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How to make a business plan

Many sole proprietors and individuals with plans to start their own business (maybe you) get tired just by the thought of making a business plan. It feels pointless to write down all the things you already carry in your head, but it's actually very smart to make a business plan. The purpose of it is to force yourself to think through different things about your future company and to see if your idea is worth pursuing financially.

A business plan's job is simply a way to translate your rosy dreams (which is the most important of all aspects) into numbers and words on paper so you can get a realistic idea if it will work. You may also need a business plan to show the bank what your dreams are all about. Sure, it's great that you want to open a café, but if there are no other thoughts than that of a sweet life in café world it's unfortunately likely that your business will fail. Therefore, the business plan must be a bit like an annoying friend who forces you to answer the questions you know that you really need to answer, but that you in your eagerness to get started don't want to admit right now.

Some issues in a business plan may seem a little ridiculous to answer. You may not have a clue about how much you will earn in the first year, but that's also the answer to that question and if you can't answer that, it's smart to try to estimate what you will earn. You could say that the business plan is something you do now, instead of getting a slap in the face later. You need to consider the following points and be able to provide clear answers to them:

Business idea
• The market for your product/service - where is it?
• What are you selling and to whom?
• Why should customers buy from you?

• What products/services do you offer now, what can you offer in the future?
• What makes you and your products special compared to companies and their products?
• What can you offer that is out of the ordinary?

• What does the market look like today?
• How will customers be reached?

Marketing and Sales
• How do your products/services compare with your competitors in terms of price, quality, customer service and what will you do better?
• Costs and prices.
• Marketing/sales activities.
• How will you sell? Directly to customers, through dealers, etc?

• Who are the main competitors?
• What can you learn from existing competitors that gives you an edge over them?
• Make a critical comparison between your products and your competitors (strengths/weaknesses).
• What reactions can you expect from the competition when you launch your business? (in terms of price wars, etc.).

• Premises, location, rent, lease -what are your realistic needs?
• Investigate the realistic need for machinery and equipment.

• Describe purchasing channels and consider whether there are other vendors that are better and cheaper.
• What conditions, such as for payment, you can count on?
• Review your needs of an average inventory.

Financial information
• Make a profit Budget, ie. a plan/assessment of the company's revenues and expenses for a given period, usually a year.
• Make a cash budget, ie. a plan for cash flow in your company. The plan explains how the receipts and disbursements are distributed over different periods.
• Make a financial plan that explains how the business will be financed.

Personal qualifications
• What kind of education do you have that is significant for the company, for example. training in a profession, etc.
• What is your own experience of the industry and the profession?
• Have you already established contact with customers, suppliers, banks, etc? If not, how will you do it?

Threats and opportunities
• Try to get a realistic look at the risks and how they can be made smaller.
• Think about the goals you have with the company, now and in the future.

With this information on paper, you will be able to better handle your business.

About the author

Stefan Ekberg has worked in marketing for small business for 20 years and has written around 30 books on how small business owners can market themselves with limited resources. . In 2012 Stefan was nominated as Entrepreneur of the Year in Stockholm.

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"The 5 minute marketer" - the book
You run a small business and you want to get ahead of the competition, but how can you give resources to marketing when you're short on time and the budget is tight? The solution is here! The 5-Minute Marketer is packed with 395 tried-and-tested ways to market your business in 5 minutes or less.