One thing that has stood out to me over the years when meeting with potential clients to discuss opening a new business is that very few and when I say few, I mean less than 40% of them have actually sat down and drafted a business plan in any shape or form before they attempt to set it up. Even though they may have a clear idea in their minds about what their business is, putting pen to paper can be a challenge but when they do, they may discover that even though their initial idea is good, adjustments may be required to make it a reality.
So what is the point of the business plan and why do you need one?
(1) Clarify Direction and Purpose
A well-written business plan defines your project, what it is about and where it needs to go over time. Try responding these key questions about your proposed business just to start off:
- What will your products or services be?
- Who will your customers be?
- Who is the proprietor(s)? What is your background?
- What does the future hold for your business and your industry?
Businesses evolve over time. When I look back at my first plan and where I am not, it is chalk and cheese but it did give me a clear starting point from which to build up from.
(2) Set-up and Management
This determines the organizational structure of your business. Will you be a sole-trader, a partnership or a limited company? What is the best tax system for you? Who will be responsible for the various tasks within the business to make it run smoothly? Will you have employees? This section also ensures that targets are met and the business is kept on track. You can also define the business philosophy, ethics, values and mission statement.
(3) Market Research
To create this section, a little investigative work is required to determine whether you project is viable in your area and whether your prospective customers even find value in your product that would attract them to buy. It also permits you to define your target market. If you cannot determine a clear target market, how can you possibly succeed? Talk to them and based on their feedback, tweak your ideas if necessary to make it more appealing and marketable. Think about your competition. What makes them successful? What do you offer that they perhaps don’t and how can you stand out?
This section is absolutely CRUCIAL to the future success of your business. You need to list your start-up costs, monthly overheads and how much you must earn daily in order to maintain your business. Many new business ventures fail simply because many do not place enough importance on their finances. For example, if your business does not earn from the get-go and lets be honest, most do not even cover expenses for the first six months to a year, the question is, how will you survive? Do you have savings to get you through the first twelve to eighteen months or do you require investors? If the answer is the latter, then a business plan is vital to approach investors so they can determine for themselves the potential your project has of making a profit and returning their investment with interest of course.
Aside from that, you have to prove the value of your project or service and charge accordingly. Again, your overheads will play an important part at this stage because if you undervalue and therefore undercharge, your business will never reach the heights of success you need.
A business plan can go from a couple of pages to one hundred depending on its complexity but the point is to establish clear ideas, product and sustainability and remember it is never to late to go back to the drawing board and redefine your existing business either. At this time of the year, it is also a fantastic way of evaluating the past twelve months and making improvements in the upcoming year.
If you need a helping hand, head over to the Canary Admin Services’ Victory “V” Store and purchase an easy to use template of a business plan that can get you started on the road to success.