your products and services?
Which types of customers and clients are most likely to buy what your company offers?
How will you differentiate your company from your competitors? Why should prospects do business with you over all other options out there?
How much revenue can you bring in next month, in six months, in a year?
What are your startup costs? What are your initial monthly expenses?
Do you have or can you get the appropriate resources (money, technology, equipment, expertise) to start your business?
Will you need to hire partners, employees, vendors, or contractors to help you? What will their job functions be?
Who will be responsible for day-to-day business tasks?

Why You Need a Written Business Plan

If you are starting a sole proprietorship, initially, you will handle everything yourself. It’s up to you to keep track of all the details, deadlines, and financials so your company can thrive, so having a written business plan that includes each of those sections can help you keep everything organized.

If you find yourself saying, “But I’m too busy getting things done to plan,” then it’s time to put some time aside to sit down and create a plan. If you are always putting out day-to-day fires and dealing with emergencies, you can easily lose focus on the big picture – where you want your company to be long-term. A plan will keep you moving in the right direction, help you focus on the most important tasks that make the biggest impact on your business, and get you to your destination much faster.

As your business grows and evolves, things can become more complicated. If you hire employees or need to apply for a business loan, you will need to share your business information with outsiders who don’t know the company as well as you do. At that point, you may find it helpful to create a more formal document that anyone can pick up and understand what your company does and how well it is doing. You will probably need to expand your business plan to include information such as an analysis of the market, industry and your financial projections and descriptions of your company, management team, and operation logistics.

However, don’t fall into the mindset that you need a completed, formal business plan before you start your business. The only time a business plan is complete is when the company is dead. Your business plan should be a living document that grows with you, so start with what you need and build it out as you need it.

Each of the following steps are stages of the business plan development process which should be tackled in order.

Idea Development

Your idea for the business may already be in place. However, there are a number of creative and brainstorming techniques which can strengthen the idea and discover variations on it.

Feasibility Study

Next, the feasibility of the business should be studied in a limited way to prevent money and time from being poured into an unfeasible idea. The study should look at market feasibility, financial feasibility, and personal feasibility. The latter is the feasibility of the business idea to meet your personal goals for entrepreneurship.

Research

The research phase begins the preparation for the business plan in earnest. Research must cover the industry, customers, competitors, and the costs of starting up the business. The findings should be carefully documented and analyzed to determine what presents opportunities and threats to the business.

Strategy

Next, the strategy phase involves returning to the basic business idea, now with the research findings in mind. Tailor your business strategy to your intended customers and primary competitors.

Drafting

Drafting the actual plan (hopefully with the help of a consultant or at least a business plan template) should be a relatively simple step after the preceding phases are finished. Multiple drafts should be prepared, first focusing on getting the ideas onto paper and improving them, and then on cleaning up the writing.

Finalizing

Finally, the plan should be improved with appropriate graphics (charts, graphs, and images), revised, and proofread. Other eyes should be enlisted to offer feedback on the plan.

The first page is quite obviously the cover sheet with the basic information, such as business name and contact information. The second page, titled the “Executive Summary,” is the most important page of the entire plan. The Executive Summary should be no longer than one page, since many potential investors will not read past the first page. Make sure to summarize the business plan by highlighting only the major points and try to generate some excitement for the business.

The next two to three pages will be the “Situation Analysis.” On these pages, it is important to mention the objectives of the business and discuss personal attributes that will showcase how you will be able to make this work. Also, discuss where you see the business going in the future. Include how performance will be measured — whether based on monetary gain, number of people served or number of products delivered. This section should also outline the target market of the business. Plan your work.

The next couple of pages will deal with the “SWOT Analysis.” SWOT stands for Strengths, Weaknesses, Opportunities, and Threats. The strengths and weaknesses of the company are considered to be internal factors. This would include the ability of employees, equipment, and knowledge. Outline potential weaknesses honestly. Opportunities and threats are potentially uncontrollable external forces that may affect your business.

The “Business Resources” of the plan will encompass no more than one to two pages. This section outlines the necessary resources to get the business up and running. This will include human resources, financial resources, physical resources (building, equipment), and the necessary experience of all involved. Also include the ways in which these needs will be met to achieve the objectives of the business.

The “Business Strategy” will be the longest section of the plan. This section should be roughly three pages and should specifically spell out the objectives and strategy to reach the concrete objectives of the business: the number of products sold, people served, monetary gain, or any combination of the three. The strategies should include specific tactics to combat potential problems.

The “Financial Analysis” will be the most difficult portion of the plan because a lot of speculation is involved. This will include: projected income, expenses, cash flow and budget. This should be done for a minimum of three years. The annual budgets should read as financial statements and should be followed up with a written summary.

Finally, the “Controls and Evaluation” section will complete the plan. This will outline the quality control of the business — specific performance and production standards, including how they will be met and monitored. There should also be a plan in place for correcting ineffective quality control.

