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Developing a Business Plan


The first thing that a new business needs is a good idea.
The second is a sound business plan.
Developing a business plan is a time consuming affair, but will be an invaluable tool for you in the end.
The process will force you to think through the details of your business and get an idea of what you will need to do to make it happen.
The end product is the package that you will use to convince others, namely creditors and investors, that it will work.
A business plan should begin by explaining the retail business that you want to open. This is where you let your idea shine.
Describe the business with its structure and goals. Create a vision statement for your company and milestones that you would like to see. Be clear about what you plan to do and how you will accomplish it.


Include a small section on yourself and explain why you are the perfect person to operate a retail operation. Talk about your competition and how you will compete with these already established businesses.
Why are you different? What will you bring to the table? Develop a marketing plan that is feasible and sound. Detail your plans for employees at your store, how many you will need and what they will be doing.
Explain partnerships that you have already established, such as with accounting and legal firms or potential vendors. Lastly, tell how you will insure your store and its people with a business insurance plan.
The second section should include all financial data that you have gathered for your proposed business. This will include a list of capital equipment, fixtures, and supplies. You will need a balance sheet and break-even analysis.
The balance sheet will detail the assets and liabilities of your business. The break even analysis is a document that predicts what gross sales volume you must have in order to break even, or cover your fixed operating expenses. You can adjust this number by raising prices or lowering operating costs. This will let you know where you need to be to be profitable and what you can and cannot afford.
You will also include pro-forma data – income statements and cash flow. The income statements will need to include a three year summary detailing your first year by month and your second and third years by quarter.
These are very similar and look like normal income statements, except that the pro-forma income statement is predicting the future, not tracking the past. You need to show how your store will become profitable, but be honest.
If the numbers are not adding up without assuming ridiculous amounts of sales, rethink the venture. Include an explanation of all assumptions that you have made to achieve the data. The pro-forma cash flow predicts the inflow and outflow of cash to your business. This is valuable for predicting times at which your company may be short of cash so you will know how much and when you will need reserves.
The last section of your business plan includes all supporting documents. In this section you should include your personal tax returns for the last three years and a personal financial statement. If you are going to open a franchise, include a copy of the franchise agreement as well. This is also the section for your resume so that they can see what you have done professionally in the past.
Include letters of recommendation from other business people or from those who could carry weight with financiers. If you already have suppliers lined up, ask them for letters of intent to show that you are ready to go. If you have any certificates or licenses that are pertinent to your store, such as a resale certificate or automobile dealer’s license, include copies of these as well.
A business plan needs to be accurate and well written. There are software programs available to help you put one together, but if in doubt, hire someone with experience to help.
This can be for the entire plan, or just in key areas, like marketing strategies or creating the financial projections. It may be a little cash out of the pocket now, but it will be worth every penny spent to develop a clear idea of what you are proposing to do.

Written by Alun Hill MCIJ, Editor · Filed Under Retail 

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