The Business Plan
Apr 12, 2012 Lawn Care Business
You need to create a business plan and utilize it, changing the plan as new information and experience dictate. The business plan is a mainstay of any business. It helps you, particularly at this early stage to accomplish the following things:
- It makes you analyze the entire business financially
- It lets you manage and check your results against the initial and subsequent plans
- It helps other interested parties, such as lenders, bankers, and possible partners, understand the objectives, financial standing, potential earnings and other pertinent information.
A business plan is a detailed blueprint of your goals and objectives. It includes every aspect of your company from proposed name to location to marketing to financing and accounting. The more complex the business, the more intricate the business plan. In fact, you will need to up-date, the plan as your company goes into business. This is the initial reality check. You then need other updates as you expand.
When you start out creating your business, the plan may be simple and direct. It will expand and alter as you and your company come to learn the restraints and realities of your business. Your first business plan and subsequent ones are reflections of the world in which you are operating. They reveal growth and decline. A business plan is ever changing to meet with your current and future situation. It will help you grow and reflect that growth. It will help prove your company’s worth when you decide to expand and when you want to cash out.
Your first business plan does not need to be elaborate. It should contain, however, such information as the name of your company, its address, telephone number and a basic description. Other required information is the products and service you offer, the projected market and possible or actual competition. List all these facts under the title “Company Information.”
Company Information should also provide the basic details on the goals of the business, the financial requirements and currently available funds or funding. You need to list the projections of earnings for the month, year and subsequent years. You can provide a graph for the first year and a 1-5 year projection. If you are talking to or considering investors, you also need to provide them with the potential return of the outlay.
The next major section is on services. You need to provide an ample description of what the company does. List all commodities you plan to offer. Provide a complete list. Include current and future offerings. Disclose and update all possibilities. This will indicate whether you have done adequate and accurate research into your market potential.
The next part of this section focuses on your competition. A thorough business plan has scouted the location. You will already know who you will need to go up against in establishing and maintaining your lawn care business. List and describe them. Show why you can successfully compete or reveal why they are not actually in competition against you.
Describe clearly any unique services you plan to offer. This will help you and any possible investors distinguish your company from any others in the lawn care business. This will indicate the direction toward which your company is heading. List any niche products or services you are planning to (or already) offer. This may include Integrated Pest Management (IPM) or organic grass treatments. Stress how such services differentiate you from your competition and will help you succeed.
The section on marketing analysis is an essential part of selling your business and yourself. This applies to you, possible investors, customers and a possible future buyer of your company. You need to provide information on such things as the marketplace, your competition, the current lawn care industry and future trends in the business. You also need to include any data on your purposed target or niche market.
Obtaining material requires research. You need to be aware of the conditions of the current marketplace. What are the actual demands? What is the potential for growth? Will a recession affect the market? Will it influence your proposed entry? In doing the research, you will clarify your goals and add a touch of reality to what you plan to do.
A thorough market analysis will help you narrow or broaden your focus. You may find it better to address your services to a particular niche. It may make more sense to have a broader base. This may change over time. This section, like the rest of the business plan, is not set in concrete. It is subject to change. The market does fluctuate and later over time. It is up to you to continually be aware of these changes and adjust your business and its market approach accordingly.
Your marketing strategy is a very important component of your business plan. If you do not know how you are going to sell your lawn care business to potential customers, you are in serious trouble. You need to know from the start not only how your product fits into the overall market, but also, how to see it obtains, retains and even increases its share.
How are you going to market your services? You will need to go into specifics here. What methods are you planning to utilize? Do you plan to use print, the internet, TV, radio or any other form of media? How you will meet your marketing goals is also a concern.
Marketing also concerns the more mundane aspects. These include such things as invoicing. Do you have a plan in place to pay for these various services? Do you have a means of paying in kind? Can you be creative in ensuring you obtain the best coverage at the least cost?
Another aspect you need to include in your plan is pricing. Before you start your business, you have to figure out the costs. How much will it cost you for each service? How much are you going to charge your customers? You need to break the figures down. You also need to be very aware of what your competition is charging.
In order to set your prices, you have to look first at the broader picture. You need to look at the value of what you offer for and in the marketplace. Next, you must consider what your competition is charging for the same or comparable services. This will give you a more than rough estimate of what you can charge. It also provides you with information to show clients how you are charging the same or less than your competitors do.
The figures you arrive at are, of course, subject to change. You need to be flexible. Costs change as do demands. You may want to offer a lower introductory price. You may want to start off at a lower rate than your other companies while you build up your business. Do not set it too low or it will be counter productive to both your pocket book and future growth.
The management plan is a more complex and often not applicable part of the business plan. Such aspects as business structure and staffing plan are not usually an actuality. These aspects are part of your plan for growth. You need to be aware of the various aspects of being an employer. You have to consider the number of employees and their responsibilities. You also have to consider where and how you will find them.
You need to be aware that as you grow, you will need to hire people to work for and with you. You need to consider, now, how many and what your style of management will be. The source of employees, the need for training and the legal aspects are also part of this decision to be an employer. Much of this is covered in Chapter 4 – Growth.
The portion of the business plan titled facilities is also part of the future intent of your lawn care business. At the beginning, your company may consist of only your home office and, perhaps, a rented shed for storage of equipment. In the future, you may have to purchase or rent larger and separate facilities. Consider your present and future needs as well as any possible improvements for now and for the future.
The operating plan of this section deals with the business affairs on hand, the prospective business you have in mind and your plans to generate new business. Initially, you may focus on getting and retaining a solid customer base. As you expand, you need to consider how to generate new customers. You also have to project the kind of growth and its extent.
A solid business requires a solid financial base. If you plan approaching anyone to become a partner or investor, you need to be accurate. You will need to provide a lender with your personal financial statement for the last 3 to 5 years of your life.
If you are starting out using your own money, you need to compile figures indicating the direction of the first financial year of your business. You need to project your profits, your losses and the profit margin. You need to prepare a balance sheet illustrating the changing or stable nature of this first year in operation. You should also prepare monthly cash flow charts, indicating where the money is going out and how much is coming in. Furthermore, you need to prepare projected capital expenditures. This includes such things as the purchase of a vehicle and lawn care equipment.
The last portion of the financial data of the management section of your business plan will focus on your projections for the next 2 to 5 years. Be sure to cover all aspects. An investor, lender or potential buyer will need to look at these figures before they make a decision. You also need to have these figures to provide yourself with a guideline for future expenditures and direction.
To sum up, the average business plan should conform to the following outline or adopt a similar pattern:
- Description of business
- Name and address
- Products and services
- Comparison to competition
- Unique or special services you offer
- Description of the total market
- Industry and market trends
- Your target market or niche market
- General strategy
How your own product or service fits into the market
- Method of marketing
- Method of obtaining fulfillment
- Method of invoicing
- Pricing policy
- Compare to market
- Business Structure
- Number of Employees
- Source of employees
- Facilities Plan
- Business on hand
- Prospective business
- Plans to generate new business
- Operating Plan
- Financial statement for past 3-5 years (personal information)
First year financial projections
- Profit and loss statement
- Balance sheet
- Monthly cash flow charts
- Projected capital expenditure
- Annual financial projections for the next 5 years