This article will show you how you can ensure profitability while creating a business plan. It will list 6 things that every business plan must have to be profitable.

1. Make sure there’s a market for your business plan. This is the most important step. Make sure there’s a market that’s willing to spend money on your products / service.

2. Make sure there’s a marketing strategy in place. You have to get your customers somehow, make sure there’s a marketing strategy in place to get them. This is often overlooked by a lot of entrepreneurs.

3. What is your unique product? What is your unique solutions? What’s your USP? Make sure there is a market that’s willing to spend money on your product or service.

4. What is your relationship strategy? It’s not about getting the first sale, it’s about building a business, what is your strategy to keep, and develop relationships with your market?

5. What is your obvious factor? Your business plan has to be simple enough for the people reading it to understand it. If your business model is too complicated, than it won’t get understood.

6. What are the numbers? What does your numbers look like. You will need cashflow and profit/loss projections. What is your break even point? Although these numbers might not be accurate, some idea is better than no idea.

Remember that a simple business model is better than a complex one.

These are the 6 elements that makes a business plan profitable. Although there are more elements involved in creating business plan, these 6 are the most important ones. No business plan can be successful without it.

When writing the business plan for your hair salon, entrepreneurs tend to make a number of mistakes that turn off readers, especially those who have a number of plans on their desk to consider.
 
Too Much Detail
 
There is such a thing as too much detail in a business plan. While the plan must cover its bases completely, including company description, industry, customer, and competitor analysis, marketing and operations plans, management team, and financial plan, it only needs to be detailed enough to persuade some investors to work with you. To create a plan that is detailed enough to convince every investor may end up working for no one. If the document is this long and complicated, it can easily be set aside by professional investors who will happily pick up another business plan that is less of a headache to read.

 
Remember that a human being is reading your salon’s plan and that he or she is just interested in hearing the story of how the salon business will work and what the payoff will be for them. They don’t care about the minutiae of how you will run the business or pages and paged of detailed customer research. This type of detail might be appropriate for an appendix, which is considered optional for readers to peruse, but the body of the plan must get to the heart of the matter by simply fulfilling the purpose of each individual section.
 
Assuming Reader Understanding
 
At the same time, don’t make the mistake of assuming that the reader already knows recent industry trends in hair salons or is familiar with your key competitors. You must show what you feel is important about these items in the appropriate sections of your plan, to reassure investors that you’ve done your homework and understand the situation yourself. If a statement is obvious you don’t need to dwell on it, but, nevertheless, don’t skip key steps in the logic of why your hair salon is a viable business.
 
Financials Without Notes
 
Finally, the financial plan includes many pages of pro-forma financial statements which are, in a sense, guesses about what will happen in the future. Readers will feel much better about these guesses if they understand the assumptions they are based on. Explain these assumptions in notes that accompany the financials. Without these explanations, the reader will make his or her own assumption – that you simply pulled numbers out of the air that sounded good and tried to pass it off as financials projections. Even if readers disagree with some of your assumptions, it is better that they know what they are than them writing you off in this way. Disagreements with readers can lead to valuable further discussion and maybe can help you strengthen your plan further in the end.

A lot of people dream of starting their own business. They have heard of the “unlimited opportunities” and the “complete freedom” and the “not having a boss”. If you are one of those who have that dream and believe it really can come true then I have something to say to you “WAKE UP!”

When you start your own business you don’t have ‘complete freedom’. As a matter of fact there’s a really good chance that you will have less freedom, a lot less freedom. To be successful you will most likely be working seven days a week and you will be working longer hours and you will be working for a lot less money (at least in the beginning). Does it still sound like something you really want to do?

As far as ‘not having a boss’ goes, well I hate to be the one to break this to you but you will always have a boss. If you don’t do what the customers want then you will go out of business and if you are lucky enough to borrow money to start and run your business then your banker/investors will be telling you a lot about how you are going to run your business. Okay so maybe they aren’t your ‘boss’ but they are still the ones who will tell your what you must do. And that’s what your current boss does now. Does it still sound good?

Of course you can be stubborn and do what you want instead of what the customers want and there’s a word for business owners that do that. They are called employees because they went out of business and had to go back to work for someone else. Still interested in starting your own business?

I’m going to assume at this point if you are still reading, that you are interested in starting your own business. Don’t get me wrong, I have started lots of companies and had a lot of success. Over a period of ten years I actually sold two of my companies to a Fortune 50 company for a LOT of money. At that time a lot of my friends commented on how lucky I was for that to happen. I just smiled and didn’t respond to those types of comments. You see, they only saw the end result of a lot of really hard work and a lot of really long hours working seven days a week. They didn’t see the failed marriage, the teetering on the brink of not being able make my payment to the bank. They didn’t see me working for free with no salary at all for weeks and weeks. They didn’t see me having to take money from my personal checking account in order to meet payroll. Yep, I sure was lucky.

