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7 Elements Of A Business Plan

The Importance of a Business Plan

❶The results were reviewed by the University of Oregon for validation, and seem to point to the improved outcomes for those with business plans:. Although not required, forming an LLC should be done with the help of a qualified legal professional.

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Are you considering starting a business?

Get to know the business structure options and discuss them with your advisors to determine which will be best for you. Things to consider when making your decision include:. Sole Proprietorships are owned by a single person or a married couple. These businesses are inexpensive to form and there are no special reporting requirements. The owner is personally responsible liable for all business debts and for federal taxes.

The business has limited legal liability like a corporation, but has fewer governance requirements. For federal taxes, LLCs are typically treated like sole proprietorships if there is one owner, or like partnerships if there is more than one owner.

However, by filing an entity classification election form with the IRS, LLCs can be treated like corporations for federal tax purposes. Although not required, forming an LLC should be done with the help of a qualified legal professional. General Partnerships are like sole proprietorships with more than one owner. Partners share managerial duties, profits and losses, and each is personally responsible liable for all business debt. Because the actions of one partner can result in personal liability for the others, partnerships have become less popular since LLCs have been around.

For federal tax purposes, the business is required to file a partnership return, with the income or loss going to each partner based on how much of the business each owns. Corporations are more complex structures than the others. As with LLCs, corporations have limited legal liability. To form a corporation, you must file with the Washington Secretary of State and you must create a governance document — which, in this case, would be bylaws.

Corporations also have other requirements, such as issuing stock certificates, holding annual meetings and keeping minutes, electing directors, etc.

Working owners of corporations are employees and must have federal payroll taxes withheld and reported the same as other employees. Corporations file federal corporate tax returns with the IRS. Although not required, forming a corporation should be done with the assistance of a qualified legal professional. Limited Partnerships LPs are not used very often for small businesses, although they are common for real estate ownership.

LPs are composed of one or more general partners and one or more limited partners. The general partners manage the entity and share fully in its profits and losses. To protect themselves from liability, general partners are often corporations or LLCs rather than individuals. Limited partners share in the profits of the business, but their losses are limited to the extent of their investment.

Limited partners are usually not involved in the day-to-day operations of the entity. Get legal advice before choosing an LP structure for your business. Corporations have bylaws that outline governance. Typically managed by directors who are elected by shareholders. If one LLC member, typically pay taxes as individual. If more than one member, typically pay taxes as partnership.

Can elect with IRS to pay taxes as a corporation either c- or s-. If standard corporation c-corp , taxed as a business. If dividends are distributed to shareholders, dividends are taxed at the individual level. Can elect with IRS to be taxed as an s-corp. This information is for reference only, for detailed considerations contact your trusted legal or tax advisors. A market analysis will help you determine if there is a need in the marketplace for your product or service, who would be most likely to buy your offerings, and where your customers are located.

Most new businesses start small and grow. When you do hire, having employees with the right attributes and skills for your business will be very important to your success. There are resources to help you with employment planning, including Labor Market Information.

Employment is an area that has a lot of regulation, including minimum wage, overtime pay, paid sick leave, employment of minors and family members, workplace safety, etc. The use of independent contractors is a frequently misunderstood area. Generally, state and federal law would require that an individual be treated as an employee unless the individual:. Being an employer also requires you to keep detailed records and fulfill your tax reporting obligations. It is important that you understand the regulations and costs as you plan your business.

The links below can help you understand your responsibilities. You need to have a well-researched estimate of the start-up and operating costs of your business. You also need to have a realistic expectation of the amount of money your business will bring in. Will your new mousetrap help people capture mice without feeling sick to their stomachs? Will your new bubblegum scented bubble bath revolutionize the way children agree to take nightly baths?

Choose a winning strategy. How will you distinguish your product or service from others? Although there are millions of types of businesses, there are actually only a few basic strategies that can be applied to make any enterprise successful. The first step in selecting an effective strategy is to identify a competitive advantage for your product or service. Your competitive advantage may include designing special features not found in rival products.

It may entail superior service characteristics such as speedier delivery, a lower price, or more attentive sales people——these are never to be sniffed at as possible winning ways, as many companies grow complacent and can be overtaken by giving customers experiences that are better than the average expectations.

Consider how will you hire and organize your workforce. Keep in mind that your initial plans will undoubtedly change as your business grows. You may need to hire more managers to supervise your expanding staff or to set up new departments to meet new customer demands. For now, you want to secure help in getting started and convince your funding sources that you will become profitable. Consider the practical issues of running a business.

Think about your role as leader or boss of the business. As you think about hiring personnel and organizing your workforce, you must also confront your desire and ability to be a good boss. For example, salaries and wages, their insurance and retirement benefits, as well as analyzing the extent of your knowledge of tax related issues. Do you need to bring in experienced managers right away? Will you keep some of the existing employees or hire all new people? And where do you find these potential employees?

