There are many reasons to write a basic business plan for your retail venture. For example, a business plan can help you get funding. A plan can also help when you’re negotiating a commercial lease. Or it can simply give you a clear vision.
But where do you start with a basic business plan? While you’ll be able to compile some of this information yourself, you’ll need to do a certain amount of market research if you’d like even a basic business plan to be as accurate (and useful) as possible.
Creating a business plan can seem like a daunting task, but it doesn’t have to be. Even just collecting a few relevant sections of information can help you formulate a skeletal business plan.
Here are the crucial components of a basic business plan.
The first place to start is to articulate what your business is.
While you probably have a solid idea about your business swirling around in your head, actually articulating it succinctly is more difficult than you might think.
Think of this section as an elevator pitch of what you do. Try to summarize your business in three to four lines. That summary should include the basics of your business — who are you and what you sell, primarily.
It can also be helpful to try out your elevator pitch on others. Ask people who you’ve talked to about your business.
OK, so you know what your business is, but who cares? You do, or you wouldn’t be doing this, right? But now you’ll need to communicate why others should buy from you.
The next crucial section of your basic business plan is your value proposition, which essentially lets the world know why other people should care about your business, too. What are you selling, and how does your product or service solve a problem for your customers? How are you different from your competitors?
In other words, your value proposition separates your brand from everyone else who might be doing something similar.
While the business summary and value proposition include some information about your target customer. It’s important to do a deep dive into who you’re selling to.
Who is your ideal customer? Do you have several? Maybe there are a few different markets that your product targets for different reasons. Get as specific as possible by creating buyer personas for your target market. Include factors like age, gender, income level, and location, but also include information about their habits, other products they like, and information about their hobbies, values, and how they spend their time.
To glean some deep insights on your potential customers, interview a few different people in your target market to dispel any assumptions that you’ve made about their needs. Interviews with real potential customers can also ensure that your value proposition holds in the real world.
Knowing more about your target market will also help you to make decisions about branding, marketing, and pricing your products, and will guide decisions about new product releases and your company’s overall direction.
While crunching numbers may not be the most fun part of your basic business plan. Compiling a picture of your company’s financial future is one of the most important pieces.
Financial projections should include your costs (both upfront and ongoing), anticipated revenues, and any debts your company might take on in the future. This section should also offer timelines as to when your company will start to see a profit.
It’s also important that your financial projections have some basis in reality. If you’re not sure what something costs, call around for a few quotes. Unsure of what your revenue will look like over your first year? Do some market research to see what the norm is.
Clarifying your company’s current and projected financial status can help you establish some realistic goals and also understand where you have room in your budget versus where you should save.
The easiest place to start when looking at your company’s financial future is to examine your known costs. While costs vary from business to business, some things to consider include:
The actual cost of your product – This should include the physical cost, but also factor in any of your own time spent researching, designing, and creating your product. If you’re housing your inventory, also include rent costs for the space.
Branding – This might include a logo and direction for the look and feel of any content and packaging you create for your brand.
Website building and hosting – You might build an eCommerce website yourself via Shopify, or you might hire someone else to create it for you. Either way, you’ll also want to consider the cost of hosting your website and having a custom domain name.
Product packaging – Whether you have an online or brick-and-mortar shop, you’ll likely need to create some packaging to get your product to your customer.
Marketing – These costs will depend on your target customer. They can include traditional marketing costs (classified ads, print materials like pamphlets and flyers, etc.) as well as digital marketing expenses (Google AdWords, paid social media ads). Different demographics use different platforms or may also find your target customers primarily get their product info offline.
Point-of-sale system – Whether you intend to sell in a storefront or at markets, fairs, and festivals, you’ll need a point-of-sale system to process transactions and keep track of inventory.
Accounting software and professional support – You may decide to take care of your bookkeeping and accounting yourself, or it might be worth hiring those services out to a pro.
Staff – This is another expense that depends on the size of your business out of the gates.