INTRODUCTION TO YOUR BUSINESS

INTRODUCTION TO YOUR BUSINESS

The first step in creating a business plan is to introduce your business idea to the future readers of the plan. Explain how you arrived at your business idea, why you think people have a need for your product or service, and what your goals and aspirations for the business are. If your business needs financing, you could give some preliminary idea of how much you may need and what you intend to do with those funds. Remember, all these ideas are likely to be significantly modified later on—some more than others—but you need to have some idea at the outset of where you are going if you are to have any chance at all of getting there.

" INTRODUCE YOUR BUSINESS IDEA TO THE FUTURE READERS OF THE PLAN. "

Mission statements and objectives are important in two main ways:· to concentrate your own and your employees' efforts (rowing harder does not help if the boat is headed in the wrong direction)

· to concentrate attention on problems to be solved (problem-solving is finding ways to get you from where you are to where you want to be)

Large companies may spend long weekends wrestling with the fine print of their mission statements; in principle, given the narrower scope of the new business, the task facing the new business owner should be less daunting.

To take mission statements and objectives first, since they are inevitably intertwined, these are direction statements intended to focus your attention on essentials, to encapsulate your specific competence, in relation to the markets/customers you plan to serve.

First, the mission should be narrow enough to give direction and guidance to everyone in the business. This concentration is the key to business success, because it is only by focusing on specific needs that a small business can differentiate itself from its larger competitors. Nothing kills off a new business faster than trying to do too many different things at the outset.

Second, the mission should open up a large enough market to allow the business to grow and realize its potential.

Ultimately, there has to be something unique about your business idea or yourself that makes people want to buy from you. That uniqueness may be confined to the fact that you are the only photocopying service in the area, but that is enough to make you stand out (provided, of course, that the area has potential customers).

Also, within the objectives you need some idea of how big you want the business to be—your share of the market, in other words. It certainly is not easy to forecast sales, especially before you have even started, but if you do not set a goal at the start and instead just wait to see how things develop, then one of two problems will occur. Either you will not sell enough to cover your fixed costs and so lose money and perhaps go out of business, or you will sell too much and have a cash-flow problem.

Obviously, before you can set a market share and sales objective, you need to know the size of your market. (See Why Research Your Market?)

The size you want your business to be is more a matter of judgment than forecast—a judgment tempered by the resources you have available to achieve your objectives and, of course, some idea of what is reasonable and achievable and what is not. You will find the range of discretion over a size objective seriously constrained by the financial resources at your disposal (or realistically available from investors and lenders) and the scope of the market opportunity.

It will be useful to set near-term objectives, covering the next 18 months or so, and a longer-term objective covering up to 5 or so years.

In summary, the mission statement should explain · what business you are in and your purpose,

· what you want to achieve over the next one to three years—your strategic goal,

· how you will go about achieving your goal—your values and standards.

Above all, mission statements must be realistic, achievable, and brief. A company formed by two young mothers developed the following mission statement: We intend to design, make, and market a range of clothes for expectant mothers that will make them feel they can still be fashionably dressed. We aim to serve a niche and so become a significant force in the mail-order market for fashion-conscious expectant mothers. We are aiming for a 5 percent share of this market in our region, and a 25 percent return on assets employed within three years of starting up. We believe we will need about $40,000 start-up capital to finance inventory, a mail-order catalog, and an advertising campaign. (Many companies separate out their specific objectives, which they wish to keep confidential, from the mission statement, which they realize they must communicate widely in meetings and company literature, to promote greater company cohesion and concentration.)

The first paragraph alone of the statement above could serve as the mission statement, for communication to all employees. Remember also that mission statements will change over time, as the environment and the company progress.

Mission statements must not become too bland or too general. For example, can you tell what business this company is in, what it aims to achieve in the next three years and how? Our key strategy is the aggressive pursuit of quality and performance in providing a wide and comprehensive range of business and consumer services. Constantly developing these in line with our market-driven approach to expanding into new areas of profitable growth, we are ready to meet the challenge of identifying and exploiting new opportunities where they exist.

For the founders of the maternity fashion business, the advantage of their clear mission statement lay in the fact that they could translate their principal objectives into specific key tasks and action plans. This plan consists of "how to" statements to achieve specific objectives and goals.

Objectives within three years:· achieve 5 percent market share in their region

· obtain a 25 percent return on assets employed

Tasks:· identify mailing lists and promotion media within three months

· design 12 items of fashion clothes within six months

· produce mail-order catalog within nine months

· locate packaging and distributor organizations within six months

Action plan (Monday morning):· start design on one product

· write for mailing list details

· look up directories of distributors

It would also be useful at this stage to explain how you arrived at your business idea, what makes you believe it will succeed, and why you want to go ahead with it now.

Copyright Ramon M. Ignacio 2008 All Rights Reserved