Funding sources will also want to know if any of your partners expect to work alongside you or if their obligations are only financial. Your plan will need to specify the key management jobs and roles.

Positions such as president, vice presidents, chief financial officer, and managers of departments will need to be defined along with stating who reports to whom. Decide on a marketing plan. Consider how will you reach your customers. What will you say to persuade and convince customers that your product or service is better value, more timely, more useful, etc.

What advertising and promotional efforts will you employ? For example, two for the price of one specials or free coupons inside those same kid-oriented cereal boxes? Where can you locate lists of the greatest concentrations of children under the age of eight or whatever group constitutes your market? Build a dynamic sales effort. In a nutshell, this part of your business plan is about how you will attract customers or clients for your product or services.

What will your basic sales philosophy be? Building long-term relationships with a few major clients or developing a clientele of many short-term customers? Organize all the relevant information about your business. Begin creating section headings and putting the appropriate information under the appropriate headings.

Write the executive summary last. It should be less about the nitty-gritty details of operations and more about your grand vision for the company and where it is headed. Gather all the information together and prepare multiple drafts. At first, do not worry about capitalization, punctuation, and grammar.

All you need to worry about is putting your ideas down on paper. Once you have a general form, you can spend time proofreading your plan and correcting mistakes. Have someone else read over it for you and take heed of their comments. Sell yourself and your business. The idea of the business plan is to present yourself in the best light. The talents, experience and enthusiasm you bring to your enterprise are unique. They provide some of the most compelling reasons for others to finance your concept.

Keep in mind that investors invest in people more than ideas. Even if your potential business has many competitors or is not on the cutting edge of an industry, the qualifications and commitment you demonstrate in your plan can convince others to proffer their support. Focus on group experiences, leadership opportunities, and successes at all levels. Present and explain your financial data. How will you convince others to invest in your endeavor? The accuracy of your financial figures and projections is absolutely critical in convincing investors, loan sources, and partners that your business concept is worthy of support.

The data must also be scrupulously honest and extremely clear. Since banks and many other funding sources will compare your projections to industry averages in the R. A data, in the United States you can use the R. A figures to test your projections before the bank does. Sample Small Business Business Plan. Specify the product, source of it, and people in need of the product. List capital, handy or loan. List whether you have sales reps, your availability for outreach on demand, and your source of mobility.

Not Helpful 4 Helpful Is it important to write a business plan for a small business even if financial support is not really needed? You can also review it once a year to see how much you and your business needs have changed. Not Helpful 17 Helpful Discuss how you will secure financing, showing details on sales projections, costs, etc. Not Helpful 18 Helpful The same way you would write it for anything else. Just follow the steps in the article. A little different or not.

Answer this question Flag as How do I write a business plan about a company which deals in technology? If I want to go into business selling tap water, what would be a good way to approach the business plan? How can I write business plan for avocado supply? Include your email address to get a message when this question is answered. Already answered Not a question Bad question Other.

Quick Summary To write a business plan, start with an executive summary that lays out your grand vision for your business. Did this summary help you? Tips Many sources exist for finding information for your business plan. Your local library and the internet are always helpful sources. The professor may be able to give helpful insight. There are a few valuable online archives of business plans that feature companies which have successfully penetrated the market based on a well defined and executed business and marketing plan.

Be certain about what gives your business the competitive edge. Make sure you cite your information. This way you will have support for any statistics you put into your business plan. Warnings Do not submit your draft business plan to potential investors! However, it is advisable to give the executive summary instead of the whole plan after it is completed.

Sometimes, busy investors may not have the time to look at an entire plan, which can sometimes be up to 50 pages.

Article Info Featured Article Categories: Thanks to all authors for creating a page that has been read 1,, times. Did this article help you? Cookies make wikiHow better. By continuing to use our site, you agree to our cookie policy.

Shahnawaz Ali Khan Nov 12, In a very simple and easy language, it tells very vital things that will be hard to understand if done some other way. Very nice and practical solution and a way to write a business plan. It is the best option for the inception, and like it said, plan has to change with time. Khurshid Ahmed May 1, Thanks for making it available. GC Gloria Chepkoech Aug NR Norma Reneau May


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The more you pay, the more advanced business plan options you get. The easy-to-use app guides users through a series of simple questions and prompts. Your answers are used to develop a summary business plan, complete with revenue projections and full-color graphs and charts.

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A business plan is a written description of your business's future, a document that tells what you plan to do and how you plan to do it. If you jot down a paragraph on the back of an envelope describing your business strategy, you've . The business plan is the blueprint for your business. You wouldn't walk over to an empty lot and just start nailing boards together if you wanted to build a house. Starting a business without a business plan is just as foolish. .

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A business plan gives you direction, helps you qualify your ideas and clarifies the path you intend to take your business. This article will explain some of the most important reasons you should slow down and create a plan to guide your small business journey. Oct 23,  · Remember, your business plan is a tool to help you build a better business, not just a homework assignment/5().