Constructing Your Business Chapter Two – The Framework
by Ron Eslinger
Just as important as constructing a solid foundation on which to build, the framing of your business needs to be solid, able to support growth and weather economic climate changes. Setting goals and drafting a plan is the frame work of your business.
Goal Setting
Goals and goal setting is an integral part of each aspect of your business startup. You were asked questions in Chapter one to help you determine if you if you are prepared to start a business and what kind of type of business you are considering. There are six aspects of goal setting that will be discussed to help you create the right frame of mind to successfully understand your expectation and goal.
- Do you believe in you? What does your business plan reveal of your commitment to you and to your business? Are your self-esteem, commitment and preparation above average? Average in these areas is a sure prescription for failure. 85% of small businesses fail. Most businesses fail because of in adequate attention to the principles in chapter one. Make a list of your traits positive and negative.
- What is it that motivates you; money, recognition, awards, helping others and/or being your own boss. Does your business plan blue print your intentions and expectations? Write down your mile markers to your goal and prioritize them.
- Can you imagine, visualize and pretend that you have accomplished your goal. That you are opening the door to your own business of counseling, coaching or complementary / alternative therapy? Make a daily list of things to complete toward your goal.
- You have opened your practice. Do you understand The Secret to attracting clients? Do you have a vision board? Can you vividly imagine with passion your business growing? If you can and when you do you will be successful. I recommend the book or video The Secret.
- What obstacles and/or temptations are you ready to overcome? When this question was posed to a group one person responded that he was addicted to TV and movies. He took his TV time five nights a week for seven months to develop his business plan and open his business on a set date. He opened his business 2 weeks earlier that his original plans in 1999. It is a booming business today. What are you willing to overcome to be your own boss?
- Reaching your goal. “What ever the mind of man can conceive and believe it can achieve.” Follow the concepts of this book and you will accomplish your goal. But first you must have a realistic goal that is written down and meditated on daily.
Once you understand the six concepts of goal setting you are ready to draft your business plan to insure that you have control of your business. Your goals and business plane allows you to build safely rather than haphazardly. By putting your ideas and goals on paper, you’ll have to think through possible problems and resolve them with foresight. Drafting a business plan is an exercise of resolving any potential pitfalls, estimating costs and profits, developing a marketing strategy, and planning for growth. Any problems that arise can be researched and restructured prior to opening day.
Many new business owners get stuck at this point. They believe that a business plan is only necessary if you’re trying to secure a loan. However, having written goals and a plan to achieve them allows possible mistakes to take place on paper, without being costly.
The first step is to ask the following goal oriented questions-
- Why do I want to be a business owner?
- How much money do I want to make annually?
- When do I need to make a profit?
- What will owning a business help me to attain?
- Are there any areas in my life I don’t want the business to interfere with?
- Do I want to have employees?
- Do I want to expand and grow my business?
- What are my personal aspirations?
The Business Plan
Now that you have your goals, the second step is to draft a plan to realize your goals. There are literally hundreds of books based solely on the topic of writing a business plan. Whether you are writing a plan to secure a start-up loan or to just have an outline of your business and growth, the time it takes to write the plan is well worth the effort.
These are the main components to a business plan
- Cover Page
- Table of Contents
- Executive Summary
- Business Description
- Service Description
- Competitive Analysis
- Marketing Plan
- Operations Plan
- Financial Plan
- Appendix
Each section of the business plan should help clarify your goals. Keep your writing detailed and specific. This is not a novel so prose is not necessary. The basic outline is logical and progressive to show a step by step guide on how you intend to start, run and grow your business.
Set aside some time on a daily basis to complete a small section of your plan. Keep in mind that the business plan is a tool to help you keep and maintain control over your business. Start by just completing each section by writing down your ideas and goals. Editing, researching data and proofing can be done at the completion of your draft.
Cover Page
Key information needed here is:
- name of the business
- address
- phone, fax, email
- name of owner
The cover page should be precise and neat. Do not clutter it with large typeface or huge graphics. If you have a logo, it can be placed here.
Table of Contents
Again, the purpose here is to make finding information easy for your reader. Keep it simple by staying in the same format as your outline and placing a page number at each section. Using subheadings can be overwhelming. Use subheadings sparingly if at all.
Executive Summary
The executive summary is the most important section of the business plan. Because it is a summary, it’s best to write this section after all the other topics have been completed. The summary is a 2-page concise picture of your business. It should be able to stand on its own and cover the main points of all the sections in the business plan. Also included here is your businesses mission statement. If seeking start-up funds, most lenders want to read the Executive summary first before receiving the entire business plan.
Business Description
By assuming that your reader has never heard of complementary care, this is the section that will educate them on the industry. This section usually focuses on two issues – national industry trends and local industry trends.
Both the national and local information should include the following:
- size of the industry
- growth rate
- trends
- future forecasts
National information can be broad in scope with the local industry information narrowing in focus. This part of the business description can be as short as 1 or 2 paragraphs.
After describing the industry, your business specifics now come into play. This should include the following points:
- Ownership
- Legal Structure
- Role in the industry
- Demand for service
- Clientele
- Profitability
Stating how and why your business will be successful is key. This section can be 2 to 3 paragraphs as well. Remember, if you are seeking funding, this section needs to sell the reader on how you can make a profit and why the additional funds are necessary to the success of the business.
Service Description-
This section of the business plan should go into more detail on the specific service of the complementary care you intend to provide, by focusing on the benefits of your service. Knowing why someone would pay for your service is the main point to make.
