Starting a new business based on your new invention? You need to know how to write a business plan. Creating a comprehensive detailed business plan forces you to make the decisions that need to be made, requires you to do your research and determine all those little details that need to be addressed, from the day to day office expenses to the cost of packaging for your invention, product, or service.

You will know what your price structure will be and how your product will be distributed. This is very important information. Your price structure depends on your distribution. Do you sell retail and wholesale? Do you sell to OEMs? How about mail order? You have to have a price structure that will accommodate a number of different prices for different channels of distribution.

By the time you’ve finished your business plan you should have a pretty good idea of all of the expenses involved in your undertaking, including the cost of manufacturing, marketing, the cost of sales, your hard costs, and fixed costs of your product. You will have knowledge about your competition, about the pricing structure for your product, the lines of distribution, cost of advertising for the various types of media campaigns, and even the cost of your product liability insurance.

Will your product need code approvals from Underwriters Laboratories (UL), IAMPMO, NSF, FDA, or one or more of the multitude of such agencies? How much will that cost and what is involved? Your plan will spell it all out.

You’ll know the retail price and the profit you will make, and you will have a timeline to follow. Make your plan concise and professional, and detailed enough to convey a sense of credibility. Get it all down on paper

If you are going to raise money to finance your invention, product, or service company, you will absolutely need a business plan. Potential investors want to see everything down on paper before they will even consider your idea.

In general your business plan should include; a cover sheet, a statement of purpose of the plan, table of contents, a description of the business, marketing – how you plan to market your product or service, your competition – demonstrate a thorough knowledge of your competition, operating procedures – describe how your business will operate, personnel – introduce your key personnel, loan applications – if any, equipment and supply list – list all of your equipment and supplies, Balance sheet, break even analysis, spread sheet with cash flow for at least three years – monthly for the first year and quarterly after that, and the assumptions upon which you based your projections.

The specifics of your business plan depend heavily on what type of business you are going to be operating. Whatever kind of business it is, you will find tons of information about how to put a business plan together online. The Small Business Administration has a comprehensive guide.

Just begin a search for business plans and review lots of samples and read the advice that you find, and then get started.

When you run into a problem that is difficult to solve, be glad you found it while doing the plan, not after you are already in business. So the more detail you provide the better off you will be, and the better your credibility.

Starting a home business may seem like a great idea, but as soon as you start seriously considering starting one, you need to have a plan. Plans are good for anything and everything, even your favorite football team has certain plans or “plays” as they are called that are needed to follow for success. In business is not different and you need a plan of attack to ensure success for your home business.

Marketing your home based business starts online, but is a lot more than building and promoting your website. The key is to get people to get to your website, so the bulk of it is going to deal with advertising and marketing your website. You need to do the research and figure out what kind of customer you need to attract to your website and your home business. Demographics can range from anything like age, gender, income, location and more.

Attracting these customers to your website is one of the most important things a person with a home business can do. Some of these strategies can be fairly simple while others can be a bit more confusing but still pretty easy. Some of these strategies are search engine utilization or marketing, affiliate marketing and article writing or marketing. Articles are a great way to drive traffic because it can make the owner look very knowledgeable about the product or type of business they are involved in.

Marketing is very different than advertising; you are not selling the particular product or service. You want to educate people and potential customers how your business can fill their needs better than anyone else. You could talk about how much better quality your product is, how much cheaper it is, or even show that you have a better-informed and educated sales team. The list goes on an on but just be aware of the importance of both marketing and advertising because they both do different yet similar things.

Building trust is one of the key things when developing a business plan. You want people to keep coming back for different services or products because they like what your business is doing and how everything is handled. Say what you are going to do and then try to perform it beyond expectations and you will have a customer for life. Then that customer might spread the word about your business and you will get even more customers, and then you will know that your business plan was a success.

Things are going pretty well, you say? Sales are up. The employees are happy. There is even a little cash left over for that special project you are anxious to start. Why start messing with a good thing? “If it ain’t broke, don’t fix it.” Right? Wrong! Many managers believe that business plans are used for only one purpose: To raise capital. While it is true that business plans are written more for this purpose than any other, it is by no means the only purpose. An often overlooked and significant benefit of a business plan is not necessarily the Plan documentation, but rather, the process itself and its impact on the management team. A business plan requires the managers to take an objective, critical look at their business. The process can change how a business is perceived, open eyes to new opportunities or focus attention on those operations that are not

The planning process involves setting organizational goals that are then translated into departmental goals that are then translated into goals for the smallest logical part of the business, (e.g. each individual sales representative in the case of a sales department). The textbook definition of the smallest logical part of a business is a “Strategic Business Unit.” If you’re not concerned about impressing people, call it a Profit Center.

Profit centers are organized in a manner that makes sense to the particular business. Some businesses may organize profit centers by classes of customers. Other businesses may think in terms of individual product or jobs. Still others think in terms of lines of business. Do you have a different pricing structure for different classes of customers or for certain jobs? Do you require higher profit margins on certain products? Do certain products, customers or jobs just naturally “fit” together? Answer these questions and you will begin to think of your business, if you do not already, as a cluster of smaller enterprises. This cluster of smaller enterprises can be thought of as an investment portfolio with each profit center representing an individual stock. Which should be invested in? Which should be liquidated? An investor has an overall goal for his portfolio. To achieve that goal he may take on higher risk investment for potentially higher return or he may accept a lower yield for proportionally lower risk.

Could your business be more profitable if some of your products, services or customers were emphasized while others were phased out? Is each individual margin on each of your profit centers adequate to justify the risk? The answers to these questions form the basis of a business plan. A formal business plan can help you manage your business better. Through it you can communicate your goals to others within your organization. The plan provides each manager with a common reference point. Departmental goals that are in harmony with the goals detailed in the business plan should also be in harmony with other departments. As the business grows, it is much easier to delegate responsibility over a particular profit center when a performance target has been set. When performance is measurable, the owner can quickly identify and correct problems. The owner will also know which managers are achieving their goals and which need assistance.

Preparing a business plan is time-consuming but is not difficult. Consider forming a planning team. The leader of the team should be able to remain objective, settle disputes between different departments and be a cheerleader for the plan. Often the team may be intimidated if the owner is also the team leader. Many businesses choose to hire a consultant to act in this capacity to insure objectivity and to provide motivation.

Motivation and involvement are the keys. If the managers contribute to the planning process, they will be supportive of its implementation. Above all, the managers (and their staff) must feel it is “their” plan. Instilling a feeling of contribution or responsibility in the employees insures their support of the plan and contributes directly to the plan’s success. A plan without support ends up on a shelf gathering dust.

Typical Sections of a Formal Business Plan:

1. Company History

2. Business Summary

3. Products or Services

4. Competition

5. Marketing Plan

6. Production Plan

7. Personnel Plan

8. Management

9. Financial Analysis

Copyright 2011 All Rights Reserved Stanley I. Simkins www.Management-Advisory-Group.com