A joint venture is a formal agreement to share the work--and share the revenue and profit. Also keep in mind you may want to include examples of marketing materials you have already prepared, like website descriptions, print ads, web-based advertising programs, etc. If you already own an existing business, summarizing your current operation should be relatively easy; it can be a lot harder to explain what you plan to become. The rental shop will solve that problem by offering a lower-cost and convenient alternative. Who are the key leaders? For example, if you manufacture a product or provide a service and will hire a key skilled employee, describe that employee's credentials. You can also find templates in Excel and Google Docs. What benefits do you deliver? Our two primary competitive advantages will be location and lower costs. If so, can I differentiate myself in a cost-effective manner? The market potential inherent in those visitors is substantial. Your Summary can serve as a guide to writing the rest of your plan. Online retailers will also provide competition, but thoroughly analyzing those companies will be less valuable unless you also decide you want to sell office supplies online. Identify your customer. It provides concrete, factual evidence showing your idea for a business is in fact sound and reasonable and has every chance of success. After you objectively evaluate your capital needs, products or services, competition, marketing plans, and potential to make a profit, you'll have a much better grasp on your chances for success. In the cycling rental business example we've been using, products and services could be a relatively simple section to complete or it could be fairly involved. What products, services, and equipment do I need to run my business? Serve as a guide to the business's operations for the first months and sometimes years, creating a blueprint for company leaders to follow. A great business solves customer problems. Now distill what you've learned by answering these questions in your business plan: The Competitive Analysis section for our cycling rental business could start something like this: Our nearest and only competition is the bike shops in Harrisonburg, VA. Our next closest competitor is located over 100 miles away. For the purposes of your business plan, narrow your focus and focus on answering these main questions: The Market Opportunities section for our cycling rental business could start something like this: Consumer spending on cycling equipment reached $9,250,000 in the states of VA, WV, MD, and NC last year. Other people may see the same opportunity you see. 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Celebrity management team members may attract the attention of your readers, but experienced lenders and investors will immediately ask what role that person will actually play in the running of the business--and in most cases those individuals won't play any meaningful role. By offering mid- to high-end quality equipment, we provide customers the opportunity to "try out" bikes they may wish to purchase at a later date, providing additional incentive (besides cost savings) to use our service. You should already have a feel for the competition's strengths and weaknesses--if you know your market and your industry. You've already defined and mapped out your products and services. After that he was the operations manager of Single Track Cycles, a full-service bike shop located in Bend, Oregon. It proves a case. If your aim of writing a business plan is to attract investors, appeal to reviewers, or even guide you in running your business then you must identify the unique features of the product or service and opportunities that the business must leverage to grow and clearly state them in the plan. Do they focus on a specific customer type, on serving the mass market, or on a particular niche? Access: Customers, suppliers, shipping, etc. How? Only you can determine that.). Since customers currently rent bicycles in the local town of Harrisonburg, road signage will communicate our value proposition to all potential customers. (Sometimes even the best ideas are simply ahead of their time.). A good business plan delves into each of the above categories, but it should also accomplish other objectives. As you map out your plan, you may discover issues or challenges you had not anticipated. How will your company be different from the competition? Save my name, email, and website in this browser for the next time I comment. Those employees will be attracted through competitive wages as well as discounts products and services. Once your Summary is complete, you can use it as an outline for the rest of your plan. Initially the people reading your business plan don't wish to plow through reams and reams of charts, numbers, and backup information. Look at their advertising, public relations, etc. Potential partners and investors. Finally, when you create your Management section, focus on credentials but pay extra attention to what each person actually will do. Our initial goal is to become the premier provider for bicycle rentals. Start by evaluating the market at a relatively high level, answering some high-level questions about your market and your industry: Fortunately, you've already done some of the legwork. He has an undergraduate degree in marketing from Duke University and an MBA from Virginia Commonwealth University. What segment of your market will you focus on? In my last post – avoidable mistakes entrepreneurs make, I stated that a business without a business plan is like a football field without a goal post.. However, sellers of new equipment do indirectly compete with our business since a customer who buys equipment no longer needs to rent equipment. If you open a restaurant, what you plan to serve will in some ways determine your labor needs, the location you choose, the equipment you need to purchase. (In this case the products and services are obvious, so including a specific section would be redundant.). But, I learnt it while in school and today I have decided to teach you for free what I spent a fortune to learn. When you draft your Products and Services section, think of your reader as a person who knows little to nothing about your business. It shows how and when cash will flow through the business; without cash, payments (including salaries) cannot be made. Let your excitement for your idea and your business shine through. Or if you plan to sell a commodity readily available in a variety of outlets, the key to your business may not be the commodity itself but your ability to market in a more cost-effective way than your competition. Or you can work with an accountant to create the necessary financial projections and documents. It is written at the end of the planning process but presented as an abstract at the beginning of a business plan. What are the consequences of copyright infringement? As you develop your Summary, you will naturally focus on the issues that contribute most to potential success. How customers perceive your business makes a dramatic impact on sales. Always remember it's much easier to serve a market you can define and quantify. Who am I targeting? It's easy to identify weaknesses in your competition, but less easy (and a lot less fun) to recognize how they may be able to outperform you: While these questions may seem like a lot of work to answer, in reality the process should be fairly easy. Also, accurate revenue projection for 3 to 5 years is a must component of an effective business plan. Focus on the basics first: If you are still stuck, try answering these questions. Determining the total population for the market is not particularly helpful if your product or service does not serve a need for the entire population. It equally guides the management against derailing from the initial vision of the business. It depends on the nature of the products the company plans to rent to customers. The above statement underlines the importance of a business plan in the startup and survival of any business. Interior and exterior remodeling and preparation. So let's dig deeper and quantify your market. Make sure you fully understand the "what" factor; you may run the business, but your products and services are its lifeblood. Your business plan shows how you will get there. The following is how an Executive Summary for a bicycle rental store might read. A business plan typically looks out over three to five years, detailing all of your goals and how you plan to achieve them. Most of the information you need about products, services, prices, and company objectives should be readily available. That way the operations section answers the "How?" In our example, defining the above is fairly simple. How will you react to and overcome new challenges? And be objective. Why do customers need and why will they be willing to purchase your products and services? Or you might realize the fundamental idea for your business is sound, but how you implement that idea should change. Explain the problem you solve. Median income. What are their experiences, educational backgrounds, and skills? Use simple terms and avoid industry buzzwords. Another problem is casual cyclists who can't--or choose not to--spend significant sums on their own bikes. Where will I fail to solve a customer problem, and what can I do to overcome that issue? Some areas are more affluent than others. What is your market? Maybe, after evaluating the competition, you realize your plan to be the low-cost provider isn't feasible since the profit margins will be too low to cover your costs. START UPS: Steps to take to protect your intellectual property (IP)? Direct cost of sales is projected to average 60 percent of gross sales, including 50 percent for the purchase of equipment and 10 percent for the purchase of ancillary items. Your business plan walks the reader through your plan. You could certainly include more detail in each section; this is simply a quick guide. Break-Even Analysis: A projection of the revenue required to cover all fixed and variable expenses. What is the size of the market? Our only other competition are the bike shops in Harrisonburg, VA, and our location will give us a competitive advantage over those and other companies who try to serve our market. You cannot market and sell to customers until you know who they are. understanding your market and the opportunities, skills, experiences, and resources your management team will need, Be as objective and logical as possible. Now let's look at the first section of your business plan: The Executive Summary. What will you do to take advantage of the opportunity? It should contain a summary of the cost and revenue projections, the product description and so on. Patents, copyrights, and trademarks you own or have applied for should also be listed in this section.