Listen, I know how it is, I really do! You are desperate to crack on with getting your business set up and there are 101 exciting things you could be doing to get nearer that goal.
A business plan isn’t really necessary, right? After all, you don’t need to show one to the bank or investors as you have all the financials sorted for starting out on your new venture.
A business plan is far more than just a fund-raising tool. It’s your blueprint for success, pulling together all your ideas, thinking, research and plans to make a success of your new business.
The good news is, creating a bona fide business plan for your business doesn’t have to be hard.
Follow this outline for writing your business plan and you’ll be ready to move on to the exciting stuff in no time.
This is where you explain the basics of your business in a way that gives the reader a good understanding of what you want to achieve and how.
It should be relatively short – a maximum of two pages – and should explain what products or services you will sell, who to and other relevant details such as the legal structure you have chosen for your business, eg sole trader.
It should also include details of your short, medium and long term goals and a financial summary, such as your projected turnover for the first year and start-up costs.
As the summary pulls together information from the rest of your business plan, the best idea is to leave it until last to complete.
Your elevator pitch is a short statement summing up your business. The idea is that this is how you would describe your business to someone if you only had the duration of a ride in a lift (elevator) to do so.
So, it needs to be just two or three succinct sentences that get to the crux of your business.
Again, it’s a good idea to work through the rest of your business plan first to concentrate your mind on the important details before writing your elevator pitch.
Your business plan is as much about you as it is about your business.
Include a section which explains why you want to start a business, why you have chosen this kind of business, why you think you have the experience, ability and commitment to make it a success.
It’s a good opportunity to delve into your ‘why’ – what makes you excited about your plans?
You should also include relevant CV-type information such as education and qualifications, work experience, training and hobbies.
WHAT ARE YOU GOING TO SELL?
What products or services (or both) will you be providing. Explain your products and services clearly so that a layman could understand. Avoid the use of technical or industry jargon where possible and use plain English.
WHO ARE YOUR CUSTOMERS?
Identify who your customers are going to be. Include detailed information about your target market.
Will you be selling to individuals or businesses?
If it’s individuals – how old are they, where do they live, how much do they earn?
If it’s businesses – what sector are they in, in what circumstances will they be looking to buy from you?
You should also include details of any customers who have already bought from you or whom you have lined up to do business with you.
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Your business may look good on paper, but proper market research is the only way to test your assumptions.
As well as researching your competitors, you should look at how big the market is and trends, such as is it growing or shrinking?
Also carry out surveys, asking your target market their thoughts on what you intend to offer. Would they buy from you? Why, or why not?
Focus groups are another way to gather feedback on your business idea.
You could also include the results of a test trading run, if that’s appropriate.
HOW WILL YOU SELL TO YOUR CUSTOMERS?
This is the section where you need to outline your marketing strategy.
You need to outline how you will let your potential customers know about your business.
Will you be relying on word of mouth or using other marketing methods such as advertising, direct marketing, email marketing, social media, trade shows or exhibitions? Do you expect to attract customers to a business website?
The predicted costs of your marketing plan need to be included in your cashflow forecast.
WHO ARE YOUR COMPETITORS?
Explore who you will be up against to attract your customers’ business. Choose about five competitors who are offering similar products and services and carry out a SWOT analysis.
STRENGTHS – What makes your business better than the competitors?
WEAKNESSES – Where do you come up short against your competitors and what will you do to mitigate?
OPPORTUNITIES – What external factors can you take advantage of which will help your business succeed, eg a growing market.
THREATS – What external factors are a black cloud hanging over your business, eg a new shopping complex near your new retail shop. How will you overcome the threat?
Use this section to explain your Unique Selling Point (USP). What makes you different to the competition, eg cheaper, faster, better (in what way)? If you can’t think of one, you need to go back to the drawing board and rethink your business.
HOW WILL YOU DELIVER AND GET PAID?
Explain the process of providing your product or service. If your product is coming from a third-party supplier, how long will it take to deliver to your customer?
Include some information about your supplier.
When and how will you get paid? Will you accept credit cards or cash only. How long will your customers have to pay? Do they pay when they order or within 28 days of being invoiced, for example.
Include information about your business “base”. Are you setting up an office at home or buying a shop? What equipment will you need to buy? What transport will you require and are there any legal requirements or insurance cover you need to enable you to trade.
HOW MUCH WILL IT COST?
You will need to have a clear picture of the costs involved in setting up and running your business. This information plays a crucial role when you are looking at how much to charge for your products or services. If you are to make a profit, the amount you make on sales has obviously got to be greater the amount you are paying out.
It is important to be realistic when you are looking at the cost of running your business. There is a lot to take into account and it’s often the “small” things which can make or break you.
When you know how much you need to charge for your product/service to cover your costs, compare it with what your competitors charge. Is it in the same ballpark? If it’s much lower, have you overlooked some costs or are you setting your profit margin lower as your unique selling point?
On the other hand, if your prices are much higher, will your customers be willing to pay the extra for your unique selling point?
Now you have given some thought to your costs and potential sales, it’s time to create a cashflow forecast for your first year,
Have the months as your headers and list your predicted sales and then costs to work out the “bottom line”.
Bear in mind seasonal changes in both your sales cycle and in costs, such as heating in the winter.
If you have annual or quarterly costs, divide them to include in your monthly costs.
And that’s it – you have a business plan, the foundation for your new business.
Be Concise – Keep your plan to the point and use simple language that everyone can understand.
Be Specific – Give details specific to your business, don’t generalise.
Know Your Market
Know your Finances.