Business Plan Basics

10 questions to ask when creating a business plan for your first year and beyond.


A high percentage of businesses fail within their first few years. And many businesses that do survive never reach their full potential or achieve a high level of profitability. So how do you maximize your chance of success and minimize your risk of failure? The answer lies in creating--and following through on--a solid business plan.

Unfortunately, too many business owners spend too little time planning. Yes, it can be time consuming, and if you haven't previously developed a successful plan, you may not know where to start. So here are 10 questions you need to ask yourself when creating your business plan.

1. What will your business do? This may seem a little silly and basic at first, but you need to state what your business will do. Will you have a retail store? Will you work out of your home? Will you set up shop in an industrial park? The more specific you can be, the better.

2. What is your target market? What types of customers will you go after? Are you targeting a local market, or do you want to reach a larger geographic area? Will you sell online? What sales approaches do you need to implement?

3. What is your value proposition? Or rather, why will customers want to buy from you? What marketing strategies and activities will you undertake to promote your company and your value proposition?

4. What products and services will you offer? Will you manufacture or outsource? What guarantee will you offer?

5. Who is your competition? What risks do they present to you today? What risks might they present in the future? What competition may exist in a year or two that doesn’t exist today?

6. What suppliers will you use? What criteria will you use to choose them? How will you select them? Where will you get your training? Where will you receive your ongoing support?


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7. What business entity will you form? Will you incorporate, or set up an LLC or a sole proprietorship? You need to consult with your accountant or attorney regarding this important decision.

8. Where will you locate your business? What will you look for in a site? What do you need to consider in negotiating a lease?

9. What will your staffing requirements be? What skills do your employees need? What salaries do you need to pay? What benefits will you offer?

10. Can this business make money? You need to develop financial projections for at least the first year, though it's best to project two years, including a profit and loss statement. This is likely the most difficult aspect of your business plan development, but it's essential to help you determine the levels of profitability you can expect to achieve. If the numbers don’t show what you are hoping for, analyze them further to see what you can honestly do to adjust your projections. Don’t fudge the numbers to get the result that you want to see.

Here's how we went about planning for our business. Our desire was to open an ink and toner retail store, but before we would commit to opening, we spent many hours over a year and a half developing our plan. Our gut feeling was that we had a great opportunity to build a successful business. There are some extremely appealing aspects to the business: The marketplace is huge; everyone, including both businesses and consumers, is a potential customer; people are printing more than ever before; and the products we would sell are consumables that need to be purchased over and over again.

But that didn’t mean we'd be successful. We needed to do our due diligence. We went to trade shows. We spoke to as many people inside and outside the industry as we could. We looked into several franchises, although we ultimately decided against that route. We researched suppliers. We attended technical training for refilling ink cartridges and remanufacturing toners.

And we continually worked on our business plan. We were also careful to avoid one of the most common business planning mistakes: becoming so enamored with the business that you lose your objectivity. Too many times, the decision is first made to launch a business or buy a company, and the business plan is then skewed to justify the go-ahead decision. Instead, your business plan should help you determine whether you should proceed with your investment.

We opened our store in April 2004, hit break-even after three months, and in 2005, our first full year, we met our goal of $400,000 in sales--even with three severe hurricanes during our first 18 months of operation. In 2006, we experienced 25 percent growth. We attribute our success to a solid business plan and good execution.

Investing the time and effort to develop your business plan will pay dividends as you launch your new business or look to take your existing business to the next level. And if you want to get funding, you'll need to provide a solid business plan. Then, moving forward, remember to refer to and amend your plan periodically.


Jane Bloom is president and CEO of INK & TONER USA, in West Palm Beach, Florida. The company offers an innovative and low-cost training program to entrepreneurs throughout the United States who want to create profitable ink and toner cartridge refill companies.




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