Entrepreneurs not only capture the essence of the American dream, but they also play an important role in shaping the U.S. economy. According to a report from Entrepreneur magazine, about 39 percent of small businesses will make a profit, 30 percent will actually lose money and 30 percent will break even.
One determinant of success, according to experts, is having a comprehensive business plan in place before launching a company. As the U.S. Small Business Administration points out, a good business plan outlines the next three to five years, detailing how the project will generate revenue.
The components of that plan should include the following:
- Company and product description: What is being sold and how is the business differentiated from competitors?
- A market analysis: This should include research on potential competitors and the industry as a whole, including customer groups and the target market.
- A marketing plan: How will the business grow through sales and marketing efforts?
- An outline of the company structure: Identify the legal structure (a corporation or sole proprietorship, for example) and information regarding ownership.
- Finances: When seeking money, entrepreneurs will need to include financial projections for short- and long-term success.
Entrepreneur magazine warns that business plans are not solely for owners seeking money. While they are useful for courting potential investors, they also force entrepreneurs to outline goals and hold themselves accountable. These plans set the standard for how the business will run and what is expected of employees. For example, stating that the company will have 500 customers by the end of the first year gives the marketing and sales team a number to work toward.
The SBA points out that the business plan is just the start of launching a successful company. Entrepreneurs should seek professional guidance to ensure they are operating within the law and tax regulations.