If you plan to sell a commodity item and the key to your success lies in, say, competitive pricing, you probably don't need to provide significant product detail. Or if you plan to sell a commodity readily available in a variety of outlets, the key to your business may not be the commodity itself but your ability to market in a more cost-effective way than your competition.
But if you're creating a new product or service , make sure you thoroughly explain the nature of the product, its uses, and its value, etc. In the cycling rental business example we've been using, products and services could be a relatively simple section to complete or it could be fairly involved.
It depends on the nature of the products the company plans to rent to customers. If Blue Mountain Cycling Rentals plans to market itself as a provider of high-end bikes, describing those bikes--and the sources for those bikes--is important, since "high-end cycling rentals" is intended to be a market differentiation.
If the company plans to be the low-cost provider, then describing specific brands of equipment is probably not necessary. Also, keep in mind that if a supplier runs out of capacity--or goes out of business altogether--you may not have a sufficient supply to meet your demand.
Plan to set up multiple vendor or supplier relationships, and describe those relationships fully. Remember, the primary goal of your business plan is to convince you that the business is viable--and to create a road map for you to follow.
The Products and Services section for our cycling rental business could start something like this:. Blue Mountain Cycle Rentals will provide a comprehensive line of bicycles and cycling equipment for all ages and levels of ability. Since the typical customer seeks medium-quality equipment and excellent services at competitive prices, we will focus on providing brands like Trek bikes, Shimano footwear, and Giro helmets.
These manufacturers have a widespread reputation as mid- to high-level quality, unlike equipment typically found in the rental market. Blue Mountain Cycle Rentals will have clear advantages over its primary competitors, the bike shops located in Harrisonburg, VA:. Expansion will allow us to move product offerings into new equipment sales. We will also explore maintenance and fitting services, leveraging our existing maintenance staff to provide value-added services at a premium price.
When you draft your Products and Services section, think of your reader as a person who knows little to nothing about your business. Be clear and to the point. Think of it this way: The Products and Services section answers the "what" question for your business. Make sure you fully understand the "what" factor; you may run the business, but your products and services are its lifeblood.
Market research is critical to business success. A good business plan analyzes and evaluates customer demographics, purchasing habits, buying cycles, and willingness to adopt new products and services. The process starts with understanding your market and the opportunities inherent in that market. And that means you'll need to do a little research. Before you start a business you must be sure there is a viable market for what you plan to offer.
That process requires asking, and more importantly answering, a number of questions. The more thoroughly you answer the following questions, the better you will understand your market. Start by evaluating the market at a relatively high level, answering some high-level questions about your market and your industry:. Fortunately, you've already done some of the legwork. You've already defined and mapped out your products and services.
The Market Opportunities section provides a sense-check of that analysis, which is particularly important since choosing the right products and services is such a critical factor in business success. But your analysis should go further: Great products are great, but there still must be a market for those products. Ferraris are awesome, but you're unlikely to sell many where I live.
So let's dig deeper and quantify your market. Your goal is to thoroughly understand the characteristics and purchasing ability of potential customers in your market. A little Googling can yield a tremendous amount of data. The key is to understand the market in general terms and then to dig deeper to understand whether there are specific segments within that market--the segments you plan to target--that can become customers and support the growth of your business.
Also keep in mind that if you plan to sell products online the global marketplace is incredibly crowded and competitive. Any business can sell a product online and ship that product around the world. On the other hand, if you live in an area with 50, people and there's only one bicycle shop, you may be able to enter that market and attract a major portion of bicycle customers in your area. After you complete your research you may feel a little overwhelmed.
While data is good, and more data is great, sifting through and making sense of too much data can be daunting. For the purposes of your business plan, narrow your focus and focus on answering these main questions:. The Market Opportunities section for our cycling rental business could start something like this:. While we expect sales to rise, for the purposes of performing a conservative analysis we have projected a zero growth rate for the next three years.
In those states 2,, people visited a national forest last year. Our target market includes customers visiting the Shenandoah National Forest; last year , people visited the area during spring, summer, and fall months. Over time, however, we do expect equipment rentals and sales to increase as the popularity of cycling continues to rise.
