Your business plan is very important even at the early start-up stage. Even before you purchase business stationery or telephones, or rent a location, you should prepare a business plan.

Are business plans different for start-up companies than for on-going companies? Sometimes. Sometimes a start-up business plan is a good step before you do a real business plan.

The Simplified Start-up Plan

  1. Do a mission statement. Answer these questions: Why should this business exist? Who will be its customers, and how will it benefit them? Why will they be better off?
  2. Consider your keys to success. Name three or four critical factors that will be essential to this new business' survival. Be tough about it. If you want the business to work, don't underestimate the importance of critical elements. For example, don't start a normal retail business in suburbs without parking.
  3. Do a simple market analysis. Estimate how many potential customers the business will have. Define the traits that will make somebody a potential customer. Where do those customers now purchase, if at all? Are there enough potential customers?
  4. Do a simple break-even analysis. How many units of sales will you need to cover costs? Are you being realistic? Add up costs for rent, overhead, payroll, advertising, etc., then figure out how much money you'll make for each unit you sell, after its specific costs, and calculate how many units you need to break even. For example, if your shoe store's regular running costs are $6,000 per month and you make $2 on average (after the cost of the shoes) on every pair of shoes, then you need 3,000 pairs of shoes in a month to break even.
  5. Now think about it. Do you really have a potential business? If you do, then you need a real business plan. If you don't, then save yourself the time and trouble.

Copyright 1997-1999 Palo Alto Software Inc.