Writing a Business Plan

If you are applying for financing, a business plan is essential. If not, a business plan is a valuable tool. Writing the plan will force you to consider the finances, operation, marketing, and competition of your business. The SBA, SCORE, your community college, and other small business support organizations have in depth explanations of each element of the plan. The outline with a brief description is here to get you started.

Cover sheet with your business name, address, and contact info.

1. Executive Summary
Write this last, but place it first in the document. This is a statement of purpose, with concise supporting analysis gleaned from the other topics below. Think long and hard about why you are going into business for yourself and what you have to offer. What is your mission?

2. The Industry
Explain your industry to someone who is not familiar with it. Identify trends, major players, and your niche within it.

3. Market Analysis
Describe the audience for your service and how you will fulfill a need. Include pertinent data in the form of charts and graphs if that will help comprehension. Is your market local, regional, national, or global?

4. Competitive Analysis
Research the other players in your market and identify ways that you will stand out from them.

5. Marketing Plan
Outline the ways in which you will reach your potential clients.

6. Management Plan
This will be mostly about you and your experience and education. You can include a résumé. Also include other resources you have to draw upon: subcontractors, colleagues, vendors, other professionals, mentors.

7. Operating Plan
List the physical equipment needed, your location of operation, what kind of suppliers you have lined up—all the nuts and bolts of day-to-day operation.

8. Financial Plan
Estimate all of your annual income and expenses for 3 years. If you are requesting a loan, do not forget to list loan payments as expenses. As a sole proprietor, you will also include your personal balance sheet and 2 years of tax forms in this section. This could be the single most important part of your plan. After going through the numbers you will know how much to charge per hour and how many hours you need to bill per day. You will know what it takes to break even, and what it takes to show a profit.

This is only a guideline. You can add other sections to the plan and craft it almost any way that best portrays your unique skills and your one-of-a-kind business. Many good books and websites are available with detailed information. For the simplest approach, look at the One Page Business Plan.

Stay Positive

The 80/20 rule says that 80% of your success depends on attitude, and 20% on external circumstances. Sure, luck is a factor in anyone's career. But your attitude in the face of adversity will mean the difference between success and failure. You are a creative person and are better equipped than most to find ways around obstacles. You know how to brainstorm ideas, think outside the box, and change perspectives until you find a solution. Keep in mind that people like working with someone who is generally happy and optimistic, not someone who whines or grumbles.

Visualize yourself the way you want to be: doing satisfying work, being well-paid, winning awards (if that's your thing), and whatever else is part of your definition of success. Mentally touch that vision frequently and update it as your business progresses. If you can maintain a positive vision and positive attitude, your chances of realizing your dreams are greatly increased.

Sole Proprietorship or LLC?

A sole proprietorship is the easiest, least expensive way to organize your business. Essentially you are the business and the business is you. There is no cost to organize this way. You will report all business income and expenses on your personal tax forms. If you use a name for your business other than your own, you should register with your state. The IRS requires your business to show a profit in 3 out of 5 years to qualify as a business, otherwise it is classified as a hobby and you are not allowed to deduct expenses.

An LLC (limited liability company) is a separate entity and offers the owner the protections of a corporation. All profits or losses flow through to the owner. You will have to write articles of organization and file them with the secretary of state. There is an annual form and fee. You might also be required to draft an operating agreement. Check the specific requirements in your state. You can do the paperwork yourself, or you can use the services of a lawyer and accountant. An LLC is advisable if you plan to grow your business, hire employees, obtain loans, or take partners.

You should research both options carefully before making a decision. Operating as a sole proprietorship does not preclude you from incorporating later.