In particular we forecast a spike in demand in since the national road racing championships will be held in Richmond, VA. According to the latest studies, recreation spending in our target market has grown by 14 percent per year for the past three years. In addition, we anticipate greater than industry-norm growth rates for cycling in the area due to the increase in popularity of cycling events like the Alpine Loop Gran Fondo.
Out target market has one basic need: The availability to source bicycle rentals at a competitive price. Our only other competition are the bike shops in Harrisonburg, VA, and our location will give us a competitive advantage over those and other companies who try to serve our market. For example, you might decide to provide information about Market Segments. In our case, the cycling rental business does not require much segmentation.
Rentals are typically not broken down into segments like "inexpensive," "midrange," and "high-end. Although you'll notice in our Products and Services section, we decided to provide "high-end" rentals. But say you decide to open a clothing store. You could focus on high fashion, or children's clothes, or outdoor wear, or casual--you could segment the market in a number of ways. If that's the case, provide detail on segmentation that supports your plan.
Providing great products and services is wonderful, but customers must actually know those products and services exist. That's why marketing plans and strategies are critical to business success. Duh, right? But keep in mind marketing is not just advertising. Marketing--whether advertising, public relations, promotional literature, etc. Like any other investment you would make, money spent on marketing must generate a return. Otherwise why make the investment? While that return could simply be greater cash flow, good marketing plans result in higher sales and profits.
So don't simply plan to spend money on a variety of advertising efforts. Do your homework and create a smart marketing program. The Sales and Marketing section for our cycling rental business could start something like this:. While customers in the counties surrounding the George Washington National Forest make up 35 percent of our potential customer base, much of our market travels from outside that geographic area.
We will not be the low-cost provider for our target market. Our goal is to provide mid- to high-end equipment. However, we will create web-based loyalty programs to incent customers to set up online profiles and reserve and renew equipment rentals online, and provide discounts for those who do. Over time we will be able to market specifically to those customers. Just as in the Market Opportunity section, you may want to include a few more categories.
For example, if your business involves a commission-compensated sales force, describe your Sales Programs and incentives. If you distribute products to other companies or suppliers and those distribution efforts will impact your overall marketing plans, lay out your Distribution Strategy. The key is to show you understand your market and you understand how you will reach your market. Marketing and promotions must result in customers--your goal is to thoroughly describe how you will acquire and keep your customers.
Also keep in mind you may want to include examples of marketing materials you have already prepared, like website descriptions, print ads, web-based advertising programs, etc. While you don't need to include samples, taking the time to create actual marketing materials might help you better understand and communicate your marketing plans and objectives. Make sure your Sales and Marketing section answers the "How will I reach my customers?
The Competitive Analysis section of your business plan is devoted to analyzing your competition--both your current competition and potential competitors who might enter your market. Every business has competition. Understanding the strengths and weaknesses of your competition--or potential competition--is critical to making sure your business survives and grows.
While you don't need to hire a private detective, you do need to thoroughly assess your competition on a regular basis even if you plan to run only a small business. In fact, small businesses can be especially vulnerable to competition, especially when new companies enter a marketplace. Competitive analysis can be incredibly complicated and time-consuming, but it doesn't have to be. Here is a simple process you can follow to identify, analyze, and determine the strengths and weaknesses of your competition.
First, develop a basic profile of each of your current competition. For example, if you plan to open an office supply store, you may have three competing stores in your market. Online retailers will also provide competition, but thoroughly analyzing those companies will be less valuable unless you also decide you want to sell office supplies online. Although it's also possible that they--or, say, Amazon--are your real competition.
Only you can determine that. To make the process easier, stick to analyzing companies you will directly compete with. If you plan to set up an accounting firm, you will compete with other accounting firms in your area. If you plan to open a clothing store, you will compete with other clothing retailers in your area.
Again, if you run a clothing store, you also compete with online retailers, but there is relatively little you can do about that type of competition other than to work hard to distinguish yourself in other ways: great service, friendly salespeople, convenient hours, truly understanding your customers, etc. Once you identify your main competitors, answer these questions about each one. And be objective. It's easy to identify weaknesses in your competition, but less easy and a lot less fun to recognize how they may be able to outperform you:.
