Starting a new business is an incredibly exciting time. Maybe you run a small business and are looking to take it to the next level, or you have a new concept and have decided there is no time like the present to get started. Either way, the following 10 points should be comprehensively answered in your new business plan.
Whether you are presenting it to a bank to support a loan application, or to an investor who is interested in your proposal, follow these steps to ensure you have compiled a high quality document. It is important to remember that a business plan is more than just a gateway to finance – your business plan is essentially your business encyclopedia, covering everything from competitors and marketing to balance sheets and long term goals.
1) Who are you?
This section is dedicated to you. Ensure you include all of your contact details, the business name, who the owners will be and your CV. It is also an opportunity to present the human side of you – by stating hobbies and interests. Having good business experience is desirable, but some investors may be just as interested in your personality.
2) Executive summary
Here is an opportunity to provide a short summary at the start of your business plan on the following three points:
• What does your business do?
• What are your business aims?
• How will your business succeed financially?
The executive summary may be easier to write once you have completed the rest of your business plan.
3) What is your business idea?
This section allows you to introduce your business name, a summary of what you will be doing, and why you will be successful. This section will require much more content than the executive summary and is often considered the sales pitch.
4) What does your business sell?
You need to explain what your company will be doing to make money. Are you selling products? If so, what products? You may be providing a service. If this is the case, what services are you offering? Be thorough and explain exactly what your company is offering.
5) What is the market like and who are your competitors?
Is there demand for your product/service? Obviously there is, because you are looking to start a business in your chosen market – but this is your opportunity to prove it. Have a look at National Statistics and other interesting sources to collate data that will hopefully highlight the high earning potential for your business. Who is your target market? What are their spending habits? Will they use your business regularly?
Identifying your competitors is fundamental. Are they successful? Studying your competitors will provide you with ideas to use throughout the business plan. What do they appear to do well? What are their weaknesses that you can capitalise on? A great way to collect this information is using a SWOT analysis, identifying competitors Strengths, Weaknesses, any Opportunities, and any Threats to your business.
6) How are you going to promote your business?
It is very important to have a marketing plan in place for your business. How are you going to spread the word? What is your budget? What are the best options available to you? How long should marketing be a priority? These are all questions that you must answer in your business plan. A simple way to plan this is to focus on the ‘4 Ps of the Marketing Mix’:
• Price – how much will your target market be paying for your product?
• Product – what is it that you are promoting?
• Promotion – what promotional activities will you be carrying out?
• Place – where will your product/service be available to your target market?
7) How will your business operate on a day-to-day basis?
How would a typical working day pan out? In order for a successful day to be had, what must you take into account? This section must be detailed, and there are a lot of areas to cover. Here are some more questions that must be answered in this section:
• Banking – who will you bank with?
• Payment – how will you take payment from customers?
• Delivery – do you deliver your goods and if so, how?
• Suppliers – who are your suppliers and what are they charging/supplying?
• Your premises – where is your business operating from? Where is the premises? How big is the premises? Do you require additional storage requirements?
• What transport do you require?
• Legal – do you require any legal cover?
• Insurance – what do you need?
• Staff – are you working by yourself or do you need to hire staff? Will you be using any sub-contractors?
8) How much will you charge?
It’s likely you’ll find this a tricky question to answer. Thorough research must be carried out on competitors and your market to gage an understanding on what you can charge to encourage your target market to use your business, and to be profitable. A solid pricing structure must be created, and this will help with the next part of your business plan.
9) How will your business perform financially?
This can be the most time consuming part of the business plan, but also, the most important. You must be able to provide financial projections that clearly show that your business has what it takes to be successful. The following list of documents must be present in your business plan. Please do not include just one of each – you should be planning for the next five years. Including different versions of these documents for best case, and worst case scenarios is highly recommended.
• Sales forecast
• Expenses budget
• Cash-flow statement
• Income forecast
• Assets and liabilities – balance sheet
• Break even
10) What happens if something goes wrong?
Nobody likes to think about problems before they arise, but it is a crucial part of a high quality business plan. If for some reason the business does not perform as forecast, there must be a “plan B” in place to give it every chance of success in the future.
K&B Accountancy Group offer a variety of accountancy packages, especially designed for the self-employed. With so much on your plate, why not let the experts take care of your accounts? To speak with one of our team, please call 020 7078 0211. Alternatively, you can contact us here.
I wish you all the best in running your business.