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Writing A Business Plan
Writing a business plan is vital if your business is to succeed. However, before you do this you need to make sure your business has a chance of working. Our steps will help you put together a successful business plan.
When you are putting it together, there are certain elements you need to include.
You will have to decide how you are going to develop your business, when you are going to develop it, and how you will manage the finances.
Here is a list of sections you should include in your business plan:
- Executive summary – this is a general overview of the business you wish to set up. It’s important you spend time thinking about how you will write this, especially if you intend to raise money from investors. They will lend quite a bit of weight to this, and thus judge your business plan accordingly.
- Brief description of the business opportunity – this explains who you are exactly, what you are selling, why and who you hope to sell to.
- Marketing and sales strategy – here you should explain why you think people will want to buy what you are offering, and how you plan to sell it to them.
- Management team and staff – this includes your credentials and the staff you plan to recruit to help you run your business.
- How you will operate – this should detail the premises you intend to work from, any production facilities required and your IT systems.
- Finances – here you need to explain how everything laid out in the previous sections will eventually result in a profit.
1. Do lots of research
First of all, you need to find out if there is a market for your product or service – will customers be willing to pay for what you are offering them? If they are, is the gap in the market big enough for you to make enough money and therefore make your new business to be a success?
In order to determine this, you will have to spend a considerable amount of time undertaking market research.
If your findings are positive, you will then have to think about how you are going to reach your target market in terms of pricing and PR. It’s important you pick the right strategies in order to achieve this.
To help you do this, analyse your potential customers. Think about:
- How do they behave?
- What type of customers are they?
- Where do most of them shop?
- How much disposable income do they have and how often might they be expected to buy your goods or services?
Make sure that the amount you are charging for your product or service is affordable to your customers, but also high enough to cover the cost and make a profit.
Your business could be doomed before it has even started if you do not carry out enough market research. Even if you have a wonderful idea, your business will not take off if you do not invest enough time in planning and researching.
Execution is key, and you are unlikely to succeed if you do not gather sufficient information from the outset.
How do I conduct my market research?
It’s a good idea to gather both primary and secondary data. Primary information is that which you collect yourself, whereas secondary is data already collected and published.
You can gather most of this research yourself for free, and take the form of either quantitative or qualitative data.
Once you have done this, you may find you have to change your original plan to suit the needs of your customers. It’s important to consider all your findings, rather than just proceed with what you feel is the best plan.
Collect as much information as you can so you have a clear and reliable picture of your market, and fully understand its needs. This way you will have a better idea of how to meet them and therefore your business being a success.
2. Decide if your business is viable
First of all, you need to find out if your business idea is original or not. If it isn’t, and is just building on an existing concept, you must ask yourself whether there is room for you in the market.
It is not impossible to eventually become a market leader in your niche.
One way to test your business plan is to carry out a SWOT analysis. If you have not heard of this term before, the acronym stands for Strengths, Weaknesses, Opportunities and Threats.
This will allow you to see the good sides of your idea, and where the weaknesses and/or disadvantages might lie.
If you feel your idea could be easily copied by someone else, protect your brand and product with a trademark and a patent.
Investigate all the different avenues you can exploit for a revenue stream. These include selling advertising space, customer subscriptions, pay-per-click advertising, and product/service commissions from other companies.
This will increase your chances of making a profit from the outset.
3. Outline the goals of your plan
While your business plan can ultimately have more than one purpose, you ulimately need to make money and posssibly attract investors further down the line.
A plan should help direct you toward this, so it's important the document is as clear as possible, and defines how you are going to reach your objectives.
4. Write a company profile
Your company profile includes the history of your business, the products or services you offer, your target market and audience, your resources, how you’re going to solve a problem and what makes your business unique.
Once you have done this, it's a good idea to add to your About Us page on your website so potential customers or investors can easily find out more about you.
Your profile can be used to describe your organisation in your business plan, and should be one of the first parts of your plan that you put together.
This should make the job of completing the rest of the plan a little easier.
5. Record all business activities
Investors want to make sure that your business is going to make them money. Because of this expectation, investors want to know everything about your business.
To help with this process, document everything from your expenses, cash flow and industry projections. Also, don’t forget seemingly minor details like your location strategy and licensing agreements.
6. Include a marketing plan
A great business plan will always include a strategic and aggressive marketing plan. This typically includes achieving marketing objectives such as:
- Introducing new products
- Extending or regaining market for existing products
- Entering new territories for the company
- Boosting sales in a particular product, market or price range. Where will this business come from? Be specific.
- Cross-selling (or bundling) one product with another
- Entering into long-term contracts with desirable clients
- Raising prices without cutting into sales figures
- Refining a product
- Writing a content strategy
- Enhancing manufacturing/product delivery.
Make sure you include the costs for each of your marketing activities (if applicable), so you can then work out the return on investment afterwards and decide if it's something worth pursuing again in the future.
Other things to think about for your marketing strategy include:
- Where do you position your product in the marketplace - is it luxury or affordable? Is it a specialist product? What unique benefits does it offer?
- Pricing policy - how price-sensitive is your target audience? Look at each product or market segment in turn. Identify where you make your profits and where it may be possible to increase margins or sales.
- How will you promote your product or service? Some methods will work better than others, and if you want to try a new marketing activity, it's best to begin on a small scale.
- What sales channel will you use to reach your custmers? Will you sell directly, or through retailers, agents, etc.? What are the pros and cons of any distribution channels you are planning to use?
- How will you sell? Look at the cost efficiency of your methods, and include any hidden costs in these.
7. Prepare to be flexible
Try to cater for all possible audiences when writing your business plan.
For example, investors will be more interested in cashflow and accounts, whereas you or others in your team will be more concerned with the marketing side of things, and achieving your objectives.
This means you should save a core copy somewhere, so you can then modify it for whoever is going to be reading it. This will save you starting over each time from scratch.
8. Keep it brief and professional
Focus on the essentials and avoid any waffle. Check it carefully for spelling and grammar mistakes, and make sure it's easy to read you can refer to it quickly.
Detailed financial or market research data can be put into an appendix, as can any employee CVs or product specifications.
Include all the sections outlined at the start of this article, and use page numbers and charts (if useful).
9. Don't forget your SWOT analysis
This part of your plan shows that you understand your business, where it sits in the industry, and the external factors that are likely to affect it.
Using just one side of A4, you should try to outline:
- Strengths, e.g. brand name, quality of product, or management.
- Weaknesses e.g. lack of finance, a niche product or reliance on just a few customers.
- Opportunities e.g. increasing demand or a competitor going bust.
- Threats e.g. a downturn in the economy or a new competitor. Make sure you are honest about these!
10. Share your vision
Your passion and dedication for your new business needs to shine through, whether it's to your team members, customers or potential investors. and you actually care about your business and the plan.
You could discuss the mistakes that you've learned from, outline any problems or challenges that you’re hoping to solve, describe your values, and establish what makes you stand out from the competition.
Think about what makes you better than your competitors and where you would realistically like to be in three years' time.
Set clear targets and the steps you are going to take to reach them.
For more tips and advice on starting a business and entrepreneurship, please see:
- Why start a business?
- Types of business
- Choosing A Structure
- Choosing A Business Name
- Designing A Logo
- Creating Business Cards
- Registering A Domain Name
- Building A Website
- Controlling Your Finances
- Forming A Marketing Strategy
- Preparing To Launch
- Peter Jones Enterprise Academy (PJEA)
- PJEA courses
- PJEA student testimonials.