How to Plan Your Business Properly
Running your own business can be an exhilarating experience, although it can seem overwhelming to suddenly find yourself fulfilling many different roles (marketing, sales, finance, HR, etc.) all at the same time.
Despite this, many stay-at-home mums find themselves dreaming about doing their own thing, whether that be cake decoration, web design, or any other skill from which they feel they could make money. But how do you know whether your passion should remain an enjoyable hobby, or whether your great idea could potentially make you millions?
A business plan. Completing one of these documents forces us to think about ALL the aspects involved in starting a business and although there may be some difficult questions (and maybe even some insurmountable obstacles, at which point you gracefully withdraw and move onto your next brilliant plan), it’s far better to think about them now than later.
A business plan will help to manage risk (when you’re a one-woman band all the responsibility rests on your shoulders) and maximise profit, as well as helping you to prioritise how to use your valuable time most wisely.
It is useful to do even if your business is already up and running as it give you a clear picture of where to take the business next, but it is best done at the beginning to help you map a clear path to success.
The most crucial thing to remember is that a business plan is a working document, so it’s perfectly acceptable to make changes to it along the way - in fact, it would be worrying if you didn’t!
Some key points:
- Make sure your plan is easy to understand and easy for you to update along the way.
- Store any detailed information (such as market research) in appendices at the end of the document, but make sure to note their existence in the main body of the plan.
- The plan can be as long or as short as you like, depending on the complexity of your business. Be clear about your aims for your business and provide a realistic route to achieving them.
- Once you’ve got all the basic information in place (company name, registered address, website, contact details, etc) you should look to complete the following sections.
1. Executive summary
Although it appears first in the document, you should actually complete this section last, so you are able to give a fully rounded overview that neatly summarises all the information from the other sections. This is the most important part of your plan.
This section elaborates on the main purpose of your business, as well as your strategy for developing it in the future.
Highlight facts such as how the business came into being (have you created it from scratch? If so, based on what experience?), what industries it operates within and when you intend to officially commence work.
Outline the products and/or services that your business will offer, with details about their key features and USPs (unique selling points).
Provide a description of your intended customer base and explain what will make them buy from you as opposed to your competitors. Being aware of your competition and being proactive in how you handle it will help your business stay the course.
Conduct thorough research into any legal or insurance obligations that are relevant to your business and list them here.
3. Sales and marketing
Provide a summary of the research you have undertaken in order to find out who your customers will be and how best to attract them. This will vary hugely from business to business and it’s vital to work out what suits your audience best. Getting out and chatting to your potential customers, suppliers and investors will help you here, but in addition to this it is now possible to create and distribute anonymous surveys online to further substantiate your predictions.
Perform a SWOT analysis on your idea - what are your strengths, weaknesses, opportunities and threats?
As a part of your market research, you will undoubtedly have realised that one of your biggest threats are your competitors. Your product or service doesn’t have to be unique to be successful, but in order to compete with pre-existing businesses you will have to show how you intend to improve upon what’s currently available (and this doesn’t have to be done purely through pricing - customer service, for example, can be equally as important) and how you propose to differentiate yourself.
4. Operations management
This section is used to show the detail of how your business will run on a daily basis and will need to include information about your premises, staff and any stock or equipment you need to purchase. Demonstrate what your supplier network will look like, as well as how you will cope should part of the supply chain break down at any point. Contingency plans are vital.
This may well be the most daunting section for new business owners to complete, but there are lots of places to go for help. Obviously you could employ an accountant, but at this early stage it might be as well to explore free options first, such as visiting your own bank for advice or searching online for free tools that offer support.
Your financial forecasts will need to cover:
- What your start-up costs will be
- A profit and loss forecast, i.e., a statement of the trading position of your business - the level of profit you expect to make and the costs you expect to incur
- A cash flow forecast, i.e., a model of your business’s financial future
- Details of any investment you will need
- How much personal income you will need to generate, over and above break-even point, in order for the business to be a viable proposition.
It is worth being as accurate as possible with your figures, as some investors will make a decision about whether to support you based purely on this information and your executive summary.
- Proofread the document for spelling, grammar and punctuation, then get a couple of trusted people (from outside your industry) to check it. It needs to be free from jargon and easy to understand.
- Approach investors (or other interested parties) with the document.
- Keep updating it.
Visit businesslink.gov.uk for more guidance.