If you are taking your first tentative steps into the world of entrepreneurship, the chances are that you’ve been harboring a desire to change your amoeba of a business idea into a reality for years. Moving from full-time employee with an excellent wage, great promotion prospects and a secure position to a self employed individual who doesn’t have a clue when their next paycheck is coming in is difficult. However, because of your belief, determination and drive, you have chosen to make the move away from employment to become an entrepreneur.
It doesn’t matter whether your business is a catering outlet, an import startup or a craft based venture, you need a business plan. Even if your overheads are low and you don’t foresee the need to secure any extra funding in the immediate future, a business plan is so much more than your ticket to a loan. A well constructed and nuanced plan is a working document that will help you clarify your thinking, address your business goals, set your vision and startup ethos, and consider your financial health. It will encourage reflection making you look at potential risks and the best way that you can mitigate them in the sort and long term. With an exceptional business plan, you have the foundations for a successful and prosperous startup. Take a look at why you should never underestimate the importance of a business plan.
There are so many business plans out there that run into the hundreds of pages, that are full of waffle and repetition. This isn’t because the author of the plan is lazy. In fact it’s the opposite. When you have a passion for something, it is all too easy to become swept up in your own enthusiasm. You can write about importing the latest ball bearings from Hong Kong until the cows come home, but you need to consider the audience of your plan. If you are heading into the bank for a meeting with the loans officer, he or she isn’t going to want to read about your life story. They want to know facts and figures. Be concise and don’t use too much descriptive language. This is a plan, not a piece of prose.
Longer plans tend to have a habit of finding their way at the back of a cupboard. A business plan needs to be a useable document. Too long, and the plan becomes unwieldy and something that cannot be utilized effectively. It takes time and effort to construct a business plan so don’t let this go to waste.
Don’t Get To Techy
There’s nothing worse than heading to meet a potential investor with your plan, only for them to become flummoxed with the high rate of industry specific technical acronyms and jargon scattered amongst the paragraphs. A bank manager won’t know the ins and outs of the latest hydraulic system you are trying to bring to the automotive industry. All they want to know is if your business is profitable or not. Keep the language simple and very much in layperson’s terms.
If you do use acronyms, make sure you use a glossary or an appendix to address these at some point in your plan.
Write The Plan
It sounds simple, but for all your desire to write a plan, getting the virtual pen on the virtual paper can be challenging. Where do you start and how do you structure your plan?
This is the most crucial section of your business plan and it is the first thing that any potential investor will read. This piece of prose needs to be short at approximately two A4 pages in length. The narrative needs to exude drive and passion but it cannot be unrealistic or emotive. This is a tricky balance to pull off.
In terms of content, your executive summary should detail what your company aims to do and consider what it is that you are asking from the reader. There must be a purpose to the first two pages so the reader is clear about what it is asking from them. It should be a stand alone document to give a thorough introduction to your company in case an investor does not have time to read through the entirety of your plan.
Many business angels require the executive summary of your plan before making any decisions regarding the rest of your document. If they like what they read in these first couple of pages, they may invite you to pitch a presentation and to bring along the rest of your more detailed plan, highlighting the profit projection, gross and net figures and long term financial goals.
It’s vital that you have a clear idea of the financial health of your startup. Make sure that you detail the profit and revenue forecasts for at least the next three years, and make it clear how you have come to those figures. This can be difficult if you haven’t begun trading yet. Your figures may come from market research, competitor analysis, and trade show research. Any potential investor will get a feel for your startup when reading your plan and listening to your pitch, so they will let you know if they think that your calculations are wildly off the mark.
There’s no point being unrealistic and presenting your business as the perfect investment opportunity with no risk. By addressing risk, you are showing any potential investor that you are reflective and keen to address potential problems before they arise. Risk is a challenge for every business and you need to lay out your corporate strategy in order to overcome this. Mitigating risk could take the form of diversifying, scaling back or seeking cheaper suppliers.
Don’t feel like the more risk you have, the less worthy of investment your startup is. On the contrary, the fact that you are addressing these potential barriers in the planning stages allows any investor to get an insight into the owner of the startup. They are investing in you as much as they are your business.
A business plan without market research is like licking your finger and working out the direction of the wind. Just because you believe that you have the finest business idea since slicing bread doesn’t mean everyone thinks the same way. You need to carry out market research to discover your potential target market and to discover whether your product or service could make money. You could employ a firm to carry out the research on your behalf or you could carry it out yourself. Ensure that you heed the feedback that you are given otherwise what is the point of the research. Identify your customers and create that niche that you need. Targeting everyone is always a mistake and will spread you too thin leading to a car crash of a business.
Your business plan needs to address the needs and wants of your market. It needs to identify a problem and show that your business is the solution. With your target audience keen on your product or service, you can show any potential investor the integral value of your new company.
Designing a business plan isn’t easy, especially for the first time entrepreneur. Luckily there are hundreds of templates online to aid you in the creation of your plan. Stick to these main points, address any potential risks and cover your finances to ensure that your business plan empowers your startup to succeed.