By: Simon B
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Writing a Business Plan
Why do I need a business plan?
Jumping into any significant venture without a plan is a bad idea, and starting a business is no exception. This is particularly true if you are starting your first business and putting a lot of your own money into it. Putting together a plan will give you specific goals to achieve and a clear idea of how you hope to achieve them. It will also give you a chance to look critically at your business idea and contemplate whether you think it has a genuine chance of success.
A good business plan will also be crucial for securing funding for your company, whether through investors, a bank loan, or a government scheme. Organisations will not invest in your business unless they are confident that it can succeed, and the best way to convince them of this beforehand is by giving them a clear roadmap of how the business can work (as well as showing them that you are the sort of person who can make it work).
What should I include?
The sort of things to include in your plan can vary based on what sort of business you are planning to run – however, here are some of the more important and common elements.
Description of the business’s products or services
You should lay out exactly what products and/or services the business will provide, as well as how they will be provided. Will you be selling your products over the internet, or from a physical shop? If you have a physical shop, where will it be? What is the best location you could afford? These questions you must consider.
Your plan should also specify how you will get supplies – for example, if you are opening a restaurant, you will need to consider how you will get hold of ingredients and any food preparation equipment you need for the kitchen (not to mention chairs, tables, and any other furnishings you need for the restaurant itself).
Information and research into the market
No matter how good your product or service is, it would be foolhardy in the extreme to start a business without an understanding of the market in which your business will operate.
In terms of your products or services, you should think about what you will offer that other would-be competitors can’t or don’t. You should think about who your customers will be – where are they based? Will you be selling to businesses or directly to individuals? Why would they choose you over a competitor?
It would be worth doing some market research – you could send questionnaires to potential customers to see what they think of your hypothetical products or services and whether they would be interested in paying for them.
You should explain how you are going to fund the business, including how much you personally will invest and how much funding you will secure from elsewhere. You will need to establish how much capital you will need to get the business up and running, including costs of renting or buying property, hiring staff, securing supplies, marketing, and anything else. When in doubt, it is better to overestimate than underestimate this.
If you are planning to secure outside investment, you should think about what your investors will get out of the business – if the business succeeds, how will they stand to profit?
It would also be a good idea to include your own day-to-day living costs in the plan – ensure that you will always have enough left over to pay for food, electricity, and your mortgage or rent.
Your personal background
Write about your own life and work, thinking about what made you want to start your business and why you think you can make it succeed. Be sure to mention any experience you have in your working life that will transfer to running your business, particularly if it directly relates to the industry that your business will be operating in.
This is true of your hobbies too. If you are enthusiastic about the type of market you are starting your business in – you are a keen chef starting a food business, for example – you may have the passion to succeed.
The executive summary is an overview of your plan, condensed to give a reader a quicker and easier way to understand your business and its products or services. Though it should be written last, this part should be put at the beginning of the plan.
It should summarise the idea for the business, as well as the overall goals for the business and a summary of how it will be funded and how much you hope to make back in the first year of trading. These should all be things that you worked out when you were writing the rest of your plan.
You may also want to come up with an “elevator pitch” – this is essentially a rendition of the most crucial parts of your business plan, distilled into about 30 seconds of speaking. The elevator pitch is the sort of quick pitch that you need to be able to give at a moment’s notice – for example, if you step into an elevator with someone who could invest in your business.
This pitch should cover all of the most important points about your business – who it’s aimed at, what it does, why it is superior to your competitors, and any other important details about why the business will be effective and why an investor could benefit from being involved.
You should learn and practice this pitch so that you can deliver it smoothly without sounding nervous or too rehearsed – having a good elevator pitch is important, but it won’t be of much use if you don’t come across to the audience as confident or worth investing in.