6 Steps You Should Take Before You Draft a Business Plan
Your business plan will be the launching pad for your start-up, and your access to funding will provide you with the fuel you need to launch and soar. But, if launched from an unstable platform, no matter how much fuel your business has, your start-up rocket can be sent way off course never achieving the heights it was capable of. If performed prior to building your business plan, the following six steps will provide you with crucial information that will serve as foundational building blocks to build a rock-solid platform to launch from.
Step 1 - Develop a Business Idea
Business ideas come from many different sources of inspiration. Your business idea may result from a desire to fill a void or solve a problem. Or, it could be a hobby that sprouts into a budding entrepreneurial enterprise. Or, maybe you have a specific set of skills or knowledge that keeps you busy fielding requests to help out family, friends and colleagues. Whatever the idea’s origin, the crucial point that must be considered when determining whether this idea has business legs is: “Will people pay me for it?” If your honest answer is “Yes”, you’ve accomplished Step One and you are on your way.
Step 2 - Assess Your Talents and Abilities
This is a step that is often overlooked in the start-up process, but it should be considered early to establish your foundation. What can you do and what will you need to outsource? In the beginning, due to budget constraints, most tasks will fall on your shoulders whether you like it or not. But, honestly assessing what you can and cannot do will help you prepare to set your budget in your business plan, and more importantly, stay within that budget as you move forward.
Step 3 - Take Inventory of Assets
Similar to Step Two, Step Three is about identifying what assets you have at your disposal already that will help you in your business venture. In other words, these are the tools of the trade that you will not need to acquire, but are instead ready to be put to work as revenue generating resources. This will include a review of your monetary assets and your access to start-up funding.
Step 4 - Choose a Business Name
It is time to choose a name. This is a fun step, right up there with coming up with the initial business idea. But, this step should be taken seriously, as this will be the jumping off point setting you on your path to building your business’ brand. If you want your name to be known to the world, take care in picking it in the first place. For a great starting point, check out this article on Docstoc.com.
Step 5 - Choose a Business Entity Type
This step gets a lot of attention, and deservedly so. But, be sure you know why this is an important step and what your options are. The type of business entity structure you choose, whether it be a sole proprietorship, partnership, LLC, S Corporation or C Corporation, will impact how your business’ expenses, profits and losses affect your tax liability, what level of liability you are personally exposed to and what options you will have for raising funding through investors and other outside sources. Docstoc has a large selection of expert videos and articles that will give you all of the information you need to know to make an informed decision. This article and this video are great places to start.
Step 6 - Identify Licenses and Permits Your Business Will Need
Of all of the steps on this list, this may be the least sexy, and it’s very likely to be the one most willingly skipped. But, skipping this step now is only setting your business up for problems in the future. One of the reasons this step is a bit of drain on the momentum you have going as you move toward your business becoming more than just an idea and into an income generating force is due to the amount of governmental red tape that must be navigated to get the answers you need. Therefore, a smart move is to save yourself a ton of frustration and time and go to www.license123.com and let their service provide you with everything you need.
If you are diligent in completing these six steps you will have all of the information you need to (1) decide whether you are ready to move forward with your new business venture, and if so, (2) start creating your business plan.
Check out Docstoc for great business resources.