Think you've got a great idea for a new business? It's one thing to have a dream, but another to be able to create an income from it. That's where a business plan comes in.
A good business plan is essential when thinking about starting a new venture. It'll help you apply for business finance and keep your vision on track once things are up and running. Here are four steps to creating and implementing an effective business plan.
1. Set out your strategic vision
Ask yourself what your company stands for. Think of everything you'd want a potential investor, partner, employee or customer to know about it. This includes:
- Vision statement: This should be brief and aspirational, yet achievable. Take the time to get it right.
- Unique selling proposition (USP): Sets out why you believe customers will come to you rather than a competitor.
- Target market identification: While you don't want to limit your customer base, the clearer a picture you have of your target market, the easier it'll be to communicate with them.
- Explanation of products and services: Should be designed in line with your USP and meet the needs of your target market.
- Key goals: Must be measurable, achievable and consistent with the financial plan.
- Capital requirements: How much will you need to start and run the business, and where will you get the funding? Will you need to apply for a business loan or overdraft? Amounts should be supported by calculations in the financial plan.
2. Set out the details
Now it's time to see how your vision will work. Who will help you bring it to life? What business structure are you considering? Here are some other things to include:
- History and structure: Outline the business' background and introduce key people like employees, managers, partners and investors.
- Competitors: Do a detailed analysis of the competitive landscape, including information on the industry, size and characteristics of the target market and your competitors' strength and weaknesses.
- SWOT (Strengths, Weaknesses, Opportunities and Threats) analysis: Put your business model to the test by identifying the strengths and weaknesses of your idea and potential opportunities and threats.
- Business assets: Identify what you have and what you need, including premises, plant and equipment, information systems, intellectual property, licences and insurance.
- Goals and milestones: Set out major business goals for the period covered by the plan, plus various milestones you want to reach along the way. Make them specific and measurable.
- Business strategies: Should include marketing, sales and customer-retention strategies.
- Financial forecasts: List your start-up costs and capital requirements, as well as your projected cash flow, profit and loss and balance sheet forecasts and a break-even analysis.
3. Make necessary changes
Writing your business plan may bring up questions about your business, and once you reach the end, you may not be happy with certain parts of your plan or your prospective day-to-day operations. Before finishing, ask yourself:
- How can I counter the strengths of my competitors?
- How can I overcome the weak points in my business plan?
- Do the assumptions I've made based on various financial projections make sense?
4. Put the plan to work
Once it's ready, treat your business plan as a guide to running your business. Remember that it's a working document, so if your goals and circumstances change, update the plan.
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