from your kitchen. Is there a market for your product? Are you capable of working from your home kitchen?
You may know immediately how big or small you want your business to be. Maybe you want to keep it small, with enough restrictions to fit your business around your lifestyle. Maybe what you really want is to have a large operation that can support your entire family. Maybe you don’t know yet. It’s good to be aware of your present personal limits and any future options. Once you have created your business plan, keep it close by so you can add to it or change aspects of it as your business grows.
When you create your business plan, make sure it is easy to read, especially if you want investors for your business. Your plan should have separate headings for each section and no typos. Make it as professional as possible.
The following sections are usually included in a conventional business plan.
1. Executive Summary
The executive summary is the first (and most important) element of a business plan. It’s an overview or outline of the entire plan and should be no longer than one page.
If your intended reader is an investor or bank lender, concentrate on the projected finances in your executive summary. Since the summary incorporates information from all the other sections, it is easier if you write this part after you have completed writing the rest of the business plan.
2. Statement of Purpose
The statement of purpose is also known as the mission statement. It defines your central values and goals. It explains what your business does in a few words or a couple of sentences. Be as concise as possible.
3. History and Background
The history and background section is very important if you’re hoping for a bank loan or appealing to investors, even if the investors are friends or family. It shows your background and discusses your food-related and business experience.
In this section, describe your skills, experience, education (e.g., degree, classes taken, workshops), and previous employment. Emphasize any past jobs in or related to the food industry. If food has been only a hobby up until now, add that here. If you have an extensive résumé that directly relates to this business, include or attach it to the business plan.
4. Description of the Business and Products
The description of the business and products covers several issues. It discusses the name of your business, its location, and the products you plan to sell.
Include the name of your business, why you chose that name, and how it will attract customers. You will also want to add the business address or location. If it’s in your home, briefly state that you will have an inspected, legal kitchen. If you will be using another kitchen, discuss the facilities included and mention any support that is offered. Also note where your bookkeeping and business office will be located.
Review the products you plan to offer and why you chose those products. You can also list your ideas for future products. Discuss your delivery methods and how products will get to customers. You can briefly describe your target customers and why they will choose your products over your competitors’. This is especially important if you are looking at a niche business such as special diet foods or meal parts for home delivery.
5. Company Values
The company values section describes how you want your company to be viewed by the public. Talk about the kind of product line you plan to offer and the overall idea behind your product choices. Will you bake homemade goodies or products that are for a special diet?
If you have a company theme — for instance, you only use ecologically friendly products or you promote recycling — add that information. If you are involved in community activities related to your business, add that in this section as well.
6. Operations and Employees
The operations and employees section discusses the structure and operations of your business. You can begin this section by talking about who will run the business. For example, will the business be owned and run by you alone, or will you have a partner?
If you need employees, discuss your recruitment and training methods, the pay structure, and the requisite skill level for your employees. State if you will hire them yourself, or if you plan to use a temporary hiring service. If an outside service is used, give your reasons for this; bookkeeping may be simpler, or if you only need seasonal help, it may make more sense to use a temporary agency.
7. Market Research
The first thing you need to describe in the market research section of your business plan is your target market. Will your customers be retail customers, wholesale customers, or both? Retail is where you sell directly to the consumer. Wholesale means that you sell your products to businesses that resell your products to their consumers. (For more information on retail and wholesale customers, see Chapter 9.) Why have you targeted this area of consumer?
Discuss what market research you have done and break it into primary and secondary categories. Primary research is the work that you have done to gather information, such as doing informal surveys of potential customers or visiting stores to see what your potential competition is doing. Use your notes — add dates and list the places you visited — to show that you really have done the research.
Secondary research includes looking at materials and data that have been collected by others. Places to look for this information include libraries, trade associations, and local business groups. List anything else that you’ve done, such as looking through the phone book for potential competitors, searching the Internet, reading magazines, and studying this book. If you have a subscription to a trade magazine, add that here as well.
In this section, you may also talk about your potential competition. Include information about who they are, what they sell, and what makes your products different. What sets you apart? Be as specific as possible.
8. Promotional Strategies
The promotional strategies section describes how you will target and develop a customer base, how the business will be marketed, and if you will participate in any community activities to promote your business.
List the activities you will do to promote your business, such as creating flyers and brochures for distribution at public markets or making guest appearances on local radio and cable shows. For additional promotional ideas, read Chapter 10.
9. Financing and Start-up Expenses
If you’re appealing to potential financiers for start-up capital, the finance and start-up expenses section will be the most important element of the plan. This area shows potential backers that you are serious about making the business profitable. Your lenders want to know they will be paid back, so there must be enough details in this section for them to feel confident that they will have their investment returned.
Include how much you will need for start-up, how you will acquire it, how long it will take to make a profit, and how much of your own money will be invested. You will need to
