I dreaded group projects when I was in school. To absolutely none of my friends' or family's surprise, I was one of those kids who always wound up taking on the entire group assignment myself because I cared so much about getting a good grade. (Plus, let’s face it, it meant I wouldn't have to work with any partners, who sometimes were just as happy to let me do the work.) While that habit didn’t earn me the popular vote at the time, as an adult who was figuring out how to write a business plan, some of those same strategies of diligent, independent work wound up helping me out in the long haul.
Just as there were in middle school when I was telling myself that taking on all of the work was the most logical option, I've discovered that when it comes to drawing up a business plan, there are always going to be things I'll need to let go of. Starting a business from home is an ever-evolving process, and it's important to know that it's OK for your business plan to grow along with your business. That's a lesson I had to learn that hard way after a bit of frustration and resilience, so I went to the experts to find out everything you need to know to make your new self-employment venture a success right out of the gate.
“A business plan is crucial to setting goals and measuring your success at reaching those goals for your business," explains Chelsea Lahmers, CEO of Moto Richmond. "Basically, you need to know how much you can afford in terms of finding a space, getting inventory, buying equipment, and all of that stuff, and a business plan can help you sort out answers to those questions and loads more.”
Yes, that’s a lot of information, but don’t be put off by the thought of needing to organize your thoughts before launching a business.
“Anyone can do it,” assures Lauren Davis, co-owner and COO at The Yoga Dojo. “Start with a rough outline of things you'd like [your business] to include. Make friends with Google — the internet is a helpful resource.”
In short, they're a great way to figure out how to run your company. They're also necessary if you're seeking outside financing, says Lahmers. “If a family member came to me to borrow money to start a company, I'd even make that person have a solid business plan. It's just a great way of looking at your project with accounting eyes!”
If you're looking for resources to help you get your plan off the ground, Lahmers recommends tinkering with LivePlan, which guided her through the process and helped her sort through the numbers. Now, years later, she credits the success she's found in her own ventures to her diligence in building a thorough plan.
"Being forced to think about those numbers and gave me something to gauge my success and predictions as I moved forward into this big project. I went from a being person that ran a business as a bit of a hobby to being a serious entrepreneur. I went from ‘getting by’ to ‘being profitable.' It wasn't overnight, but putting the time into a serious business plan forces you to look at the numbers and react to them in a measurable way.”
There are a few different ways to compile your information into a business plan. The first way is to take the long view by starting backwards. “I thought about what I wanted our business to look like on day one, in one year, in three years, five, and ten years,” says Davis. “What would it take to make that happen? Then, I put that on paper. I brainstormed ways to get there and what we'd need.”
Lahmers' approach focuses on the present-day state of your business, with flexibility to grow into the future. Here's what she recommends you know to get started:
1. Know your fixed costs like rent, insurance, payroll, supplies, etc. LivePlan allows you to do these things on an annual basis if your business should be about the same every month, or allows you to adjust by month if your business is seasonal like mine is.
2. List your gross sales numbers. You can break this down however you would like.
3. Know your costing number. This will include supplies and potentially labor, depending on how you have that stuff set up.
4. Include your raison d'etre. You really need to know the identity of your business, the demographics of your clientele, your competition, your opportunities, your marketing plan, all the good stuff that you already know — or else you wouldn't be starting the business in the first place.