Here is where you need to explain what separates you from any competition in the area. Using the information you previously gathered, point out any differences in the following:
- Location
- Hours of Operation
- Your training and experience
- Basic pricing
More detail will be spent in the next section about the competition so keep this short and to the point. This section can be 3 to 4 paragraphs in length.
Competitive Analysis
In this section of the business plan defining who your competition is, their strengths and weaknesses and how you intend to compete with them is the main goal. Focus on your strengths, services, products and any other aspect which differs from the competition.
Following are some main areas to point out:
- Services that aren’t being offered
- Product availability
- Price differences
- Location
- Hours of operation
- Specific expertise and training
- Marketing, promotional and advertising campaigns
By listing the competitions strengths and weakness and comparing them to your business, you’ll be able to see any potential areas that may need adjusting to assist with the success of your company. For example, if the competition keeps hours on a Saturday, and you weren’t originally planning on offering that timeframe, you may want to consider offering it until such time as your client base is established.
Marketing Plan
This is one of the most important sections of the business plan because it requires that you be specific and realistic with the profit potential and growth rate.
Define the following 4 main areas:
- Target Market
- Market Size
- Price Structure
- Advertising and Publicity
Take for example a therapist who wants to focus on Smoking and Weight Loss. The target market would be the amount of people in the community that smoke and or are overweight. A search of the Centers for Disease Control (www.cdc.gov/tobacco and www.cdc.gov/obesity) website can yield estimated numbers to start with. Once the target market has been defined, the next step is to estimate your niche or market size. Then describe the price structure of the services and products offered. The final step is to explain the advertising and marketing that will be needed to reach the intended target market.
By using specific numbers and realistic goals, you’ll be able to see at this stage whether or not your business will be able to turn a profit and have the potential for growth. If the numbers fail to satisfy the income necessary to support the business, redefine and expand your market. This will save you time and headaches in the long run and give yourself and a possible lender a truer sense of success.
Operations Plan
As a complementary service provider, this section will not be very lengthy, but it’s still very important. Here is where you describe how the business will be run.
- Management & Staff – describe positions needed now and for future growth and their job responsibilities
- How customers will be receiving the services provided – individual or group appointments, consultations and seminars
- Equipment – any specialized equipment needed for production or services
- Growth potential – moving to a larger space, renting storage, hiring assistants
Any specialized skills, training or continuing education also needs to be referenced here as well.
Financial Plan
For lenders, this is the heart of the business plan. The financial plan is your blue print to success. It takes a little more effort to develop a complete financial picture but this exercise will put on paper whether the business has a chance of being profitable and obtaining future growth.
Estimating an accurate financial section requires completing the business plan. Return to the income projections, balance sheets, cash flow and funding necessary to start the business when you have a clear picture of costs involved in opening your business.
- Cash Flow Statement – This is a month by month projection of the money the business will make and the business expenditures. For a very general starting point, take your annual income sales goal and divide it by twelve. Expenses will vary, but consider these items: rent, wages, utilities, insurance, taxes, equipment, supplies, telephone service, consultation fees, and internet access.
- Income Statement – This isn’t as detailed as the cash flow statement but uses the grand totals of that statement, along with any depreciation (equipment, building).
- Balance Sheets – This statement seems to be the most difficult to construct since it doesn’t really reflect income and expenses. There are two sections to the Balance Sheet – the assets (items the business owns) and liabilities (what the business owes). These two figures must equal each other.
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- Assets are: Cash in bank, accounts receivable, property, equipment, real estate
- Liabilities are: rent, mortgage, equipment or anything that the business owes money on.
These projections should cover approximately three years and show expected revenues and expenses along with assets and liabilities. Once a basic financial plan is drafted, refer to it periodically throughout the start-up period and first few months in business to use as a guide. Adjust estimate amounts with actual figures for a truer sense of income projections.
Appendix
This section should have back-up documentation of figures, resume of management, lease agreements, contracts, sample marketing material or any other documentation to show accuracy of projects and credibility of the industry and staff.
Once completed, it is generally a good idea to have another person read your business plan. This helps to shed light on areas that may not be explained properly. Remember, if seeking funding, the business plan should take the reader in a logical sequence of who, what, when, why and how you plan on starting your business. Even if funding isn’t the goal of the business plan, remember it is your blueprint to whether or not your business idea is viable and can make a profit.
Blue-Prints
Writing a business plan takes time, effort and information. Here are a few ideas to help with creating a winning plan for success.
- Set aside time to work on your plan – a business plan takes time to create. Don’t rush in and expect to finish a plan in one day.
- Gather up-to-date information – before writing the plan, visit the library, chamber of commerce and search the internet for all pertinent information needed. If possible read another business plan to get a feel for wants needed.
- Know what the purpose of the plan will be – is it to obtain funding or to see whether the idea is viable, or to entice investors? Know the goal before writing.
- Be open minded – sometimes at this stage, changes must be made in order to achieve a profitable business. Realize that writing a business plan helps you see changes before they occur.
- Easy access – Put the business plan in a 3 ring binder for easier copying and updating.
- Make it professional – if others will be reading your plan, remember a book is usually judged by its cover. Keep it in line with the image of your business.
For further assistance, the following web sites offer actual written business plans to read and sample templates for various types of businesses.
Center for Business Planning
SCORE® Counselors
www.score.org/template_gallery.html