Whatever your current situation, if you want to move forward in this or any business, it is necessary to have a foundation on which to build and a direction in which to go. You have a foundation on which to build, and a direction in which to go. You wouldn’t embark on a long trip to a place you’ve never been without a road map, would you? Developing a business is much like traveling, and yo0ur road map is a sound business plan.
Goals Set Are Goals Achieved
It is estimated that over 95 percent of people who set realistic goals for themselves achieve those goals. Unfortunately, it is also estimated that less than 50 percent of all people actually set realistic goals.
If you’ve been studying business at all, you know that many small businesses fail within five years of starting. Some fail because of lack of capital, others because the market wasn’t as strong as the business owner had hoped, but whatever the reason cited, many failures can be traced back to lack of business planning or unrealistic planning.
Realism is vital in successful business planning. It doesn’t do you any good to set up a business based on an unrealistic plan. If your current financial situation permits you to set up shop in a small facility with one employee, it’s unrealistic to outline a plan to have a multi-level salon with 20 employees within six months (yes, this is an exaggeration, just to prove a point).
Setting unrealistic goals is detrimental in two ways. For one thing, if your goals are always out of reach, you set yourself up for failure. Not only will your business fail to thrive, but constant failure will be discouraging, and eventually you will resign yourself to being a failure.
Secondly, striving to attain unattainable goals prevents you from focusing on goals that would be attainable, that will make your business a success.
WHAT IS A BUSINESS PLAN?
We’ve established that a business plan is a road map from which to navigate your future in the business. But what does that really mean?
Basically, a business plan is a description of your business. It takes into consideration factors like the nature of the business, the nature of your particular marketplace, the competition, and the financial situation.
You need a business plan because it will help you identify specific actions you need to take; develop financial resources; and communicate to others, such as bankers, vendors, and employees, what y9our business is all about. It will also give you a clear-cut idea of what the business is all about. Having a plan will help you develop as a leader by forcing you to think about the current and future state of your business.
Creating a business plan forces you to take a realistic, objective look at your business. By taking an objective look at your business, you can identify strong and weak points. You can see potential problems before they become actualities, and sometimes solve them ahead of time.
A business plan should include enough information about your business to:
Identify potential problems and goals;
Suggest ways of overcoming obstacles;
Plan for the future.
A strong business plan forces you to analyze the market from both a business owner’s and a customer’s point of view. It helps you determine the potential demand for your service in your area, and your ability to provide it. It can also provide it. It can also provide insight on how to better your chances of succeeding.
A well-researched business plan gives you financial and management information vital to your success. It can also tell you, before you star5t your business are going to work.
WHAT’S IN A BUSINESS PLAN?
A business plan, whether you are just starting out or already established, should contain some basic components.
First, the plan should have a detailed description of your business. This description should tell what services you provide, how many employees you have and what capacities they work, the demographic of the marketplace, the customers you target, and an analysis of existing competition.
Second, you should include a stated purpose. What goals are you setting in this plan? Is the intent to raise capital for starting up a new business, to fine-tune an existing business, or to study the market to determine if you really want to start your own business right now?
You also want to include your financial status in your business plan. The more detail you use here, the more effective your plan will be. It’s not enough to say you have a certain amount of money to start a salon. Instead, break down different cost as specifically as possible. For example, if you are starting up a business, outline realistic, expected expenses such as design and build-out costs, furnishing and promotion, and general overhead. This will give you a clear picture of what to expect, and what you will need to get started.
DO YOUR HOMEWORK
A business plan isn’t something you can sit down and write in a spare half-hour between appointments. It takes a lot of research and though to put together a plan that will be of use to you.
One way to start is to sit down with paper and a pen and ask yourself the following questions:
- What business am I in?
- What services do I provide?
- Where is my market and what changes or trends are appearing?
- Who will my customer be?
- Who is my competition and how are they positioned and promoted?
- What is my sales strategy?
- What merchandising methods do I plan to use?
- How much money is needed to operate my business?
- How will I get the work done?
- What management controls are needed and how can they be carried out?
- When should I revise my plan?
This last question is important because a business plan must be flexible. In an industry like nails, new trends are always cropping up. Also, all elective service industries, such as beauty and entertainment, are subject to the whims of the economy. Suppose, for example, that your salon is located in a town where most of the citizens work for a large manufacturing plant. Most of your customers, therefore, are supported by this plant. If the plant initiates a major layoff, the economy is going to go down, and your customers are going to have to tighten their belts. For many of them, nail services, especially fairly expensive nail services, may be of the things to go. This does not necessarily spell gloom and doom for your operation, however, if you have planned for such a situation will probably call for a revision in your business plan. Again, this is an exaggeration, but envisioning a worst-case scenario can help you plan for possible pitfalls.
Whether there is a major change in the economy of your area or not, it’s a good idea to review and update your business plan periodically, just to make sure you are still on track.
Once you have answered those 11 questions in as much possible, it’s time to complete the information and review it. Once information and review it. Once you have all the information at your fingertips, you may discover that your original goals need to be modified – or you may find that there are opportunities available that you never consider.
PUT IT IN WRITING
Now that you’ve compiled and reviewed all this information, what do you do with it? The next step is to organize all your research into a formal plan that can be presented to others.
A formal business plan demonstrates to other that you have through your proposal through, you know what you want to do, and you know what you need to do to achieve your goals. This indication of organization goes over well with bankers when you try to get financing for your plans.
A business plan should appear in a bound copy with a cover. It should conform to generally accepted report guidelines, such as the following:
The title page, with the name of the business, the principals who own it, the business address and telephone number.
The statement of purpose, which tells the reader exactly what is wanted. The statement of purpose must be clear and concise. If the plan is meant to be used as a policy guide, say so. If it is meant to help obtain financing, say that and indicate how much money you are going to need.
The table of contents, which enables the reader to easily find the information he or she wants.
The body of the business plan – a details description of the business.
The financial data, including sources and application of funds, equipment lists, balance sheets, total assets, total liabilities, net worth, break even analysis, income projection, profit and loss statements, and financial reports.
Support documents, such as resumes, leaser, demographic studies, relevant contracts, or letters of reference.
There’s no getting around it, developing a sound business plan is a hassle. It’s time-consuming and, frankly, a lot of the research involved may seem boring. But the benefits are invaluable. Having a business plan means having all the information you need at your fingertips when you need it, rather than having to do time-consuming research in a crisis situation.
It’s kind of like ironing all your clothes when you do the laundry: it’s a task you’d rather put off, but it makes getting dressed every morning so much easier. By the same token, the time invested in putting your business plan together now will make the day-to-day running of your business much easier.
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