Using the Business Plan Format - Parts 1 through 4
No matter what business plan format you use to sort out your small business ideas, you'll need to start right up front and define the business you are in.
Instructions and suggestions for completing Parts 1 through 4 of the business plan template are addressed on this page.
Take your time and go through the business plan discussion below, and you'll have a better appreciation for what it takes to have a good solid plan.
Example discussion for XYZ Lawn Care and Landscape Maintenance
Service is shown in blue text.
You and Your Business - time to define it
Part 1 - What business are you in?
I know this sounds funny, but there are so many people with small business ideas that don't understand the business they are in. They may work for years at providing services and products, but still can't articulate what business they are in.
Knowing the business you are in can help you understand what you need to do and better plan for success. Effective competitors know very well what business they are in.
You can be out there just "doing stuff" and "selling stuff", but you won't be nearly as effective. Would you become a regular customer of someone who was just out there "selling and doing stuff" or would you rather do business with someone that knows exactly what his products and services are?
Use the business plan format to clearly record the business you are in, and you'll be miles ahead of the "doing and selling stuff" crowd.
Understanding what business you are in is key to understanding your:
- general marketplace
- niche in the marketplace
- strategic approach to success
Take your time and make certain you know what your business is before you start. One of the first questions your customer is going to ask is: What is it that you do?
You'll have to be able to articulate the answer to that question with some authority and conviction. Otherwise, your customer may lose confidence in your ability to provide a product or service.
Example: If you are in the lawn care business, are you just cutting lawns, or are you also doing landscape installation and/or maintenance? Do you cut residential lawns or are you handling larger contracts like shopping centers, apartment buildings and commercial complexes?
Use this portion of the business plan format to make certain you are clear about your business focus. Everything flows from there.
For our example, we'll say that we are going to focus on lawns, but offer other light landscape maintenance tasks like trimming bushes, weeding and replacing bushes. No installation or major maintenance like dirt and rock work, or tree trimming.
Also, in the off season, we will offer snow removal for the parking lots and main walkways.
Part 2 - What is your marketplace?
Every business operates in a clearly defined marketplace. Now that you know the business you are in, you'll want to narrow your marketplace so you can focus on being successful in that competitive environment.
Remember that focus works.
Consider the following when you are narrowing your focus in the marketplace:
- Who are my customers?
- What motivates them to buy?
- How large is the market?
- Is the marketplace easy to reach?
- Am I familiar with the marketplace?
- What is the price sensitivity of the marketplace?
Use this portion of the business plan format to define the market focus of your small business ideas. Your success hinges on focused planning, so you'll need to narrow your focus to a niche that you can "win".
Example: Perhaps you want your lawn care business to specialize in apartment buildings, condominium associations and retirement communities. These are large areas of lawn to service. They need a steady and reliable lawn care service. They won't use a bunch of kids in the neighborhood with lawn mowers.
They'll also need a truck with a plow on it to clear the parking lots, and reliable service to clear walkways of snow.
Use the business plan format to record essential information about your marketplace so it is clear where you are going to operate your business.
Part 3 - Why is this business necessary in the marketplace?
This part of the business plan format asks questions about why your customers might be motivated to do business with you. You'll need to know why your product or service something they should invest in.
Here are just a handful of reasons that someone might buy a product like you are offering:
- high quality
- capable of an upgrade
- compatible with other products
Here are a few reasons that someone might be interested in a services like you offer:
- high quality
- compatible with other services
- no time to do it themselves
- too difficult to do
- undesirable task
- insufficient staff
You better be able to determine why your product/service offering is necessary or desirable, especially if it isn't immediately apparent to the marketplace.
This business plan format won't improve the quality or desirability of your offering, but it can help you determine whether your product or service is worth launching in the first place.
Example: Our lawn care and landscape maintenance business is necessary in the defined area of the marketplace because the people who reside at these locations expect someone else to take care of the yard. This is often the responsibility of the property manager or resident manager, and they just won't have the time, equipment or inclination for this kind of dirty work.
With respect to snow removal, walkways need to be cleared and sanded to reduce slip hazards and allow people to use the parking lots.
Part 4 - What makes you qualified to compete in the marketplace?
This part of the business plan format helps you perform a little self-assessment to determine why customers would want to do business with you. It asks a very pointed question: Would you do business with you or another product/service provider?
Consider strengths you have and special qualities of your product/service that will make you a provider of choice. Consider characteristics about you and your competitors such as:
- understanding of your customer's situation
- price or rate structure
You'll want to prioritize this list according to your perception of how important these and other factors are to your potential customers. Also, this listing will be used later on when you start to evaluate your competitors, so use a wide range of factors - not just those that apply to you specifically.
Example: Some lawn care and landscape maintenance services do a reasonable job cutting the grass, but they don't trim and clean up well, and they don't offer other maintenance services like trimming bushes and removing snow. Also, my crew will have uniforms, and that will offer a professional appearance for our customers.
As far as qualifications, cutting grass and snow removal isn't rocket science, and pruning and trimming isn't all that technically challenging, so we shouldn't get much resistance in that area. Besides, our maturity and experience as homeowners will be reassuring to potential customers.
For purposes of providing you with an sample business plan that discusses these small business ideas, I have completed parts 1 through 4 of the business plan template for XYZ Lawn Care and Landscape Maintenance Service. See my example here.
Done with Business Plan Format, take me back to Business Plan Template