When you start your own business you don’t see things like those I just mentioned. If you are serious about starting your own business then you have heard that you must have a ‘business plan’ to take to the investors. Well, I have looked at lots and lots of business plans over the years and for the most part they were all worthless. People who want to start a business tend to see the world through rose colored glasses. For example when they get to the part on the business plan where they are to assess the competition nearly everyone completely under estimates not only the number of competitors but the strength of the competitors too. People who are convinced that they want to go into business for themselves tend to operate with blinders on. I’ve seen people come up with some really outlandish things in the ‘Competition Analysis’ of a business plan.

Failure to properly analyze the competition is one of the most common flaws I see in start-up business plans. Here’s an example: I had a gentlemen come to me (as a potential investor) with the idea of starting his own Lexus repair shop. He had been a mechanic for over 15 years and had all of the ‘industry certifications’ and had been through all sorts of courses and schools on how to diagnose and repair just about anything related to Lexus automobiles. He had no experience in how to “run” a repair shop but that’s the subject of another article.

Here’s how brief recap of how the conversation about competition went:

Me: “What about your competition, who are they? Him: “There really isn’t any”. Me: “What? How do people get their cars repaired now?” Him: “Nearly everyone takes their cars to one of the local dealerships for repairs. I can do it a lot cheaper than the dealerships because I will not have all their overhead.” Me: “So there are no independent shops that work on Lexus?” Him: “There are some independent shops but they are so small that I wouldn’t consider them real competitors.” Me: “So why are they so small?” Him: “I think their prices are too high.” Me: “Are their prices lower than the dealerships who are doing the majority of the work now?” Him: “Yes. The independent shops are almost always a lot cheaper than the dealerships.” Me: “So maybe the independents are so small because people who own a Lexus are not swayed by lower prices. After all they paid a lot for their car. Maybe they are not as price conscious as you think.” Him: “I can do the same work for 30% to 40% cheaper, how could they not be interested in that?”

Can you see what’s going on here. This guy was convinced he could do it better, faster and cheaper than anyone else. Yet the facts as he presented them showed that the customers he wanted to go after were not easily persuaded by the “cheaper price” argument which happened to be what he wanted to use as his unique selling proposition.

One of my favorite sayings when talking to people about their business plans is “Don’t confuse me with the facts because my mind is already made up.” A business plan is supposed to get people to think. To do an unemotional analysis to see if there really is a viable opportunity there. But too many of them will do all sorts of mental gymnastics to justify their position. I don’t care what type of business you are thinking about starting, there is competition out there. Don’t kid yourself.

Another big problem I see in business plans is a lack of management experience. Here’s another real world example. I had a ‘friend of a friend’ ask me to meet with a friend of theirs. It was a woman who had the idea of starting her own “cookie bakery”. She didn’t have the funds necessary and was coming to me as a potential investor. I agreed to meet with her. One of the very first questions I asked was “Where did you come up with the idea of starting your own bakery”? She said that for years she had baked cookies and she had lots and lots of people tell her she should start her own bakery. These people (mostly friends and family) said she baked the best cookies they had ever tasted. She had brought some to our meeting and to her credit, they were very good.

When I asked her about her experience in running a bakery she told me she had never actually worked in a bakery. As a matter of fact, she had been a secretary up until the birth of her second child and had taken 6 years off. Now that the child was going to school, she was ready to “go into business for myself”.

Out of respect for the friend who had asked me to meet with her I didn’t quickly end the meeting as I normally would have. Instead I took some time and asked her some questions. My goal was to try to get her to stop being emotional and to only analyze the facts. A few of the questions were:

• “Have you picked out a location?”
• “Do you have any idea what the lease will be?”
• “How much will it cost to renovate to get it ready?”
• “How much equipment will it take?”
• “Can you lease it or do you have to buy it?”
• “Where are you going to get your customers?”
• “How much is the insurance going to be?”
• “What about liability insurance in case someone claims your cookies made them sick?”
• “Where are you going to get your customers?”
• “How are you going to advertise?”
• “How about utilities?”
• “How much will it cost you to make a single cookie?”

She stumbled through most of her answers and in exasperation said “You don’t seem excited about this idea”. She said she was really excited about the idea and was hoping I would get excited to. I told her I get excited when the companies I have invested in are making a lot of profit.

The meeting was going nowhere and I couldn’t get through all of her emotions so I told her to get all of the information together then total up the monthly expenses with no salary for herself and come back and tell me how many cookies she needed to sell everyday just to pay the bills. She told me that as the owner she should get a salary. I agreed and said your salary will be paid from the profits so your income is virtually unlimited. Just put the numbers together and give me a call when you can tell me how many cookies you have to sell everyday just to pay the bills.

Guess what? I never heard back from her. I was the one who rained on her parade with a harsh dose of reality.

It takes a lot of courage to go into business for yourself. It’s not for the faint of heart and requires a 100% commitment. And in the beginning it requires you to take a realistic look at the facts without deluding yourself. If you are going to present your business plan to anyone else with the hopes of having them invest in your new venture, you better be ready for some really tough questions. The best way to prepare yourself for those types of questions is to not kid yourself when working up your business plan. As a final note don’t EVER tell a potential investor that there is no competition. They know better.