While these questions may seem like a lot of work to answer, in reality the process should be fairly easy. You should already have a feel for the competition's strengths and weaknesses--if you know your market and your industry. Keep in mind competitive analysis does more than help you understand your competition. Competitive analysis can also help you identify changes you should make to your business strategies.
Learn from competitor strengths, take advantage of competitor's weaknesses, and apply the same analysis to your own business plan. It can be tough to predict when and where new competitors may pop up. For starters, regularly search for news on your industry, your products, your services, and your target market. But there are other ways to predict when competition may follow you into a market.
Other people may see the same opportunity you see. Think about your business and your industry, and if the following conditions exist, you may face competition does the road:. In general terms, if serving your market seems easy you can safely assume competitors will enter your market. A good business plan anticipates and accounts for new competitors. The Competitive Analysis section for our cycling rental business could start something like this:. Our nearest and only competition is the bike shops in Harrisonburg, VA.
Our next closest competitor is located over miles away. The in-town bike shops will be strong competitors. They are established businesses with excellent reputations. On the other hand, they offer inferior-quality equipment and their location is significantly less convenient. We do not plan to sell bicycles for at least the first two years of operation. However, sellers of new equipment do indirectly compete with our business since a customer who buys equipment no longer needs to rent equipment.
Later, when we add new equipment sales to our operation, we will face competition from online retailers. We will compete with new equipment retailers through personalized service and targeted marketing to our existing customer base, especially through online initiatives. And so on While your business plan is primarily intended to convince you that your business makes sense, keep in mind most investors look closely at your competitive analysis.
A common mistake made by entrepreneurs is assuming they will simply "do it better" than any competition. Experienced businesspeople know you will face stiff competition: showing you understand your competition, understand your strengths and weaknesses relative to that competition, and that you understand you will have to adapt and change based on that competition is critical. And, even if you do not ever plan to seek financing or bring in investors, you absolutely must know your competition.
The next step in creating your business plan is to develop an Operations Plan that will serve your customers, keep your operating costs in line, and ensure profitability. Your ops plan should detail strategies for managing, staffing, manufacturing, fulfillment, inventory--all the stuff involved in operating your business on a day-to-day basis.
Fortunately, most entrepreneurs have a better handle on their operations plan than on any other aspect of their business. After all, while it may not seem natural to analyze your market or your competition, most budding entrepreneurs tend to spend a lot of time thinking about how they will run their businesses.
Operations plans should be highly specific to your industry, your market sector, and your customers. Instead of providing an example like I've done with other sections, use the following to determine the key areas your plan should address:. You should think through and create a detailed plan for each category, but you won't need to share the results with the people who read your business plan.
Think of Operations as the "implementation" section of your business plan. What do you need to do? How will you get it done? Then create an overview of that plan to make sure your milestones and timeline make sense. Many investors and lenders feel the quality and experience of the management team is one of the most important factors used to evaluate the potential of a new business.
But putting work into the Management Team section will not only benefit people who may read your plan. It will also help you evaluate the skills, experiences, and resources your management team will need. Addressing your company's needs during implementation will make a major impact on your chances for success. The Management Team section for our cycling rental business could start something like this:. Joe has over 20 years experience in the cycling business. He served for 10 years as a product manager for Acme Bikes.
After that he was the operations manager of Single Track Cycles, a full-service bike shop located in Bend, Oregon. A complete resume for Mr. Rouleur can be found in the Appendix. Mary was the U. Mountain Biking National Champion. She worked in product development for High Tec frames, creating custom frames and frame modifications for professional cyclists.
She also has extensive customer service and sales experience, having worked for four years as the online manager of Pro Parts Unlimited, an online retailer of high-end cycling equipment and accessories. For example, if you manufacture a product or provide a service and will hire a key skilled employee, describe that employee's credentials.
Otherwise, include staffing plans in the Operations section. One key note: Don't be tempted to add a "name" to your management team in hopes of attracting investors. Celebrity management team members may attract the attention of your readers, but experienced lenders and investors will immediately ask what role that person will actually play in the running of the business--and in most cases those individuals won't play any meaningful role.
