The importance of writing a business plan
This is an excerpt from Business of Personal Training With Web Resource, The by Mark Nutting.
A business plan is a detailed description of your company, its concept, how it will run, what it will cost to run, and where you want it to go. As you learn about the world of business, you may come across varied opinions about how to write a business plan or even whether it's worth it. For instance, you may hear skeptics say that it's just a guess - an educated guess if you've done your homework, but still a guess - so how accurate and useful can it be? What's more, we can't know anything with certainty. The zombie apocalypse could start tomorrow, and wouldn't that throw a monkey wrench into your business plan?
On the other hand, all of science starts with an educated guess in the form of a hypothesis: "I think ______ will take place when I do __________." You then test the hypothesis, and if it pans out - great! If it doesn't, you develop a new hypothesis and try again. And that's what must be done with a business plan. Once you get up and running, you refer back to it, and if things are not going as planned, then you change your plan to reflect your updated best (educated) guess.
Some discussions of how to write a business plan advise you to project your business as far as 10 years into the future. However, the further out you project, the more likely you are to be off the mark. For that reason, I favor extending your business plan only to the point where you can get started, get established, and set a direction for growth, which means about three years for most of the business options we've discussed.
Could you simply bypass the writing of a business plan? Why should you bother putting in the time and effort if you'll probably have to change it anyway? Here are two big reasons:
- A business plan enables you to start the business with a good sense of your strengths and weaknesses, the challenges that may arise due to competition or economic factors, and your chances of succeeding. If you can't make it work on paper - that is, in a business plan - then it's not going to make it in real life.
- If you need to acquire additional financing, a business plan will show potential investors that you've done your research and are willing to put in the work to make your business succeed. No savvy businessperson will invest in a casual idea that doesn't consider all of the details - good, bad, and ugly.
One final question before getting started: How long should a business plan be? Answers vary widely. Some sources say that a typical plan runs 15 to 20 pages, whereas others say it should be at least 50 pages long. My own belief is that the page count is secondary to the content. Your business plan needs to include sufficient detail in each section for you to know - and show - that you have thought through all relevant variables that can be known at this time. The number of pages then depends on what you need to say in each section. For example, if there is literally no other fitness facility within an 8- to 12-minute radius of your proposed site, then your competitive analysis section will be very short.
You can find a business plan template in appendix A and in the web resource (www.HumanKinetics.com/TheBusinessOfPersonalTraining); you can use it to develop your own business plan. In addition, each section of this chapter fleshes out part of the template. If you are thinking about starting your own personal training business, consider taking notes as you read this chapter and jotting down brainstorm ideas for your own business plan.
As mentioned in chapter 4, my wife, Heather, and I are (as I write this) in the process of opening a boutique fitness studio. Thus I use a business model very similar to ours in the following discussion of the details of writing a business plan.
Components of a Business Plan
A business plan consists of nine key components:
- Cover letter (optional)
- Executive summary
- Business or company description
- Market analysis and demographics
- Competitive analysis
- Management plan
- Financial plan
- Capital required
- Marketing plan
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