Step 4 – The Business Plan
Your Business Plan is the most important aspect to get right before starting a business.
If you don’t get it right, banks and investors may not fund you and if you do get your business off the ground, it’s more likely to fail.
By now, you would have identified your Business Idea, Researched it and Consulted Experts. You would have gathered a lot of useful information that needs to be collated and presented in a plan that can be easily reviewed and followed.
There are many different types of business plan templates out there, but all will include details of your business idea, financial forecasts and how you will promote and market your business.
Here are the 5 items you need to include in your business plan.
1. Your business opportunity
Detail here your business idea, your personal and business goals and a description of the business itself.
What is your legal structure? What products and services do you offer? Who owns/manages your business? What industry are you in and what’s the outlook for your industry? Who is your main market? What Research have you undertaken to determine all of this?
Include here a SWOT analysis identifying your strengths, weaknesses, opportunities and threats, incorporating information about your main competitors or a competitor analysis and your brand and unique selling point or point of difference.
2. Your Marketing Strategy
You need to outline your plan to promote your product/service and to get sales. Your plan needs to include:
- Marketing goal(s) – what specifically do you want to achieve from your marketing plan?
- A customer profile – specify the age, gender, location, customer drivers and barriers to buying from you, for each of your target market segments.
- Pricing – what pricing structures will you be using and why? Will your pricing structure change in the future?
- Distribution – what channels will you be using to distribute your products or services?
- Advertising and promotion – what specific paid and non-paid activities will you undertake?
- Stakeholders – who can you engage as potential partners, suppliers, ambassadors who can help encourage sales? Who could detrimentally affect your sales and how will you engage them?
- Sales forecast – include a realistic sales prediction and your target for Year 1 and Year 2.
- Evaluation – how will you monitor and measure the success of your marketing activities?
If you’re not sure where to start with your marketing and what to ask an expert, you can watch a free 1 hour training video here or check out our free marketing tools and articles here as well as here.
3. Legal requirements and risk management
Include details here of:
- Licences you need. What regulations, Codes of Practice and key legislation do you need to be aware of?
- International Standards you need to follow
- Insurances you need
- Intellectual property such as trademarks or patents.
Also include any information about any contracts, leases and agreements you’re required to sign to fulfil the requirements of this business.
Additionally you need to outline any key risks to your business (including those outlined in your SWOT analysis) and how you will address or mitigate each of those risks.
In this section you need to outline the key elements of your proposed operations. Include details about:
- Human Resource Management – employees, organisational chart, summary of key personnel’s (including owner) knowledge, skills, qualifications, and relevant experience, wages estimate, employee conditions and awards, training and development
- Are you considering being an Independent Contractor, or hiring contractors?
- Workplace Health and Safety
- Premises description and location
- Equipment requirements
- Stock and Inventory
- Information and Technology systems.
- Do you want to buy an established business or franchise?
- Are you planning on importing or exporting?
- Have you got Risk and Emergency Management Plans?
5. Financial statements
You will need to include a start-up budget and ongoing costs to run your business, as well as forecasts for future income and spending.
The specific items you should include are:
- Start-Up Budget
- Annual Profit Budget – Year 1 and 2
- Cash Flow Forecast including projected cash flow by quarter
- Balance Sheet – forecasted opening balance sheet and year-end balance sheet
- Break-Even Analysis.
Understandably you may feel a little overwhelmed at this point if you haven’t had to produce this type of document before.
This is why it’s important to Consult Experts who can assist with this process. Employing an accountant for example to assist with the financial documents is a relatively small cost to pay, compared to the risk of opening a business based on inaccurate financial information.
Yes, developing this document may take some time, but it should be easier if you have first completed Step 1 The Business Idea, Step 2 Research and Step 3 Consult Experts. It is definitely worth doing a Business Plan properly as it will give you a firm foundation to start from.
If after completing your plan you think your idea still has merit, continue to the final Step 5 – Business Set-up.
However if after developing the plan your idea doesn’t stack up or you can’t get the support you need, go back and revise or shelve your idea. It has not been a wasted exercise, so for the only thing you have lost is time.