Once all of these sections are complete, it is necessary to put them together in a folder to create a professional presentation. Follow each of these guidelines and include every section above for a complete business plan to start your new business.

Work your plan.

The first component in your MLM business plan should be to know exactly why you have this home business. You have to be so passionate about this key point that you will do what ever it takes for your home business to work. I want you to ask yourself just how badly you want it to be successful and what is the annual dollar amount that determines whether you are successful or not in your home business. I want you to write out your business motto that includes your business philosophy and the annual dollar amount you intend to earn. I want you to read this business motto several times a day to insure that you will keep in the forefront what you want to accomplish.

The second component in your MLM business plan is to know what you’re marketing and to whom you are marketing to. If you represent an MLM business with more than three products, you will first determine which is the most popular product or service people are purchasing. Once you know which product or service you will market, then determine who is the target market who wants this product or service because of the benefits from that product or service.

The third component in your MLM business plan is to know exactly what your message is to this target market. The message is based on benefits your market is looking for. Your customer wants to purchase products that addresses a need of theirs. The key is to think like your customer. Ask yourself why someone would buy your product or service.

The fourth component in your MLM business plan is to come up with a 100 ways for you to get one customer. Most marketers use just one way to get 100 customers. You will find more customers than you can handle if you’re constantly thinking like your customer and what their needs are.

The fifth component in your MLM business plan is to mastermind with a group of three or four other business owners. Business owners think like an employer. Business owners understand that they are solely responsible for how their business is doing. Business owners join local business organizations as a means of networking. Everyone has an expertise that can be shared. On the same token, everyone has areas that they need assistance with. Your mastermind group will allow you to be constantly accountable, creative, and innovative. You need to plan out daily, weekly, monthly, and yearly goals for you to keep striving for.

The sixth component in your MLM business plan is to find and nurture other leaders within your organization. You will have a full proof recession plan if you can teach others these first five components of an MLM business plan.

To discover the Painless Secrets to business building techniques and a free report titled, “The Painless Secrets To MLM” please visit http://www.addnewrepsnow.com/

I have often been asked by aspiring entrepreneurs:

- Should I write a business plan?

- If so, where do I find information on how to write a business plan?

- What should be included in a business plan or how detailed should it be?

These are good questions. Let me begin by saying that there are several preliminary steps that should be completed BEFORE embarking on the arduous task of compiling and organizing data into a comprehensive business plan.

Usually, after a process of determining whether a business idea is worth pursuing, entrepreneurs immediately launch into a process. For some entrepreneurs, the process of validating the idea is relatively quick, while for others it is exhaustive in scope. However, over the years, I have observed there are some preliminary steps to be completed before starting to develop the business plan. These preliminary steps are a three step process I refer as the Gut Check Mirror (GCM) Test:

1. Figure out if you really have an entrepreneurial personality profile. Many people assume because they have been successful in the world of traditional employment that they will automatically succeed as an entrepreneur. Wrong! Wrong! Wrong! I am so passionate about preventing entrepreneurs from making this mistake, that I wrote a book on this specific topic called Transitioning From Employee to Entrepreneur – A Roadmap for Aspiring Entrepreneurs.

The premise of this thesis is that success is not guaranteed based on past successes in the employment environment. These are three simple steps to take before making the decision to invest a substantial part of your net worth, commit 3-7 years of your life, and put your future on the line in an attempt to become your own boss. One of the first things you need to do is evaluate your personality profile by taking an entrepreneurial profile test. This beginning step helps to make the determination if you have what it takes to be an entrepreneur.

2. After validating your entrepreneurial profile, the next step is to determine what type of entrepreneur you are. This is another critical step many ignore – at their peril. There are four business models for an entrepreneur to consider in making the decision to become his or her own “boss”:

a. Starting a business from scratch

b. Buying an existing business

c. Becoming a franchisee in a franchise system

d. Becoming a consultant in your area of expertise

Each of these business models has advantages and disadvantages, as well as commonalities. How do you decide which business model is right for you?

- If entrepreneurship is core to your personality, you should probably start your own business.

- If your risk profile is middle of the road, then buying an existing business may be a better fit for you.

- If you like the idea of starting your own business, BUT you do not want to risk starting a business from scratch AND you do not necessarily want to buy somebody else’s business, franchising is probably your best path.

- If you have limited funds BUT you possess a high degree of technical expertise in your field, becoming a consultant might be the best choice.

You need to decide which business format suits you best before deciding on the business you want to either start or buy, or sign on as a franchisee or consultant.

3. After you complete the first two steps, a specific business can be selected and then you can begin the process of developing a business plan.

Business Plan Development

There are five steps to writing a business plan.

1. Format. Determine what type of process or format to use. There are three:

a. Write a business plan from scratch

b. Use business planning software or a template

c. Engage a consultant to assist you in writing the business plan

Each of these alternatives or formats has its own advantages and disadvantages:

Business plan from scratch

The advantages of crafting a business plan from scratch is two fold. First, it is the least expensive way to go; second, although it requires a lot of work on your part, you become familiar with the data because you are the one doing all of the research and compiling all the data.

