Are you wondering why do I need a Business Plan for my startup or small business? A well thought out business plan can act as your roadmap of where you are going and how you are tracking along the way.
A business plan helps you to:
- Set out your idea on paper
- Keep you focused
- Spot any potential pitfalls
- Assist in communicating your idea to others
- Confirm your objectives and longer term goals
- Measure your progress
You’ll need a business plan if you want to secure investment from investors, secure a loan from a bank or just about any other finders.
It can also help with staff buy in to your vision and for them to understand how you plan to achieve them. Having everyone pulling together in the same direction is essential as a start up.
What is a Business Plan
A business plan is a written document that describes your business. It covers objectives, strategies, sales, marketing, costs and financial forecasts.
Starting a new business can involve many requirements for your time, it is essential to keep focused on what you are trying to achieve. Having the plan written gives you a constant reminder.
Another important factor to consider when writing your plan is are my projections realistic and achievable?
Sometimes it will be worthwhile budgeting with an under objective and another with over the objective. This way you can see the effect of under performance on the bottom line, also you will see the implications of higher trading volumes on your cash flow.
Writing A Business Plan
So now we know why we need a business plan, how do you go about writing one?
A good place to start is by downloading a Business Plan Template, there are several places you can do this for free. A great resource for this is The Prince’s Trust.
As well as the downloadable Business Plan, you can also download Financial Tables which includes cost analysis and cash flow forecast template.
Make It Easy To Understand
Make you business plan easy to understand, potential investors will need to grasp your plan easily.
Show how you will generate your profit, and explain when your business will start to make profit. Explain how you will cover the costs in the startup period if you are not generating immediate profit.
Use clear language and try to avoid jargon and don’t use unnecessary padding.
The Devil is in The Detail
Ensure you explain in detail exactly how you are going to hit your targets. Dig down into the details and specific actions you will be taking.
Give a brief synopsis of the key people within the business, including the experience in your proposed market. Alternatively, the transferable experience they bring to the business and how they will employ that experience.
Detail how the key people already have contacts within the industry with suppliers and customers and if how that will benefit the business.
Understand You Market
Make sure your plan is clear about your target market – who will you be selling to and how many other companies are already selling similar products?
It is also important to consider how you will converse with your potential audience, what channels will you use.
What Is Your USP
What is it that will differentiate you from your competitors? How will you entice customers to come to you? This is a major factor in attracting clients from their existing suppliers.
Pricing Your Product or Service
Because setting your product or service at the price right is tricky as a new start, carry out as much research as possible on the market you intend to offer. Compare what other companies offer at the top of the price band, and also why some are priced at the lower end.
Knowing exactly where your competition is priced, and the reasons behind the extremes will help you with pricing.
For Example, price too high and you will see reduced demand and sell less volume. Conversely, too little and you may produce volume at the expense of profit, remember it is profit that pays the bills.
Knowing Your Numbers
Another essential part of a business plan is the budget/ finance section. To be successful your business needs to make profit. Albeit you may sell lots, without profit your business will not survive long term.
Be very clear on how you will make a profit, what will happen in various scenarios and what actions you will take.
For example; what will happen if you have to pay an extra 10% for your materials, products or in costs? How will that effect your bottom line?
Your Business Plan is a tool to help you understand you and others objectives and how you will achieve them. It is a working document that should be integral to your success.
Finally, now you have created your plan, review it on a regular basis, either weekly or monthly, to ensure you are still on track to achieve your goals.