Many people jump into a business with huge amounts of enthusiasm and passion. Some of these people are truly lucky and get those elusive “breaks” that allow them to grow and develop their business, but most do not. Did you know that 8 out of 10 businesses fail within the first 3 years? One of the major reasons, is that in the haste to get up and running, people forget about all the “behind the scenes” stuff that quite often is critical to success. Don’t get me wrong, you still need the passion and enthusiasm too!
I’m going to paint a picture for you.
Imagine if you will that you start out on a journey, by opening your front door and walking outside. You haven’t checked the weather, so you don’t know it’s going to rain. It does, and you have no jacket or umbrella, so you get soaking wet – you are now cold and miserable.
You didn’t plan your route, and before it rained you veered off the path onto a less-used track. It’s not as well-cared for and the ground is rougher. You wore sandals on your feet, and the rain has turned the path to mud. You are slipping and sliding around. Your feet are sore and you really want your tramping boots on.
Time marches on, and because of the conditions and your spontaneous decision to go “off-road” your journey is taking longer than anticipated. You didn’t take any food or water with you, as you thought it was just a “walk in the park”. So you are now hungry and thirsty as well.
Do you keep going and power through it all the best you can? Or, do you give up and call someone on your cell phone?
Do you see that with forethought and planning, you would be better prepared for the unexpected? Would having a jacket, umbrella, boots, food and drink allowed you to have continued on your journey?
This is a fair analogy for a business start-up. I can give you 3 good reasons right now for having a business plan:
- Without planning, a business is less able to deal with the twists and turns that will undoubtedly occur. Without planning, and a little luck, 8 out of 10 new businesses will fail.
- If you want to borrow any money, your bank manager (or any financial lender) will want to see a business plan
- It makes you seriously think about what you want from your business and how youa re going to run it
But don’t give up before you start. I am going to help guide you through the business planning process, step by step, so that you have the best chance of being in the 20% of successful new businesses. Think of it as a road map for your business.
So let’s jump right in and see what makes up a business plan…
The Executive Summary Section
The summary itself
This is a bit of a curve ball! In terms of presenting or showing your business plan to someone else, the Executive Summary sits at the front of the plan. But, you can’t summarize what you haven’t written yet. So, my advice is leave it until the end. By that stage it’s not so hard to take out the key points from throughout your whole plan and make them into a summary.
When it comes time to prepare the summary, think about someone who is short of time – what do they need to know about your business? Don’t pad it out or write it in long, flowing sentences. Be short and snappy, and even shorten to bullet points if you can.
The business details
- Business/company name
- Address – including any registered address and trading address if different. This will be your home address if you work from home.
- Contact details, such as phone number and email address
- Legal status of the business – it could be a Limited Company, a Partnership or like me a Sole Trader. This will also depend on the legal business entities in your own country.
- A brief description of what your business will do
To give you an example for my own business. It will…
- Provide services in marketing, sales and business development for small to medium business, to support growth and maximize opportunities for success.
- Affiliate marketing, by monetizing a niche website
It’s important for anyone supporting the business, whether financially or otherwise, who the key personnel are. Details to include for each main person involved are:
- Experience and knowledge of the industry your business will be in
- Previous Employment
- Key skills relevant to the business
- Any business experience and/or training
- Academic/professional qualifications
Think of this section as a bit like a resume, but perhaps a bit shorter.
The Vision Section
The business idea
This is designed to be a summary of your business idea. Expand on the short summary of what your business will do in the “Business Details” above. For example, to expand on my own situation, my business idea is:
- To assist small to medium enterprises with their marketing, allowing them to utilize an experienced marketing professional on a flexible basis, without having to add to their business overheads. The key focus is to offer help and support to time-constrained businesses, who want to push forward using marketing but aren’t sure how to do so and also don’t have the necessary resources. The key geographic area is Aberdeenshire, particularly NE Aberdeenshire. Key specialist areas will be: Social Media, Advertising, Website Advice, Sales Promotions and Marketing Planning.
- To run an online business centred around affiliate marketing, monetizing a niche website and earning through referrals to retailers.
If you are preparing to go to a bank or lender, you will need to include some financial goals here. If you can fund your business yourself, your goals could be anything you want. Whatever they are, it’s important to set some for several reasons.
