If you’re reading this, you’re probably a small business owner or considering starting a business. Or you’re a blood relative and it’s a slow day. (Hi Mom!)
It can be overwhelming to figure out how to start a business, what you need to do, and a step I’ve found a lot of people skip is the “why.” Where and when is up to you, so I won’t get into ALL of the “5 Ws.”
Do You Really Need a Business Plan?
A lot of contemporary advice starts with a business plan. But I’ve read quite a few articles from other creative entrepreneurs who skipped this step altogether. My advice is somewhere in the middle.
I think you need to know what you’re getting into and have a plan of action. Running around with a head full of half-fledged ideas is a recipe for failure. Beyond that, if you haven’t defined what success looks like for your business, how will you even know if it “succeeds” or not?
So no, I don’t think you need to make a Word doc with sections organized by roman numerals outlining your company structure, budget, and so on. Unless you need a business loan. Then your bank is going to want to see the numbers.
But I DO think you should have certain key elements outlined somewhere. Doesn’t matter if it’s a notebook, a Trello board, or a Google doc. You should have one central place to keep tabs on your business and to fully flesh out your ideas before acting on them.
What to Do BEFORE Even Writing Your Plan
Don’t waste time writing a comprehensive business plan before you know why you want to start a business. This is the time to think about what it is you want to do, whether it’s feasible, who will buy from you, and if you really want to do the work involved or if it sounds better in theory.
Things to ask yourself:
- What do I want to sell?
- Who will buy it? (You can read more about target markets here.)
- Why will they want to buy it from me and not someone else?
- Do enough people want this product that I can make money doing this?
- How do the costs of running this business compare to the potential proceeds?
- How much effort is involved with the work both in and on the business?
- Do I really want to wear all the hats that come with being a solopreneur?
If you’ve asked yourself all those questions and want to continue, you can continue to the next step of actually planning.
Things to Include in Your “Business Plan”
I have an official business plan. I’ve researched to see what information should be included and revised it countless times. And then… I never actually look at it for day-to-day business management.
So instead of telling you the BS sections that everyone else will tell you “need” to be included in your plan, I’m going to tell you the sections I have actually used and revisited.
Also called elevator pitch, this is your one or two sentence statement that clarifies what you’re doing, for whom, and why. It’s easy to waste a lot of time here, so don’t worry about pretty phrasing just yet. What’s more important is to figure out what exactly you’re doing so you have something to base the rest of the plan on.
It’s also the most fun piece of this and, if you’re like me, sometimes it’s easier to keep going when you get started with something enjoyable.
Yep, it’s budget time. This is much less fun but equally if not more important! Things to go over in this section:
- Business expenses
- The baseline income you need to live on
- The goal lifestyle you hope to achieve with your business
- The pricing range you can charge between surviving and thriving (you’ll probably start closer to the first number and raise your prices to the second as you gain skills and experience)
- How this compares to your competitors’ pricing
I think this is a good section to include right after budget because now that you know what to charge, you have to think about who will buy from you. Of course, you might need to adjust your budget after considering marketing costs, but that’s ok. Flexibility is a good thing!
Things to include:
- Target market
- Where to find them
- How to connect with them
- Costs of customer outreach
- Plan to differentiate yourself (Why should clients choose you over competitors?)
Licensing and Permits
Technically this could be “business structure” but if you’re a business of one, you don’t need to lay out each board members duties and how to split finances and so on. You DO need to figure out what kind of business you have, and what kind of license and/or permits you’ll need to run that business in your current location.
Things to include:
- Do you sell products or services?
- In what state are you operating and are there rules that pertain to your type of business in that state?
- IF you need a business license (in Delaware, sole proprietors do NOT need a license because their income gets rolled into personal taxes), do you want to register as a sole proprietorship, an LLC, an S-Corp, etc.?
- Registered agent (you can hire one or register yourself)
- Will you need an operating agreement? (some banks require this for LLCs, but in my case, it was a little ridiculous since it was an agreement with myself)
- Will you register your business name?
- Will you sign up for an EIN? (sole proprietors can usually use their social security numbers, but it varies by state)
If you’ve laid out all these details and you’re ready to go forward, great! There’s still a lot of work ahead of you, but you’ve also got the fun stuff, like naming your business and branding and doing the actual work you’re signing up to do.
Do you have a business plan for your business? What elements do you include in yours?