Business Plans for Teen Entrepreneurs

So you want to start your own business? That's great! But before you can do that, you need to write a business plan. A business plan is a document that outlines your business goals and how you plan on achieving them. It also includes financial projections and a marketing strategy.

Writing a business plan is important for two reasons:

  1. It helps to crystalize your business idea and forces you to create a roadmap of your goals and how to get there

  2. It can help you raise money if you want to attract investors in your business

Writing a business plan may seem like a daunting task, but it's actually not as difficult as it seems. In this article, we will teach you how to write a business plan that gets results!

Business plans can be as simple or complicated as you’d like. As a teen entrepreneur, it is best to keep it very simple at first unless the people who will help fund your business want a lot more details.

The main sections of a business plan consist of:

  • An executive summary

  • Description of your company

  • Marketing /Competition analysis

  • Financial analysis

  • Organization and management

Executive Summary

Briefly tell your reader what your company is and why it will be successful. Include your mission statement, your product or service, and basic information about your company’s leadership team, employees, and location. You may also include financial information and high-level growth plans if you plan to ask for financing.

Example of Executive Summary

“We have a simple mission: to provide solutions for brands, agencies and organizations by executing clever campaigns that generate results while staying true-to-their core values of creativity & innovation with integrity! We offer consulting, marketing and advertising solutions tailored for entrepreneurs of all sizes. Our competitive advantage is that we have a group of talented young and motivated partners with expertise in digital media advertising on platforms such as: Facebook, Google, Pinterest, Twitter, Tik Tok, and others.”

Company Description

Use the company description section to provide basic information about your company. Go into detail about the problems your business solves. Be specific, and list out the consumers, organization, or businesses your company plans to serve.

Explain the competitive advantages that will make your business a success. Are there experts on your team? Have you found the perfect location for your store? Your company description is the place to boast about your strengths.

Market Analysis

Market analysis should accomplish at least two goals:  

  1. To get an overview of the competition for your product or service; and

  2. To help determine demand for your product or service, and

Competition

Your business plan should include an up-to-date analysis of the competition. Why? Because you need to know on what aspect of the business you would like to concentrate. Will you be offering a completely new product or service? Will your product or service be a tweak of existing business offerings? What benefits can you build into your product or service that your competitors don't offer?

You'll need a good understanding of your industry outlook and target market. Competitive research will show you what other businesses are doing and their strengths. In your market research, look for trends and themes. What do successful competitors do? Why does it work? Can you do it better? Now's the time to answer these questions.

Demand for Your Product or Service

One of your most important tasks is to find out if anyone will be interested in the products or services you intend to sell. Most teen entrepreneurs feel there will be significant demand for their products or services before they do the most superficial investigation or research to confirm their high suspicions. But as long as teen entrepreneurs focus on how their products or service can benefit their customers, they can more easily determine whether anyone will be interested in what they have to sell.

As you are working on the marketing analysis of your marketing plan, you should also think about when your product or service will be offered. Is your business seasonal, or will you sell your service or product all year round? Naturally, the need for your product or service can change during the year because of factors you cannot control. For example, if you intend to sell Christmas wreaths, your window for making money is probably from Thanksgiving through late December. Another example is a lawn-care business that would likely thrive over about four months in the Northeastern part of the United States.

 

Organization and Management

One of the biggest problems for teen entrepreneurs in putting together a business plan is to convince the readers of the plan that they have the experience necessary to pull off their ventures.

This fact makes it essential that you pay close attention to how you describe your personal attributes and the qualifications of your business partners, if any.

Begin by laying out who is in charge of what in your company and if you have partners. Include any technical expertise you or your partners possess, such as skills in programming, knowledge about blockchain technology, etc. Show how each person's unique experience will contribute to the success of your venture.

Describe the legal structure of your business. State whether you have or intend to incorporate your business as a C or an S corporation, form a general or limited partnership, or if you're a sole proprietor or limited liability company (LLC).

Financials

The financials should include how much to charge for a unit of your product or service and how much start-up money you will need.

How Much to Charge

To determine how much you will make in your business, you need to know how much to charge. How much you will charge will depend on two important considerations: 1) your competition if your offering is similar to theirs, and 2) how much it will cost you to offer your product and services.

Your competitor's price is fixed, so there is nothing you can do about it. You can be, however, that if you are charging more than an established competitor, you will not be able to make your business work unless you have some other competitive advantage.

Calculating how much it will cost to offer your product or service and how much to charge is where you have to spend much of your analysis time.

Your product or service cost per unit should include your business's fixed and variable costs. Fixed cost is the amount you pay for equipment in making your product or service, regardless of whether you sell one unit of your product or service or 1000 units. A fixed cost is typically assigned to equipment that will last several years once you buy it. An example would be the cost of buying a lawnmower if you owned a lawnmowing business.

Variable cost is the amount it costs you to make each unit of your product or service. An example could be how much gasoline you would need to mow the average lawn in the lawnmowing business.

If you intend to offer a product or service that is not based on physical work, such as programming, your variable cost can be how much it will cost to deliver the product if you pay yourself hourly. For example, if you are coding HTML for creating a website, you can estimate that you would pay yourself $20 per hour for coding.

Break Even

Break-even means the price at which you neither make nor lose money. Based on your variable and fixed costs, you can determine how much you should charge to break even when your offer your product or service. Once you know this number, you can see whether you can charge as much or more (or less) than your competitors.

Given how much you will charge for your product, how much it costs to make it, and how many units you think you can sell, you can project how much money you can make from your product monthly over a year. 

 

How Much Income You Project Monthly

You will need to create a statement in Excel that shows various elements monthly:

  1. Revenue – how much you will sell a unit of your product or service times the number of units you truly believe you can sell in a month.

  2. Expenses – the cost to make your product or service for the month, including salaries, paper, pens, printer ink, etc.

  3. Profit Before Taxes – Revenue minus expenses

  4. Taxes – for now, plug in 10% of taxes; chances are that you will pay very little taxes because you will probably make very little money in the early days of your business if you are profitable at all; check with an accountant on this matter if you are raking in the dough.

  5. Net Income – Profit Before Taxes minus Taxes.

 

How Much Start-Up Money You Need

How much start-up money you need to start your business is directly related to your fixed and variable costs. One simple formula to use is to project start-up cost as follows:

Start-Up Cost = Fixed Cost + Variable Cost Over a Few Months

Fixed cost is relatively easy to tabulate as a component of your start-up cost. For example, if you want to start an online business, your fixed cost would include the purchase price of a computer.

To determine how much of your variable cost to include in your start-up cost, you have to make a conservative analysis of the amount of business you will get over the first few months of your business. For example, you can include: 1) the variable costs for salaries you would pay yourself and other employees (if any) over a three-to-four-month period, 2) the expenses for materials such as printer paper, stationary, etc. over the same period.

Adding this amount of would allow your business to run for that period without worrying about whether customers will buy units of your product or service according to your projections in your business plan.