Effective business planning

Many people who have always wanted to start their own business never do, simply because they’re overwhelmed by the process and unsure of what specifically is involved. With a to-do list that includes everything from writing a business plan to coming up with a name to hiring employees, startup can seem daunting.

A solid plan can help you start off strong and stay that way. Writing a business plan is one of the first steps you should take toward startup, well before you launch your business. A business plan will serve as your guide to decision making during the life of your business, starting with the question of whether to start in the first place.

The second use of a plan is to satisfy lenders and investors, virtually all of whom will require a written business plan before approving a loan or making an equity investment. Plans also serve as a means of communicating with potential partners, allies, vendors, employees and even customers.

Here are some tips to help you get started.
*Before putting pen to paper, research resources and tools that can help. In addition to books, software programs can automate the task. .
● Be realistic when making projections. One of the most frequent errors made when writing a business plan is over-estimating revenue and under-estimating expenses. Improve revenue estimates by narrowing your target market down to a realistic niche, then interpret revenue and expenses in terms of that market.
● Include monthly cash-flow projections for the first year. Also prepare an overall projection of profit and loss for three years, as well as a projected balance sheet. Calculate the break-even point at which sales will cover costs. Research financial ratios specific to your industry, and look at published industry-specific ratios to make sure your assumptions are realistic.

● Pay special attention to marketing. First, develop goals. Second, do a market analysis, including identifying target markets, researching competition and assessing market trends. Then prepare a marketing strategy, including your approaches to sales, promotions, advertising, PR, networking, community building, customer service and other marketing channels and tools. Develop a plan to implement that marketing strategy, and include benchmarks to see if what you planned actually happened.
● Choose your target customer, then take aim in the right direction.
Open the doors to your business, and it’s easy to think of the whole world as your oyster. Why focus on a target market and exclude all those other market segments with which you could be conducting business, right?
● Find the perfect match. The most important thing a small-business owner can do is figure out what kind of customers will help them get to the goal. Who are the most strategically valuable people to them? Identify as many traits as possible so you can organise your business to keep those customers coming back.
● Identify different segments. After you’ve outlined whom your best customers will be, recognise that you may have more than one profile. For instance, a catering business may find lucrative market segments in cooking and presenting elaborate holiday meals for affluent families, as well as providing simple, daily heat-and-serve meals for busy working parents.
● Service, service, service. More small businesses lose customers [due to] poor service than bad products. Your business’s most important marketing tool is the way you conduct sales and service customers. Every time you do work for a client, you are marketing yourself. When you do that well, customers pay you back with loyalty and referrals.


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