Business Planning

Business Advisory Services » Business Planning

You need to be able to objectively review your idea and what it will take to bring it into being. This is a good idea for every business, but absolutely essential if you are planning on applying for financing. Your business plan will also serve you well as a road map for managing your business over the next few years. And we'll guide you through the process. First we will cover what is in a business plan and where to get the information. The following sections will provide information and examples that you will need in order to write and implement your plan.

Sources of Information

Direct Experience
No one knows everything there is to know about a business. If you have worked in the industry for a while you have a great advantage over less experienced competitors. If you do not have experience in the industry, consider working for someone else for a while. Or find a similar business in another location.

Research - Ways to get information:
Trade associations exist for almost every imaginable trade or profession. Go to any SBDC Business Information Center and ask for the Encyclopedia of Associations, which is published by Gale Research. Contact any applicable associations and ask what information they can provide. Trade shows are also a valuable source. There will be people from all manner of related professions. These can be a good chance to ask questions and make contacts. Don't forget your local library or bookstore. They have a variety of books on how to start businesses and write business plans. In addition, the Internet is loaded with business planning information, visit our links page.

Business and entrepreneurial publications can also be very helpful. Magazines such as Inc., Entrepreneur, Venture and In Business are good examples. Look through current and past issues and check for articles on the type of business you are interested in. You can also check for articles on a wide variety of topics at your local library or through the state library web site: www.lib.de.us.

For information on typical financial profiles for a business, check Robert Morris Associates or Dun & Bradstreet. These books give national averages of revenues, and expenses broken down by the size of the business. Even such categories as inventory are listed. This is especially useful when you are preparing your financial projections. If Robert Morris Associates says the average small video store has a profit margin of 4% and you are projecting 20%, you had better be able to prove why your video store will do so much better than everyone else's.

For information on Delaware: business climate, population, demographics, locations and a very wide variety of other topics, check the Delaware Economic Development Office web site: www.state.de.us/dedo/index.htm.

The SBDC can obtain a market feasibility study for your business. It contains data such as a detailed demographic profile of your market area and a great amount of other information. Call the SBDC at (302) 571-1555 for more information.

Be sure to check the Business Resource List in the back of this book.

The Plan
Okay, so now you've found the perfect business. Prove it. "I just know it will work" won't make it. "Because I'm better than other people at my trade won’t make it either.

What is the one thing you need in order to have a successful business? The answer is customers. There have to be people out there who need or want what you are selling and they must be willing and able to pay for it. In sum, there must be enough people to generate enough money to support the business.

You need to do some thinking and some research. In short, you have to plan. Planning is risk-free, and its main cost is your time. You owe it to yourself and any other person or institution who is risking money on your idea to thoroughly investigate the details of your venture.

A business plan is the written expression of your business idea. It is obviously important to anyone thinking of starting a business, but it is useful for those already in business. The process of writing down everything involved in bringing the idea to reality requires dealing with all the varied aspects of that business - the How, Why, Where, When, Who and How Much. It forces you to take an objective look at the entire idea and should permit you to see areas that need rethinking. The plan will help you sort through things logically and should result in a sound usable outline to work with.

The business plan also serves as the major instrument of communication between you and the outside world - to bankers, investors and so on. So adapt your plan to whatever needs you have. If you are going to be asking for financing you will be doing a good deal of financial work and "from the ground up" explanation in order to prove that the money you are asking for will be a good investment for the lender or investor to make.

Planning is a continuous process. Write, do, revise, and so on. You should continue to evaluate where your business is and where you want to go.

Contents of a Business Plan

• Cover Page
• Name of Business, Address, Phone, Name of Owner(s), and Logo, if you have one
• Introduction
• Business form (corporation, sole proprietorship, etc.)
• If you are applying for financing, list how much, what funds of your own you have, and how the funds will be used
• Executive Summary

In one or two pages, give the reader an idea of what the business does. Try to cover:

• What you do
• What will be unique or different
• Who will be your customers
• Why you will be successful
• When do you plan to start
• How do you plan to implement your idea
• How much money will it cost and where will you get the necessary funds

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