If you don't have a lot of experience--but are willing to work hard to overcome that lack of experience--don't be tempted to include people in your plan who will not actually work in the business. If you can't survive without help, that's okay. In fact, that's expected; no one does anything worthwhile on their own. Just make plans to get help from the right people. Finally, when you create your Management section, focus on credentials but pay extra attention to what each person actually will do.
Experience and reputation are great, but action is everything. Financial projections and estimates help entrepreneurs, lenders, and investors or lenders objectively evaluate a company's potential for success. If a business seeks outside funding, providing comprehensive financial reports and analysis is critical. But most important, financial projections tell you whether your business has a chance of being viable--and if not let you know you have more work to do. It's easy to find examples of all of the above.
Even the most basic accounting software packages include templates and samples. You can also find templates in Excel and Google Docs. A quick search like "google docs profit and loss statement" yields plenty of examples. Or you can work with an accountant to create the necessary financial projections and documents.
Certainly feel free to do so, but first play around with the reports yourself. While you don't need to be an accountant to run a business, you do need to understand your numbers, and the best way to understand your numbers is usually to actually work with your numbers. But ultimately the tools you use to develop your numbers are not as important as whether those numbers are as accurate as possible--and whether those numbers help you decide whether to take the next step and put your business plan into action.
Then Financial Analysis can help you answer the most important business question: "Can we make a profit? Some business plans include less essential but potentially important information in an Appendix section. You may decide to include, as backup or additional information:. Keep in mind creating an Appendix is usually only necessary if you're seeking financing or hoping to bring in partners or investors. Initially the people reading your business plan don't wish to plow through reams and reams of charts, numbers, and backup information.
If one does want to dig deeper, fine--he or she can check out the documents in the Appendix. While you may use your business plan to attract investors, partners, suppliers, etc. Because ultimately it's your time, your money, and your effort on the line. Top Stories. Top Videos. So first let's gain a little perspective on why you need a business plan.
Be as objective and logical as possible. What may have seemed like a good idea for a business can, after some thought and analysis, prove not viable because of heavy competition, insufficient funding, or a nonexistent market. Sometimes even the best ideas are simply ahead of their time. Serve as a guide to the business's operations for the first months and sometimes years, creating a blueprint for company leaders to follow.
Communicate the company's purpose and vision, describe management responsibilities, detail personnel requirements, provide an overview of marketing plans, and evaluate current and future competition in the marketplace. Create the foundation of a financing proposal for investors and lenders to use to evaluate the company. Who must your business plan convince? And if you're not convinced, fine: Take a step back and refine your ideas and your plans. Who can your business plan convince?
As you map out your plan, you may discover issues or challenges you had not anticipated. Now let's look at the first section of your business plan: The Executive Summary. A brief description of products and services A summary of objectives A solid description of the market A high-level justification for viability including a quick look at your competition and your competitive advantage A snapshot of growth potential An overview of funding requirements. Your Summary can serve as a guide to writing the rest of your plan.
The following is how an Executive Summary for a bicycle rental store might read. The economic outlook indicates fewer VA, WV, NC, and MD cycling enthusiasts will travel outside the region The park has added a camping and lodging facilities that should attract an increased number of visitors The park has opened up additional areas for trail exploration and construction, ensuring a greater number of single-track options and therefore a greater number of visitors.
Initial growth will be moderate as we establish awareness in the market Initial equipment purchases will stay in service for an average of three to four years; after two years we will begin investing in "new" equipment to replace damaged or obsolete equipment Marketing costs will not exceed 14 percent of sales Residual profits will be reinvested in expanding the product and service line.
What you will provide What you need to run your business Who will service your customers, and Who your customers are. Identify your industry. Retail, wholesale, service, manufacturing, etc. Clearly define your type of business. Identify your customer.
You cannot market and sell to customers until you know who they are. Explain the problem you solve. Successful businesses create customer value by solving problems. In our rental example, one problem is cycling enthusiasts who don't--or can't--travel with bikes.
