Starting a business is a major commitment that will consume 24/7 of your life with no end in sight. It is always good to know what you are getting into before you take the plunge. From my experience writing business plans for large and small companies alike for the last 8 years, there are basically two reasons why you need a business plan – the first reason is to re-assure yourself that this wild dream that you have in your mind is actually attainable. And, the second reason is to convince a lender or a venture capitalist. More than likely, you are writing for the second reason. Whatever your reason may be, as the legendary management guru Peter Drucker would bluntly put – always ask yourself what your business is, who your customers are, and what the customer considers value.

In my opinion, here is a list of pointers that will save you headaches later.

a. Be clear about what you are selling.

Spend as much time as you need to define and clarify what you are selling. From the gettgo, come up with a 15 second elevator pitch. This will come handy later on. If you need professional help to come up with a pitch, companies like – 15secondpitch can help. This is a great resource to help you discover who you are, what your company does, and what others perceive of you and your verbal and written messages.

b. Come up with Mission, Vision, and Objective statements for your venture.

Mission, Vision, and Objectives – They may all look the same at first glance, but they reflect different rationale.

The mission statement represents the underlying operating philosophy and the values of the company – ‘The mission at Company ABC is to provide a reliable, yet affordable XYZ technology for residential customers.’

The Vision statement represents a long term plan – that provides a direction to make significant impact – ‘Our vision at company ABC is to become a global niche leader in XYZ technology by the year 2009.’

The Objective represents definitive goals for different purposes within the company. Peter Drucker first popularized the term “management by objective” in his 1954 book ‘The Practice of Management’. Objectives can be set in all domains (services, sales, R&D, human resources, finance) – ‘The main objective of company ABC is to understand the target market, to implement the most optimized form of logistics, to include a series of efficient fulfillment processes and to provide an unmatched form of customer service.’

c. Be honest with your Strengths and Weaknesses.

You can conduct a simple SWOT analysis on your venture. SWOT stands for Strengths, Weaknesses, Opportunities, and Threats. Create four quadrants and fill up with honest lists of answers. This simple test allows you to assess your compatibility with the venture that you are getting into. This test will also indicate opportunities, threats and barriers to entry that exist in your vertical market.

d. Conduct a thorough research on your vertical market.
Leverage on new Internet research tools to conduct comprehensive studies. At every stage of your research, be open to adopt new directions based on your findings.

e. Make sure there is a real opportunity
or move on to a different venture.

f. Make sure your product or service addresses pain point (s).

This goes back to the point (a). Understand and address your customer needs.

g. Conduct a thorough research on your competitors.

Create a matrix and conduct a thorough competitive analysis. See what your competitors are offering.

h. Make sure your product or service addresses pain point (s) better than your competitors.
Its all right if your competitors got in the market before you did. But, focus on doing things little bit differently that you address the customer needs, pain points better than them.

i. Be realistic with the revenue projections.

Don’t fall for cliches like – ‘According to Forrestor’s research, our market will be $ X billion by ___’, ‘We will drop our product in China and we will make billions.’ There is nothing wrong with wanting to become another Google or Microsoft, but make sure you have unique product or services. If you have a patent on your innovation, that helps. If you already have an angel investor on board, that gives you credibility. If you have a veteran management team in place, that is going to help you a lot! Always be ready to explain to lenders and Venture Capitalists how you are going to reach the big numbers – and never ever use cliched answers.

j. Surround yourself with people smarter than you. Do not be afraid to ask for help.

Always reach out to people smarter than you. Big ideas take right people to bring them to life. You want to do things smartly and not give your idea away, but at the same time you need to be open to sharing with right people. One rule of thumb is – it is better to team up with people with complimenting skill sets. If you are an engineer, you don’t need another engineer to support your point of view. You need a professional sales partner to sell your product, and a sharp finance guy to keep the numbers in order.

k.. Seize the opportunity to scale up – quick.

Big deals don’t happen on their own. Big deals happen because of right people, right product, right momentum in the market among many possible variations. If you have everything in order and luck is in your favor, seize the opportunity to scale up – and do it quick! Otherwise, good entrepreneurs know when to pack up their bags and move on to another opportunity. I advise entrepreneurs to get out of business if the venture doesn’t take off within two years.

There are some very compelling reasons for writing a business plan for small businesses. The challenge is that the misconceptions about what needs to go into a small business plan scare most owners and entrepreneurs away.

If you are like most small business owners or managers, you are incredibly busy, if not borderline overwhelmed. The idea of taking hours of valuable time to write a plan for your business may not seem worth it. But the data proves differently.

When writing a business plan for small business, focus on what really needs to be done, and what really needs to be measured. The plan does not have to be a 15 or 20 page document. In fact, it should only be one or two pages maximum. You should also have a yearly budget or financial plan as well. You really do not need to go overboard and do tons and tons of research about the market, and the opportunity, especially if you are already in business!

