A brand new, money-making business idea is enough to send you into a creative frenzy and charging full-steam ahead with implementation. It is thanks to this same enthusiasm that so many ideas come into fruition and eventually, with hard work and dedicated passion, become successful enterprises. Before jumping in over your head though, it is important to cover the basics - like your business plan.
What is a business plan?
A business plan is usually an extensive but useful document that outlines all aspects of your proposed business or business idea, from objectives through to growth potential, legal requirements, target markets, logistics and even finance.
Why do I need a business plan?
As moms, we are used to taking mental notes, doing 10 things at the same time and rarely missing a trick, but when it comes to business there are some pretty good reasons to sit down and put it all in writing:
1. Helps identify potential problems before they happen. Planning ahead will ensure you've covered all bases in terms of what could go wrong with your business. In addition, by the end of the process you'll know if you need to file for any trademarks, permits or licences. Like anything in life, the devil is always in the details, and better planning always means that things will run more smoothly.
2. Sets long- and short-term priorities. While we'd all love to jump straight into making our ideas a reality, the fact of the matter is that resources have limits (especially in start-ups). A business plan will help you to set priorities and identify where best to allocate your time, effort and money.
3. Helps provide information to potential investors, lenders and banks. If you need financial support, like a loan from investors or a bank, they will require your business plan to assess the economic viability of your business and the risks associated with investing.
4. Maintaining Focus. Along the road there may be times where you find yourself off the beaten track. Review the goals, priorities and company values laid out in your business plan to help you get back on top of things.
What to include in your business plan
Okay, now that you're ready to write a business plan it is time to go over what you actually need to include. Business plans can come in various shapes and sizes and ultimately you should do what works for you.
If you want to raise a lot of money, a big formal document with charts, graphs and assumptions is better. If the business plan is just for you an informal handwritten page might just do the trick. Whatever your requirements, the following are the common elements of a business plan:
Business Profile:Think of this section as an introduction to your business.
How would you describe it to your friends and family? Include details such as name and location.
What are the business core goals and objectives and, most importantly, what needs will the business satisfy, and why?
Product and Market Analysis:Describe your product and market place.
What will you be selling?
What is the history; how did you come up with the idea?
What does your product do? What is your service about? Describe your products and services in detail.
Highlight your target market and how you plan to gain market share.
Who will be your competitors and what features do their products/ services have?
Marketing Plan:This is your chance to discuss your marketing plan and strategy.
Identify who your potential customers are.
Describe what they buy and why they will buy it from you. Include as much information as possible on your plans to reach these people through advertising, public relations, personal promotion, your website, etc.
Operations Plan:What does your business need to work?
If you are selling a product, what will it cost to make and ship it?
Where will your products be made and what equipment and materials will be required to make them?
How will the product get to you and will you wholesale or sell direct?
Will you need business premises, such as a shop or office?
Are there any regulations that may affect you?
Management Plan: This section covers everything to do with managing your business and, as a start-up, may only be relevant in the long term, as you may do everything yourself initially. This typically includes things like job descriptions, employees, company policies, development and training.
Financial Plan:Highlight how you will finance your business and include your financial projections.
What will it cost to set the business up? Will you need to pay for an office or store, websites, telephones or internet, office furniture, marketing material or anything else?
How much can you sell your product or services for? What are your assumptions around these and why?
Can you calculate a break-even point – when sales and expenses equal one another, and how long it will take to reach this?
Make sure you cover how much money you will need and what you’re going to spend it on.
Action Plan: Outline key milestones and goals you want to achieve. This is a helpful guide when it comes to actually managing your business. These may also include some personal goals for you.
Appendices: If your business plan is a formal document, include information to support your business plan such as legal documents, business references, contracts, client testimonials, relevant financial papers and anything else to back up what you say in the business plan.
Tips for writing a business plan
Once you've gathered all of the information mentioned above, it is time to sit down and get it into a professional business plan. Follow these simple business plan writing tips:
Be involved: There are professional business plan writers out there, but try to resist handing over all the work to someone who doesn’t know as much about your business as you do. If you aren’t confident writing your own business plan and decide to hire a professional, make sure you’re involved every step of the way and know your business plan inside-out. In addition, a DIY business plan is far more economical as consultants can often be costly.
Use the Internet: With plenty of example business plans and business plan templates available online, it’s easy to get a feel for what your business plan should look like.
Don’t embellish the facts: When outlining financial projections never be too optimistic by overestimating profits and sales. Be realistic and base your predictions as much as possible on actual information. We’d all love to be millionaires overnight, but your business plan will look a lot more credible if it looks reasonable.
Write your executive summary last: Chances are that a lot of things you didn’t think of before writing your business plan will come up during the process. Write this summary last to make sure you’ve covered everything. Ensure that it is to the point and informative at the same time. This is essentially your pitch to potential investors.
Don’t depend solely on your idea: A great business idea still needs the research to back it up, so don’t focus too much on the idea itself in your business plan. Investors and lenders want to see actual facts, figures and market information.
Be professional: Use professional language when writing your business plan and always be clear and concise.
Proofread: You don’t want to show too many people your business plan, but it’s always good to have one or two pairs of eyes go over it to pick up anything you may have missed. Ask a trusted friend or relative.
If you want more tips on the financial side of things take a look at our Small Business Finance article. If you are powering ahead with your marketing then take a look at How to Set up a Website. Good luck!