Another problem is casual cyclists who can't--or choose not to--spend significant sums on their own bikes. The rental shop will solve that problem by offering a lower-cost and convenient alternative. Show how you will solve that problem. Our rental shop will offer better prices and enhanced services like remote deliveries, off-hours equipment returns, and online reservations.
If you are still stuck, try answering these questions. Some may pertain to you; others may not. Who is my average customer? Who am I targeting? Unless you plan to open a grocery store, you should be unlikely to answer, "Everyone! How will I overcome that paint point? Where will I fail to solve a customer problem, and what can I do to overcome that issue? In our rental example, one problem is a potential lack of convenience; we will overcome that issue by offering online reservations, on-resort deliveries, and drive-up equipment returns.
Where will I locate my business? What products, services, and equipment do I need to run my business? What skills do my employees need, and how many do I need? How will I beat my competition? How can I differentiate myself from my competition in the eyes of my customers? You can have a great plan to beat your competition, but you also must win the perception battle among your customers. If customers don't feel you are different, then you aren't truly different. Perception is critical.
Provide high-quality equipment, sourcing that equipment as inexpensively as possible through existing relationships with equipment manufacturers and other cycling shops Use signage to attract visitors traveling to the national forest, highlighting our cost and service advantage Create additional customer convenience factors to overcome a perceived lack of convenience for customers planning to ride roads and trails some distance away from our shop Develop customer incentive and loyalty programs to leverage customer relationships and create positive word of mouth.
Are products or services in development or existing and on the market? What is the timeline for bringing new products and services to market? What makes your products or services different? Are there competitive advantages compared with offerings from other competitors? Are there competitive disadvantages you will need to overcome?
And if so, how? Is price an issue? Will your operating costs be low enough to allow a reasonable profit margin? How will you acquire your products? Are you the manufacturer? Do you assemble products using components provided by others? Do you purchase products from suppliers or wholesalers?
If your business takes off, is a steady supply of products available? The following is a breakdown of anticipated rental price points, per day and per week:. Customers can extend the rental term online without visiting the store. A grace period of two hours will be applied to all rentals; customers who return equipment within that two-hour period will not be charged an additional fee. Newer equipment inventory with higher perceived quality Price points 15 percent below the competition Online renewals offering greater convenience A liberal return grace period that will reinforce our reputation as a customer-friendly rental experience.
What is the size of the market? Is it growing, stable, or in decline? Is the overall industry growing, stable, or in decline? What segment of the market do I plan to target? What demographics and behaviors make up the market I plan to target? Is demand for my specific products and services rising or falling? Can I differentiate myself from the competition in a way customers will find meaningful? If so, can I differentiate myself in a cost-effective manner? What do customers expect to pay for my products and services?
Are they considered to be a commodity or to be custom and individualized? Your potential customers. In general terms, potential customers are the people in the market segment you plan to target. Say you sell jet skis; anyone under the age of 16 and over the age of 60 or so is unlikely to be a customer.
Plus, again in general terms, women make up a relatively small percentage of jet ski purchasers. Determining the total population for the market is not particularly helpful if your product or service does not serve a need for the entire population. Most products and services do not. Total households. In some cases determining the number of total households is important depending on your business. For example, if you sell heating and air conditioning systems, knowing the number of households is more important than simply knowing the total population in your area.
While people purchase HVAC systems, "households" consume those systems. Median income. Spending ability is important. Does your market area have sufficient spending power to purchase enough of your products and services to enable you to make a profit? Some areas are more affluent than others. Don't assume every city or locality is the same in terms of spending power. A service that is viable in New York City may not be viable in your town.
Income by demographics. You can also determine income levels by age group, by ethnic group, and by gender. Again, potential spending power is an important number to quantify. Senior citizens could very well have a lower income level than males or females age 45 to 55 in the prime of their careers.
Or say you plan to sell services to local businesses; in that case, try to determine the amount they currently spend on similar services. Always remember it's much easier to serve a market you can define and quantify. What is your market? Include geographic descriptions, target demographics, and company profiles if you're B2B. In short: Who are your customers? What segment of your market will you focus on? What niche will you attempt to carve out?