The disadvantages are, first of all, it is time consuming; secondly, if your business plan is going to be used to secure business financing, it may not be in a format with which lenders are familiar. Do not underestimate this factor. Lenders are lazy. They want facts presented in a format that makes everything easy to see and understand.

Business planning software or template

If you decide to use a template or business planning software, this will streamline the business plan development process. One of the most comprehensive template software programs is from Palo Software: http://www.paloalto.com/. Their software costs $99.95 for the Standard Version and $199.95 for the Pro Version. This platform is especially powerful and can be used for a range of business models, from very simple to the most sophisticated plans imaginable.

There are free versions of business plans provided by www.score.org and on the Internet for basic business planning. Simply go to Google.com and search “Free Business Plans.” You should beware that some of templates you will find listed on this search may be inadequate for your needs, especially if you are attempting to secure financing.

Consultant services

Finally, if you decide to engage a consultant, there are three alternatives to consider.

o Non-profit organizations such as local Chambers of Commerce mentoring programs, Score.org and community colleges

o Paid professionals such as your CPA or financial adviser

o Business plan consultants who make their living writing business plans. These consultants vary in price from less than a thousand, to as high as five to ten thousand, depending on the sophistication of the plan.

2. Research. After deciding on the methodology you are going to use to develop your business plan, the next step is to begin the research. This research will encompass the following factors:

a. Competition. It is important that you conduct a thorough study on the depth and scope of the competition, the strength of each competitor, chinks in the armor and how you intend to exploit these weaknesses.

b. Pricing model. What the margins are and what your margins need to be.

c. Real Estate. In many businesses, location is the main determinate of success (Location, Location, Location). If there is a significant relationship between success and real estate, you must research this area extensively.

d. Equipment. If the business requires specialty equipment, then separate financing options may need to be considered, as well as delivery and installation times.

e. Staffing. If the business requires technical expertise, what is the market price for this expertise and what is the recruitment strategy? Inadequate research and understanding in this area can bring a new business to its knees very quickly.

3. Revenue and Expense Models. Depending on the sophistication of your financial model and your familiarity with Microsoft Office Excel and the creation of financial projections, this component may need to be outsourced to a financial professional. The template business plans have preformatted cash flow spreadsheets, income statements, and balance sheets, all integrated into a smooth presentation format in the business plan. However, depending on the complexity of your financial mode, a great deal of financial acumen may be needed to properly compile these details in a meaningful fashion.

4. Financing Plan. The most useful tool for obtaining financing is a well-crafted business plan with thoroughly developed assumptions and research references. There are four main choices for financing, with a less common fifth option:

a. Personal funds; i.e., savings, retirement funds and investments

b. Personal borrowing; i.e., home equity, family and friends, credit cards, unsecured bank loans

c. Equity, personal or third part angel investors

d. Business loans from institutional lenders

e. Venture capital (usually reserved for high tech businesses and concepts)

5. Exit Plan. All too often, this is not considered in the initial planning process. Yet, it is arguably one of the most important elements of a business plan, because without a successful exit, most of the effort in starting and managing a business is for not.

Writing a business plan need not be an overwhelming task if it is approached systematically and methodically, following a time tested process.

A simple and effective method to organize the management plan section of your business plan is to divide it into sections and parts below:

o In-house Management Team

o Outsourced Management Resources

o HR Requirements Needs

o Officer (Ownership) Structure

Part 1 of the Management Section

Structure

Teams that are planning to start a partnership or corporation will need to specify at the granular level how the business will be arranged from not only a legal standpoint, as well as any applicable intricacies, for example the amount of ownership each relevant partner has.

Part 2 of the Management Section

Professional Support

It is suggested that you hire professionals to maintain your business venture, for example attorneys, accountants, engineers and consultants (several business plan consultants exist online). This section is where you will outline these types of specialized personnel who are vital to you’re the operations of business, however are not in fact a component of the business.

Part 3 of the Management Section

HR (Human Resources)

Lastly, we arrive at the final section of the management plan – human resource section. You should know how many will run the business, and total itemized cost (all of which will be in the financial section). What’s foremost is to determine the total personnel needed by developing job descriptions, coupled with the total clients they will be able to absorb on a monthly basis. Next, compute the expenditure of each staff member (including salary, benefits ect.). To finish, shape how you will located the required personnel and how the regional economy and employment rates will affect the HR efforts.

Part 4 of the Management Section

What Staff is in Control?

Dependent on the sheer size of the business, this section can extend from several line items to many content-rich pages. Once you list each staff member and their duties, develop the subsequent information for each position:

o Resume or CV

o Any compensatory information (salary, benefits, profit-sharing etc. )

o Any applicable contracts such as NDA (non-disclosure agreements, non-competes etc.),

Look for more articles from me regarding business plans, market research or funding your venture, current company or start-up. Also be sure to first talk to your small business development center in your community, if you are new to the business plan process – This is funded101 signing out.