To write your plan, you will need a few things to get started. If you can assemble any of your sales and financial information for the past couple of years, that would be a bonus. You will need a notebook and writing instrument, possibly a laptop or a computer, and yourself. Then, basically find a quiet place to sit down for about an hour, and think about your business, and where you want it to go, and how you think you can get it there.

Let’s start with where you want your business to go. This is just a fluffy way of saying your vision for your business. Set a timeline for your vision; say 18 months or up to 5 years out. Then think about what your sales would be if everything goes as planned. What are your primary products or markets, and where will you do it.

Here’s an example: Within the next 3 years, grow MS Cut to $750,000.00 in sales providing industrial routing and cutting services to manufacturers and distributors in the Indianapolis market.

Or how about this: In the next 18 months, launch Tim’s Lunch & Deli, growing to $250,000 in sales. We will provide delicious sandwiches, soups and salads using all locally grown vegetables and products to the public in downtown St. Paul.

By writing out where you want your business to go in this fashion, you can clearly imagine the end result of your vision.

In terms of how you are going to get there, this is the strategy and tactics section of your plan. Again, what are the ways you are going to do the things you need to do? This could be everything from the methods you will use to attract customers, to the way that you will approach pricing your products or services. It can also address your marketing and advertising plans.

The main thing to keep in mind when it comes to your strategies and tactics, is to make them realistic. If you are going to need a lot of specialty skills (that you don’t currently have…) or technologies or a lot of money to do them, then chances are they won’t get used. Write this section of your plan so that you can actually do everything you need to do.

Next, you need to create a few measurables for your business. These are things like monthly sales revenues, profit percentages, labor hours to sales, number of returns per month, number of employee hours each month, etc.. These are all things that you can keep track of so that you will know if your plan is working, or if you need to address something quickly.

Each business, and each industry can have it’s own set of unique measurables. You may have one statistic you can keep that is a telling symbol for your business. Keep track of it, and see how it effects other areas of your business.

You should be able to track anywhere from 3 to 9 different measurables. Any more than that and you will not get much from it, and you are less likely to actually collect the information anyway. If you are using software like QuickBooks, Peachtree Accounting or another accounting app, there are several measurables you can pull and use to track your success.

All of the above information will fit nicely on one or two pages. Once you have that information, and you have written your business plan for your small business, the number one thing you can do is to use it, and use it often. Make a monthly (or weekly) appointment with yourself, your business partner, or your senior staff to review the plan, and make sure it still relevant. If something changes (and it will!), change your plan. It should be a living, dynamic document that you use on a regular basis to run your business.

By writing a business plan for your small business, you are creating a better opportunity for your business, and giving it a better chance of success.

Starting a new business based on your new invention? You need to know how to write a business plan. Creating a comprehensive detailed business plan forces you to make the decisions that need to be made, requires you to do your research and determine all those little details that need to be addressed, from the day to day office expenses to the cost of packaging for your invention, product, or service.

You will know what your price structure will be and how your product will be distributed. This is very important information. Your price structure depends on your distribution. Do you sell retail and wholesale? Do you sell to OEMs? How about mail order? You have to have a price structure that will accommodate a number of different prices for different channels of distribution.

By the time you’ve finished your business plan you should have a pretty good idea of all of the expenses involved in your undertaking, including the cost of manufacturing, marketing, the cost of sales, your hard costs, and fixed costs of your product. You will have knowledge about your competition, about the pricing structure for your product, the lines of distribution, cost of advertising for the various types of media campaigns, and even the cost of your product liability insurance.

Will your product need code approvals from Underwriters Laboratories (UL), IAMPMO, NSF, FDA, or one or more of the multitude of such agencies? How much will that cost and what is involved? Your plan will spell it all out.

You’ll know the retail price and the profit you will make, and you will have a timeline to follow. Make your plan concise and professional, and detailed enough to convey a sense of credibility. Get it all down on paper

If you are going to raise money to finance your invention, product, or service company, you will absolutely need a business plan. Potential investors want to see everything down on paper before they will even consider your idea.

In general your business plan should include; a cover sheet, a statement of purpose of the plan, table of contents, a description of the business, marketing – how you plan to market your product or service, your competition – demonstrate a thorough knowledge of your competition, operating procedures – describe how your business will operate, personnel – introduce your key personnel, loan applications – if any, equipment and supply list – list all of your equipment and supplies, Balance sheet, break even analysis, spread sheet with cash flow for at least three years – monthly for the first year and quarterly after that, and the assumptions upon which you based your projections.

The specifics of your business plan depend heavily on what type of business you are going to be operating. Whatever kind of business it is, you will find tons of information about how to put a business plan together online. The Small Business Administration has a comprehensive guide.

Just begin a search for business plans and review lots of samples and read the advice that you find, and then get started.

When you run into a problem that is difficult to solve, be glad you found it while doing the plan, not after you are already in business. So the more detail you provide the better off you will be, and the better your credibility.