A business plan is simply a resume for your proposed business. Its primary importance is that your business plan becomes your calling card. Anytime you are going in to talk to a property manager about leasing space for your business, or you are meeting with a potential lender or investor, your business plan will announce/outline who you are and what your purpose is.
In most cases, a business plan is created to explain and illustrate the vision you have for your business, and to persuade others to help you achieve that vision. To accomplish this, your plan will need to demonstrate on paper that you have a firm visualization of what your business is going to be. It needs to convince others that your business concept can be successful, and that you possess the expertise-alone or collectively-to assure that it will be both successful and profitable.
While it is obviously important to be able to present your business concept in a way that allows others to understand quickly and precisely what you hope to be doing, you also need to develop a business plan for your own use. The process of developing your business plan will require you to focus on exactly what you are trying to achieve, precisely where you want to be going, and exactly how you plan to get there. It will force you to detail the many expenses involved to open your business, the projected sales and monthly expenses of actual operation, and the volume of business you will need to generate to meet your obligations.
All of this information will greatly influence your many choices, including the kind of location you will be looking for.
Two Types of Business Plans
There are basically two types of business plans that we create for clients who are looking to open their own retail espresso operation. Both business plans are designed to help you develop your new business from conceptualization to opening day.
Once you are actively operating on a daily basis, both of these business plans will have achieved their purpose. From that point on, you will be gathering and measuring the actual performance data of your operation as the basis for planning your future.
The first type of business plan you will need is a Concept Presentation Plan.
Concept Presentation Plans are typically 10- to 24-pages long, and basically describe your business concept, products, principals (owners and key management), target market, trends in the industry, etc. This type of plan contains no financial projections or financial statements. Its primary purpose is to convince landlords and property managers that you have a sound and appealing business concept, and that you are interested in negotiating for the lease of an available space.
The second type of business plan is a Full Financial Business Plan.
Typically, you will need a Full Financial Business Plan to borrow money from a bank, or to entice investors to lend you money. Depending upon the contents, it can consist of anywhere from 25 to 100 pages of information. It can contain all the elements of the concept presentation plan, but primarily it examines in-depth what the total costs of your project will be, when the project will turn a profit, and what level of return you can expect.
Everyone who opens a retail business should have a full financial business plan completed before they open. It is probably more important for you, than anyone else, to be able to see the potential profit and loss for your proposed business. The extensive research which will be necessary to project expenses, sales, and profitability is essential to your understanding of the financial operation of your business. The importance of each of your management functions-setting menu prices, establishing cost of sales and expense budgets, creating sales goals-can only be appreciated when understood individually, and as they relate to the overall financial statement.
It is also very important for you to identify the people who do not need to see your financials. In fact, it is to your advantage that they do not. Realtors and property managers fall into this category. It is not to your advantage for a property manager to see what level of financial performance and profit you are expecting from your proposed business. Your future landlord might be justifiably concerned that you have enough capital to pay your rent each month. He may legitimately wish to see a personal financial statement to be reassured that you own some equity in your house, have some funds in your bank account, and are running your household on a positive cash-flow basis. But these concerns can be addressed with your personal financial statement.
You want to avoid putting your landlord in the position of saying to himself: "Wow, this guy's going to be doing 500 cups a day and netting $120,000 a year. I'm certainly not going to rent him this kiosk space for $500 a month! I am going to hold firm at $1,000 a month!"
Concept Presentation Plan
Your Concept Presentation Plan-the nonfinancial business plan-should include the following elements: