- November 15, 2022
- 10 minute read
The key to the success of any startup company is getting organized right at the start. In order to increase your chances of success, you will need to be organized, focused and you must identify the key priorities for your business.
This is where a business plan comes into action. Think of a business plan as your road map, where you can put all your thoughts on paper so that you have a clear idea of where your business is going.
In doing this business plan, you will be able to check if your idea makes sense, discover any weaknesses in your plans or product, assess any potential risks (e.g. if a third party that you use goes out of business, what will you do?), and identify any business opportunities that you may not have previously considered.
Having a business plan is also important when it comes to convincing other people to back your business – whether that be a bank or an investor. If you are seeking to raise capital using a bank, they are not likely to lend any money unless you present a business plan. Therefore, it is important that your business plan looks professional and contains all the relevant information that said bank or investor would be looking for.
A traditional and more commonly used business plan uses a standard structure. With this type of plan, you are expected to go into detail in each section.
There is also a different type of business plan called a ‘lean startup’. This one is less common, but it still uses a standard structure. In this case, you would only be expected to summarize the most important points of your plan, making it easy to read and understand. This type of plan would typically not include any of the business background and would generally only be laid out across one page. This simplified version not only takes less time to create, but it also allows you the flexibility to adapt and update your plan in the future.
Although it may seem like a daunting prospect, writing a business plan needn’t be a stressful experience – there are many templates and business plan software packages available online which in conjunction with this article, should help you through this process. We will be focusing on the traditional business plan, which among other things, will include an executive summary.
First and foremost, you will need to have a very clear vision and objectives. Here you will have an opportunity to talk about your product / service, what makes your startup unique, the solutions you are intending to offer in the marketplace, what makes you different from the competitors, how you will add value to the market and of course, how you will make money.
You will need to give information about where you will run your business from (e.g. physical or online) and if your product or service requires research and development, here is where you should explain this. You may also consider including a mission statement to tell your audience all about your values, aims and standards.
The first thing you need to do is identify your target market. Things such as geographic location and the demographic (age, gender, income level, etc) are of utmost importance at this early stage.
Do some market research with face-to-face interviews to get a better feel for what your potential customers want from your business. Ask them which solutions they are looking for, listen to their responses carefully, so that you can tailor your product or service to their needs. In doing this, you should be able to address the problems within the market and provide solutions for these potential new clients.
When you’re starting a new business, you should ensure that you don’t get lost in the crowd. Analyze the market and find out who your competitors are, where they stand in the market and how they promote themselves. Try to find a new spin so that you stand out and get peoples’ attention.
When budgeting, there are many things that need to be taken into consideration. First and foremost, you need to establish how much money you will need to start the business as well as its daily operating costs. No stone should be left unturned! Consider the property costs, fixtures and fittings, office equipment & insurance (building, contents, public liability, employer liability, etc.).
Then you will need to think about your legal fees and any inventory that you may need to buy. If you are considering employing anybody, payroll is also something that needs to be considered. Your business plan should include a startup balance sheet showing all your assets and liabilities as well as the owners’ equity at the point of startup.
A good financial plan is one that is based on realistic projections calculated through careful research. You will need to strike a balance, so that your forecast isn’t overly optimistic or pessimistic.
Look at the total population of the target market in your area and calculate what percentage of that market you believe you are going to penetrate. Don’t try to take on too big a chunk of the market in the initial stages as you don’t want to bite off more than you can chew. Make educated projections taking into account any anticipated costs, calculate your break-even figure and set yourself milestones that you will need to achieve on your way there and beyond.
Quite often, not a lot of importance is put on this element when starting up a new business. This can often result in confusion down the line when it comes to hierarchy. To prevent such debates, you can prepare a simple organogram outlining who is in charge and the relevant roles of each member of the team. In this section of your business plan, you might also want to consider including resumes and CVs of key members of your team, as well as projections for possible future hiring.
Having a clearly defined marketing plan and budget that is carefully thought out will work wonders for you. Remember that not all marketing needs to be paid for and that there are many free options out there for you to take advantage of.
Lay the foundations of your marketing strategy by investing plenty of time in social media interaction, as well as a well-constructed website. Google maps is another very powerful tool that is free and easy to use. In focusing on your Google Maps ranking, you can unlock one of the key elements to ensuring you are found by potential customers – above your competitors.
You will also want to consider e-mail marketing and loyalty programs as a possible next step. Once you have explored these free options, you should then plan out all the paid advertising that you will use to promote your business – e.g., brochures or flyers.
Your business plan should have a cover, as well as an index and if possible, graphs and tables to show figures. It should also contain an appendix with any supporting documents.
Once you have done your business plan and you feel that it is as complete as it can be, you will need to proofread it so that any spelling or grammar mistakes are identified and corrected. You should keep it professional, ensuring that there are no slang words used and that it’s neither too long nor too short.
After you have proofread it, share this with others and seek their feedback as quite often, a fresh set of eyes can uncover important elements that have been missed. Take on board any comments or opinions, positive or negative, and use these to make improvements to your plan and create a final version.
Now that you have your final version, you are ready to approach a financial institution or investor to put forward your funding request. You will need to have a clear idea what your funding requirements are and what you will be using it for. Be prepared to provide tax returns, credit reports and a personal financial statement.
So, there you have it – A business plan summary that should hopefully show you how to achieve that all important structure to kick-start your startup, and help you hit the ground running!
Photos via Freepik