What percentage of that market do you hope to penetrate and acquire? What is the size of your intended market? What is the population and spending habits and levels? Why do customers need and why will they be willing to purchase your products and services?
How will you price your products and services? Will you be the low cost provider or provide value-added services at higher prices? Is your market likely to grow? How much? The short answer is yes. Not only will a business plan be key to getting loans and investments, but it will also play an important role in distinguishing your boutique from your competitors. Think of it as a way of answering the question of why does the world need your small business?
Due to the heavy competition, writing a business plan for a retail clothing boutique, or any business for that matter is essential. A clothing retail boutique business plan will include many of the core parts of a standard business plan. However, there are a handful of additional planning aspects you will need to outline such as your product line and choice of shop location, for example.
This article will walk you through how to tailor your plan to take into account these and other features while ensuring you include all the necessary pieces of a traditional business plan. If you want an example of a business plan for a general clothing store, it might be helpful to view our sample business plan for clothing retail. It can help give you a starting point when developing your own plan as you go through the rest of this article.
A retail boutique is going to compete with other boutiques as well as various types of clothing retailers, such as chain stores, department stores, and outlet stores, to name a few. It will also face online competitors, such as Etsy shops and even Amazon and Craigslist. And these other clothing retailers will often have more flexibility than a boutique in terms of location and inventory.
So it will be important for you to identify and leverage any competitive advantage that sets you apart. A retail clothing boutique differs from other clothing retailers by offering specialized products. You will likely have a more selective product line than other retailers, but the items in that line will be unique or difficult to find in other stores. You will likely choose styles and items that cater to a particular kind of shopper, also known as your target market.
We discuss the specifics of how to outline your target market later in this article. Show them you have thought through who you want to shop at your store, and how you will get them in the door. For the most part, you will stick to the basic format of a business plan. But you will need to include some specific points that other types of businesses might not be concerned with.
The following is an overview of essential elements for your business plan:. Every business plan must contain an executive summary. We advise you to write this section last so that you can crystallize the details of your plan beforehand. The executive summary will touch on the key points of your plan but keep it brief.
Limit it to pages, at most. This is the part of the plan you will first share with potential investors. Your executive summary should provide an outline of your vision for your store, a concise breakdown of your target market , and a list of the primary features of your management team and financials.
You can also include the gist of your market analysis if you conducted one, but make sure to keep it at a level suited to a casual reader. Will you only utilize local suppliers or carry clothing from specific designers? Maybe you include personal stylists or outfit packages as part of the experience? Whatever the case, establish how your boutique will differentiate itself and provide a solution to customers that are tired of dealing with crowded and all too similar clothing options.
This mindset will also apply to your location. Unlike larger or more general retailers, boutiques tend to occupy spaces within larger structures, such as plazas or shopping centers. This section should also map out who your vendors will be, and the expected costs of obtaining your product line.
You will want to consider a purchasing strategy for obtaining products. Will you look for a domestic or international manufacturer? How will you vet the quality of their materials? General merchandise retailers tend to feature a wide variety of products. Specialty products should fill a particular niche in the market. Maybe you will specialize in hats and jewelry, upcycled clothing, or something else entirely. There are many possibilities depending on your vision for your boutique.
The target market section is one of the most crucial aspects of your business plan. Your target market consists of your ideal customers. Your mission is not to appeal to everyone. Rather, a clothing boutique makes itself attractive to a niche market. Maybe you find your niche among shoppers seeking vintage clothing. Maybe you are marketing discounted clothes to a campus crowd at a nearby university. Know your target market, their price range, and where they are likely to come across your store.
If you can, talk with your potential customers directly, run surveys or even limited sales runs to see if your business is viable. Including any results that support your solution here not only ensures your idea is sound but also makes your business a more viable option for investors. The target market section of your business plan can be extremely detail-oriented. It could be well worth it for you to check out our article on all the details that can enhance this section.
When it comes to a boutique, brand identity is essential. Your company name, choice of location, the setup of your space, and the kinds of products in your inventory will all play parts in building your brand. The design and branding of your boutique will help attract your ideal client base and again differentiate your business from the competition.
You will also want to pick a location that has rent and utility costs that are within your budget.