Are you thinking of going it alone in a business sense? Maybe you and a partner have had that great entrepreneurial moment to take the world by storm. No matter how good the idea for a business is, it is far more likely to fail without a suitable plan to back it up. The old saying ‘Fail to prepare, prepare to fail’ is only too true in this situation. Yes, some people have been very successful without much or a plan or without a plan at all, but these are few and far between. You are statistically more likely to fail without a carefully put together plan of attack. Just remember, having a plan doesn’t guarantee success but can help you to becoming one.
What’s the Point of a Plan?
Great question and one that has a very sensible answer. Your plan is for you. Its main purpose is to convince you (and your team) that this idea is actually a good one. Many new ideas are set in dream world with no real substance to them. Often, they are filled with fantasy and projections which are designed at persuading investors to get on board. If you are familiar with the TV show The Apprentice, then you will not doubt have witnessed countless business plans being torn apart for lack of thought process. Your plan must have some basic details in it to prove your business will work and be successful. It must be logical and broken down into stages. Walk before you can run. Where will you be after a month? How will the business look after its first year? These milestones help to focus you and your team and also show investors that you are serious and that your business can work.
Do Your Research
A great idea by an overconfident person will only go so far. There is a lot of research to do before an idea can be fully committed to. You need to know the market you are entering into and where you fit within it. Ideally, there will be nothing like your business anywhere in the world so you are truly unique and can be an instant market leader. Be aware that there could be a good reason why nothing exists in this area!
What is the competition and how do they operate? Drilling down into this can help you work out your USP and work out what you can offer that those other businesses can’t. It will also show you the size of the market and if it is flooded. It is also important to research costs associated with your business. Do you need stock, warehousing, office space? All of these criteria should be included in your business plan.
This might sound a bit random, but research business plans themselves. There are different formats you can use so find one that fits you and your business. Them research what actually goes into different sections of the plan.
What Do I Need to Include?
So, you’ve checked the market and found a style of business plan that you are going to use. Now you need to know what actually goes into a business plan. The following sections are suggested areas and are not an exhaustive list.
Title Page and Table of Contents
A professional looking plan will have a suitable title and a table of contents to guide the potential investor through your plan. The table of contents also shows that you have thought through your plan step by step. The company logo is also needed on the front cover and can be used throughout the document as an image in the same place on each page.
This section briefly explains what your business is and why it will be a success. Include a mission statement, details of employees and their roles, where your business sits in the market, your physical location, and your exit strategy. You might also include financials here if you are hoping to attract funding from investors. This is the first and most important section, so it is worth spending time on this and getting it right. There is no harm in researching and reading similar business plans to understand what is required here. Brief and to the point are the key to this section.
As the heading suggests, describe your company in detail. Include how your company will solve a particular problem or prove a service to a certain area. It is important to be as specific as possible here and potentially list companies and organisations you will be focussing on. Also include any expertise you already have within the business or ones that you will be seeking to acquire. Really promote your own experts as this again show the potential for success. Where will your business be based and explain why this is the best place for you. You will need to showcase the advantage you have over your competitors whether this is through patents, speed of service or quality of product. This should link with how you are going to be a success.
Know the current market and how you will benefit from it. This might be a niche or a gap you have identified or a full take over plan. Whatever your strategy is, you must make it clear and obvious that you have done your homework. Name competitors and their successes and compare yourselves to them. You might have the aim of taking over from them in the next 5 years or look to emulate them in another part of the market. All of this analysis is further proof that your idea will work. Showing that you understand how other companies operate informs your decision making moving forward.
This can look very different depending on how established your business already is. You might be expanding a business into other fields. In this case you will have accounts and financial records to base projections upon. If this is a new start up, then your projections will be based upon market research. It is important here to be realistic and not project huge financial gains quickly. This is a sure-fire way to put off potential investors. Include specific examples to support your timelines which can be from other companies initially. Make sure that you have included balance sheets and cash flow documents (as much as you can) to give as clear a picture as possible about your business.