Goals keep you on track, reminding you what you are aiming for. It also helps measure your success along your business journey. Remember you can change or update them along the way – there is no rule saying they are fixed for eternity, but it is good to have some goals when you are starting out. It is proven to help success.
The best approach is to have short term and longer term goals, like
- what do you want to achieve in your first year of business? (x number of customers, a turnover of x, x website visitors, or a new car!)
- where do you see your business in 3-5 years? This is a huge help to getting past that 3-year milestone. Chances are if you can visualize your business in 3-5 years time, then your business will still be around in 3-5 years time.
What does the business do?
This is really designed to qualify your product or services, buy detailing what they are, their features and the benefits to your customers or audience. Take a look at these few examples here:
|· Social Media Support||· Matching the business with the best platform(s)
· Scheduling & content advice
· Selecting content
· Actual posting
|· Reaching the right audience for best results
· The right style for best effect
· Save time
· Save time
|· Advertising Support||· Setting objectives
· Selecting the right media
· Advert design
· Measuring results
· Facebook advertising
|· Know what you want to achieve
· Reach the right people
· Lower cost than graphic designer
· Know your ROI
· How to get customers from Facebook
What makes the products or services of the business different
It’s important to think about how you are going to give your business stand out. it doesn’t have to be a unique business or idea, but if it’s not how are you going to do or be better than your competitors? Think of answering this question:
Your product/service is unique or different compared with the competition because…?
Are there any legal restrictions or insurance conditions that will apply to your business, or what you are selling? If so, they should be documented here. You should include how you intend to meet any of these laws or conditions.
If legislation changes while you are running your business, it’s a good idea to update this section as you go along.
This doesn’t mean you have to undertake formal research! It’s as simple as identifying any key trends in your industry, location or desired customers. For example, one of the trends in my chosen market I details as:
- Many people are dabbling in social media, but aren’t sure exactly what platforms they should invest in and/or aren’t using it to best effect
It’s good to complete this section with how you came to know this information. It could be your own experience – if you have worked in a particular industry for 5-10 years, there’s no reason to doubt you know what your talking about. Or, if you have got information from an online source you can say so here, or reference newspapers, current affairs etc.
Evaluating your customers
Again this isn’t meant to be complex. It’s just thinking about the following:
- who are the customer groups you will be selling to?
- what do these customers want? i.e. what need, desire or problem are you fulfilling?
- what might they pay
Thinking about your competitors
Who are your competitors, if you have any? And if so, what are their strengths and weaknesses? What can you do to offer something better?
Managing your risk
Are you aware of any particular risks to your market, location or offering? If so, what can you do to minimize this risk?
How will you calculate your prices?
How do they compare to your competition?
Reasons for any difference
Remember: there’s nothing wrong with asking for a higher price, provided there is a perception among your customers that you are providing more value!
Promotion and advertising
How and where will you promote your product/service?
It’s a good idea to develop a marketing plan as well at this point, to summarize what you will spend on promotion and advertising and when. This is one of the single biggest areas of overspending for new businesses, because they don’t set a budget and plan how they will use it.
It’s also important to note that very few businesses succeed without investment in marketing, so be prepared to spend a little here! Without it, you won’t get very far.
The Finance Section
I would say this is imperative – even if it’s just you working online from home. What will it cost before you can start running the business?
It could be something as straight forward as a computer and internet connection! If you don’t already have it, it’s a start-up cost.
It’s a good idea to work out all your expenditure, so you can assess what it’s going to cost you and how you can fund your business.
So to get a realistic picture, you need to think about:
- Costs to start your business – fixed costs to get going
- Costs to run your business (from home this could be electricity, phone, internet connection – recurring costs to keep you going
- Promotion and Advertising costs – how much and when will you spend on this?
- If you don’t already have the money, how are you intending to get it? And what are the debt servicing costs?
- What do you expect to earn and by when?
Asking these questions and thinking about the financial implications helps a business start on the right foot. The business goals then help guide the business, ensuring it stays on track for ongoing success.
I hope you have found this useful. If you have any questions or are not sure about any particular section, then please do get in touch. I’m here to help. Being a small business owner myself, I like to see other small businesses succeed.If you like this, why not share it?