Creating a Very Basic Business Plan
You can certainly create an expanded business plan using an almost unlimited amount of free templates online, however, here is a very simple outline of some questions you need to be able to answer:
Who will I be marketing to and serving?
This can be by geography, industry, age demographic, or all sorts of other categories. My primary focus is small business owners with between 1 to 10 employees. For service orientated businesses, I typically look for business owners that require some sort of professional licensing. This is only a guideline, but it’s important to have a general target starting out.
What is your product/service menu and how will you price it?
It may be tempting to under price your services to get more business in the beginning, but this can create issues as your volume increases. Some simple market research can tell you what others are charging in your space. Search online, call some competitors, the information should be easy to obtain for most industries.
What are your fixed expenses? What are your variable expenses? What is your break-even point?
Fixed Expenses: The expenses that you will incur regardless of whether you get any new clients. Things like your liability coverage, office rent, software costs, ect. What is your monthly nut to crack each month?
Variable Expenses: These would be the expenses you incur for each new client. This may be variable depending on the specific product/service you provide. For example, when completing tax returns, a variable expense be printing and mailing expenses.
Break-Even Cost Per Unit/Service = (Fixed Costs) / (Price – Variable Cost)
This may be overly simplified, but it will help you make some pricing decisions.
How much money do I need to make in order for it to be worth my time?
How much do you need to earn to support your lifestyle? How much do you need to earn to make it worth your time? Once you have these numbers down on paper, you can calculate how many clients (or product sales) you need to complete to reach those numbers.
Is this realistic? What is a realistic timeline? (then triple it). Can you pay your bills in the meantime? If not, you may be in for a very financially painful experience. Better to know on the front end.
How will you gain new clients?
Be very specific. What actionable strategies will you implement each week? Who will you speak with? Start creating a list. How will you gain interest? Is this a proven strategy? It’s hard to run a business without clients, make sure you have a strategy ready to go live right away. Most businesses fail due to lack of planning (and action) in this category than for any other reason.
Once you can answer these basic questions and feel “this could work”, you are now on your way to getting off the ground!